Meeting record growth demands
Financial planning for the present and the future
During the past two years, the Texas Hill Country has experienced record growth, and during that time, PEC has added more than 30,000 accounts. That’s double the size of a typical rural, electric cooperative. This pattern has been unfazed by COVID-19 and its impacts on the economy.
With our service territory growing exponentially, it is essential for PEC to upgrade and maintain existing infrastructure and build new infrastructure. This helps us sustain our reliable electric service to members and prepare for the future. In the past several months, PEC’s Board of Directors has taken steps to position the cooperative in a manner that allows for cost-effective financing of this much-needed construction.
“We will need $900 million in infrastructure investment to meet the growing demands of our membership over the next five years,” said Randy Kruger, PEC’s chief financial officer. “This will require $500 million in new borrowings. By financing these projects, we are able to spread out the cash flows over the life of the assets as they serve our members.”
Kruger added that PEC’s size and strong financial health, including PEC’s AA- rating from Fitch, enables the cooperative to access low-cost sources of capital not available to smaller electric cooperatives. Accordingly, we are restructuring our lending programs to ensure we have access to diverse, flexible, and efficient sources of funding.
“We continue looking for ways to keep our costs down while planning for the future,” Kruger said. “The board of directors and the executive team know the importance of keeping the cooperative healthy, and it’s my job to explore cost effective and responsible ways of doing that.”
Other cost-saving measures underway include leasing certain assets rather than purchasing them. PEC is also working to take advantage of today’s all-time low interest rates by refinancing legacy high interest rate debt, which has the potential to save members millions of dollars.