Billing Procedures (also available in Spanish) 12

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3 What is a Cooperative 1 Cooperative Principles 2 Board of Trustees 3 Your Cooperative 4 We re Here for You 4 Your Electric Service 5 Restoring Your Power During an Outage 5 What to Do If the Lights Go Out 6 Before You Dig 7 General Billing Information 8 OCEC Rates 9 Service Charges 10 Top Ways to Save Energy 11 Billing Procedures (also available in Spanish) 12 What You Can Do If Your Bill Seems High 17 OCEC Extras 18 Red Flag Policy 19 Line Extension 20 Line Extension Policy 21 Bylaws & Articles of Incorporation 28 Non-Discrimination Statement 41

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5 YOU ARE A MEMBER OF OTERO COUNTY ELECTRIC COOPERATIVE, INC. Welcome to Otero County Electric Cooperative (OCEC). Our commitment to you is to provide the best possible electric service at the lowest possible price. You share in the ownership and governance of the cooperative. You are an owner Cooperatives are owned by the people they serve, called members. We exist to provide electric service to our members, at the lowest possible cost. As for how margins are handled, rather than having to make a return on investment for stockholders, a cooperative exists to provide services/products to their membership in the most economical way. Therefore, all margins are directly allocated back to the membership based on each member s patronage, or purchase of services. When revenue exceeds costs, margins are allocated to the members. These allocations are referred to as Capital Credits. While the Capital Credits are allocated each year, they are not immediately paid back to the membership as the cooperative uses a portion as operating capital. Capital Credits are retired each year that it is financially possible after consideration is given to the cooperative s funding needs for the following year s operating requirements, system growth and improvements. You have a voice Members come together annually to elect members to serve as their representatives on the Board of Directors. YOUR TOUCHSTONE ENERGY COOPERATIVE OCEC is a Touchstone Energy Cooperative. Touchstone Energy is a national alliance of local, consumer-owned electric cooperatives providing high standards of service to customers large and small. More than 700 Touchstone Energy cooperatives in 46 states are delivering energy and energy solutions to more than 27 million customers every day. Touchstone Energy cooperatives service their members with integrity, accountability, innovation and a longstanding commitment to communities. 1

6 As a cooperative, we are member-owned and democratically controlled. We strive to adhere to the following principles: 1 ~ Voluntary & Open Membership Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2 ~ Democratic Member Control Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner. 3 ~ Member Economic Participation Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefitting members in proportion to their transactions with the cooperative, and supporting other activities approved by the membership. 4 ~ Autonomy & Independence Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy. 5 ~ Education, Training & Information Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public particularly young people and opinion leaders about the nature and benefits of cooperation. 6 ~ Cooperation Among Cooperatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures. 7 ~ Concern for Community While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members. 2

7 OCEC serves consumers in Otero, Lincoln, Chaves & Socorro Counties. Ten trustees are elected from 5 districts and serve 3-year terms with 4 trustees elected every third year. Preston Stone Trustee Northwest District Cody Harwell Trustee Southeast District Marty Mills Trustee Central District Bill Bird Trustee Northeast District Kenny Blazer Trustee Southwest District Tim Rabon Trustee Southwest District Charlie Mulcock President Southeast District Matt Flotte Secretary Central District Scott Shafer Treasurer Northwest District Fred Hansen Secretary Northeast District 3

8 You Have the Power Anyone who receives electricity from the cooperative is a member. Cooperatives are led by the members. CLOUDCROFT 202 Burro Avenue PO Box 227 Cloudcroft, NM (FAX) ALTO 1135 Highway 48 PO Box 1135 Alto, NM (FAX) CARRIZOZO th Street PO Box 669 Carrizozo, NM (FAX) Office Hours ~ Weekdays from 8 AM to 5 PM, excluding holidays; however, the Lobby of each office closes at 4 PM. 4

9 Through ongoing maintenance, proactive vegetation control, and use of the latest technology, your cooperative is able to avoid numerous interruptions. Still, interruptions of your electric service can occur due to severe weather, trees & other vegetation, animals, accidents, equipment failure, or maintenance to lines and equipment. When they happen, the system is designed to prevent full-blown outages. When an object, such as a tree branch, comes into contact with the power line, the system will shut down and restart immediately giving the item time to clear itself. What you see is a blink, and while blinks can be frustrating, they are a sign that an outage was prevented. Full-blown power outages don t occur very frequently, but rest assured that when they do, your cooperative is fast to respond. Staff is on-call 24 hours a day, 365 days a year, just in case you need us. During a major outage, the main goal is to restore power safely to the greatest number of members in the shortest time possible. The steps your cooperative will take to restore power are: 1. Transmission Towers & Lines. Tens of thousands of people could be serviced by one high-voltage transmission line, so if there is damage here, it gets attention first. 2. Distribution Substations. If the problem can be corrected at the substation level, power may be restored to a large number of people. 3. Distribution Lines. Once repaired, all members served by the same line could see the lights come on, as long as there is no problem farther down the system. Work is completed on the lines that affect the most members first. 4. Service Lines. Sometimes damage occurs between your house and the transformer on a nearby pole. This can explain how you have no power when neighbors do. Special Note: Individual households may receive special attention if loss of electricity affects life support systems or poses an immediate danger. Call your cooperative before an emergency arises. 5

10 If your electricity should go off, first go to your main electrical panel to see if a breaker has tripped. Fuses must be replaced while breakers only need to be reset. If the problem is not in your main panel, call a neighbor to determine if other homes in the area have been affected. If the problem is not within your home s wiring or if several homes are involved, call OCEC Cloudcroft ~ , Alto ~ or Carrizozo ~ If the outage occurs outside normal operating hours, please call and your call will be answered by our dispatch center. When you report an outage ~ Give us your name and physical address. Also give us your phone number, in case we need to contact you for further information. If you have multiple accounts, please also give us the account number or meter number for the location that is experiencing the outage. This will help us dispatch crews to the correct location. If you know the cause of the outage, please describe it. (Example: A limb is on the line, a pole has been hit by a vehicle, etc.) Informing us of the nature of the outage saves a great deal of our time and your inconvenience. If you report the outage to us, please do not call again. Others may need to report outages, as well. Be assured tat the repairs are being made as quickly as possible. While the electricity is off ~ Keep your refrigerator and freezer closed. Food should keep for 48 hours, as long as the doors are kept shut. If the outage should persist, arrangements should be made to store food at another location or dry ice should be purchased. Stay away from power lines on the ground. Do not attempt to remove trees or limbs from lines. That s our job! Life support equipment ~ If someone in your home is dependent on life-support equipment, (Example: respirator, infant heart monitor, etc.) do not wait until you have an outage to notify us of these circumstances. Call now at or These residences are given priority for restoring service during an outage. 6

11 New Mexico state law requires everyone involved in any excavation to provide at least two (2) working days notice to owners of underground facilities when a dig is planned. All facility owners are then required to mark the locations of any underground lines or take other appropriate measures to protect them. Municipalities, pipelines, gas distribution, telecommunication, water and electric companies have underground facilities everywhere in New Mexico. Striking any one of these lines can cause service interruptions, injury, or even death. New Mexico One Call (NMOC) exists to provide the resources and educations excavators need so that every dig is a safe one. You may contact NMOC by any of the following methods. BY PHONE Statewide ~ Dial 811 or BY FAX or ONLINE EMERGENCY REQUEST Dial 811 or

12 Bills for electric service are sent out on or around the 10th day of each month for the prior month s usage. The net of the bill is payable within 20 days of the date the bill is issued. If the bill is not paid by the due date on the billing, a second billing notice is sent. If the bill is not paid by the date shown on the second billing notice, the service may be subject to disconnection for non-payment. If the service is disconnected for non-payment, a deposit and reconnect charge, plus usage up to the date of disconnect is added to the current bill and must be paid prior to services being reconnected during regular working hours. If reconnected after hours or on weekends, an additional overtime fee is also added. It is to every member s advantage, and greatly simplifies paper work if bills are paid on time. If for some reason, a bill cannot be paid within 20 days, please contact the office and we will try to make arrangements with you to get caught up. Don t let it go and have the service disconnected for non-payment. This makes extra expense and inconvenience for you and extra work for your cooperative office and crew. Your cooperation in this matter is appreciated and to your advantage. Reconnecting your own electric service after it has been disconnected for any reason is a dangerous practice and also illegal. New Mexico law makes any tampering with a meter, or attempting to steal electricity in an way, an illegal act that is punishable by fine, imprisonment or both. 8

13 SUMMARY OF RATES ~ EFFECTIVE MARCH 4, 2010 Base Energy Rate for All Classes ~ $ RATE CLASS CUSTOMER CHARGE TOTAL KWH/KW CHARGE General Service ~ Regular Rate $16.50 Demand Charge per KW: (above 10 kw) $9.25 Energy (all kwh) $ General Service ~ Optional Rate $19.00 Demand Charge per KW: (above 10 kw) On Peak: 12 PM to 10 PM (12) $10.00 Off Peak: 10 PM to 12 PM (18) $0.00 Energy (all kwh) On Peak: 12 PM to 10 PM (12) $ Off Peak: 10 PM to 12 PM (18) $ Large Power ~ Regular Rate (50 kva or more) $75.00 Demand Charge per KW: (all kw) $10.50 Energy (all kwh) $ Large Power ~ Optional Rate (50 kva or more) $85.00 Demand Charge per KW: (all kw) On Peak: 12 PM to 10 PM (11) $11.00 Off Peak: 10 PM to 12 PM (19) $5.25 Energy (all kwh) On Peak: 12 PM to 10 PM (11) $ Off Peak: 10 PM to 12 PM (19) $ Residential Service ~ Flat Rate $16.00 Energy (all kwh) $ Residential Service ~ Optional Rate $18.50 Energy (all kwh) On Peak: 12 PM to 10 PM (14) $ Off Peak: 10 PM to 12 PM (16) $ Street Lighting Service ~ Monthly Charge 100 Watt HPS $ Watt HPS $ Watt HPS $ ,000 Watt HPS $58.30 Note: All rates are subject to Fuel & Debt Service Adjustments 9

