cfc-news August 9, 2021

KRTA: Electric Co-ops Demonstrate Strong Financial Metrics

CFC recently released the 2020 Key Ratio Trend Analysis (KRTA), providing an in-depth look at the financial and operational performance of 815 electric distribution cooperatives for the year ending Dec. 31, 2020. The results show the majority of electric cooperatives have maintained strong financial metrics and have successfully managed through last year’s economic downturn.

“Rural electric distribution cooperatives’ disciplined management and their ability to navigate the challenges created by the pandemic is a testament to the community-based electric cooperative business model,” CFC Senior Vice President and Chief Corporate Affairs Officer Brad Captain said. “Members ended 2020 with solid financials, consumer growth and stable operations positioning them to continue to help improve the quality of life in rural America well into the future.”

Increases to TIER, MDSC Drove Strong 2020 Financial Performance

Financial performance was strong year-over-year as demonstrated by coverage ratios, which assess ability to repay debt, and equity levels. Both times interest earned ratio (TIER) and modified debt service coverage (MDSC) ratios experienced slight increases. TIER rose from 2.64 to 2.80 and MDSC rose from 1.91 to 1.96. Equity as a percentage of assets also trended higher to 45.80 percent, compared with 45.61 percent in 2019.

Consumer growth was positive in 2020 with nearly 90 percent of cooperatives showing increases, including notable pockets of high consumer growth in Texas, Idaho and Florida.

Despite the economic challenges and less than 3 percent declines in both kilowatt-hour sales and revenue, cooperative leaders held accounts receivable over 60 days and write-offs steady from 2019 as well as continued to benefit from the low-interest rate environment with average interest rates on outstanding debt down to 3.69 percent in 2020 from 3.98 percent in both 2018 and 2019.

CFC has published KRTA—an annual report that tracks the median value of 145 financial and operational ratios for participating distribution cooperatives over the previous five years—since 1975.

KRTA Training and Tools

CFC offers free online education for members who want to learn more about the KRTA. To enroll, e-mail MemberTraining@nrucfc.coop.

CFC also offers the KRTA Toolpak, an Excel-based model, to help analyze a cooperative’s performance. Members can access the KRTA Reports and Toolpak through the Financial Analysis page on CFC’s Member Website.