"Credit profiles of electric cooperatives are typically characterized by sound debt service coverage, good liquidity, power cost adjustment mechanisms, and the ability to adjust rates with no third-party oversight," said Standard & Poor's credit analyst Richard Cortright. "The cooperatives that we rate have generally adjusted to elevated commodity price volatility and heightened financial exposure to wholesale markets by incorporating various risk management programs and hedging techniques, as well as by raising rates." Key credit challenges that cooperatives will face in the coming years are caused in large measure by significant capital requirements driven by the need for additional generating capacity and for environmental compliance work related primarily to existing coal facilities. To maintain coverage levels that are appropriate for their ratings, cooperatives may have to raise rates, which they are often loathe to do.

Key credit challenges that cooperatives will face in the coming years are caused in large measure by significant capital requirements driven by the need for additional generating capacity and for environmental compliance work related primarily to existing coal facilities. To maintain coverage levels that are appropriate for their ratings, cooperatives may have to raise rates, which they are often loathe to do.