14 DESCRIPTION OF CHARGE CUSTOMER CHARGE Connect Charge ~ Normal Business Hours $30 Charged for all service orders, including transfers of service and new service connects. Connect Charge ~ Outside of Normal Business Hours - Includes Saturday, Sunday & Holidays $200 Records Change $10 Meter Tampering ~ 1st offense $150 Meter Tampering ~ All subsequent offenses $300 When service is disconnected for tampering, consumer shall also be charged for actual cost of damage to utility s property, charges for kwh usage and reconnect fee. Trouble Call ~ Normal Business Hours $150 Trouble Call ~ Outside of Normal Business Hours $200 When Cooperative is requested to dispatch servicemen to consumer s premises, and trouble is found to be in consumer s appliances or facilities, or from causes over which utility has no control, trouble call charges may be added to consumer s account. Relocation of facilities for consumer s convenience Actual Cost Trip Charge $80 Charged to consumer for trip to consumer s premises to collect or disconnect for non-payment of bill, in addition to account balance. Returned Check Processing Fee $25 Meter Test $35 If a meter test is requested and the meter has been tested within the past 18 months, and the meter proves to be less than two percent (2%) in error, there shall be a testing fee charged to consumer account. Other Special Services Rendered by Cooperative Actual Cost Mailing Charges outside USA Actual Cost Late Fee A late fee shall be applied to the balance of consumer s bills, excluding residential consumers, when said bill becomes delinquent. 3% per month 10

15 Use Power Strips on Electronics. As technology advances, it takes more power to operate electronics. Take a large, flat screen TV for example; when it s turned off it still uses the same amount of electricity as a 75-watt light bulb. Plug your electronics into a power strip and make sure they re completely off with the flip of a switch. Lower the Temperature of Your Water Heater. In most homes, the hot water temperature could be reduced without a drastic change in comfort. Install CFL s. Compact fluorescent lights use up to 75% less energy than standard incandescent bulbs and they last up to 10 times as long. Get a Programmable Thermostat. You can set it so the temperature adjusts when you are away from home or sleeping to decrease the amount of energy used to heat and cool your home. Adjust Your Lifestyle. You can make simple changes in your daily life, such as turning off lights when you leave a room, hanging your clothes to dry or closing blinds on a sunny day, to reduce energy consumption. Look for the Energy Star. This little star identifies the most energy efficient products available for appliances, lighting and electronics. Teach Your Family. Increase your energy saving efforts by getting the whole family on board. In addition to saving immediately, you are helping the next generation of energy consumers become good stewards today. 11

16 Readings are retrieved on the 1 st of every month from the Automatic Meter Reading System. These readings are processed through the billing department; making every effort for accuracy and to retrieve every reading. The billing readings are loaded to the billing system, and reports are run for every account and are thoroughly checked and reviewed. Readings are checked for low/high usage against the last 3 months kilowatt hour (kwh) usage as well as the same month the previous year. If a potential misread is suspected; a meter reader is sent to check the reading and verify accuracy of the reading. Meters are also checked to be sure every meter has a good reading that month. Every effort is made to get a reading from each meter, but at times a reading is not retrievable. If a meter reading is estimated, the bill will reflect this. The billing department spends a week preparing for the actual billing date. The normal billing date is the 10 th of every month, unless that falls on a weekend or holiday. The billing reports are not only checked for accuracy of readings, but for usage on inactive meters, meters with no readings, malfunctioning meters, and correct dates. We are able to provide our consumers with details regarding bills. Hourly and daily reports can be generated through the AMS and billing systems. We also track the high and low temperatures for various climate zones daily. These two reports are useful when trying to research a high bill, trying to save energy usage, and tracking usage for a particular meter for any reason. Immediately prior to the actual billing, final checks are done. Deposits are applied where applicable. The billing department tries to make sure that all connects, disconnects and meter changes are complete before the billing process. All payments and updates are halted while the billing process is being run. A file is sent to OCEC s printing company immediately after billing is complete. The bills are printed and usually mailed out the next day. Consumers should receive their bills within a few days after the billing. Some consumers choose the option of paperless billing. In that case; an notification is sent to these consumers alerting them that their bill is ready to view. Bills are due 20 days from the date of mailing. This is always around the 3 rd -5 th of the month. Payments can be made in various ways. Payments can be mailed in with the stub, to any of our offices; payments can be made online at our website through our E-bill system at any time; payment can be made by phone or in person with Visa and MasterCard; payments can be made through the consumer s personal bank through Online Billing. We accept payments at any of our 3 offices, and we have drop boxes at all offices as well as various sites in the community. If a payment is in our office before 4:00 PM, that payment will be posted to the account immediately. After 4:00, payments will be posted the next business day. If payments are put in the drops boxes, we guarantee that they will be posted within 2 business days. E-bill payments are posted every 5 minutes from 5:00 AM-8:00 PM. All payments made after the due date on the bill are deemed past due. If you find yourself unable to pay by the due date on the bill, call to make payment arrangements. Depending on the circumstances you may be eligible for programs such as Budget Billing or Installment agreements. 12

17 Verify bill accuracy by residential consumer Otero County Electric Cooperative has the ability to check and verify readings for residential consumers through the Automatic Meter Reading system. The consumer can read the meter physically at the same time an employee can dial through and retrieve readings. Some of the meters are digital; while some are read with dials. An employee in the billing department can explain how to read a meter with dials. This can be done to verify a real-time reading. The AMS also tracks daily interval readings that are available to any consumer requesting this information. Budget Billing Budget Billing is a program where we take your last twelve months of billings and average them to come up with a set monthly dollar amount. Budget billing is a great way for our consumers whose bills are higher over the winter or summer months than the rest of the year to average them out. Budget Billing is also for those who like to budget their monthly expenses. To sign up for Budget Billing call Third-Party Notification OCEC offers a Third party notification program to those residential customers who notify us in writing of their desire to participate in the program and designate a specific person, organization, or governmental agency that is ready, willing, and able to assist the residential customer with the payment of utility bills. Upon receipt of such notice from a residential customer, OCEC will not discontinue service to a participating residential customer for nonpayment of past due charges without contacting the designated person, organization, or governmental agency by phone or in writing at least fifteen days prior to the proposed discontinuance of service. It then is up to the designated person, organization, or governmental agency to assist with payment of the residential consumer's past due charge within a reasonable period of time. Complaint Procedures If a consumer suspects a billing discrepancy, Otero County Electric must be contacted within 30 days; otherwise the bill be considered correct. The Billing Department must be contacted and notified of the nature of the billing question. The most common question regarding billing is High Bill Complaints. If a consumer thinks bills are higher than normal, please call any of the offices. Every effort will be taken to figure out why the billing is high. We have the ability to do hourly reports, daily reports, compare climate temperatures and kwh use. If this is not satisfactory; our Member Services department will schedule an electrical audit with the consumer to physically check the meter, electrical appliances and general troubleshooting. If a meter reading mistake or a billing error is found; an adjustment will be done to the billing account as soon as possible. If the bill is correct, but difficult to pay, OCEC will work with the consumer to develop a payment plan. If you are not satisfied with the arrangements that we provide, or we are unable to settle a dispute you have the right to file a complaint with the New Mexico Public Regulation Commission (NMPRC), 1120 Paseo de Peralta, Santa Fe, NM Telephone or ASK PRC or

18 Non-payment Discontinuance and Restoration of Service Fifteen days before OCEC discontinues a service for nonpayment a written notice is mailed to the customer stating its intent to disconnect. If payment or payment arrangements have not been made three days prior to the actual date of discontinuance of service, OCEC will take reasonable steps to communicate with the customer by telephone or personal contact to remind the customer of the pending date of discontinuance of service. In order to restore service to a customer who has been disconnected for nonpayment, all past due charges must be paid along with a connect fee, and, if required, a deposit or additional deposit. OCEC will at all times make a reasonable effort to restore service on the day restoration is requested, and in any event restoration shall be made no later than the next working day following the day the charges are paid. Otero County Electric Cooperative will not discontinue service to a residence where a seriously or chronically ill person resides, or will reestablish service to such a residence if Otero County Electric Coop receives a signed medical certification form or a substantially similar form, from a medical professional stating that discontinuance of service might endanger the customer's life or health along with a financial certification form signed by a qualifying agency or self certified if accompanied by a copy of a Medicaid Eligibility ID, No. Residential Security Deposits OCEC may require a security deposit for residential consumers who have not previously had service on our system and who have not established an acceptable credit rating; from a chronically delinquent residential consumer ; as a condition for reconnection of service following discontinuance of service; or from a residential consumer who in an unauthorized manner has interfered with or diverted the service on or about or delivered to the residential consumer's premises. The amount of the deposit will be based two (2) times the previous twelve months highest bill but no more than one sixth the estimated annual usage. OCEC shall base its deposit criteria upon the most recent available prior twelve-month corresponding period at the same service location; or, if there is not a comparable period of service at the same service location, the deposit shall be based upon consumption of similar units in the same area. Residential customers who have not previously had utility service with OCEC can bring in the following documentation to help in determining the amount of the security deposit. Residential customer owns or is purchasing the residence. The residential customer has an adequate income. Residential customer has an adequate credit reference from a utility where the residential customer had prior utility service. Documentation obtained from a commercial credit source. Any other reasonable documentation. 14

19 If a prospective residential customer cannot establish an acceptable credit rating but previously received utility service under the name of a spouse, the utility may consider prior utility service to that spouse in determining whether and in what amount a security deposit will be charged. If a residential customer or prospective residential customer can demonstrate to OCEC that they do not have adequate financial resources to pay the security deposit and the residential customer brings in documentation from the administering authority that shows they meet the qualifications of Low Income Heating and Energy Assistance Program (LIHEAP), OCEC shall give special consideration to such a residential customer in determining whether or in what amount a security deposit will be charged. Simple interest on deposits at a rate not less than the rate required by law shall accrue annually to the residential customer's credit for the time the deposit is held by the utility. The deposit shall cease to draw interest on the date it is returned, on the date service is terminated, or on the date the refund is sent to the residential customer's last known address. Any residential customer who has not been chronically delinquent for the twelve-month period from the date of deposit or guarantee shall promptly receive a credit or refund in the amount of the deposit together with accrued interest due or shall be permitted to terminate any guarantee. If the amount of the deposit exceeds the amount of the current bill, the residential customer may request a refund in the amount of the excess if such excess exceeds twenty five dollars ($25). If the residential customer fails to qualify for a refund of the deposit on the first anniversary date of the deposit, that account shall be reviewed at least annually, and the amount of the deposit shall be credited if the residential customer has not been chronically delinquent during the preceding twelve (12) months. A residential customer may request a refund at any time after twelve (12) months payment history, which refund shall promptly be paid if the residential customer has not been chronically delinquent during the prior twelve-month (12) period, or a utility may pay such refund in the absence of a request within a reasonable period of time. Unclaimed deposits shall be handled as provided by law. Winter Moratorium If you meet the qualifications of LIHEAP and have no past due amounts or you remain current on any settlement or installment agreement for amounts due as of November 15, your service will not be disconnected from November 15 through March 15. Contact the Human Services Department at , or the appropriate tribal or pueblo entity for eligibility information for Low Income Heating Energy Assistance Program (LIHEAP). Members of New Mexico tribes or pueblos who need help with translation or with other matters may contact the commission s consumer relations division at (888) , who will contact the appropriate tribal or pueblo official for assistance. [ NMAC - N] Assistance Agencies 15

