Press Release|Public Finance
KBRA Affirms Obligor Rating of A with Stable Outlook for Corn Belt Power Cooperative (IA)
30 Aug 2023 | New York
KBRA affirmed the Obligor Rating of A with a Stable Outlook for Corn Belt Power Cooperative (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 39,300 rural residential, farm, commercial, and industrial customers.
Key Credit Considerations
Credit Positives
- CBPC’s members are contracted to purchase all power requirements from CBPC pursuant to take-and-pay agreements through 2075, beyond the final maturity of long-term debt (2051).
- CBPC and its members benefit from independent rate setting authority and firm service territory boundaries.
- Members maintain solid financial performance, with average debt servcie coverage (DSC) in excess of 2x for the past three years.
- Through its all requirements power purchase contract with Basin Electric Power Cooperative (Basin)and participation in the Southwest Power Pool, CBPC’s operating risk is minimized and its exposure to the electricity market volatility is limited, supporting member wholesale rate stability.
Credit Challenges
- CBPC and Basin have taken steps to diversify their respective energy portfolios, both remain dependent on coal-fired generation, exposing them to regulatory and market risk.
- CBPC serves a relatively small number of ultimate customers, with a concentration in ethanol/biodiesel load, which accounts for almost a quarter of member load.
Rating Sensitivities
For Upgrade
- Load growth driving consistently stronger CBPC and/or member financial performance.
- Continued diversification in power supply and material reduction in the member average power cost.
For Downgrade
- CBPC debt service coverage and TIER consistently lower than 1.15x and 1.20x, respectively.
- Consistently weaker member financial performance or material reduction in ethanol demand that affects a member's economic stability could pressure the rating lower.
To access rating and relevant documents, click here.