Basin Electric Power Cooperative

06/18/2026 | Press release | Distributed by Public on 06/18/2026 12:17

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of Basin Electric's financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes that appear elsewhere in this report and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2025, included in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on May 6, 2026 (the "Prospectus"). In addition to historical consolidated financial information, the following discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and "Forward-Looking Statements" included elsewhere in this report.
Executive Overview
We are a not-for-profit G&T cooperative corporation based in Bismarck, North Dakota, principally engaged in the business of providing wholesale electric services to our members through long-term wholesale power contracts. These electric services generally represent the capacity and energy requirements of our members beyond that available to them from other sources, primarily WAPA, which provides hydroelectric power and transmission services to our members.
We have three operating segments: Electric Utility, Gasification, and Coal and Limestone Operations. The Electric Utility segment provides wholesale electric service and other ancillary services to our members throughout their respective service territories with our own electrical generation and transmission assets and various contractual arrangements. The Gasification segment includes Dakota Gas, which operates a gasification facility that converts lignite coal into synthetic natural gas and other products, including fertilizers, DEF, carbon dioxide, and other oil and chemical products. The Coal and Limestone Operations segment includes Dakota Coal, which purchases coal and coordinates deliveries of coal to the Electric Utility generation facilities and Gasification operations and produces lime and limestone that is used for emissions control at the generation facilities.
For the three months ended March 31, 2026, we sold 10.7 million MWhs of electricity, of which 82% was sold to our Class A Members. Our consolidated net margin and earnings was $75.4 million in the three months ended March 31, 2026, compared to $47.7 million for the three months ended March 31, 2025. Our results for the three months ended March 31, 2026, were primarily impacted by the following factors:
Total operating revenue increased $62.6 million, or 8.0%.
◦Operating revenue at our Electric Utility operating segment increased primarily due to a rate increase on electricity sales to our members effective January 1, 2026, and increased electricity sales to non-members.
◦Operating revenue at our Gasification operating segment increased mainly due to higher fertilizer, DEF, and synthetic natural gas revenue. Fertilizer and synthetic natural gas sales prices were higher and DEF volumes sold increased.
◦Operating revenue at our Coal and Limestone Operations operating segment increased largely due to higher lignite coal sales resulting from higher average sales prices.
Total operating expenses increased $36.2 million, or 5.2%.
◦Electric fuel and purchased power and Electric operations and maintenance increased largely due to increased fuel, general and administrative, and production expenses. Fuel expenses were higher as a result of higher natural gas generation and prices and higher coal expense. General and administrative expenses increased due to employee-related and software expenses and production expenses were impacted by higher contracted services, property taxes and materials.
◦Cost of products sold increased primarily due increased prices for electricity, natural gas purchases, and coal.
Other income increased $7.5 million primarily due to monetization of tax credits related to the capture and sequestration of CO2 through Dakota Gas' investment in Dakota Carbon Services LLC.
Interest and other charges increased $10.0 million mainly due to an increase in net interest expense primarily due to higher debt balances resulting from additional capital expenditures in electric utility property.
Key Factors Affecting Results
In addition to commodity prices, changes in rates and weather conditions, other factors have been important to our results of operations and financial condition and may significantly impact our outlook in future periods. Some of these factors include: changes in member load growth; major capital expenditures; commodities and asset management; changes in regional transmission organizations; changes in our membership; our rate structure; the rate covenant in our Indenture; our net margin and patronage capital; the future of Dakota Gas; our tax status; environmental regulations; our large load commercial program; and available financing from RUS. For information regarding these and other factors affecting our results, see "Key Factors Affecting Results" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Prospectus.
Results of Operations
Provided below is a summary and discussion of our operating results on a consolidated basis for the three months ended March 31, 2026 and 2025, followed by a discussion of the operating results of each of our operating segments for the three months ended March 31, 2026 compared to 2025.