20 The following agencies may be able to assist you in paying your electric bill. LIHEAP State Wide ~ LIHEAP ~ Otero County LIHEAP ~ Lincoln County Phone ~ (575) Phone ~ (575) Fax~ (575) Fax ~ (575) Juniper Drive Hwy 70 Alamogordo, NM Ruidoso Downs, NM Southeast NM Community Action Corporation Phone ~ (575) Phone ~ (575) Fax~ (575) Fax ~ (575) E First Street # San Jose Blvd Alamogordo, NM Carlsbad, NM 16

21 Know What You Are Using Everything from your home s construction to your family s lifestyle can affect your monthly bill. When you know the combination of factors that determine your monthly bill, you can make the most effective changes. Adjust Your Daily Habits You can realize potential savings by making simple adjustments to your daily lifestyle all without spending a dime. For example, instead of setting your heat at 78 degrees, set it at 72 and dress in layers to stay warmer. Make Small Improvements to Your Home Small projects can add up to big savings. For example, caulking windows will help keep warm air in during the winter, switching from incandescent light bulbs to compact fluorescent bulbs provides the same amount of light using less energy, and installing a programmable thermostat controls your home s temperature and energy used on heating and cooling. Replace Outdated or Inefficient Equipment & Appliances Upgrading the items that use the most energy water heaters, heating and cooling equipment, and large appliances can make a significant impact. Remember, You re Not Alone OCEC is here to help. Our staff can help you identify ways to reduce your energy consumption. The PowerGram and Enchantment, monthly publications available to you from OCEC, contain many helpful energy efficiency tips. To start, check out the Top Ways to Save Energy on the next page. Even Out the Ups & Downs People use more electricity in some months, less in others. When you sign up for budget billing, you pay the same amount each month based on your average bill. This way, you won t be hit with a big bill one month and a smaller bill next month. If interested in this service, please contact the Billing Department at

22 As a member of OCEC, you will receive certain extras from us at no charge. These extra service include 1. Member Services Department By calling our offices and asking for Member Services, you will be able to obtain the following: A. Questions answered concerning your billing. B. Detailed reports on electric usage at your home. C. A walk-through energy audit at your home or business. D. Energy conservation measures. E. Recommendations when buying new appliances. F. Programs presented to schools, civic groups and other organizations. 2. Enchantment Paper The Enchantment newspaper is mailed to you each month. This paper is published by our statewide organization in Santa Fe, NM and includes articles about the cooperatives throughout New Mexico; and Tri-State Generation and Transmission Cooperative, Inc. the supplier of electricity to the majority of the cooperatives in New Mexico. The back page of the paper provides OCEC related information and tips on energy conservation. 3. Power-Gram This monthly newsletter is included with the consumer monthly billing. The Power-Gram is published by the Member Services Department. You will find safety tips and energy conservation tips as well as information on community happenings, employee information and general information about your cooperative. 18

23 Under Federal law and regulations, OCEC is required to adopt an Identity Theft Red Flag Prevention Policy.This is required under the Federal Trade Commission ( FTC ) regulations at 16 C.F.R. sec OCEC maintains accounts for its members, which allows the members to pay for service after it has been rendered. Bills are sent and payments are due on a monthly basis. These are considered covered accounts and therefore are covered by this Red Flag policy. Methods for Opening Accounts OCEC requires that prospective members who wish to receive utility service submit a membership application with the following information: A. Legal name of adult household members on the account B. Spouse legal name C. Contact and billing information D. Physical address where service will be provided E. Employer, employer phone, address, and how long employed F. Social Security Number if they are willing G. Whether they are renting, buying, or own H. Name, address, phone no. and relationship of one relative not in the same household I. Password and security question J. A valid Government issued photo identification must be presented in OCEC s offices. Methods for Accessing Accounts OCEC allows members to access information related to their accounts using the following methods. A. In person at one of OCEC s offices with a valid Government issued picture identification or password. B. Over the telephone after providing OCEC s Customer Service Representative with their name and password. C. Access E-bill through OCEC web site ~ 19

24 OCEC has made significant changes to the Line Extension Policy. The area most affected by this revision is line extensions involving Underground Residential Distribution (URD), specifically URD services from the pedestal and/or transformer to the meter. Since 2008, OCEC has taken responsibility for the installation, ownership and maintenance of new URD services to the meter. Previously, this was the responsibility of the customer requesting the new service. OCEC would like to prevent any unnecessary costs to our customers. There have been instances where installations not meeting OCEC s requirements had to be removed or abandoned, because prior to construction, there were no communications between the customer, their electrician and OCEC. This situation is not good for anyone. All of the changes made to OCEC policies, procedures and specifications can not be covered here, but this notifies you that changes have been and will continue to be made by OCEC when necessary. Therefore, OCEC is requiring the customer and/or the customer s electrician to contact the OCEC Staking Department before any installation of electrical facilities is initiated. This will clarify the customer s responsibility, OCEC s responsibility, where the meter should be located, and anything else that may require discussion prior to construction. Please contact the Staking Department if you have any questions. 20

25 OTERO COUNTY ELECTRIC COOPERATIVE, INC FOURTH REVISED RULE NO. 15 ~ CANCELING THIRD REVISED RULE NO. 15 EXTENSION POLICY 1. STATEMENT OF POLICY: CONSUMER ADVANCES REQUIRED This extension policy is intended to enable Otero County Electric Cooperative, Inc. (OCEC) to extend its lines and facilities as needed to serve new consumers and locations within its service area without imposing undue burden or cost on existing consumers. To that end, and subject to any credits available under this rule, a developer or consumer requiring an extension of facilities for new service will be required to pay to OCEC an advance in aid of construction equal to the estimated cost to OCEC of purchasing, constructing, and installing the additional facilities necessary to provide the requested service. The advance may also include a prorated share of any unrefunded advances previously received by OCEC from other consumers, other than developers, Federal, State, Local Governments, and Railroads, and applied to the cost of facilities which will also be used in providing the new service. The advance shall not be refunded to the consumer, but the consumer will, nevertheless, for a period of twenty years after payment of the nonrefundable advance and provided that the consumer continues to receive service from OCEC, receive a prorated share of any advances collected from future consumers for the use of facilities constructed through advances from the first consumer. This does not include developers, Federal, State, Local Governments, and Railroads. Line extensions and service agreements shall be established on an individual basis for entities such as but not limited to, the United States Government, the United States Military, the State of New Mexico, county or local governments, the Mescalero Apache Tribe, and Railroads. 2. PERMANENT SERVICE DEFINITION Permanent Service as defined herein is construed to mean service to domestic, small and large commercial, rural and urban consumers when the use of service both as to amount and permanency can be reasonably assured. Consumer shall be financially able and responsible to fulfill all obligations to be specified by written agreement. Consumer shall also provide copies of the deeds to all properties involved in the line extension. To be considered permanent, the electric meter shall supply electric power to one of the following: All trailer and mobile homes placed on a permanent foundation with the wheels, axles, and tongue arrangements removed. Water wells. A building if it is fully enclosed and has a minimum of 400 square feet of floor space, with a permanent foundation and roof. Any barn or shop not fully enclosed with over 800 square feet of floor space and with a permanent foundation affixed to the earth. Campers, fifth wheels, recreational vehicles, cargo containers, semi-trailers, yurts, tents, electric gates, entrances, carports, or other services deemed non-permanent by OCEC will not be considered permanent structures. A. CONTRACT TERM: To assure that the additions to the plant, lines and systems of OCEC required to provide electric service to new consumers will not cause undue hardship upon OCEC or its then existing consumers, each new consumer shall be required to contract to receive service and pay the minimum 21

26 charges for a period of at least five years continuous billing. B. MINIMUM BILL: The minimum bill shall be the customer charge in accordance with the applicable rate schedule for each service. Every new service will also be charged a connect fee plus tax. C. FREE EXTENSIONS: OCEC will extend electric service to any permanent consumer without a construction charge provided that the total construction investment required does not exceed the current non-monetary construction credit equal to OCEC s calculated cost for a 10 kva pole-mounted single-phase transformer, lift pole, service, and meter. There will be one construction credit given for each permanent service. If the construction investment required for the permanent consumer exceeds the construction credit, the consumer will be required to make an advance in aid of construction in an amount equal to the excess, prior to the construction of any facilities. The applicable rate minimum will apply to free extensions. 3. UP AND DOWN SERVICE (NONREFUNDABLE) A. DEFINITION: Up and Down Service as herein defined refers to electric service to circuses, bazaars, fairs, concessions and similar enterprises, and to construction works of temporary character. 1. Term: Not less than one month. 2. Connection Cost: Where it is necessary for OCEC to extend lines, install transformers, make enlargement of any part of its system or do any other work to serve the consumer, the applicant-consumer shall make a non-refundable payment equal to the estimated cost of installation and removal, less credit for estimated salvage of material to be recovered, before construction begins. 3. Minimum Charge: The minimum monthly bill shall be the customer charge in accordance with the applicable rate schedule for each customer. 4. TEMPORARY & INDETERMINATE SERVICE (NONREFUNDABLE) A. DEFINITION: Temporary Service as herein defined refers to electric service to mines, quarries, oil wells, sawmills, industrial and commercial enterprises of speculative character, trailers and mobile homes, enterprises and ventures where the applicant is the lessee or tenant of the property to be served, and to other types of service, except Up and Down Service, where the amount of use and permanency of service cannot be reasonably assured. B. DEFINITION: Indeterminate Service as herein defined refers to service that does not, at the time of connection, meet the requirements of a Permanent Service. If within 12 months the consumer contacts OCEC to verify it meets the requirements for a Permanent Service, upon verification by OCEC, the consumer may receive a refund of the construction credit up to OCEC s calculated cost for a 10 kva single-phase pole-mounted transformer, lift pole, service, and meter. 1. Contract Term: The contract term shall be for a period of five years. 2. Advances: Where it is necessary for OCEC to extend lines, install transformers, make enlargement of any part of its system or do any other work to serve the consumer, the consumer shall, before construction begins, make an advance in aid of construction in the amount equal to the estimated cost of installation. 3. Minimum Charges: The minimum bill shall be the customer charge in accordance with the applicable rate schedule for each customer. 22

