Industry Report Card: Rate-Setting Ability Remains Key To U.S. Electric Co-ops' Credit Stability Oct 06

Standard & Poors, October 2006

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

Abstract
The credit quality of the U.S. electric co-op sector remains solidly investment grade and stable. The co-op sector continues to demonstrate sound credit metrics with adequate debt-service coverage and good liquidity. The ability to adjust rates with no third-party oversight remains key to co-ops' strong credit quality, which is typically enhanced by long-term, full-requirements contracts with members. Because many generation and transmission co-ops are requiring new base load plant, a number of co-ops have successfully extended these contracts up to 2040 and beyond to allow for long-term debt financing. Despite the increased competitive options available to members in many regions, most co-ops have extended their all-requirements agreements without substantial changes to terms that would weaken credit quality. The absence of...

Companies mentioned in this report are: Dairyland Pwr Coop,Arkansas Elec Coop Corp,Basin Elec Pwr Coop,National Rural Utilities Cooperative Finance Corp,Hoosier Energy Rural Elec Coop Inc,Oglethorpe Pwr Corp,Buckeye Pwr Inc,Tri-State Generation & Transmission Assn,Associated Elec Coop Inc,Seminole Elec Coop,Central Iowa Pwr Coop,PowerSouth Energy Cooperative,Old Dominion Elec Coop,Square Butte Elec Coop,Wabash Vy Pwr Assn,Chugach Elec Assoc,Vermont Elec Coop Inc,Georgia Transmission Corp.,Central Elec Pwr Coop Inc,Western Farmer's Elec Coop,Diverse Pwr Inc,Great River Energy,Brazos Elec Pwr Coop,Brunswick Electric Membership Corp

Dairyland Pwr Coop,Arkansas Elec Coop Corp,Basin Elec Pwr Coop,National Rural Utilities Cooperative Finance Corp,Hoosier Energy Rural Elec Coop Inc,Oglethorpe Pwr Corp,Buckeye Pwr Inc,Tri-State Generation & Transmission Assn,Associated Elec Coop Inc,Seminole Elec Coop,Central Iowa Pwr Coop,PowerSouth Energy Cooperative,Old Dominion Elec Coop,Square Butte Elec Coop,Wabash Vy Pwr Assn,Chugach Elec Assoc,Vermont Elec Coop Inc,Georgia Transmission Corp.,Central Elec Pwr Coop Inc,Western Farmer's Elec Coop,Diverse Pwr Inc,Great River Energy,Brazos Elec Pwr Coop,Brunswick Electric Membership Corp

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