Consolidated Summary
The following table summarizes our consolidated net margin and earnings for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
(In thousands) 2026 2025 % Change
Electric Utility $ 60,363 $ 42,172 43.1 %
Gasification 2,738 (2,376) 215.2 %
Coal and Limestone Operations 9,828 5,516 78.2 %
Other (a)
2,438 2,390 2.0 %
Net margin and earnings attributable to Basin Electric $ 75,367 $ 47,702 58.0 %
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(a)Includes intersegment eliminations.
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
•Electric Utility net margin increased primarily due to increased revenue from member sales largely due to higher average rates effective January 1, 2026, and higher electricity sales to non-members partially offset by increased fuel, operations and maintenance expenses and interest and other charges.
•Gasification net earnings increased primarily due to higher monetization of tax credits related to the capture and sequestration of CO2, lower interest and other charges, and higher fertilizer and DEF revenues, partially offset by higher operating expenses related to increased cost of products sold.
•Coal and Limestone Operations net earnings increased primarily due to higher average sales prices of lignite coal.
Electric Utility Results
Our operating revenue from Electric Utility operations is derived from electricity sales to our members and to non-members (including Dakota Gas). Our revenues from our sales to our members are a function of the volume of those sales and our rates, particularly our rate to our Class A Members. For a discussion of certain factors affecting demand for power from our members and sales to non-members, see "Electric Utility Results" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Prospectus.
The following table summarizes the performance and certain operating statistics of the Electric Utility segment the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
(In thousands) 2026 2025 % Change
Operating revenue:
Sales of electricity to members $ 600,778 $ 555,678 8.1 %
Sales of electricity to non-members 68,804 60,178 14.3 %
Other 2,007 2,577 (22.1) %
Total operating revenue 671,589 618,433 8.6 %
Fuel and purchased power 335,299 310,658 7.9 %
Operations and maintenance 181,712 177,243 2.5 %
Depreciation and amortization 49,697 51,505 (3.5) %
Total operating expenses 566,708 539,406 5.1 %
Operating margin 104,881 79,027 32.7 %
Other income 17,105 16,781 1.9 %
Interest and other charges 62,735 53,911 16.4 %
Income tax benefit (1,112) (275) 304.4 %
Net margin $ 60,363 $ 42,172 43.1 %
Electricity energy sales (in thousand MWh):
Member sales 8,778 9,106 (3.6) %
Non-member sales 1,918 1,446 32.6 %
Total electricity energy sales 10,696 10,552 1.4 %
Peak billing demand (in MW) 5,071 5,150 (1.5) %
Average rate per MWh:
Member sales $ 68.44 $ 61.02 12.2 %
Non-member sales $ 35.87 $ 41.62 (13.8) %
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
Electric Utility net margin increased $18.2 million as a result of:
Operating revenue increased $53.2 million mainly due to:
•Sales of electricity to members increased $45.1 million primarily due to higher average member rates effective January 1, 2026 partially offset by lower energy volumes sold resulting from lower weather-related demand.
•Sales of electricity to non-members increased $8.6 million primarily due to increased energy sold partially offset by lower prices. Energy sold increased 472,000 MWhs mainly due to lower member sales.
Fuel and purchased power increased by $24.6 million mainly due to increased fuel expense of $34.5 million due to higher natural gas expense resulting from higher generation from natural gas facilities somewhat due to new gas generation coming online in mid-2025 and higher prices. Coal expense was higher due to increased coal prices. Partially offsetting the increase was a decrease in purchased power of $9.9 million due to lower volumes purchased.
Operations and maintenance increased $4.5 million mainly due to:
•Increased general and administrative expenses of $3.6 million mainly due to higher employee-related expenses and software costs.
•Increased production expenses of $3.5 million primarily due to higher contracted services, property taxes and material costs associated with new gas generation coming online in mid-2025.
•Maintenance expense decreased $3.7 million mainly due to absence of maintenance work performed at Leland Olds Station in 2025.