27 5. EXTENSIONS WITHIN SUBDIVISIONS AND DEVELOPMENTS A developer is any consumer or customer of OCEC that pays to have a power line extended to serve more than one tract or lot, or is connecting multiple meters in a name other than their name or family members name. Extension of facilities to serve subdivisions and land developments will be made on the following basis: A. The interested party shall contact OCEC requesting service to the land to be developed and shall be treated as a developer rather than an individual member. B. The developer shall provide OCEC a legally dedicated final plot plan of the subdivision with all necessary signatures showing the boundaries, lot layout by number, streets, alleyways, easements and any other information pertinent to the development of the property. C. The developer shall provide the necessary easements to allow OCEC to provide service to each individual lot in the subdivision. These easements shall be dedicated and shown on the plot plan filed for record with the respective county, and OCEC shall be furnished a copy of such instrument. If no approved subdivision plat is furnished, the developer shall provide a valid easement before construction of the power line. D. Overhead Facilities: Where overhead facilities are requested by applicant -developer, OCEC will provide the developer with a plan for providing service to each lot in the subdivision together with an estimated cost of installing the required electric facilities. These electrical facilities shall be limited to the primary or secondary lines to lot corners and all necessary support structures required to provide service to the subdivision and shall not include transformers, services and other facilities for the individual lots. The developer will be required to pay as an advance in aid of construction the total estimated cost of installing the primary lines in the subdivision, as provided in Sec. 9 (Estimates). This amount will be paid prior to the start of construction. There will be no refunds for construction. OCEC will not charge any previous construction cost to the consumer or refund to the developer any money for a consumer connecting in a subdivision where the developer has installed the primary power line. Any extension OCEC builds off of this line will also be exempt from any refund to the developer. E. Underground Facilities (Primary Only): Where underground facilities are requested by applicant-developer, they shall provide at no cost to OCEC, all ditching, bedding, and back-filling in accordance with OCEC specifications. OCEC will provide the developer with a design for providing service to each lot in the subdivision together with an estimated cost for installing the required electric facilities. The developer will be required to pay as an advance in aid of construction the total estimated cost of installing the primary lines in the subdivision, as provided in Sec. 9 (Estimates). This amount will be paid prior to the start of construction. There will be no refunds for construction. Any extension OCEC builds off of this line will also be exempt from any refund to the developer. OCEC will not charge any previous construction cost to the consumer or refund to the developer any money for a consumer connecting in a subdivision where the developer has installed only the primary power line. F. Underground Facilities (Primary & Secondary): For subdivisions in which the developer has paid for installation of all primary lines, transformers, and secondary lines to each lot; the developer will be entitled to a construction credit equal 23

28 to a 10 kva pole-mounted single-phase transformer, lift pole, service and meter minus the cost to serve the consumer, for each consumer connected within 5 years from the execution of the construction contract. 6. UNDERGROUND FACILITIES OCEC may agree to provide underground service to a group of contiguous landowners or lots presently served from an overhead distribution system provided such service is requested by all landowners involved. A. The landowners requesting the change shall first pay the total removal expense of the overhead distribution system, plus the total cost of the new underground system. Total removal expenses shall be the original cost, less depreciation, of the overhead facilities involved, plus the cost of removal, less salvage value of material removed. B. Modifications in service entrance or metering required for the land owner to accept underground service shall be entirely at the landowner s expense and it is the landowner s responsibility to complete the necessary modifications. C. Any consumer requesting that an overhead primary power line be converted to an underground primary power line, for his convenience, shall also pay for the underground primary power line to be designed and built with redundancy, for the reliability of the system. D. Where underground facilities are requested by applicant-land owner or developer, they shall provide at no cost to OCEC, all ditching, bedding, and backfilling in accordance with OCEC specifications. E. Pursuant to common Industry Standards, OCEC will not install, provide, or maintain a pad-mount 3-phase delta underground transformer or service. All other 3-phase underground service voltages will need to be coordinated with OCEC for approval. F. OCEC shall install, own, and maintain new secondary underground cable for all services with load requirements less than 50 kva. The consumer shall install, own, and maintain the conduit system as specified by OCEC for all such services. If for any reason OCEC is unable to install and/or remove the service cable in the customer s conduit system, the customer shall repair the conduit system at the customer s expense. OCEC will not connect the service until such repair has been made, and OCEC is able to install and/or remove the service cable in the customer s conduit system. Underground service terminations made in the customer owned meter loop may be made by the customer s licensed electrician. G. For all underground services with load requirements 50 kva or larger, the customer shall install, own, and maintain the secondary underground cable from the transformer to the service entrance. 1. When served by a pad-mount transformer, the customer shall also provide a rack or cabinet within 10 feet of the transformer, where the OCEC provided meter can shall be installed by the customer s licensed electrician. The customer shall also provide conduit system between the padmount transformer and meter can as specified by OCEC. OCEC will provide and install the meter, along with the required current transformers, which will be installed in the pad-mount transformer. 2. When an underground service is served from pole-mounted transformer(s), the customer shall provide an OCEC approved weatherproof enclosure to house the current transformers at the service entrance. The OCEC provided meter can shall be installed next to this enclosure by the 24

29 customer s licensed electrician, where OCEC will then install the meter. OCEC will specify the maximum distance the service entrance may be from the transformer(s) based on the customer s expected load and service conductor. 7. GENERAL RULES APPLICABLE TO OCEC EXTENSION POLICY A. For purposes of determining the amount of the advance in aid of construction required from a consumer under this policy, the total construction investment required for the new service shall include the new consumer s prorated share of any unrefunded advances received within the preceding twenty years from other consumers other than the United States Government, the United States Military, the State of New Mexico, county or local governments, the Mescalero Apache Tribe, and Railroads for the construction of facilities which will be used in providing the new service. OCEC will then allocate and distribute the prorated share collected from the new consumer among the consumers who paid the advances so that the new advance paid by each such consumer using the facilities (taking into account the distribution) will be approximately equal. B. All line extensions including poles, conductors, insulators, transformers and all necessary equipment shall be owned and maintained by OCEC. All metering, including instrument transformers when necessary, shall be installed, owned and maintained by OCEC. C. The consumer shall install, own and maintain, at their own expense, the complete service entrance wiring, including meter loop, meter pole, meter socket, and other appurtenances beginning at the point of contact of OCEC s service conductor with the consumer s service leads. D. Consumer s installation shall be installed and maintained, at his expense, in a thoroughly safe and efficient manner, and in full compliance with the National Electric Code, National Electrical Safety Code and the New Mexico Electric Code, or any other Governmental laws as well as Rules and Regulations of OCEC then effective. E. OCEC shall establish the maximum distance allowed for an electric meter from our primary line based on the consumer s electric load. F. When a consumer desires energy to be delivered at a point or in a manner other than that specified by OCEC, a charge shall be made by OCEC to the consumer equal to the additional cost associated with the consumer requested modifications. G. If unusual circumstances exist, an extension or enlargement may be made under a special contract providing the contract terms and conditions are such that no adverse effects shall be imposed on OCEC s existing consumers. H. When a consumer desires service under voltage conditions other than those available by OCEC, any necessary transformer and accessory equipment required to supply the required voltage shall be supplied, owned and maintained by the consumer at a point on the consumer s side of the meter. I. The consumer shall furnish and install at the consumer s own expense, reduced voltage starting equipment or equivalent on all motors of 10 horsepower and larger which are to be served from OCEC s electrical facilities. Starting equipment for reduced voltage starting must meet OCEC s approval. Service will not be furnished to operate individual single phase motors in excess of 10 horse power rating except where written permission is granted by OCEC. J. The consumer or developer will provide necessary easements and rights-of-way pertaining to the area being served at no cost to OCEC. K. OCEC shall not under any circumstances or conditions be required to make an 25

30 extension or enlargement, or provide underground facilities that would not be economically feasible and thereby cause hardship on other consumers of OCEC. L. Any electric line extension that OCEC deems to be a main line or feeder line that would benefit the total system may be paid in part or fully by OCEC to include refunds on lines less than 20 years old. M. Customers shall be responsible for the cost of any and all additional expenditures required by any approval agencies such as but not limited to State, United States Forest Service (USFS), Bureau of Land Management (BLM), Railroad and Highway Department. N. Convenience Light credits shall cover the cost of (1) 100 watt HPS light installed on existing OCEC pole with existing secondary. OCEC shall not install a light on consumers meter pole. 8. CUSTOMER BUILT OPTION The customer may elect to have the line extension constructed by a qualified contractor, in lieu of OCEC crews. OCEC shall provide the engineering design, construction inspection, and any other labor, material and expenses associated with the line extension at the customer s expense. Thus, the customer will pay the actual cost of OCEC s activities, in addition to the contractor s cost. OCEC will charge a deposit of $50 per lot for subdivisions, or $50 per service outside of subdivisions, for the design, inspection, and other labor, material, and expenses associated with the line extension. The deposit will be applied to the actual costs incurred by OCEC. If OCEC s actual costs exceed the deposit, the customer will be invoiced monthly and payments will be due within 30 days. In the event the customer payment is overdue, OCEC will cease all engineering and inspection activity until the account is made current. In the event OCEC s costs are less than the deposit, OCEC will refund the difference between the deposit and OCEC s costs. Upon satisfactory completion of the project construction and complete payment for OCEC s costs, OCEC will assume ownership and responsibility for the new line extension. The customer will hire only those contractors who are properly and currently qualified and licensed, in accordance with state and local law regulation, to construct electrical distribution systems, including, but not limited to, EL-1 and EE98 certification. OCEC must approve any contractor selected by the customer. Also, the customer will comply with all applicable state and local construction inspection requirements. OCEC will specify all materials and equipment to be used in the electrical system including, but not limited to: wire, cable, conduit, transformers, poles, fixtures, switching gear, relays, capacitors, and insulators. The customer shall be free to acquire said materials from any source, provided that all materials are new and from approved manufactures that meet the specifications as promulgated by OCEC that are in effect at the time OCEC provides the Design and Construction Specifications to the customer. The customer shall comply with OCEC specifications for materials, equipment, trenching, and construction standards. In order to assure compliance, OCEC will select a Construction Inspector who will visit the construction site. The inspector shall have the authority to accept, or reject the work and materials of the customer or contractor. Contractor must receive written approval from OCEC construction Inspector prior to covering any conduit or cable. For contractor installed conduit, if OCEC is unable to pull cable, contractor is responsible for complete repair or replacement of problem area. OCEC has no obligation to purchase an electrical system which is not accepted by OCEC s Construction Inspector. In addition, OCEC will not provide electric service to a system which is not accepted by OCEC s Construction Inspector. The customer shall provide to OCEC easements and rights-of -way in an approved format of OCEC, which reflects the as-built configuration and location of the electric system. The customer shall provide a tabulated inventory of all material used in construction of the electrical Facilities. 26

