Financial Statements
For the Quarterly Periods Ended March 31, 2026 and 2025
FINANCIAL HIGHLIGHTS
Associated Electric Cooperative, Inc. (Associated) is pleased to present the enclosed interim financial statements, which include balance sheets, statements of revenues and expenses, and statements of cash flows as of, or for the periods ended March 31, 2026, and 2025 The discussion below is not meant to be comprehensive but rather to identify significant aspects in the current quarter performance of Associated.
Overview
Net margin for the three-month period ended March 31, 2026, was $22.2 million compared to $28.6 million in the same period of 2025 Total assets were $4 3 billion and $3.7 billion at March 31, 2026, and March 31, 2025, respectively. Significant factors contributing to Associated’s financial performance for this period are discussed in detail in the paragraphs below.
Operating Revenues
Member Revenue
Revenue from members decreased $9.7 million for the quarter ended March 31, 2026, compared to the same period of 2025. The decrease was due primarily to an 8.4% decrease in member energy sales volume and a 13.8% decrease in seasonal billing demand, resulting in $17.5 million less in member revenue, partially offset by a rate increase effective April 1, 2025, that resulted in additional member revenue of $7 8 million.
Nonmember Revenue
Revenue from nonmembers increased $58.4 million for the first quarter of 2026 compared to the same period of 2025. The increase was primarily driven by an additional $47.8 million in interchange sales resulting from a 34.3% increase in interchange sales volume and a 17.6% increase in the weighted average sales price.
Operating Expenses
Generation Operation
Generation operation expense increased $44.4 million for the first quarter of 2026, primarily driven by higher fuel and market prices during Winter Storm Fern (January 23–26) and increased natural gas generation to capitalize on favorable nonmember sales market conditions
Fuel expense for natural gas generation increased $43.4 million compared to the first quarter of 2025. Gas generation increased 460,315 MWh, or 16.4%, and the average fuel cost/MWh increased 29.7% for the gas fleet A significant portion of this increase was driven by a price spike in late January associated with Winter Storm Fern.
Fuel Expense
Contracted Generation
Contracted generation consists of firm capacity from Associated’s hydropower contract and various short-term capacity agreements. Expenses increased $6.8 million for the first quarter of 2026, driven by a hydropower contract rate increase and a short-term capacity contract in effect from December 2025 through March 2026.
Financial Position:
Significant changes in the balance sheet at March 31, 2026, compared to the prior year include the following:
Utility plant, including construction work in progress, increased $547.4 million primarily due to capital spending on the design and construction of three new natural gas-fired peaking generating units in addition to contracted purchases of equipment for potential future generating facilities, transmission system upgrades and projects for the existing generating fleet
Right of use asset-operating leases increased $8.2 million due to four new rail car leases beginning January 1, 2026. The right-of-use assets recorded in January 2026 totaled $11.4 million. The majority of the activity was renewals and amendments of existing leases.
Cash and cash equivalents increased $146.7 million primarily due to advances received on long-term financing from RUS and 2-year bridge financing, partially offset by capital expenditures.
Designated cash and cash equivalents increased $20.0 million, while restricted and designated short-term investments decreased $20.0 million, due to the sale of treasuries and government agency securities with original maturities of more than three months.
Deferred regulatory debits, including the current portion, increased $21.6 million due to an $11.8 million increase in deferred maintenance costs, a $7.2 million increase in deferred mark-to-market losses on diesel, natural gas and interest rate hedging activity and a $2 6 million increase in the deferral of asset retirement obligation costs
Patronage capital increased by $81.5 million due to the net impact of the retirement of $27.6 million in patronage capital in May of 2025 and margins.
Long-term debt, including current maturities, increased $456.1 million. Associated received $50.0 million from CoBank on a 2-year bullet loan in April 2025 and $487.6 million in advances on loans from the Rural Utilities Service, partially offset by $81.5 million in principal payments.
Deferred regulatory credits, including the current portion, decreased by $10.2 million mostly due to an $8.0 million decrease in deferred gains on diesel and natural gas swaps
Other deferred liabilities increased by $21.6 million mostly due to a $14 3 million increase in transmission deposit funds held for generator interconnection studies and a $7.6 million increase in long-term operating lease liabilities.
For the Three Months Ending March 31 (In thousands of dollars)
These interim financial statements are unaudited. In the opinion of management all adjustments, which are normal recurring accruals, necessary for a fair presentation of results for interim periods have been included. The interim financial statements should be read in conjunction with the Notes to the Financial Statements included in the 2025 Annual Report.
Sheet As of March 31
These interim financial statements are unaudited. In the opinion of management all adjustments, which are normal recurring accruals, necessary for a fair presentation of results for interim periods have been included. The interim financial statements should be read in conjunction with the Notes to the Financial Statements included in the 2025 Annual Report.
Sheet
As of March 31 (In thousands of dollars)
These interim financial statements are unaudited. In the opinion of management all adjustments, which are normal recurring accruals, necessary for a fair presentation of results for interim periods have been included. The interim financial statements should be read in conjunction with the Notes to the Financial Statements included in the 2025 Annual Report.
Statement of Cash Flows For the Three Months Ending March 31
These interim financial statements are unaudited. In the opinion of management all adjustments, which are normal recurring accruals, necessary for a fair presentation of results for interim periods have been included. The interim financial statements should be read in conjunction with the Notes to the Financial Statements included in the 2025