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2007 KRTA Reflects Electric Co-Ops’ Consistent Financial Strength

August 18, 2008

The National Rural Utilities Cooperative Finance Corporation (NRUCFC) today announced the results of its 2007 Key Ratio Trend Analysis (KRTA), an annual assessment of financial trends among electric cooperatives nationwide. The latest report concludes that electric cooperatives remain financially solid despite rising costs, particularly power costs.

“Key financial ratios — such as TIER, debt service coverage and equity as a percent of assets — indicate that the nation’s electric co-ops remain financially strong, despite rising power costs,” said Claudia Phillips, CFC vice president for Programs and Planning Analysis and KRTA manager. “The report also shows that electric co-ops continue to provide reliable, high quality power service to a growing number of American households.”

The 2007 KRTA report, which was produced by NRUCFC based on data submitted by 820 electric distribution cooperatives, shows that although the growth in power generation costs outpaced growth in revenue, the increases were moderate. Electric cooperatives, which currently serve 12 percent of the U.S. population, also registered higher growth rates in new member- consumers and in kilowatt-hour (kwh) sales than the industry average.

Some of the 2007 financial highlights of electric cooperatives include the following KRTA median numbers:

— Times interest earned ratio (TIER) dipped to 2.24 in 2007 from 2.29 the year before. It remains significantly higher than the minimum 1.25 TIER required by the USDA Rural Utilities Service.

— Equity as a percentage of assets was 41.14 percent compared to 42.01 percent in 2006.

— Rising fuel and power costs are significant issues for electric utilities and their member-consumers today. In 2007, electric cooperatives’ power cost per kwh sold rose 4 percent compared to the 2006 median. However, this increase was less than one-half the 9.4- percent increase in 2006. Since 2003, the median power cost for electric cooperatives has risen 29 percent.

— The number of Americans served by electric cooperatives continues to grow. Median consumer growth was 1.35 percent in 2007, down from 1.51 percent in 2006. However, while the median growth rate dipped slightly, the composite numbers showed continued strong consumer growth. Electric cooperatives added a total of 409,000 new households in 2007, an increase of 2.81 percent — nearly double the 2006 overall electric utility industry average of 1.45 percent, according to the U.S. Energy Information Administration.

— In 2007, the median electric cooperative distribution system had 12,866 meters and served an estimated 33,580 people.

— The median growth in kwh sold was 3.7 percent in 2007, doubling the 2006 rate of 1.77 percent and surpassing the five-year average annual rate of 2.64 percent.

— Average residential usage in kwh per month per member-consumer in 2007 rose 2.6 percent to 1,198 kwh after declining in 2006 — the highest usage in the last five years. The increased use of consumer electronics products is likely contributing to increased residential use of electricity.

— Cooperatives continue to do an excellent job of keeping the power on for member-consumers. The median line service availability index indicated power was available 99.96 percent of the time in 2007.

The KRTA has been published annually by NRUCFC for its electric cooperative members for the last 33 years to assist them with long-term financial planning and management. NRUCFC’s 2007 KRTA contains 145 ratios of each cooperative’s operations for the past five years in 10 key planning areas, from revenue and margins to sales and growth. Five other system groupings — U.S. median, state median, cooperatives of similar consumer size, cooperatives primarily served by the same wholesale supplier and cooperatives with similar plant growth — are also presented to each cooperative for comparative purposes.

About NRUCFC

National Rural Utilities Cooperative Finance Corporation is a not-for-profit finance cooperative that serves the nation’s rural utility systems, the majority of which are electric cooperatives and their subsidiaries. With more than $19 billion in assets, NRUCFC provides its member-owners with an assured source of low-cost capital and state-of-the-art financial products and services.

 Contacts: Matt Rhoades Corporate Communications 703-709-2112 matt.rhoades@nrucfc.coop

SOURCE: National Rural Utilities Cooperative Finance Corporation (NRUCFC)




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