31 After the electrical system has been constructed, and accepted by OCEC s Construction Inspector, the customer shall sell to OCEC and OCEC will buy the line extension for $1.00. OCEC and the customer shall execute an Electric Line Extension Sales Agreement (customer built) to transfer the property. This sale shall be free of any liens or encumbrances and the customer shall provide a properly executed release and/or waiver of lien from any contractor employed in this project. Customer shall also provide all necessary easements. 9. ESTIMATES All estimates for new electric service will be in the amount of $50.00, per estimate. All estimates for subdivisions will be an amount of $50.00, per lot, per estimate. Multiple requests for multiple estimates on the same property will incur multiple estimate fees. OCEC is not responsible for change in prices on estimates after 60 days or for changes in locations previously agreed on or new subdivision layouts. Estimates for line extensions that are not in a subdivision, but are in excess of 1,320 feet, (1/4 mile) in length, will incur a cost of $50.00 per quarter mile or fraction thereafter. All estimate fees will be payable in advance. All estimate fees are non-refundable. However, OCEC will credit the first requested estimate fee towards the customers contribution in aid to construction. 27

32 ARTICLE I-MEMBERSHIP SECTION 1. Membership. Any natural person, firm, association, corporation, business, trust, partnership, federal agency, state or political subdivision or agency thereof or any body politic (hereinafter called person ) located in the area served by Otero County Electric Cooperative, Inc. (hereinafter called the Cooperative ) may receive electric service as a member of the Cooperative or as a member of the general public, upon request and upon meeting such rules, regulations, practices, acts or requirements from time to time established by the Cooperative relating to the availability and terms of electric service. Unless otherwise specified in the application for electric service, each person shall be deemed to be also an applicant for membership in the Cooperative, agreeing to purchase from the Cooperative electric energy according to the terms of any service agreement by and between such person and the Cooperative and according to rates and service regulations established by the Cooperative in accordance with the Public Utility Act as amended and the Rural Electric Cooperative Act as amended and agreeing to comply with and be bound by the Articles of Incorporation and Bylaws of the Cooperative consistent with said Acts. No person shall become or remain a member of the Cooperative unless such person shall agree to use electric energy furnished by the Cooperative when such electric energy shall be available through its facilities. Membership in the Cooperative shall not be transferable and no person may hold more than one membership in the Cooperative. Upon compliance with the above terms, a person becomes a member of the Cooperative upon receipt of electric service. SECTION 2. Termination of Membership. Upon the withdrawal, death, cessation of existence or expulsion of a member or if a member shall fail or refuse to use electric energy made available by the Cooperative or if electric energy shall not be made available to such person by the Cooperative within any period after such person shall have become a member as may be specified in the service agreement, the membership of such person shall thereupon terminate. The Board of Trustees of the Cooperative may, by the affirmative vote of not less than two-thirds of all the Trustees, expel any member who shall have refused or failed to comply with any of the provisions of the Articles of Incorporation, Bylaws, or rules or regulations adopted by the Board of Trustees, but only if such member shall have been given written notice by the Secretary of the Cooperative that such refusal or failure makes him liable to expulsion and such refusal or failure shall have continued for at least ten days after such notice was given. Any expelled member may be reinstated by a majority vote of the Board of Trustees or by a majority vote, after hearing, of the members at any annual or special meeting. Termination of membership in any manner shall not release a member or his estate from any debts due the Cooperative. ARTICLE II- RIGHTS AND LIABILITIES OF MEMBERS SECTION 1. Property Interest of Members. Upon dissolution, after: (a) All debts and liabilities of the Cooperative shall have been paid, and (b) All capital furnished through patronage shall have been retired as provided in these Bylaws, the remaining property and assets of the Cooperative shall be distributed among the members and former members in the proportion which the aggregate patronage of each bears to the total patronage of all such members, unless otherwise provided by law. 28

33 SECTION 2. Non-liability for Debts of the Cooperative. The private property of the members shall be exempt from execution or other liability for the debts of the Cooperative and no member shall be individually liable or responsible for any debts or liabilities of the Cooperative. ARTICLE III- MEETINGS OF MEMBERS SECTION 1. Annual Meeting. The Annual meeting of the members shall be held during the month of August of each year, on such date and at such place within the service area of the Cooperative, which the Board of Trustees may select and designate, and shall be designated in the notice of meeting. Failure to hold the Annual meeting at the designated time shall not work a forfeiture or dissolution of the Cooperative. SECTION 2. Special Meetings. Special meetings of the members may be called by the Board of Trustees, by any three Trustees, by not less than ten per centum of the members, or by the President, and the meeting shall be held at the place as may be designated in the petition. SECTION 3. Notice of Members Meetings. Written or printed notice stating the place, day and hour of the meeting, and in case of a special meeting or an annual meeting at which business other than that listed in SECTION 6 of this article is to be transacted, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than twenty-five days before the date of the meeting, either personally or by mail, by or at the direction of the Secretary, or upon a default in the duty by the Secretary, by the persons calling the meeting, to each member. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the member at his address as it appears on the records of the Cooperative, with postage thereon prepaid. The failure of any member to receive notice of an annual or special meeting of the members shall not invalidate any action which may be taken by the members at any such meeting. SECTION 4. Quorum. Three percent of all members present in person shall constitute a quorum for the transaction of business at all meetings of the members. If less than a quorum is present at any meeting, a majority of those present may adjourn the meeting from time to time without further notice. SECTION 5. Voting. Each member shall be entitled to only one vote. Voting by proxy shall not be allowed. Except for voting on the election of Trustees, all questions shall be decided by a vote of the majority of the members voting thereon in person, except as otherwise provided by law, the Articles of Incorporation, or these Bylaws. SECTION 6. Order of Business. The order of business at the annual meeting of the members and, so far as possible, at all other meetings of the members, shall be essentially as follows: 1) Report the existence of a quorum. 2) Reading of the notice of the meeting and proof of the due publication or mailing thereof, or the waiver or waivers of notice of the meeting as the case may be. 3) Reading of unapproved minutes of previous meetings of the members and the taking of necessary action thereon. 4) Presentation and consideration of reports of officers, Trustees and committees. 5) Election of Trustees. 6) Unfinished business. 7) New business. 8) Adjournment. ARTICLE IV- BOARD OF TRUSTEES SECTION 1. Number. The Board of Trustees shall be composed of ten members. SECTION 2. Qualifications and Tenure of Trustees. The area served by the Cooperative is hereby divided into five Trustee districts as follows: Northwest District (NW) encompasses all the area served by the Cooperative North and 29

34 West of the boundary described hereinafter: Beginning with the 2nd Standard Parallel South, which is the Southern boundary of Township 10 South, and coincides with the Lincoln-Otero County Line, as a Southern limit on the Western side. Follow this line to a point which is the Southeastern Corner of T10S, R12E. From this point go North along the East boundary of R12E to a point that is the Southwest corner of Section 19, T10S, R13E, thence East along the Southern boundaries of Sections 19, 20, 21, 22, 23 and 24, all in T10S, R13E, thence continuing East along the Southern boundaries of Sections 19, 20, 21, 22, 23 and 24, all in T10S, R14E, to a point on the Eastern boundary of Range 14 East which is the Southeast corner of Section 24, T10S, R14E. Thence North along the Eastern boundary of Range 14 East to a point that is the Southeastern corner of T8S, R14E. Thence East along the South boundary of Township 8 South to a point that is the Southeastern corner of T8S, R17E. Thence North along the East boundary of Range17 East to the Northeastern corner of T6S, R17E where upon the boundary offsets West to the Southeastern corner of T5S, R16E, and continues North along the Eastern boundary of Range 16 East. Northeast District (NE) encompasses all of the area served by the Cooperative North and East of the boundary described hereinafter: Beginning with the Southern boundary of Township 13 South as a Southern limit on the East side and continue West along this boundary to a point on the Eastern boundary of the Mescalero Apache Indian Reservation that is a common point on the Otero, Chaves, and Lincoln County lines and is also the Southwestern corner of T13S, R17E. Then North along the Western boundary of Range 17 East, which is also the Eastern boundary of the Mescalero Reservation, to a point that is the Southwestern corner of T11S, R17E, and a Northeastern corner of the Mescalero Reservation. Thence West along the Southern boundary of Township11 South which is also a Northern boundary of the Mescalero Reservation to a point that is the Southwestern corner of T11S, R13E. This is also a point at which the Mescalero Reservation boundary turns North. From this point the district boundary goes North along the Western boundary of Range13 East to a point that is the Southwest corner of Section 19, T10S, R13E, thence East along the Southern boundaries of Sections 19, 20, 21, 22, 23 and 24, all in T10S, R13E, thence continuing East along the Southern boundaries of Sections 19, 20, 21, 22, 23 and 24, all in T10S, R14E, to a point on the Western boundary of Range 15 East which is the Southeast corner of Section 24, T10S, R14E. Thence North along the Western boundary of Range 15 East to a point that is the Northwestern corner of T9S, R15E. Thence East along the Northern boundary of Township 9 South to a point that is the Southeast corner of T8S, R17E. Thence North along the Western boundary of Range 18 East to a point that is the Northwestern corner of T6S, R18E, whereupon the boundary offsets West to the Southwestern corner of T5S, R17E and continues North along the Western boundary of Range 17 East. Central District (CN) encompasses all the area served by the Cooperative within the boundaries described hereinafter: Beginning at a point on the Western boundary of Range 11 East and at the Northwest corner of Section 19, T14S, R11E. Thence South along the Western boundary of Range 11 East to a point that is the Southwest corner of Section 31, T15S, R11E. Thence East along the Third Standard Parallel South that is also the Southern boundary of Township 15 South to a point that is the Northwestern corner of Section 6, T16S, R11E. Thence South along the Western boundary of Range 11 East to a point that is the Southwestern corner of Section 31, T16S, R11E, and is also the Southwestern corner of Township 16 South, Range 11 East. Thence East along the Southern boundary of Township 16 South to a point that is the Southeastern corner of Section 36, T16S, R11E, and is also the Southeastern corner of Township 16 South, Range 11 East. Thence North along the Eastern boundary of Range 11 East to a point that is the Northeastern corner of Section 13, T16S, R11E. Thence East along the Southern boundaries of Sections 7, 8, 9, 10, 11 & 12 all in the T16S, R12E, to a point that is the Southeastern corner of Section 12, T16S, R12E. Thence North along the Eastern boundary of Range 12 East to a point that is the Northeastern corner of T16S, R12E. Thence East along the Third Standard Parallel South that is also the Southern boundary to Township15 South to a point that is the Southeastern corner of T15S, R13E. Thence North along the Eastern boundary of Range 13 East to a point on the Southern boundary of 30

