Official Notice of Capital Credits Allocations

THIS NOTICE OF capital credits allocations is issued in accordance with the bylaws of Fannin Electric Cooperative.

Fannin EC is pleased to announce it has allocated the 2025 calendar year net margins from the retail sale and distribution of electricity to the 2025 member-consumers as credit to such patrons’ individual capital accounts in Fannin EC. This allocation was made to all patrons purchasing electricity from Fannin EC and was made for $165,403.

Before allocations are made to the patrons, the estimated margins are first spread among Fannin EC’s different revenue classes. Allocations for each revenue class are then made pro rata on the basis of patronage (a measurement of usage or purchases). For Fannin EC, patronage is the dollar amount billed to you for electricity sold over the total dollar amount billed for electricity sold to all patrons. This patronage is determined on the basis of each revenue class and results in a separate allocation factor for each revenue class.

To calculate your portion of the patronage capital credits allocation, multiply the factor listed below for the applicable revenue class by your 2025 dollar amount billed by Fannin EC.

Revenue Class	Revenue Class Description	Factor per Revenue Billed
RC1	Residential	0.0050511626
RC4	Irrigation	0.0042664164
RC5	Small Commercial	0.0050726723
RC6	Large Commercial	0.0064074464
RC8	Churches	0.0045470645
RC12	General Service	0.0036161106
RC13	Churches—Large	0.0051948597

The above allocations were made by virtue of the fact Fannin EC is a not-for-profit cooperative owned by the member-consumers who purchase electricity from it (also called patrons). As a not-for-profit cooperative, Fannin EC is:

• Democratically controlled by its members.
• Operated for the benefit of its members.
• Operated at cost with respect to electricity purchased by the patrons.

In order to operate at cost, Fannin EC is required by its bylaws to allocate its margins (revenue billed for electricity sold in excess of the actual operating costs and expenses for such electricity sold) to its patrons as credits to each patron’s individual capital account. The amount credited to your capital account is commonly referred to as “patronage capital,” “patronage capital credits” or simply “capital credits” and represents your ownership in Fannin EC.

The patronage capital credits allocated to your individual capital account for the 2025 margin are not redeemable in cash and may not be applied to your power bill.

As a cooperative, Fannin EC’s primary sources of capital for its current and future operations are patronage capital and lender financing. Common uses of patronage capital credits include, but are not limited to, the following:

• Construction of new electric distribution plant facilities (for example, power lines and substations)
• Maintenance and repair of existing electric distribution plant facilities
• Reduction of interest cost by lowering the amount of future borrowed capital and paying down existing debts
• Maintenance of a reserve to protect against storms and emergencies
• Satisfaction of loan covenants

Pursuant to the bylaws of Fannin EC, the board of directors has the responsibility and authority to determine when and to what extent patronage capital will be redeemed to the patrons (i.e., paid in cash). The decision to redeem patronage capital is based on whether or not such redemption will impair the financial condition of Fannin EC. The board of directors generally strives to redeem patronage capital credits of prior years on an annual basis and will make this annual determination by taking into consideration the above list at a later point during the year.

Since patronage capital represents a patron’s ownership in the cooperative, you are encouraged to notify Fannin EC of any changes to your mailing address. Additionally, if there are questions regarding your patronage capital account and how allocations of patronage capital are calculated, please contact the cooperative as follows:

Fannin Electric Cooperative
Attn: Karen Wood, CFO
P.O. Box 250
Bonham, TX 75418-0250.
Phone: (903) 583-2117
Fax: (903) 583-7384