Interest and other charges increased $8.8 million mainly due to an increase in net interest expense primarily due to higher debt balances.
Gasification Results
Gasification operating revenue is mainly derived from the sale of synthetic natural gas, carbon dioxide, anhydrous ammonia, urea, DEF and various other products produced by Dakota Gas.
The following table summarizes the performance and certain operating statistics of the Gasification segment for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
(In thousands) 2026 2025 % Change
Operating revenue:
Synthetic natural gas $ 41,784 $ 40,710 2.6 %
Fertilizers and diesel exhaust fluid 55,900 51,411 8.7 %
Other byproducts and miscellaneous 16,769 18,835 (11.0) %
Total operating revenue 114,453 110,956 3.2 %
Cost of products sold 109,491 100,790 8.6 %
Selling, general and administrative 23,740 22,240 6.7 %
Depreciation and amortization 10,346 10,019 3.3 %
Total operating expenses 143,577 133,049 7.9 %
Operating deficit (29,124) (22,093) 31.8 %
Other income 39,684 31,111 27.6 %
Interest and other charges 4,000 8,688 (54.0) %
Income tax expense 3,822 2,706 41.2 %
Net earnings (loss) $ 2,738 $ (2,376) 215.2 %
Sales volumes:
Synthetic natural gas (dekatherms in millions) 7.0 10.1 (30.7) %
Fertilizer products (tons in thousands) 83.1 83.8 (0.8) %
Diesel exhaust fluid (gallons in millions) 13.5 11.1 21.6 %
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
Gasification net earnings increased $5.1 million as a result of:
Operating revenue increased $3.5 million mainly due to:
•Synthetic natural gas revenue increased by $1.1 million primarily as a result of higher natural gas prices, substantially offset by lower volumes sold. Realized prices of $5.95 per dekatherm were 48 percent higher.
•Fertilizer and DEF revenue increased $4.5 million. Fertilizer sales revenue increased $2.2 million due to higher prices, partially offset by a decrease in volumes sold. DEF revenue increased $2.3 million largely due to higher volumes sold.
Cost of products sold increased by $8.7 million primarily due to higher electricity prices and higher natural gas purchases, labor and benefits, contracted services, and coal expense, partially offset by lower chemicals expense.
Selling, general and administrative increased by $1.5 million largely due to higher general and administrative expenses, partially offset by lower freight.
Depreciation and amortization increased by $327,000 mainly due to investments in infrastructure enhancement projects to improve the availability of the Synfuels Plant.
Other income was $8.6 million higher largely due to increased benefits from the monetization of tax credits related to the capture and sequestration of CO2 through Dakota Gas's investment in Dakota Carbon Services LLC resulting from higher CO2 volumes sequestered.
Interest and other charges decreased $4.7 million primarily due to lower interest expense as a result of lower debt balances due to certain third-party debt being paid off in December 2025.
Income tax expense was higher primarily due to higher income before income taxes.
Coal and Limestone Operations Results
Coal and Limestone Operations revenue is mainly derived from the sale by Dakota Coal of lignite coal for use at our generating facilities and for coal gasification at Dakota Gas. In addition, Dakota Coal operates a limestone quarry and sells lime and limestone to Basin Electric and other third parties.
The following table summarizes performance and certain operating statistics of the Coal and Limestone Operations segment for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
(In thousands) 2026 2025 % Change
Operating revenue $ 86,127 $ 77,827 10.7 %
Cost of products sold 53,221 51,548 3.2 %
Selling, general and administrative 2,150 2,395 (10.2) %
Depreciation, depletion and amortization 5,000 4,599 8.7 %
Total operating expenses 60,371 58,542 3.1 %
Operating margin 25,756 19,285 33.6 %
Other income (expense) (3,065) (1,693) 81.0 %
Interest and other charges 3,098 3,356 (7.7) %
Income tax expense 3,565 2,404 48.3 %
Earnings including noncontrolling interest 16,028 11,832 35.5 %
Earnings attributable to noncontrolling interest (6,200) (6,316) (1.8) %
Net earnings $ 9,828 $ 5,516 78.2 %
Sales volumes:
Lignite coal (tons in millions) 3.2 3.3 (3.0) %
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
Coal and Limestone Operations net earnings increased $4.3 million as a result of:
Operating revenue increased $8.3 million mainly due to higher lignite coal sales of $8.1 million resulting from higher average sales prices.
