Press Release|Public Finance
KBRA Affirms Obligor Rating of A with Stable Outlook for Corn Belt Power Cooperative (IA)
23 Aug 2024 | New York
KBRA affirms the Obligor Rating of A with a Stable Outlook for the Corn Belt Power Cooperative, IA (CBPC). CBPC is an electric generation and transmission cooperative that supplies wholesale power to nine electric distribution cooperatives and one municipal electric association (the 'members') across 41 northern Iowa counties. CBPC's members provide retail electric service to approximately 39,400 residential, farm, commercial, and industrial customers.
Key Credit Considerations
Credit Positives
- CBPC’s members are contracted to purchase all power requirements from Corn Belt pursuant to take-and-pay agreements through 2075, beyond the final maturity of CBPC's long-term debt (2051).
- CBPC and its members benefit from independent rate setting authority and exclusive service areas.
- Members maintain solid financial performance, with average debt service coverage in excess of 2x for the past three years.
- Through its membership in Basin Electric Power Coooperative and the Southwest Power Pool, CBPC’s operating risk is minimized and its exposure to the electric market volatility is moderated, supporting member wholesale rate stability.
Credit Challenges
- Although CBPC and Basin have taken steps to diversify their respective energy portfolios, both remain dependent on coal-fired generation, exposing them to potential regulatory and market risk.
- CBPC serves a relatively small number of ultimate customers compared to its peers, with a concentration in ethanol/biodiesel load, which accounts for almost a quarter of member load.
Rating Sensitivities
For Upgrade
- Load growth that results in consistently stronger member and/or CBPC financial performance.
- Continued diversification in power supply and sustained reduction in the member average power cost.
For Downgrade
- CBPC debt service coverage and TIER consistently lower than 1.15x and 1.20x, respectively, would be a negative credit factor.
- Consistently weaker member financial performance or material reduction in ethanol demand which CBPC could not offset, could pressure the rating lower.
To access rating and relevant documents, click here.