35 the Mescalero Apache Indian Reservation that is also the Northeastern corner of Section 24, T15S, R13E. Thence West along the Southern boundary of the Mescalero Reservation to a Southwestern corner of the Mescalero Reservation that is also the Southeastern corner of Section 13, T15S, R11E. Thence North along a Western boundary of the Mescalero Reservation that is also the Eastern boundary of Range 11 East to a point that is the Northeastern corner of Section 24, T14S, R11E. Thence West along the Northern boundaries of Section 24, 23, 22, 21, 20 & 19, all in T14S, R11E, to a point that is the Northwestern Corner of Section 19, T14S, R11E, and is the point of beginning. Southwest District (SW) encompasses all the area served by the Cooperative South and West of the boundary hereinafter described: Beginning with the Second Standard Parallel South which is the Northern boundary of Township 11 South and coincides with the Lincoln-Otero County Line, as a Northern limit on the Western side. Follow this line to a point which is the Northeastern corner of T11S, R12E. Thence South along the Eastern boundary of Range 12 East which is also an Eastern boundary of the Mescalero Apache Indian Reservation to a point that is the Northeastern corner of T12S, R12E. Thence East along the Northern boundary of Township 12 South, which is also a Northern boundary of the Mescalero Reservation, to a point which is the Northeastern corner of T12S, R16E and is also a Northeastern corner of the Mescalero Reservation. Thence South along the Eastern boundary of Range 16 East, which is also the Eastern boundary of the Mescalero Reservation, to a point which is the Southeastern corner of Section 13, T15S, R16E, and is also the Southeastern corner of the Mescalero Reservation. Thence West along the Southern boundary of the Mescalero Reservation to a Southwestern corner of the Mescalero Reservation that is also the Southeastern corner of Section 13, T15S, R11E. Thence North along a Western boundary of the Mescalero Reservation that is also the Eastern boundary of Range 11 East to a point that is the Northeastern corner of Section 24, T14S, R11E. Thence West along the Southern boundaries of Sections 13, 14, 15, 16, 17 & 18, all in T14S, R11E, to a point on the Eastern boundary of Range 10 East, which is the Southwestern corner of Section 18, T14S, R11E. Thence South along the Eastern boundary of Range 10 East which is the Southwestern corner of Section 18, T14S, R11E. Thence South along the Eastern boundary of Range 10 East to a point on the Third Standard Parallel South, which is the Southeastern corner of T15S, R10E. Thence East along the Third Standard Parallel South, which is the Northern boundary of Township 16 South, to a point which is the Northeastern corner of Township 16 South, Range 10 East. Thence South along the Eastern boundary of Range 10 East to a point that is the Southwestern corner of Township 16 South, Range 11 East. Thence East along the Northern boundary of Township 17 South to a point that is the Northeastern corner of Section 4, T17S, R11 E. Thence South along the Eastern boundaries of Sections 4, 9, 16, 21, 28, & 33, all in T17S, R11 E, and along the Eastern boundaries of the same sections in all Townships South of this point in Range 11 East. Southeast District (SE) encompasses all of the area served by the Cooperative South and East of the boundary described hereinafter. Beginning with the northern boundary of Township 14 South as a Northern limit on the East side and continue West along this boundary to a point on the Eastern boundary of the Mescalero Apache Indian Reservation. This is a common point on the Otero, Chaves, and Lincoln County Line and is also the Northwestern corner of T14S, R17E. Thence South along the Western boundary of Range 17 East, which is also the Eastern boundary of the Mescalero Reservation, to a point that is the Southeastern corner of the Mescalero Reservation and is also the Southeastern corner of Section 13, T15S, R16E. Thence West along the Southern boundary of the Mescalero Reservation to a point on the Western boundary of Range 14 East in Township 15 South that is the Northwest corner of Section 19, T15S, R14E. Thence South along the Western boundary of Range 14 East to a point on the Third Standard Parallel South that is the Southwestern corner of Section 31, T15S, R14E. Thence West along the Third Standard Parallel South that is also the Northern boundary of Township 16 South to a point that is the Northwestern corner of Section 6, T16S, R13E. Thence South along the Western boundary of Range 13 East to 31

36 a point that is the Northwest corner of Section 18, T16S, R13E. Thence West along the Northern boundaries of Sections 13, 14, 15, 16, 17, & 18 all in T16s, R12E to a point that is the Northeastern corner of Section 13, T16S, R11E. Thence South along the Eastern boundary of Range 11 East to a point that is the Southeastern corner of Section 36, T16S, R11E, and is also the Southeastern corner of Township 16 South, Range 11 East. Thence West along the Southern boundary of Township16 South to a point that is the Northeastern corner of Section 4, T17S, R11E. Thence South along the Eastern boundaries of Sections 4, 9, 16, 21, 28, & 33 all in T17S, R11E, and along the Eastern boundaries of the same Section in all townships south of this point in Range 11East. The Board of Trustees will review the boundaries of the districts prior to the annual meeting in 1994 and will propose at the 1994 annual meeting amendments to the Bylaws to adjust the boundaries of the districts if the Board deems such adjustments necessary. Thereafter, the Board shall consider the boundaries and, if necessary, propose adjustments to the Bylaws at every fifth annual meeting. Two Trustees shall be elected for each district by vote of the members present at the meeting and residing in such district. Trustees shall be elected by a plurality of the votes cast for each Trustee position. In the event of a tie vote, the tie will be broken by the toss of a coin. The ground rules of such a coin toss will be determined by the Chairman of the meeting, who may not be one of the candidates involved in the tie vote. The persons qualified and elected as Trustees shall compose the Board of Trustees until the successors shall have been elected and shall have qualified. If the election of Trustees shall not be held on the day designated herein for the annual meeting or at any adjournment thereof, the incumbent Trustees shall hold office until the next following annual meeting of the members or until a special meeting of the members shall be held for the purpose of electing the Trustees if such special meeting is called. Trustees shall be elected by districts at each annual meeting of the members beginning with the year of 1981, by and from the members, who serve for three years or until their successors have been elected and shall have qualified with the following exceptions: Trustees at the 1981 annual meeting shall be elected only for the districts of Trustees whose terms will expire in Trustees whose terms do not expire in 1981 shall continue to serve until their term does expire at which time Trustees shall be elected for those districts. No person shall be eligible to become or remain a Trustee or to hold any position of trust in the Cooperative who: (a) is not a member of the Cooperative; or (b) is not a bona fide resident of the district for which he is elected; or (c) is anyway employed by or financially interested in a competing enterprise or a business selling electric energy or supplies to the Cooperative, or a business primarily engaged in selling electrical or plumbing appliances, fixtures, or supplies to the members of the Cooperative; or otherwise have any financial interest in the Cooperative other than as consumer of electric services or one entitled to capital credits or receiving Trustee benefits; or (d) is absent from three (3) or more consecutive meetings of the Board of Trustees without having a bona fide reason, said reason to be determined by the remaining Trustees, and any Trustee so removed by and under this SECTION shall be notified by the Board of Trustees; or (e) shall refuse or fail to fulfill his or her fiduciary duty to the Cooperative. Upon establishment of the fact that a Trustee is holding office in violation of any of the foregoing provisions it shall immediately become incumbent upon the Board of Trustees to remove such Trustee from office. Nothing contained in this SECTION shall affect in any manner whatsoever the validity of any action taken at any meeting of the Board of Trustees. SECTION 3. Nominations. Nominations for Trustees to be elected shall be by Petition signed by fifteen or more members acting together, and who are bona fide residents of the district for which the nomination is made. The Petition shall be filed not less than twenty (20) days or more than forty (40) days before the date of the Meeting of the Members in which Trustees are to be elected. Nominations for the position of Trustee from the floor, at the annual Meeting of Members, is not allowed. 32

