Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Lender to U.S. electric co-ops carries $4 billion in exposure to waylaid Texas market

Stock MarketsMar 05, 2021 05:35PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: Overhead power lines are seen during record-breaking temperatures in Houston, Texas 2/2

By Tim McLaughlin

BOSTON (Reuters) - A go-to lender for U.S. electric cooperatives has $4 billion in exposure to the Texas market, where last month’s deep freeze slammed the finances of several co-ops hit with astronomically high gas and electric prices during the state’s grid blackout.

The latest quarterly financial disclosure from the National Rural Utilities Cooperative Finance Corporation (CFC) shows the Texas market accounts for 15% of the lender’s $27.1 billion in outstanding loans. Dulles, Virginia-based CFC has not had any loan defaults in its electric utility loan portfolio since fiscal 2013.

Numerous Texas electric co-ops are facing potential bankruptcy due to the massive bills incurred when power prices spiked during the Texas freeze that killed several dozen people and left millions without power for days.

CFC, which is searching for a replacement of its long-time chief executive, will be put to the test in the coming weeks and months as Texas electric utilities and cooperatives sort out billions of dollars in unpaid charges from the collapse of the state’s main electric grid.

On Monday, Brazos Electric Power Cooperative Inc, the biggest electric co-op in Texas, filed for bankruptcy protection in Houston, citing a disputed $1.8 billion debt to the state's main grid operator.

CFC has disclosed that it has $85 million in outstanding unsecured loans and letters of credit to Brazos. CFC said it is not currently able to assess to what extent, if any, the bankruptcy process may impair the lender’s ability to collect the amounts outstanding, according to a U.S. regulatory filing.

CFC did not return a message seeking comment.

CFC is a tax-exempt, member-owned finance cooperative run by CEO Sheldon Petersen, who has quadrupled the size of CFC’s loan portfolio over the past 25 years. Global executive search firm Korn Ferry (NYSE:KFY) is looking for someone to replace Petersen, who plans to retire this year.

About 98% of CFC’s portfolio consists of loans to rural electric systems. Its financing supplements the loan programs of the Rural Utilities Service (RUS) of the U.S. Department of Agriculture. CFC makes loans makes so electric co-ops can buy and build transmission lines and generation facilities.

In 2018, for example, Texas-based Rayburn Country Electric Cooperative Inc received a $250 million line of credit from a group of lenders led by CFC, according to Refinitiv data.

Like Brazos Electric, Rayburn is due to receive a massive energy bill linked to last month's storms. Rayburn expects to receive about $735 million in invoices from Texas' main electric grid operator for costs associated with energy spikes during the recent deep freeze.

That is about 92,000% more than Rayburn's normal February weekly bill of about $800,000, according to disclosures with Texas utilities regulators.

Lender to U.S. electric co-ops carries $4 billion in exposure to waylaid Texas market

Related Articles

American Airlines sees minor impact after 5G rollout
American Airlines sees minor impact after 5G rollout By Reuters - Jan 19, 2022

WASHINGTON (Reuters) - American Airlines (NASDAQ:AAL) said on Wednesday it had seen some delays and four cancellations as a result of new 5G service and some additional impact to...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email