Cost of products sold increased $1.7 million primarily due to higher costs in lignite coal mining operations.
Selling, general and administrative decreased $245,000 primarily due to lower freight expenses related to lower lime sales.
Depreciation and amortization increased $401,000 mainly due to investments in mining equipment.
Other income (expense) increased $1.4 million due to unrealized losses on investments.
Interest and other charges decreased $258,000 related to lower debt balances.
Income tax expense was $1.2 million higher largely due to higher income before taxes.
Earnings attributable to noncontrolling interest was comparable to 2025.
Other Results
Other consists of the operations of Basin Cooperative Services, certain tax adjustments, intersegment eliminations, and other activity not associated with the Electric Utility, Gasification, and Coal and Limestone Operations segments. Basin Cooperative Services provides certain nonutility property management services to Basin Electric.
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
The change in other is primarily related to the intersegment elimination of the decreased loss at the Gasification segment. See "-Gasification Results" above for further detail on the decreased loss.
Liquidity and Capital Resources
General
Our liquidity is provided through a combination of cash generated from operations (including the operations of our subsidiaries), the MIP, the net proceeds of our financings and available commitments under existing credit facilities. While we fund operational costs with cash generated from our operations and our subsidiaries' operations, we also issue commercial paper and periodically access our existing credit facilities to manage our liquidity. We also utilize the credit facilities to fund capital expenditures on an interim basis, which we intend to repay with the proceeds of the issuance of long-term debt secured under our Indenture.
Capital Resources
We had cash, restricted and designated cash and short-term investments of $925.4 million as of March 31, 2026. This is inclusive of cash and investments of $272.0 million designated for regulatory revenue deferrals as of March 31, 2026.
Our liquidity is supported by two revolving credit facilities. We have a $1.25 billion unsecured syndicated revolving credit agreement. As of March 31, 2026, we had issued a letter of credit in the amount of $250,000 with no amounts outstanding under this facility and no outstanding taxable commercial paper.
We also have a tax-exempt commercial paper program supported by a $100.0 million credit facility with National Rural Utilities Cooperative Finance Corporation ("CFC"). As of March 31, 2026, $100.0 million of the CFC facility was used to support commercial paper issuances.
We have a MIP available to all Class A and Class C Members. As of March 31, 2026, our obligations under the MIP totaled $178.0 million.
The following table summarizes amounts outstanding under our lines of credit to our subsidiaries:
Facility Limit Outstanding Amounts as of March 31, 2026
(In thousands)
Dakota Gas $ 500,000 $ 90,000
Dakota Coal 250,000 160,220
Basin Cooperative Services 3,000 -
Nemadji River Generation (a)
300,000 27,599
Total $ 1,053,000 $ 277,819
_____________
(a)Nemadji River Generation, our wholly owned subsidiary, was formerly the owner of a 30% undivided interest in NTEC. In January 2026, Nemadji River Generation exited NTEC effective December 31, 2025 and the subsidiary is expected to be fully dissolved by the end of 2026.
Dakota Coal. In addition to our revolving credit facility, Dakota Coal issued a promissory note to us that it used for the expenditures associated with a truck dump and unit train load-out facility. As of March 31, 2026,
$13.9 million was outstanding under this note. Also, Dakota Coal issued two notes to us that it used for the expenditures associated with development of coal reserves. As of March 31, 2026, $7.6 million was outstanding under these notes.
