Since 2009, at least 14 cases have been filed against electric cooperatives over patronage capital (or capital credits) in eight states: Alabama, Arkansas, Georgia, Missouri,… Read More »Arkansas water co-op heads to court to settle dispute over capital credits
USDA Magazine Article Discusses Management of Capital Credits and Patronage Dividends The USDA publishes a bi-monthly magazine, Rural Cooperatives, which covers various issues encountered by… Read More »USDA Magazine Article Discusses Management of Capital Credits and Patronage Dividends
Cooperative’s Consolidation and Liquidation of Subsidiaries
[To view this post in the typical AHC Cooperative Tax Brief format, click here.]
Like for-profit corporations owned by investors and shareholders, cooperatives provide services through subsidiaries. Whereas for-profit corporations own and operate subsidiaries to generate greater income for shareholders, cooperatives typically own and operate subsidiaries to provide diverse services to patrons and non-patrons. Like corporations, however, cooperatives occasionally find advantages in liquidating and consolidating subsidiaries when their need for such subsidiaries expires. Read More »Ruling Addresses Cooperative’s Consolidation and Liquidation of Subsidiaries
A federal appellate court recently addressed a distribution cooperative’s lawsuit against a G&T cooperative with which it had a power purchase agreement. Though the lawsuit alleged the G&T cooperative breached the PPA, the latest ruling focused on whether federal courts have jurisdiction to hear the claim. Ultimately, the courts concluded that the claim belonged in state court, as it did not involve a question of federal law. Read More »Cooperative’s PPA Lawsuit Against G&T Remanded
AHC attorneys have been closely following lawsuits against cooperatives’ capital credit management. We recently developed an updated summary of the cases. Take a moment to review the summary by clicking here.Read More »Updated Capital Credits Litigation Summary
A 2008 case and its follow-up in 2011 addressed several issues arising from common provisions in power purchase agreements. These issues involve spinning reserve requirements, dispatch rights, and the applicable heat rate formula. The underlying dispute emphasizes the need to clearly address the parties’ bargain in the power purchase agreement (PPA), preferably with the input of the parties’ legal counsel.Read More »Electric Coop vs. Power Supplier: Feuding PPA Parties Illustrate “Real Life” Disputes Involving Common PPA Provisions
In another lawsuit concerning cooperatives’ capital credit practices, a North Carolina trial court ruled in favor of a cooperative that we previously wrote about in another blog post.
The court ruled, based on the facts at issue, that the cooperative had no fiduciary duty to the plaintiffs, which were a group of deceased members’ estates. In addition, it declared that the cooperative had authority to adopt a procedure for retiring deceased members’ capital credits on an accelerated and discounted basis. However, it expressly did not rule on whether the cooperative, in practice, properly discounted the capital credits. In other words, the court reserved judgment on the specific manner of discounting the particular capital credits at issue in this case. Read More »Cooperative Litigation Update: N.C. Court Rules on Coop’s Discounting Program
Earlier this past July, the Texas Court of Appeals ruled on important aspects of the cooperative lawsuit concerning Denton County Electric Cooperative, Inc., d/b/a CoServ Electric (“CoServ”). The court ruled, among other things, that (i) the cooperative was not subject to certain statutory rules governing non-profit corporations, and (ii) the electric cooperative statute did not impose a fiduciary duty on the cooperative itself. Read More »Cooperative Litigation Update: Texas Cooperative Lawsuit Considered on Appeal
The latest AHC Cooperative Taxation Brief discusses the Internal Revenue Service’s recent private letter ruling that confirms its long-held stance on discounting capital credits. The… Read More »IRS Confirms the Propriety of Discounting Capital Credits
Another class action proceeding has been filed against Carroll Electric Service Corporation, this time before the Arkansas Public Service Commission. In a previous post, we discussed the Arkansas Superior Court’s dismissal of a civil action filed against Carroll. This latest filing largely continues that litigation, just at a different forum.
Read More »Class Action Continues Before State Public Service Commission
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