Moody’s Investors Service reaffirms Tri-State’s senior secured debt rating, lowers outlook  

• Affirms its A3 rating for the cooperative’s senior secured debt; lowers outlook to “negative.” 
• Moody’s favorably notes liquidity, rate design consideration and advancement of Responsible Energy Plan, and recognizes effect of higher fuel and purchased power costs, and uncertainty in federal regulatory processes. Tri-State’s ratings remain at investment grade. 

(January 31, 2023 – Westminster, Colo.) – Moody’s Investors Service recently reaffirmed its ratings of Tri-State's senior secured debt, including the cooperative’s First Mortgage Bonds with an A3 rating and its Baa1 Issuer Rating. Citing the continuing cash flow impact from Tri-State's cumulative 4% wholesale rate reduction between 2021 and 2022, Moody’s lowered Tri-State’s outlook to “negative” amid concerns with the timely recovery of higher fuel and purchased power costs. 

Tri-State’s ratings remain classified as investment grade, and Tri-State maintains its strong financial position. In its report, Moody’s favorably noted the power supply cooperative’s consideration of a formulary wholesale rate in 2024 and its ability to adjust wholesale rates to recover higher costs. Moody’s also noted Tri-State's good liquidity profile including unrestricted cash and available borrowing capacity. The rating agency additionally acknowledges Tri-State's transition, including work to advance flexible power supply contracts for its members and increase clean energy, while reducing emissions.  

Reflecting its change in outlook, Moody’s cited concerns about the effect of higher fuel and purchase power expenses, which are an industry challenge, on operating cash flow. Moody’s also notes the uncertainty Tri-State faces at the Federal Energy Regulatory Commission (FERC) regarding the contract termination payment (CTP) methodology that the commission is expected to decide this summer, and how that methodology and decision may impact Tri-State and its remaining members. 

“As a not-for-profit cooperative, Tri-State continues to use deferred revenue to stabilize and reduce our members’ wholesale rates, delivering immediate cost savings at a time when inflation, supply chain pressures and rising energy costs are affecting rural communities,” said Duane Highley, Tri-State CEO. “Our members’ and board of directors’ consideration of a formulary rate design would help ensure costs are recovered and Tri-State maintains its strong financial position.” 

“Importantly, Moody’s recognizes the important connection between a rate neutral contract termination payment tariff and our cooperative’s credit profile,” said Highley. "We continue to advocate for contract termination payments that support rate neutrality, and leaves our members and Tri-State unharmed when a member desires to end its contract early.”   

Moody’s favorably noted Tri-State's advancement of its Responsible Energy Plan, which includes goals for 50% of the energy consumed by its members to come from clean energy by 2025, and 70% by 2030. The rating agency also noted Tri-State's plan to eliminate all emissions from its coal facilities in Colorado and New Mexico by 2030, with the reductions in New Mexico already achieved. In addition, Moody’s positively reviewed Tri-State's member-led initiative to increase contract and power supply flexibility for its members through partial requirements contracts. 

“Through our clean energy transition, we have worked to ensure that our members will not only have among the cleanest, most reliable and lowest-cost energy portfolios in the nation, but also have the flexibility to meet member’s individual goals, all while maintaining strong financial performance,” said Highley.  

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About Tri-State 

Tri-State is power supply cooperative of 45 members, operating on a not-for-profit basis, including 42 utility electric distribution cooperative and public power district members in four states that together deliver reliable, affordable and responsible power to more than a million electricity consumers across nearly 200,000 square miles of the West. For more information about Tri-State, visit www.tristate.coop.  

Contact: 

Lee Boughey, 303-254-3555, lboughey@tristategt.org 
Mark Stutz, 303-254-3183, mstutz@tristategt.org 

Certain information contained in this press statement are forward-looking statements including statements concerning Tri-State’s plans, future events, and other information that is not historical information. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described from time to time in Tri-State’s filings with the Securities and Exchange Commission. Tri-State’s expectations and beliefs are expressed in good faith, and Tri-State believes there is a reasonable basis for them. However, Tri-State cannot assure you that management’s expectations and beliefs will be achieved. There are a number of risks, uncertainties and other important factors that could cause actual results to differ materially from the forward-looking statements contained herein.