§ 60. Patronage capital contributions, allocations, and retirements.
(a) Each cooperative's by-laws shall, unless otherwise determined by
agreement of the members, provide for patronage capital allocations and
retirements in the manner provided by this section. Agreement by the
members for purposes of this section shall mean member approval of
by-law provisions or by a majority vote of the members voting at a duly
called meeting. Any matter set forth in this section which is subject to
determination of the board of directors shall be determined in the
exercise of such board of director's business judgment.

(b) Patronage capital shall be determined by a cooperative on an
annual basis and shall be the excess, if any, of amounts received or
receivable by such cooperative from furnishing electricity over such
cooperative's operating costs and expenses properly chargeable against
furnishing electricity, as determined using such accounting method or
methods as agreed upon by the members. Costs and expenses chargeable
against furnishing electricity shall include:

(1) expenses of the operation and maintenance of its facilities during
such fiscal year;

(2) interest obligations of the cooperative coming due in such fiscal
year;

(3) depreciation and other expenses to finance or to provide a reserve
for the financing of the construction or acquisition by the cooperative
of additional facilities to the extent determined by the board of
directors;

(4) expenses to provide a reasonable reserve for working capital as
determined by the board of directors;

(5) expenses to provide a reserve for the payment of indebtedness of
the cooperative maturing more than one year after the date of the
incurrence of such indebtedness in an amount not less than the total of
the interest and principal payments in respect thereof required to be
made during the next following fiscal year;

(6) expenses to provide a fund for education in cooperation and for
the dissemination of information concerning the effective use of
electric energy and other services made available by the cooperative;
and

(7) all other costs and expenses from and directly related to the
furnishing of electric energy to the patrons.

(c) "Patron", as referred to in subdivisions (b) through (h) of this
section, shall be defined as (1) a member and (2) a nonmember to whom
the cooperative furnishes electric energy or other services on a
patronage basis pursuant to bylaws or as agreed upon by the members.

(d) On an annual basis, patronage capital determined under subdivision
(b) of this section shall be allocated on the books of the cooperative
to each patron having furnished such capital and shall be based upon and
in proportion to:

(1) the revenue from each patron or group of similar patrons to the
cooperative's total revenue;

(2) the contribution of each patron or group of similar patrons to the
cooperative's overall patronage capital;

(3) the kilowatt-hour usage of each patron or group of similar patrons
to the total kilowatt-hour usage of all patrons;

(4) any other method which is agreed upon by the members; or

(5) any combination of paragraphs one, two, three and/or four of this
subdivision as agreed upon by the members.

(e) "Retirement" in reference to patronage capital shall mean the
redemption and payment in cash or other property, as provided by
subdivision (f) of this section, of patronage capital to the cooperative
patrons or former patrons to whom it has previously been allocated. The
allocation of patronage capital to a patron's patronage capital account
shall in no event create a vested right to the retirement of the amount
so allocated. The board of directors of a cooperative may, in its
discretion, retire patronage capital allocated on the books of the
cooperative when it determines such retirement is consistent with sound
business and management practices and the long-term financial stability
of the cooperative. Patronage capital shall be retired according to the
method chosen by the members and at the time the board of directors
shall determine as a matter of its discretion. However, patronage
capital may be retired in advance of the date when it would otherwise be
retired under the previous sentence in such circumstances and upon such
conditions as are agreed upon by the members, including, but not limited
to, upon a patron's or former patron's death, the termination of a
patron or former patron's electric service, or a patron or former
patron's filing for bankruptcy. In the event of such early retirement of
patronage capital, the amount of patronage capital allocated to the
patron or former patron on the cooperative's books may be discounted for
purposes of its retirement in accordance with such method as is agreed
upon by the members. The difference between the discounted amount and
the patron's or former patron's patronage capital may be retained by the
cooperative as part of its net savings in a manner determined by the
board of directors.

(f) When the board of directors of the cooperative has determined,
pursuant to subdivision (e) of this section, that patronage capital
shall be retired, the retirement may be accomplished by a bill credit,
by the mailing of payment or notice of payment to the patron's or former
patron's last known address of record on file with the cooperative, or
by such other method as the board of directors shall determine to be
appropriate. No interest shall be paid or payable by the cooperative on
any patronage capital. The amount of patronage capital being retired may
be reduced by any amount owed to the cooperative by the patron or former
patron.

(g) A cooperative may adopt such procedures for the assignment and
contribution of unclaimed patronage capital to the cooperative as are
agreed upon by its members. Such procedures may include providing that
patronage capital which has not been claimed by a patron or former
patron, after reasonable efforts to locate said patron or former patron,
shall be added to the net savings of the cooperative. Mailing of a check
or notice of the availability of a check to the last known address of a
patron or former patron by first class mail and publication of the list
of patrons or former patrons having unclaimed patronage capital on the
website and/or newsletter of the cooperative for a period of three years
shall be deemed reasonable effort to locate said patron or former
patron.

(h) In the event that the cooperative should engage in the business of
furnishing goods and 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, bylaws, or by approval of
the members, be prorated annually on a patronage basis and allocated to
each member and shall be retired to said member according to the method
chosen by the members and at the time that the board of directors shall
determine as a matter of its discretion. Nothing in this section,
however, prevents a cooperative from furnishing goods and services other
than electric energy on a non-patronage basis to non-members; the net
earnings of which may be retained as part of its net savings.

(i) With respect to any cooperative formed under this chapter that is
exempt from federal income taxation under paragraph twelve of subsection
(c) of section five hundred one of the internal revenue code of nineteen
eighty-six, as amended, or any corresponding provision of future federal
tax law, or any cooperative which would otherwise qualify for said
exemption but for having less than eighty-five percent (or whatever
threshold may be specified in the future for said purpose by the
internal revenue code) of income from members, this section shall in all
events be limited to and interpreted in a manner which is compliant with
the requirements of exemption under such internal revenue code section,
and any agreement by the members or determination by the board of
directors under this section with respect to the subject matter hereof
shall also be limited to and interpreted in a manner which is compliant
with such internal revenue code section.