A Message from the Chief Financial Officer

Arkansas Electric Cooperative Corporation (AECC) provides the generation and transmission services required by the 17 distribution cooperatives in Arkansas via wholesale power contracts that extend to 2042. AECC has reliably provided generation resources to meet its members’ requirements with a diversified generation portfolio that includes coal, natural gas, hydropower, solar and wind. As a member of both the Southwest Power Pool and the Midcontinent Independent System Operator, AECC offers its generation into these markets and then obtains the most affordable energy to meet the needs of its member cooperatives. AECC no longer uses its own generation resources to serve only its members’ needs. This process allows only the most efficient and reliable resources to be provided to our members.

AECC has experienced stable operations during 2019. Assets grew by 1.59 percent, equity grew by .78 percent and long-term debt grew by only 4.46 percent, driven primarily by taking a draw from a Federal Financing Bank (FFB) loan to take advantage of lower interest rates. AECC’s revenue dropped by 4.5 percent, driven primarily by the lower market pricing being passed on to AECC’s members. Net margins decreased by $14.2 million due to planned maintenance projects on AECC’s generation fleet, along with an increase in depreciation, which included an increase in our asset retirement obligation associated with landfill monitoring at our coal generating facilities. In addition, AECC’s interest expense increased related to receiving a draw from our FFB loan. 

The utility industry has changed dramatically during the last two years with the expansion of distributed energy resources (DERs).  DERs provide an alternative to the full requirements utility business model and is expected to be a growing market. The Electric Cooperatives of Arkansas recognized this future trend several years ago and created a separate company to provide alternative resources to serve our members. AECC has also continued its commitment to maintain a diversified wholesale generation mix which includes hydropower, wind, solar, and geothermal energy.  This portion of our generation portfolio increased by 13 percent in 2019.

By carefully considering the needs of our members and our financial partners, AECC is well-positioned and will continue to provide best in class services for many years to come.

Michael W. Henderson

Executive Vice President & Chief Financial Officer