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CFC recently released the 2019 Key Ratio Trend Analysis (KRTA), providing an in-depth look at the financial and operational performance of 816 electric distribution cooperatives. The analysis of current national median figures and associated five-year trends reflect the resiliency of distribution cooperatives.
In 2019, the United States had 14 separate billion-dollar disasters that included three major inland floods (Missouri River, Mississippi River and Arkansas River), eight severe storms, two tropical cyclones (Dorian and Imelda) and a wildfire event according to a NOAA National Centers for Environmental Information report.
U.S. gross domestic product (GDP) growth in 2019 slowed to 2.2 percent compared with above-average growth of 3.0 percent in 2018 according to the U.S. Department of Commerce Bureau of Economic Analysis.
Distribution Co-ops Maintained Strong Finances Despite Natural Disasters and an Economic Slowdown
“Distribution cooperatives maintained a strong financial position in 2019 while withstanding large-scale weather events and economic slowdown,” CFC Senior Manager of Financial Products and Analysis Bettina Kimmel said.
Electric distribution cooperative financial ratios stayed strong where the median equity as a percentage of assets stayed the same for 2019 at 45.6 percent compared with 2018; median modified debt service coverage (MDSC) stayed the same at 1.9 compared with 2018; while the median times interest earned ratio (TIER) slightly declined to 2.6 for 2019 from 2.8 in 2018.
In 2019, the typical electric distribution cooperative posted a drop in electric sales to 1.32 percent compared with abnormal growth of 6.49 percent in 2018. The decline can be attributed to the $14 billion weather events and economic slowdown. According to the U.S. Energy Information Administration, retail electricity sales across the United States dropped by 109 billion kWh to 3.749 trillion kWh, or 2.8 percent, last year.
CFC offers members the KRTA Toolpak, an Excel-based model, to assist in the analysis of a cooperative’s performance. Members can access the KRTA Reports and Toolpak through the
Financial Analysis page on CFC’s Member Website.
During 2019, electric distribution cooperatives saw very little growth in net consumers served, 0.58 percent versus 0.60 percent in 2018. Cooperatives experienced a drop in wholesale power cost sold, from 7.13 cents per kWh in 2018 to 7.07 cents per kWh in 2019, the fourth decline in five years.
New All-Time Low Overdue Bills As Percentage of Operating Revenue Percentage
Timely payment of electric bills continues to be a top priority for cooperative members in 2019. Overdue bills (more than 60 days) as a percentage of operating revenue dropped to 0.09 percent—an all-time low since 2001 when it hit 0.27 percent. The median amount written off as a percentage of operating revenue for three straight years holds steady at 0.09 percent.
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.