37 The secretary shall mail with the notice of the meeting, but at least seven days before the date of the meeting, a statement of the number of Trustees to be elected and the names and addresses of the candidates. Notwithstanding anything contained in this SECTION, failure to comply with any of the provisions of this SECTION shall not affect in any manner whatsoever the validity of any election of Trustee. SECTION 4. Removal of Trustees by Members. Any member may bring charges against a Trustee by filing such charges in writing with the Secretary, together with a petition signed by at least ten per centum of the members and request the removal of such Trustee by reason thereof. The Trustee shall be informed in writing of the charges at least five days prior to the meeting at which the charges are to be considered and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence in respect of the charges; and the person or persons bringing the charge against him shall have the same opportunity. The question of the removal of such Trustee shall be considered and voted upon at the next regular or special meeting of the members and any vacancy created by such removal may be filled by vote of the members at such meeting without compliance with the foregoing provisions with respect to nominations. SECTION 5. Vacancies. Subject to the provisions of these Bylaws with respect to the filling of vacancies caused by the removal of Trustees by the members, a vacancy occurring on the Board of Trustees shall be filled by the affirmative vote of a majority of the remaining Trustees for the unexpired portion of the term of the Trustee in respect of whom the vacancy occurs. SECTION 6. Compensation. Trustees as such shall not receive any salary for their services, but by resolution of the Board of Trustees a fixed sum and expenses of attendance, if any, may be allowed for attendance at each meeting of the Board of Trustees. No Trustee shall receive compensation for serving the Cooperative in any other capacity, nor shall any close relative of a Trustee receive compensation for serving the Cooperative, unless specifically authorized by a vote of the members or by two-thirds vote of the Board of Trustees voting and participating other than the Trustee affected. However, the Cooperative shall provide Trustees and their dependents the same medical, health and hospitalization insurance benefits furnished to other Cooperative employees, provided that the Cooperative may only furnish such benefits to the Trustees during the terms in office. ARTICLE V- MEETINGS OF TRUSTEES SECTION 1. Regular Meetings. A regular meeting of the Board of Trustees shall be held without notice other than this Bylaw requirement, immediately after and at the same place as, the Annual meeting of the members. A regular meeting of the Board of Trustees shall also be held at such time and place in the State of New Mexico as the Board of Trustees may provide by resolution. Such regular meeting may be held without notice other than such resolution fixing the time and place thereof. SECTION 2. Special Meetings. Special meetings of the Board of Trustees may be called by the President or by any three Trustees, and it shall thereupon be the duty of the Secretary to cause notice of such meeting to be given as hereinafter provided. The President or the Trustees calling the meeting shall fix the time and place (which shall be in the State of New Mexico), for the holding of the meeting. SECTION 3. Notice of Trustees Meetings. Written notice of the time, place and purpose of any special meeting of the Board of Trustees shall be delivered not less than five days previous thereto, either personally or by mail, by or at the direction of the Secretary, or upon a default in duty by the Secretary, by the President of the Trustees calling the meeting, to each Trustee. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Trustee at his address as it appears on the records of the Cooperative, with postage thereon prepaid. 33

38 SECTION 4. Quorum. A majority of the Board of Trustees shall constitute a quorum, provided, that if less than such majority of the Trustees is present at said meeting, a majority of the Trustees present may adjourn the meeting from time to time; and provided further, that the Secretary shall notify any absent Trustee of the time and place of such adjourned meeting. The act of the majority of the Trustees present at a meeting at which a quorum is present shall be the act of the Board of Trustees. ARTICLE VI- OFFICERS SECTION 1. Number. The officers of the Cooperative shall be a President, Vice President, Secretary and Treasurer. The offices of Secretary and Treasurer may be held by the same person. SECTION 2. Election and Term of Office. The officers shall be elected, by ballot, annually by and from the Board of Trustees at the meeting of the Board of Trustees held directly after the Annual meeting of the members. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until the first meeting of the Board of Trustees following the next succeeding Annual meeting of the members or until his successor shall have been elected and shall have qualified. A vacancy in any office shall be filled by the Board of Trustees for the unexpired portion of the term. SECTION 3. Removal of Officers and Agents. Any officer or agent elected or appointed by the Board of Trustees may be removed by the Board of Trustees whenever, in its judgment, the best interest of the Cooperative will be served thereby. In addition, any member of the Cooperative may bring charges against an officer by filing such charges in writing with the Secretary, together with a petition signed by ten percent of the members, and request removal of the particular officer by reason thereof. The officer against whom such charges have been brought shall be informed in writing of the charges at least five days prior to the meeting at which the charges are to be considered and shall have an opportunity, at the meeting, to be heard in person or by counsel and to present evidence in respect of the charges; and the person or persons bringing the charges against the Officer shall have the same opportunity. The question of the removal of such officer shall be considered and voted upon at the next regular or special meeting of the members. SECTION 4. President. The President shall: (a) be the principal executive officer of the Cooperative and, unless otherwise determined by the members or the Board of Trustees, shall preside at all meetings of the members and the Board of Trustees. (b) sign, with the Secretary, any deeds, mortgages, deeds of trust, notes, bonds, contracts or other instruments authorized by the Board of Trustees to be executed, except in cases in which the signing and execution thereof shall be expressly delegated by the Board of Trustees or by these Bylaws to some other officer or agent of the Cooperative, or shall be required by law to be otherwise signed or executed; and (c) in general perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Trustees from time to time. SECTION 5. Vice President. In the absence of the President, or in the event of his inability or refusal to act, the Vice President shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice President shall also perform such other duties as from time to time may be assigned to him by the Board of Trustees. SECTION 6. Secretary. The Secretary shall be responsible for: (a) keeping the minutes of the meetings of the members and of the Board of Trustees in books provided for that purpose; 34

39 (b) seeing that all notices are duly given in accordance with these Bylaws or as required by law; (c) the safekeeping of the corporate books and records and the seal of the Cooperative and affixing the seal of the Cooperative to all documents, the execution of which on behalf of the Cooperative under its seal is duly authorized in accordance with the provisions of these Bylaws. (d) keeping a register of the names and post office addresses of all members; (e) keeping on file at all times a complete copy of the Articles of Incorporation and Bylaws of the Cooperative containing all amendments thereto (which copy shall always be open to the inspection of any member) and, at the expense of the Cooperative, furnishing a copy of the Bylaws and of all amendments thereto to any member upon request; and (f) in general performing all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Trustees. SECTION 7. Treasurer. The Board of Trustees may appoint a Manager to perform such duties and exercise such authority as the Board of Trustees may from time to time vest in him. The Treasurer shall be responsible for: (a) custody of all funds and securities of the Cooperative: (b) the receipt of and the issuance of receipts for all monies due and payable to the Cooperative and for the deposit of all such monies in the name of the Cooperative in such bank or banks as shall be selected in accordance with the provisions of these Bylaws; and (c) the general performance of all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Trustees. SECTION 8. Manager. The Board of Trustees may appoint a Manager to perform such duties and exercise such authority as the Board of Trustees may from time to time vest in him. SECTION 9. Bonds of Officers. The Treasurer and any other officer or agent of the Cooperative charged with responsibility for the custody of any of its funds or property shall be bonded in such sum and with such surety as the Board of Trustees shall determine. The Board of Trustees in its discretion may also require any other officer, agent or employee of the Cooperative to be bonded in such amount and with surety as it shall determine. SECTION 10. Compensation. The powers, duties, and compensation of any officers, agents and employees shall be fixed by the Board of Trustees. SECTION 11. Reports. The officers of the Cooperative shall submit at each annual meeting of the members reports covering the business of the Cooperative for the previous fiscal year. Such reports shall set forth the condition of the Cooperative at the close of such fiscal year. ARTICLE VII-LIABILITY AND INDEMNIFICATION SECTION 1. Trustees Limited Liability. A Trustee shall not be personally liable to the Cooperative or to its members for monetary damages for breach of fiduciary duty as a Trustee unless: (a) the Trustee has breached or failed to perform the duties of his office in compliance with Section , NMSA 1978; and (b) the breach or failure to perform constitutes willful misconduct or recklessness. SECTION 2. Officers and Trustees Indemnification. Subject to SECTIONS 4, 5, and 6 of this Article VII, the Cooperative shall indemnify any person who is or was a Trustee or an elected or appointed Officer of the Cooperative and any person, who, while a Trustee or officer of the Cooperative, is or was serving at the request of the Cooperative as a director, officer, partner, Trustee, em- 35

40 ployee or agent of another cooperative or of a foreign or domestic corporation or nonprofit corporation, partnership, joint venture, trust, unincorporated association, other incorporated or unincorporated enterprise or employee benefit plan or trust, and who is made a party to any action, suit or proceeding, civil or criminal, by reason of holding or having held such an office or position. SECTION 3. Employees and Agents Indemnification. Subject to SECTIONS 4, 5, and 6 of this Article VII, the Cooperative shall indemnify any person other than a Trustee or an Officer acting as such who has or had an employment or agency relationship with the Cooperative and who is made party to any action, suit or proceeding, civil or criminal, by reason of serving during the course of such relationship, including service at the request of the Cooperative as a director, officer, partner, Trustee, employee or agent of another cooperative or of a foreign or domestic corporation or nonprofit corporation, partnership, joint venture, trust, unincorporated association, other incorporated or unincorporated enterprise or employee benefit plan or trust. SECTION 4. Indemnification Disqualification. The Trustee, Officer or other person shall not be indemnified if they shall be adjudged to be liable on the basis that they breached or failed to perform the duties of his office or position and the breach or failure to perform constitutes willful misconduct or recklessness. The Trustee, Officer or other person shall, further, not be indemnified in respect to any proceeding charging improper personal benefit to him, whether or not involving action in their official capacity, in which he shall have been adjudged to be liable on the basis that personal benefit was improperly received. There shall be no indemnification of a person, other than a Trustee, unless the board of Trustees finds that the indemnity: (a) acted in good faith; (b) reasonably believed that he was acting in the course of his office, employment or agency and in a manner to be in or at least not opposed to the best interests of the Cooperative; and (c) in the case of any criminal proceeding, had no reasonable cause to believe the person s conduct was unlawful. Termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, be determinative that the person is disqualified from receiving indemnification. SECTION 5. Indemnification Amount. Indemnification shall, pursuant to SECTION 2, and may, pursuant to SECTION 3, be made against judgments, penalties, fines, settlements, and compromises, cost and expenses, including attorney s fees, reasonably incurred by or on behalf of the indemnity in connection with the defense of such proceeding. Reasonable expenses incurred by a Trustee, officer or other person who is a party to a proceeding may be paid or reimbursed by the Cooperative in advance of the final disposition of such proceeding if: (a) such person furnished the Cooperative a written affirmation of his good faith belief that he is not disqualified from receiving indemnification under SECTION 4 of this Article VII; (b) such persons furnished the cooperative a written undertaking by or on behalf of the person to repay such amount if it shall ultimately be determined that he is disqualified or, in the case of a person other than a Trustee or an Officer acting as such, not fully indemnified in the board of Trustee s discretion; and (c) a determination is made that the facts then known to those making the determination would not preclude indemnification. SECTION 6. Indemnification Procedure. No indemnification under SECTIONS 2 and 3 shall be made unless authorized in the specific case after a determination has been made that indemnification is permissible in accordance with the Rural Electric Cooperative Act and this Article VII. Such determination shall be made: 36

