CFC’s 2023 Key Ratio Trend Analysis Results Continue To Demonstrate Cooperatives’ Resiliency

Rhea-AI Summary

On June 27, 2024, the National Rural Utilities Cooperative Finance (CFC) released its 2023 Key Ratio Trend Analysis (KRTA) report, highlighting the financial trends of electric distribution cooperatives. Despite high-interest rates, these cooperatives showed resilience with continued consumer and utility plant growth, maintaining strong financial metrics and improved margins. Consumer growth was at 0.89%, with some states like Florida, Idaho, and Utah experiencing over 2% growth. Utility plant growth exceeded 5%, the highest since 2008. Inflationary pressures, particularly power costs, have been managed well, enabling higher margins and healthy coverage ratios. Accounts receivable and write-offs remained at pre-pandemic lows. The report is based on data from 812 cooperatives, calculating 145 financial and operational ratios for comprehensive performance analysis.

Positive

• Electric cooperatives maintained strong financial metrics despite high-interest rates.
• Consumer growth was recorded at 0.89%, with notable increases in Florida, Idaho, and Utah.
• Utility plant growth exceeded 5% for the first time since 2008.
• Managed inflationary pressures led to higher margins and healthy coverage ratios.
• Accounts receivable and write-offs continued at pre-pandemic lows.

Negative

• None.

DULLES, Va., June 27, 2024 (GLOBE NEWSWIRE) -- The National Rural Utilities Cooperative Finance Corporation (CFC) has analyzed the final data from its 2023 Key Ratio Trend Analysis (KRTA) report, an annual assessment of financial trends among electric distribution cooperatives nationwide. The results show that, despite a high interest rate environment, electric cooperatives continued their consumer and utility plant growth and have maintained strong financial metrics, including improved margins. This underscores their sustained financial health and operational efficiency.

“Rural electric cooperatives’ disciplined management has enabled the network to be resilient in the face of elevated interest rates, moderating supply chain disruptions, inflation and power costs, while maintaining their focus on providing affordable, reliable and sustainable power in their local communities,” CFC Senior Vice President and Chief Corporate Affairs Officer Brad Captain said.

After peaking at 1% in 2022, consumer growth tapered to 0.89% last year, with approximately 88% of cooperatives showing increases, including notable pockets of greater than 2% consumer growth in Florida, Idaho and Utah.

Utility plant growth continued its blistering pace, which exceeded 5% for the first time since 2008.

“Despite increasing costs, electric cooperatives continue to make investments in plant and utility infrastructure to maintain their focus on improving the quality of life in the communities they serve,” CFC Senior Vice President and Chief Banking Officer Joel Allen said.

2023 KRTA ratios also showed that inflationary pressures have been abating, especially with power costs. Although costs increased over 2022 levels, cooperatives were able to manage them, as demonstrated by a decrease in power costs as a percent of revenue. This is significant because, unlike in 2022, cooperatives were able to generate higher margins in 2023, which produced healthy coverage ratios.

In another positive sign, both accounts receivable over 60 days and write-offs continued at their pre-pandemic lows. Accounts receivable remained at 0.08% of operating revenue, and write-offs remained at 0.06% of operating revenue.

Final KRTA results are based on data submitted by 812 electric distribution cooperatives for the year ending Dec. 31, 2023. CFC calculates 145 financial and operational ratios for each cooperative and provides a report showing the cooperative’s ratios compared with U.S., state and other key consumer group median values. Median reporting minimizes the effect of outliers and provides a clearer picture of cooperative performance.

About CFC

Created and owned by America’s electric cooperative network, the National Rural Utilities Cooperative Finance Corporation (CFC)—a nonprofit finance cooperative with $36 billion in assets—provides unparalleled industry expertise, flexibility and responsiveness to serve the needs of our member-owners. CFC is an equal opportunity provider. Visit us online at www.nrucfc.coop. 

About KRTA

CFC has published KRTA—an annual report that tracks the median value of 145 financial and operational ratios for participating electric distribution cooperatives over the previous five years—since 1975. Based on data reported by electric distribution cooperatives, KRTA provides electric cooperative CEOs and directors/trustees with a complete picture of their system’s financial performance.

Contact: Brad Captain, Corporate Relations Group, 800-424-2954

FAQ

What were the key findings of CFC's 2023 Key Ratio Trend Analysis?

CFC's 2023 Key Ratio Trend Analysis indicated strong financial metrics, including continued consumer and utility plant growth, higher margins, and managed inflationary pressures among electric distribution cooperatives.

How did electric cooperatives fare in consumer growth in 2023?

In 2023, electric cooperatives recorded consumer growth of 0.89%, with states like Florida, Idaho, and Utah experiencing over 2% growth.

What was the utility plant growth rate for electric cooperatives in 2023?

Utility plant growth for electric cooperatives exceeded 5% in 2023, the highest rate since 2008.

How did inflationary pressures impact electric cooperatives in 2023?

Despite increased costs, electric cooperatives managed inflationary pressures well, leading to higher margins and healthy coverage ratios in 2023.

What were the accounts receivable and write-off rates for electric cooperatives in 2023?

Accounts receivable remained at 0.08% of operating revenue, and write-offs stayed at 0.06% of operating revenue, maintaining pre-pandemic lows in 2023.