Cash Flows
Cash is provided by operating activities and issuance of debt. Capital expenditures comprise a significant use of cash.
For the Three Months Ended March 31,
(In thousands) 2026 2025 % Change
Net cash provided by (used in)
Operating activities $ 163,699 $ 214,492 (23.7) %
Investing activities (224,825) (104,472) 115.2 %
Financing activities (956) 12,562 (107.6) %
Net (decrease) increase in cash and cash equivalents and restricted and designated cash and cash equivalents (62,082) 122,582 (150.6) %
Cash and cash equivalents and restricted and designated cash and cash equivalents, beginning of period 987,493 693,910 42.3 %
Cash and cash equivalents and restricted and designated cash and cash equivalents, end of period $ 925,411 $ 816,492 13.3 %
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
Operating activities. Net cash provided by operating activities decreased $50.8 million, primarily driven by increased collateral posted and the timing of payment of accounts payable; partially offset by higher net margin and earnings driven by the rate increase effective January 1, 2026.
Investing activities. Net cash used in investing activities increased $120.4 million largely due to $121.6 million in incremental capital expenditures in 2026 mainly resulting from expenditures associated with the Bison Generating Station capital project.
Financing activities. Net cash (used in) provided by financing activities decreased $13.5 million primarily due to the decreased investment from our Members under the member investment program.
Projected Capital Expenditures
For additional information on our projected capital expenditures, see "Project Capital Expenditures" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Prospectus.
Electric Utility
We annually forecast expenditures required for additional electric generation and transmission facilities and capital for enhancement of existing facilities. We review these projections periodically to update our calculations to reflect changes in our future plans, construction costs, market factors and other items affecting our forecasts. Our actual capital expenditures could vary significantly from these projections because of, among other things, unforeseen construction, changes in resource requirements, changes in actual or forecasted load growth, labor market uncertainty, weather or other issues. Our long-range capital plan details actual and projected construction requirements and system upgrades of approximately $7.1 billion for the years 2026 through 2030.
Gasification
Construction and equipment requirements of Dakota Gas are projected to result in capital expenditures of approximately $146 million over the period of 2026 through 2030.
Coal and Limestone Operations
Mine development and equipment requirements of Dakota Coal are projected to result in capital expenditures of approximately $262 million for the years 2026 through 2030.
Material Cash Requirements
Our material cash requirements relate primarily to operating expenses, capital expenditures and debt service. There were no material changes to our contractual and other obligations from those reported within Management's Discussion and Analysis of Financial Condition and Results of Operations of the Prospectus.
Credit Rating Triggers
Basin Electric Power Cooperative's senior secured debt and commercial paper have been assigned credit ratings by independent credit rating agencies. The current ratings are as follows:.
Senior Secured Commercial Paper Outlook
S&P A A1 Negative
Moody's A3 P-2 Stable
Fitch A F1+ Stable
These credit ratings are based on rating criteria developed by each rating agency and reflect their respective assessments of Basin Electric's creditworthiness. Each rating agency applies its own methodologies, and the significance of a particular rating may differ among rating agencies. Credit ratings are not recommendations to purchase, sell, or hold securities, and do not address market price, liquidity, or the suitability of any security for a particular investor. Credit ratings may be revised or withdrawn at any time by the respective rating agencies.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used for items such as present value of lease assets and lease liabilities, plant depreciable lives, actuarially determined benefit costs, valuation of derivatives, asset retirement obligations, present value of expected tax credits, and income tax expense or benefits. Ultimate results could differ from those estimates. We refer to accounting estimates of this type as critical accounting policies and estimates.
Our significant accounting policies are discussed in Note 2 to our consolidated financial statements included in the Prospectus. There have been no significant changes to these policies for the three months ended March 31, 2026.
Basin Electric Power Cooperative published this content on June 18, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on June 18, 2026 at 18:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]