Basin Electric displayed its financial strength and stability during the COVID-19 global pandemic.
This was a direct reflection of the strong financial position of the membership. Unlike many others, Basin Electric was able to rely on existing cash balances and liquidity available through the Member Investment Program to pay bills when the short-term markets were not as accessible due to uncertainty caused by the economic impacts of the pandemic.
The cooperative preserved outlooks and ratings from our three rating agencies, Fitch Ratings, Standard & Poor’s, and Moody’s Investors Service, throughout these challenging times. The rating agencies pointed to the membership’s ability to financially weather the disruption caused by the pandemic, Basin Electric’s robust liquidity position and financial strength, and healthy member relations that highlighted the positives of the cooperative model.
As in the past several years, Basin Electric maintained close contact with the rating agencies throughout the year. Where typically we would travel to meet face-to-face, formal updates were given virtually to keep the agencies informed of our financial status.
This practice was particularly important during 2020 to keep the agencies updated on challenges faced, ability to absorb any financial stress, and plans for maintaining financial strength in the future.
While 2020 was a financially difficult year for many businesses, Basin Electric and its subsidiaries continued to operate efficiently and were able to find ways to reduce costs.
General and administrative expenses for Basin Electric for 2020 were approximately $15 million or 11% under budget, due in a large part to many employees working from home.
Dakota Gas was also diligent in managing costs as total operating costs for 2020 were $32.4 million under budget.
Basin Electric was ranked among the nation’s top cooperatives by the National Cooperative Bank in its annual NCB Co-op 100 list, which highlights the economic impact of co-ops across the country. The cooperative was ranked #17 overall, and was ranked #1 in the energy sector.
2020 FINANCIAL SERVICES ACTIVITIES
ELECTRIC RATES – During 2020, Basin Electric’s average Class A rate was
61.4 mills per kilowatt-hour.
SENIOR SECURED BOND RATINGS – Moody’s Investors Service affirmed its
A3 rating with a stable outlook, while Fitch Ratings and Standard & Poor’s Rating Services affirmed their A ratings with a stable outlook.
SHORT-TERM RATINGS – Basin Electric’s short-term ratings are F1+ from Fitch,
A1 from S&P, and P-2 from Moody’s. Basin Electric uses short-term commercial paper for short-term operating needs and as a source of bridge financing until it can secure long-term financing.
LIQUIDITY – On Dec. 31, 2020, cash and cash equivalents and short-term investments, including restricted and designated cash, totaled $524.8 million. Basin Electric had additional liquidity of $885.7 million in unused lines of credit, for total available liquidity in excess of $1.4 billion.
CONSOLIDATED RESULTS – Basin Electric’s financial statements are consolidated with those of its subsidiaries. For the year ending Dec. 31, 2020, the consolidated net margin and earnings was $75.2 million. This is $1.4 million less than the 2019 consolidated net margin and earnings of $76.6 million.
ELECTRIC – Basin Electric’s total utility operating revenue for 2020 was $1.7 billion, a decrease of $98 million from 2019. Revenue from member systems totaled $1.6 billion in 2020, a decrease of $68.2 million from 2019. Revenue from non-member sales totaled $17.5 million in 2020. Actual sales to non-members totaled $126.2 million, however, $108.7 million was deferred for recognition in the future. The 2020 non-member sales were $2.2 million less than the 2019 non-member sales before revenue deferral activity. Total 2020 sales were $70.4 million less than the 2019 sales before revenue deferral activity. Total utility operating expenses plus interest and other charges before income taxes for 2020 were $1.5 billion, which is $141.9 million less than in 2019. Basin Electric’s margin before income taxes, combined with Basin Cooperative Services’ net operating results, yielded a combined margin of $73.4 million to be allocated to members.
SUBSIDIARY RESULTS – Dakota Gas had a net loss of $94.9 million during 2020, and Dakota Coal had net income of $1.4 million
ASSETS – The total assets of Basin Electric and its subsidiaries as of Dec. 31, 2020, were $7.6 billion, an increase of $123.5 million from a year earlier.
MEMBER INVESTMENT PROGRAM – Basin Electric’s Member Investment Program ended the year with $324.2 million, however the program reached an all-time high of $401.8 million on July 10, 2020. The program offers members an additional investment source at a competitive rate of return while providing Basin Electric with an additional source of liquidity.
UTILITY DEBT – As of Dec. 31, 2020, Basin Electric had approximately $4.48 billion of debt outstanding including Member Investment Program obligations and outstanding advances on lines of credit, at a weighted average interest rate of 4.23%.
EQUITY POSITION – At year-end 2020, Basin Electric had total equity of $1.5 billion, an increase of $42.5 million from 2019. At the end of 2020, equity represented 26.4% of Basin Electric’s total capitalization. As of Dec. 31, 2020, Basin Electric had an equity-to-asset ratio
CAPITAL CREDIT ALLOCATIONS AND RETIREMENTS – In March 2020, Basin Electric allocated $59.5 million to its patrons. Since 1966, Basin Electric has allocated almost $1.4 billion in patronage capital credits to its members. During 2020, Basin Electric returned $32.6 million of previously allocated capital credits to its members. Basin Electric has retired $343.9 million of allocated patronage capital credits over the history of the cooperative.
RETURN OF CASH TO MEMBERS – Since 2000, Basin Electric has returned nearly $752.7 million to the membership through patronage capital retirements, bill credits, and power cost adjustments.