41 (a) by the board of Trustees by a majority vote of a quorum of Trustees not at the time parties to the proceeding; (b) if such a quorum cannot be attained, by a majority vote of a committee of the board of Trustees duly designated to act in the matter by a majority vote of the Board of Trustees, in which designated Trustees who are parties may participate, and consisting solely of two or more Trustees not at the time parties to the proceeding. (c) by special legal counsel, selected by the board of Trustees or a committee thereof by vote as set forth in paragraph (a) or (b) of this SECTION 6 or, if the requisite quorum of the full board of Trustees cannot be obtained therefore and such committee cannot be established, by a majority vote of the full board of Trustees, in which selection Trustees who are parties may participate; or (d) pursuant to a resolution of a majority of the members present and voting at any Annual or Special meeting. Authorization of indemnification and determination as to the amount shall be made in the same manner as the permissibility determination, except that if the permissibility determination is made by a special legal counsel, authorization and amount determination shall be made in a manner specified in sub-section (c) of this SECTION 6 for the selection of such counsel. would not preclude indemnification. SECTION 7. Employee Benefit Plans. For the purpose of this Article VII, the Cooperative shall be deemed to have requested a person to serve as a director, Trustee, employee or agent of an employee benefit plan or trust whenever the performance of his duties to the Cooperative also imposes duties of him or otherwise involves his services to the plan or trust or the participants or beneficiaries of the plan or trust; excise taxes assessed on him with respect to an employee benefit plan or trust pursuant to applicable law shall be deemed fines ; and action taken or omitted with respect to an employee benefit plan or trust in the performance of duties for a purpose reasonably believed to be in the interest of the participants and beneficiaries of the plan or trust shall be deemed to be for a purpose which is not opposed to the best interests of the Cooperative and to be neither willful misconduct or reckless. SECTION 8. Insurance and Similar Protection. The board of Trustees may purchase and maintain insurance or furnish similar protection, including but not limited to providing a trust fund, a letter of credit or self-insurance, on behalf of any person who is or was a Trustee, officer, employee or agent of the Cooperative or who, while a Trustee, Officer, employee or agent of the Cooperative, is or was serving at the request of the Cooperative as a director, Officer, partner, Trustee, employee or agent of another cooperative or a foreign or domestic corporation, partnership, joint venture, trust, unincorporated association, other incorporated or unincorporated enterprise or employee benefit plan or trust, against any liability asserted against and incurred by the person in such capacity or arising out of that person s status as such, whether or not the Cooperative could indemnify the person against such liability under the provisions of this Article VII. SECTION 9. Non-Exclusive. The indemnification authorized by this Article VII shall not be deemed exclusive of any other rights to which these seeking indemnification may be entitled under an agreement approved by the board of Trustees, a resolution of the members or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office or position, and shall continue as to a person who has ceased to be a Trustee, officer, employee or agent and inure to the benefit of his personal representatives and heirs. ARTICLE VIII: NON PROFIT OPERATIONS SECTION 1. Interest or Dividends on Capital Prohibited. The Cooperative shall at all times be operated on a Cooperative non-profit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons. 37

42 SECTION 2. Patronage Capital. allocated in connection with the furnishing of electric energy. In the furnishing of electric energy, the Cooperative s operations shall be so conducted that all patrons, members and non-members alike, will, through their patronage, furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis, the Cooperative is obligated to account on a patronage basis to all its patrons for all amounts received and receivable from the furnishings of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. All such amounts in excess of operating costs and expenses at the moment of receipt by the Cooperative are received with the understanding that they are furnished by the patrons as capital. The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of operating costs and expenses. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital account of each patron and the Cooperative shall within a reasonable time after the close of the fiscal year notify each patron of the amount of capital so credited to his account. 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 pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital. All other amounts received by the Cooperative from its operation in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, allocated to its patrons on an electric energy patronage basis and any amount so allocated shall be included as a part of the capital credited to the accounts of patrons as herein provided. In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired with priority on a pro rata basis before any payments are made on account of property rights of members. If, at any time prior to dissolution or liquidation, the Board of Trustees shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons accounts may be retired in full or in part. Any such retirements of capital shall be made at such times in such amounts, and in such manner as the Board of Trustees may, from time to time, determine and prescribe, subject, however, to the security provisions of outstanding loan documents of the corporation and to the rules, regulations and restrictions promulgated by the Rural Utility Services. Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instructions from the assignor and only to successors in interest or successors in occupancy in all or a part of such patrons premises served by the Cooperative unless the Board of Trustees, acting under policies of general application, shall determine otherwise. The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Bylaws shall constitute and be a contract between the Cooperative and each patron and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provisions. The provisions of this article of the Bylaws shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative s office. SECTION 3. Pursuant to 7-8-6, N.M.S.A Comp. Any unclaimed capital credit payments to patrons shall be used for educational scholarships of members or their immediate families or for such other charitable uses as determined by the Board of Trustees. The Board of Trustees shall provide for the management and distribution of the unclaimed capital credit payments which shall include the authority to set up educational and charitable trusts as the Board of Trustees may deem appropriate. A patron shall be deemed to have made an irrevocable gift to the Cooperative of the patron s capi- 38

43 tal credit payment if the patron fails to claim the capital credit payment within two years after the Cooperative has mailed, postage pre-paid, to the last known address of the patron as furnished to the Cooperative. Any gifts of capital credit of this provision shall be used for educational and charitable purposes as set forth in this SECTION. ARTICLE IX- DISPOSITION OR ENCUMBRANCE OF PROPERTY SECTION 1. The Cooperative may not sell or otherwise dispose of all, or any substantial portion of its property, unless such sale is authorized at a meeting of the members thereof by the affirmative vote of not less than two-thirds of all the members of the Cooperative and unless the notice of such sale shall have been contained in the notice of the meeting. SECTION 2. The Board of Trustees of the Cooperative, without authorization by the members thereof, shall have full power and authority to authorize the execution and delivery of a mortgage or mortgages or a deed or deeds of trust upon, or the pledging or encumbering of, any or all of the property, assets, rights, privileges, licenses, franchises and permits of the Cooperative whether acquired or to be acquired, and wherever situated, as well as the revenues and income there from, or upon such terms and conditions as the Board of Trustees determine, to secure any indebtedness of the Cooperative. ARTICLE X- FINANCIAL TRANSACTIONS SECTION 1. Contracts. Except as otherwise provided in these Bylaws, the Board of Trustees may authorize any officer or officers, agent or agents to enter into any contract or execute and deliver any instrument in the name and on behalf of the Cooperative, and such authority may be general or confined to specific instances. SECTION 2. Checks, Drafts, etc. Except as otherwise provided by law or in these Bylaws, all checks, drafts or other orders for the payment of money, and all notes, bonds or other evidences of indebtedness issued in the name of the Cooperative shall be signed by such officer, officers, agent or agents of the Cooperative and in such manner as shall from time to time be determined by resolution of the Board of Trustees. SECTION 3. Deposits. All funds of the Cooperative shall be deposited from time to time to the credit of the Cooperative in such bank or banks as the Board of Trustees may select. SECTION 4. Fiscal Year. The fiscal year of the Cooperative shall begin on the first day of January of each year and end on the thirty-first day of December of the same year. ARTICLE XI- MISCELLANEOUS SECTION 1. Waiver of Notice. Any member or Trustee may waive in writing, any notice of a meeting required to be given by these Bylaws. The attendance of a member or Trustee at any such meeting shall constitute a waiver of notice of such meeting by such member or Trustee, except in case a member or Trustee shall attend a meeting for the express purpose of objecting to the transaction of any business because the meeting shall not have been lawfully called or convened. SECTION 2. Rules and Regulations. The Board of Trustees shall have power to make and adopt such rules and regulations, not inconsistent with law, the Articles of Incorporation or these Bylaws, as it may deem advisable for the management, administration and regulation of the business and affairs of the Cooperative. 39

44 SECTION 3. Accounting System and Reports. The Board of Trustees shall cause to be established and maintained a complete accounting system which, among other things, and subject to applicable laws and rules and regulations of any regulatory body, shall conform to such accounting system as may, from time to time, be designated by the Administrator of the Rural Electrification Administration of the United States of America. The Board of Trustees shall also, after the close of each fiscal year, cause to be made by a Certified Public Accountant a full and complete audit of the accounts, books and financial condition of the Cooperative as of the end of such fiscal year. A report of such audit shall be submitted to the members at the next following annual meeting. SECTION 4. Seal. The corporate seal of the Cooperative shall be in the form of a circle and shall have inscribed thereon the name of the Cooperative and the words Corporate Seal, New Mexico. SECTION 5. Board Committees. The board of Trustees may create committees consisting partially or wholly of others than Trustees and, by resolution adopted by a majority of its full membership, designated from among its members one or more board committees, including an executive committee. The Board of Trustees shall, from time to time, designate the authority of any such committee except that no such committee shall have authority to take any action on behalf of the board of Trustees to retire the capital credited to members accounts or in any matter which, under the Articles of Incorporation, these Bylaws or the Rural Electric Cooperative Act, requires the members approval, such as merger, consolidation, dissolution or the disposition of all or any substantial portion of the Cooperative s property (other than encumbrances to secure the Cooperatives indebtedness). SECTION 6. Enchantment. The Board of Trustees is authorized to subscribe to enchantment magazine for the individual consumers of the Cooperative at an annual subscription rate of between $4.00 to $8.00, and such subscription shall be paid by the Cooperative s members through the electric rates as would any other expense of the Cooperative. ARTICLE XII- AMENDMENTS These Bylaws may be altered, amended or repealed by the members at any regular or special meeting, provided the notice of such meeting shall have contained a copy of the proposed alteration, amendment or repeal. NOTE: The original Bylaws were adopted at the first meeting of the Board of Trustees held on the 18th day of October, 1939, and portions of the Bylaws have been amended at the Annual meetings of the membership from time to time through the years since

45 Otero County Electric Cooperative, Inc. is the recipient of Federal financial assistance from the US Department of Agriculture (USDA). The USDA prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual s income is derived from any public assistance program. (not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA s TARGET CENTER at (202) (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC , or call toll free (866) (voice) or (800) (TDD) or (866) (relay voice users). USDA is an equal opportunity provider and employer. 41