Electric cooperatives are paying more to borrow, competing harder for grid equipment and buying that equipment at roughly twice its 2019 price. They are growing, investing and strengthening their finances anyway.
That was CFC CEO Andrew Don’s message at the CFC-sponsored luncheon during the NRECA Regional Meetings in Oklahoma City on Oct. 22. Don framed his remarks around a question facing cooperative boardrooms: What has happened to our capital expenditure cost structure and why has it increased so dramatically?
His answer had three parts: the cost of capital, demand for equipment and the cost of equipment.
Money Will Cost More, for Longer
Growing federal deficits, hyperscaler debt issuance and geopolitical uncertainty are pushing rates up. Ten-year Treasury yields reached a 24-year high of 5.31% in October. Don also noted a shift in who buys federal debt. Structural lenders, which buy Treasurys at least in part because mandates require it, held almost 60% in 2012 but hold less than 45% today. That leaves more of the market to yield-sensitive investors who demand higher returns.
"What has been a 'higher for longer' outlook is transforming into a 'higher for much longer' view," Don said. He told leaders to, "expect your capital expenditure plans to face interest rates that stay elevated for the next decade."
Everyone Is Building at Once
The five largest U.S. hyperscalers are expected to spend nearly $800 billion on capital expenditures this year, and investor-owned utilities plan to spend upward of $1.4 trillion through the end of the decade. An NRECA survey of 48 generation and transmission cooperatives found 10-year capital expenditure projections up about 24% to $88 billion.
He also urged executive teams and boards to watch data centers building off-grid or only partially connected, where sharp demand swings could affect nearby systems.
"Do we know what is being built near us, how it intends to be powered and what happens to our system when it swings?" he asked.
Grid Price Index Puts Hard Numbers on Equipment Costs
"The Consumer Price Index does not tell you what a padmount transformer costs," Don said. "So, CFC, working with the nation's electric supply cooperatives, built an index that does."
The CFC Grid Price Index uses actual purchase data from supply cooperatives to track the quarterly wholesale cost of distribution equipment, including transformers, conductors, switchgear and utility hardware, against a 2019 baseline.
As of the second quarter of 2026, those costs had risen approximately 100% since 2019, compared with roughly 30% for overall consumer prices. Transformers alone rose 78% in 2021 and 2022.
"The supply chain normalized as the COVID-19 disruption ended. But the price levels did not," Don said. "A falling inflation rate does not restore the purchasing power of a 2019 construction budget."
After a 2023 correction, the index resumed climbing, with annual inflation of 7.1% in the first quarter of 2026 and 9.1% in the second. Don pointed to persistent demand, a higher manufacturing cost base and trade policy, noting the index shows correlation in timing with tariff changes, but not causation.
CFC will update the index quarterly. Don said it gives executive teams and boards an independent benchmark for work plan analysis, budget reviews and future borrowing needs and trusted context for conversations with members about capital spending and rates.
"At CFC, we believe sound governance begins with sound information," he said. "That is what the index provides."
CFC GPI 2Q 2026 Member Resources
- Download the CFC GPI 2Q 2026 slides.
- Access the CFC GPI 2Q 2026 data series on the CFC Member Website.
- Read CFC’s newest issue brief, “The Grid Price Index: Measuring Cost Changes for Electric Cooperatives.”
- Watch the latest Industry Insights video on equipment lead times and costs.
Electric Cooperatives are Growing, Investing Anyway
National medians from CFC's 2025 Key Ratio Trend Analysis tell that story. Consumer growth was about 0.71%, with nearly 87% of cooperatives reporting increases. Kilowatt-hour sales grew about 2.56%, and utility plant grew 4.51%. Revenue growth strengthened, offsetting higher expenses, while both TIER and MDSC improved from 2024.
"You have been absorbing every one of the pressures I just described, and you have been building anyway," Don said. "That is not luck. That is the cooperative business model doing what it was designed to do."
You have been absorbing every one of the pressures I just described, and you have been building anyway. That is not luck. That is the cooperative business model doing what it was designed to do.
"None of us can control what money costs, or what the tariff schedule looks like next year, or how the race between AI and interest rates plays out," he added. "What we can control is whether we make these decisions with good information."