S&P Global affirms Basin Electric’s ratings in August

The ratings agency S&P Global affirmed Basin Electric’s rating on Aug. 25, with a long-term senior secured rating as ‘A’ and a stable outlook. The cooperative's short-term rating of A1 was also affirmed.

Susan Sorensen, Basin Electric vice president and treasurer, said semi-annual updates are provided to the three agencies who publish ratings for Basin Electric. The update in July was held virtually due to the ongoing COVID-19 global pandemic.

“S&P was the first of the agencies to publish their credit review of Basin Electric. The review affirmed both our short-term and long-term rating as well as maintaining a stable outlook. Their review highlighted both credit positives and credit negatives. A credit positive pointed to our robust liquidity position. Rating agencies look favorably on liquidity as it reflects financial security by access to cash should an unforeseen event occur in the future, like the 2021 February weather event,” Sorensen said. “Our wholesale power contracts with our members are another credit strength noted by S&P Global. Not only the contracts themselves, but they look through the contracts to the financial strength of our members standing behind them. Basin Electric’s broad and diverse base of membership was also given a favorable nod in their write up.”

As for areas where S&P Global shows concern, exposure to the volatility of commodity markets was noted. “That’s driven primarily by Dakota Gas and the increased exposure from volatile commodity prices not present in our peer G&Ts,” she said. “We make sure when we are giving our updates, we show our efforts to mitigate those risks. They also looked at our progress on ESG (environmental, social, and governance). They gave us accolades for the reduced generation from coal as a percentage of our total generation portfolio. But, they turned that around and noted we were replacing some of that coal with additional carbon-based (natural gas) generation.”

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