Q1 2026 Highlights and Financial Statements

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 Revenues 500 450 400

152.3

93.9

In millions of dollars

350 300 250 200 150

308.9

318.6

1st Qtr 2026

1st Qtr 2025

100 50 0

Member Revenue

Nonmember Revenue

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 250

$45.00 $40.00

150

$35.00 $30.00

128.5 85.1

$25.00 $20.00

100

$/MWh

In milions of dollars

200

$15.00 50

84.0

84.1

1st Qtr 2026

1st Qtr 2025

0

$10.00 $5.00 $0.00

Coal Fuel Exp

Gas Fuel Exp

Coal $/MWh

Gas $/MWh

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.

40.00% 36.00% 32.00% 28.00% 24.00% 20.00% 16.00% 12.00% 8.00% 4.00% 0.00%

Financial Ratios

27.77%

30.02% 22.80%

24.46%

Equity to Total Capitalization Equity to Assets March 31, 2026 March 31, 2025

Associated Electric Cooperative, Inc. Statement of Operations For the Three Months Ending March 31 (In thousands of dollars)

2026 Operating revenues: Members Nonmembers

Operating expenses: Generation operation Contracted generation Power purchased Depreciation and amortization Transmission Expense Generation maintenance Administrative and general Taxes Accretion of asset retirement obligations Operating margin before interest expense Interest Expense: Interest on long-term debt Less: interest capitalized Operating margin Nonoperating: Interest and dividend income Other nonoperating income Interest expense Total nonoperating Net margin (loss)

2025

$308,942 152,329 461,271

$318,624 93,915 412,539

239,917 20,430 48,185 29,471 35,468 25,821 26,946 2,112 565 428,916 32,356

195,497 13,631 50,881 28,191 31,308 24,307 25,120 2,058 603 371,595 40,944

25,542 (9,601) 15,941 16,414

20,754 (4,883) 15,871 25,073

5,764 489 (462) 5,791 22,206

3,568 515 (548) 3,534 28,607

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.

Associated Electric Cooperative, Inc. Balance Sheet As of March 31 (In thousands of dollars)

2026

2025

$5,091,783 1,046,547 6,138,330 (2,931,134) 3,207,196

$5,019,239 571,727 5,590,966 (2,828,481) 2,762,485

32,951 12,775 720 17,877 64,323

31,375 4,609 1,219 14,552 51,756

18,189 26,944 45,133

19,946 24,834 44,780

236,627 150,482 0 118,406 119,734 111,532 74,972 24,091 835,843

89,962 130,482 20,000 117,056 116,816 108,270 80,349 17,734 680,668

108,115 74,462 182,577

92,845 77,777 170,621

4,335,073

3,710,309

Assets Utility Plant: Electric plant in service Construction work in progress Less accumulated depreciation

Other property and investments: Nonutility property Right of use asset-operating leases Net investment in direct financing leases Advanced construction funds

Restricted assets: Investments in associated organizations Other restricted assets and designated assets

Current assets: Cash and cash equivalents Designated cash and cash equivalents Restricted and designated short-term investments Accounts receivable, net Fuel inventories Materials and supplies inventories Other current assets Current portion of deferred regulatory debits

Deferred regulatory debits Other deferred assets

Total Assets

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.

Associated Electric Cooperative, Inc. Balance Sheet As of March 31 (In thousands of dollars)

2026

2025

Capitalization and Liabilities Patronage capital and other equities: Memberships Patronage capital Other equities Accumulated other comprehensive inc. (exp)

$12 935,363 55,543 (2,419) 988,498

$12 853,817 55,543 (2,000) 907,372

2,483,125

2,033,816

Asset retirement obligation

73,113

64,909

Accumulated provision for postretirement benefits

20,500

20,905

42,513 196,447 59,999 87,856 8,529 28,662 424,007

48,241 112,341 58,392 81,087 20,066 36,234 356,361

237,160 108,669 345,829

239,832 87,114 326,946

4,335,073

3,710,309

Long-term debt, excluding current maturities

Current Liabilities: Payable to member cooperatives Accounts payable Other current and accrued liabilities Current maturities of long-term debt Current portion of asset retirement obligation Current portion of deferred regulatory credits

Deferred regulatory credits Other deferred liabilities Total Capitalization and Liabilities

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.

Associated Electric Cooperative, Inc. Statement of Cash Flows For the Three Months Ending March 31 (in thousands of dollars) 2026 Cash flows from operating activities: Net margin(loss) Adjustments to reconcile net margin to net Cash provided by operating activities: Provision for depreciation and amortization Amortization of loan expenses and other costs Decrease (increase) in deferred debits Increase (decrease) in deferred credits Increase (decrease) in asset retirement obligation Change in assets and liabilities: Accounts receivable Fuel inventories Materials and supplies inventories Accounts payable Other current and accrued liabilities Other operating activities, net Net cash provided by operating activities Cash flows from investing activities: Construction expenditures for utility plant Sale (purchase) of investments Investments in associated organizations Direct financing lease proceeds Other investments Reimbursement of capital expenditures Net cash (used) in investing activities

2025 $22,206

$28,607

31,661 18,737 (36,856) 11,412 (1,273)

30,453 (62) (12,164) 10,449 423

24,909 (9,693) 1,077 10,200 12,378 (11,875) 72,882

14,727 10,676 (182) (44,406) 17,145 (2,920) 52,747

(204,333) 1,093 1,841 128 860 (17) (200,428)

(86,659) 654 1,509 119 865 (15) (83,526)

Cash flows from financing activities: Increase (decrease) in net borrowings from member cooperatives Issuance of long-term debt, including change in current maturity Retirement of long-term debt, including change in current maturity Net cash (used) in financing activities

4,601 150,886

20,289 100,000

(18,177) 137,310

(136,904) (16,616)

Net increase (decrease) in cash and cash equivalents and designated cash and cash equivalents

9,764

(47,395)

377,345

267,839

387,109

220,444

Cash and cash equivalents Designated cash and cash equivalents

236,627 150,482

89,962 130,482

Cash and cash equivalents and designated cash and cash equivalents

387,109

220,444

Change in plant expenditures included in accounts payable

38,073

8,621

Supplemental disclosure of cash flow information: Cash paid for interest (net of amount capitalized)

15,968

15,992

Cash and cash equivalents and designated cash and cash equivalents, beginning of period Cash and cash equivalents and designated cash and cash equivalents, end of period

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.