Official Notice of Capital Credits Allocations

This notice of capital credits allocations is issued in accordance with the bylaws of Fannin Electric Cooperative (EC).

Fannin (EC) is pleased to announce it has allocated the 2023 net margins from the retail sale and distribution of electricity to member-consumers as a credit to those patrons’ individual capital accounts. This allocation was made to all patrons purchasing electricity from Fannin EC and was made for the following 2 amounts:

• $618,028 for net distribution margins directly related to the retail sale and distribution of electricity to its patrons.
• $565,597 for G&T margins, which represents the patronage capital allocated to Fannin EC by its power supplier, a wholesale generation and transmission cooperative.

Before allocations are made to patrons, the estimated net distribution margins and G&T 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 divided by 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 2023 dollar amount billed by Fannin EC.

Factor per Revenue Billed

Revenue Class	Revenue Class Description	Electric Distribution	Power Supply (G&T PAT CAP)
RC1	Residential	0.0229674115	0.0171537866
RC4	Irrigation	0.0205351307	0.0157104454
RC5	Small Commercial	0.0184792860	0.0182843027
RC6	Large Commercial	0.0155355367	0.0203350304
RC8	Churches	0.0213177456	0.0157033208
RC12	General Service	0.0044463160	0.0037559263

The above allocations were made by virtue of the fact that Fannin EC is a nonprofit cooperative owned by member-consumers, also called patrons, who purchase electricity from it. As a nonprofit 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’s bylaws require the co-op 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 2023 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:

• Construction of new electric distribution plant facilities (lines and substations, for example).
• 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., returned 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 the 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:

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