Article VIII - Non-Profit Operation
Section 8.01. Interest or Dividends on Capital Prohibited
The Association shall at all times be operated on an association nonprofit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Association on any capital furnished by its patrons, unless otherwise required by law or regulatory authority or by resolution of the Board of Directors.
Section 8.02. Patronage Capital in Connection With Furnishing Electric Energy
- In the furnishing of electric energy the Association’s operations will be so conducted that all patrons will through their patronage furnish capital for the Association. In order to induce patronage and to assure that the Association will operate on a nonprofit basis the Association may account on a patronage basis to all its patrons for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. All such amounts in excess of total operating costs and expenses at the moment of receipt by the Association are received with the understanding that they are furnished by patrons as capital.The Association shall maintain such books and records as will enable it at any time to compute, upon reasonable notice, the amount of capital contributed during any given period by each of its members and non-members.
- All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuant of a legal obligation to do so and the patron had then furnished the Association corresponding amounts for capital.
- All other amounts received by the Association from its operations in excess of the costs and expenses shall, insofar as permitted by law, be (1) used to offset any losses incurred during the current or any prior fiscal year and (2) to the extent not so allocated shall be included as part of the capital credited to the accounts of patrons, as herein provided or to facilitate general rate reductions.
- In the event of a bid or proposal of purchase of most or all of the assets of the Association, outstanding capital credits will be calculated and set up on the books of the Association as an outstanding indebtedness against the Association, to be assumed by the prospective purchaser.
- Capital credited to the account of each patron shall be assignable only on the books of the Association pursuant to written instructions from the assignor and only to successors in interest or successors in occupancy in all or part of such patrons’ premises served by the Association unless the Board of Directors, acting under policies of general application shall determine otherwise.
- The Association, before retiring any capital credited to any patrons account, shall deduct therefrom any amount owing by such patron to the Association together with interest thereon at the statutory rate on judgments in effect when such amount became overdue, compounded annually.
Section 8.03. Dissolution or Liquidation
- In the event of dissolution or liquidation of the Association, after all outstanding indebtedness of the Association shall have been paid, any outstanding capital credits shall be retired without priority on a pro rata basis before any payments are made on account or property rights of members.
- The remaining liquidation proceeds, if any, shall be distributed ratably among all members of the Association during the period of its existence.
Section 8.04. Patronage Refunds in Connection With Furnishing Other Services
In the event that the Association should engage in the business of furnishing goods or services other than electric energy, all amounts received and receivable therefrom which are in excess of costs and expenses properly chargeable against the furnishing of such goods or services shall, insofar as permitted by law, be prorated annually on a patronage basis and returned to those patrons, from whom such amounts were obtained.