Company Quick10K Filing
Tri-State Generation & Transmission Association
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 0 $0
10-Q 2019-11-13 Quarter: 2019-09-30
10-Q 2019-08-09 Quarter: 2019-06-30
10-Q 2019-05-10 Quarter: 2019-03-31
10-K 2019-03-08 Annual: 2018-12-31
10-Q 2018-11-09 Quarter: 2018-09-30
10-Q 2018-08-10 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-09 Annual: 2017-12-31
10-Q 2017-11-08 Quarter: 2017-09-30
10-Q 2017-08-14 Quarter: 2017-06-30
10-Q 2017-05-05 Quarter: 2017-03-31
10-K 2017-03-10 Annual: 2016-12-31
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-12 Quarter: 2016-03-31
10-K 2016-03-14 Annual: 2015-12-31
10-Q 2015-11-12 Quarter: 2015-09-30
10-Q 2015-08-21 Quarter: 2015-06-30
8-K 2020-01-30 Officers
8-K 2020-01-23 Officers
8-K 2020-01-08 Exit Costs, Impairments, Regulation FD, Exhibits
8-K 2020-01-03 Officers
8-K 2019-11-25 Officers
8-K 2019-09-24 Officers
8-K 2019-07-08 Officers, Regulation FD, Exhibits
8-K 2019-06-17 Officers
8-K 2019-04-17 Officers
8-K 2019-04-03 Amend Bylaw, Exhibits
8-K 2019-03-22 Officers
8-K 2019-02-12 Officers, Regulation FD, Exhibits
8-K 2018-09-20 Enter Agreement, Exhibits
8-K 2018-08-23 Officers
8-K 2018-07-06 Regulation FD, Exhibits
8-K 2018-06-27 Officers
8-K 2018-05-30 Officers
8-K 2018-05-18 Officers
8-K 2018-04-25 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-28 Officers
8-K 2018-02-02 Officers
8-K 2018-01-03 Officers
TRIS 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1 – Presentation of Financial Information
Note 2 – Accounting for Rate Regulation
Note 3 – Investments in Other Associations
Note 4 – Investments in and Advances To Coal Mines
Note 5 – Cash, Cash Equivalents and Restricted Cash and Investments
Note 6 – Contract Assets and Contract Liabilities
Note 7 – Other Deferred Charges
Note 8 – Long-Term Debt
Note 9 – Short-Term Borrowings
Note 10 – Asset Retirement Obligations
Note 11 – Other Deferred Credits and Other Liabilities
Note 12 – Employee Benefit Plans
Note 13 – Revenue
Note 14 – Income Taxes
Note 15 – Leases
Note 16 – Fair Value
Note 17 – Variable Interest Entities
Note 18 – Legal
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 4. Mine Safety Disclosures
Item 6. Exhibits
EX-31.1 tris-20190930ex311047387.htm
EX-31.2 tris-20190930ex312e432a2.htm
EX-32.1 tris-20190930ex32169677f.htm
EX-32.2 tris-20190930ex322e46acb.htm
EX-95 tris-20190930xex95.htm

Tri-State Generation & Transmission Association Earnings 2019-09-30

TRIS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
LBSR 0 0 2 0 -0 -0 -0 -0 0.7 -1,081%
GRAS 0 0 3 1 0 -2 -2 0 9% -0.2 -1,557%
ETFM 0 0 2 0 0 -2 -2 0 -0.2 -166,272,400%
PHR
NXT
NPHC 0 0 6 0 0 -7 -7 1 71% -0.2 -2,939%
TRIS 0 5,023 1,329 0 39 38 3,055 0% 79.5 1%
XSNX 0 0 3 1 1 4 4 0 44% 0.0 1,366%
IGMS
LCLP 0 0 9 -0 -0 -3 -3 2 135% -0.7 -21,823%

10-Q 1 tris-20190930x10q.htm 10-Q tris_Current folio_10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to

 

Commission File No. 333-212006

 

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

(Exact name of registrant as specified in its charter)

Colorado

84-0464189

(State or other jurisdiction of incorporation or
organization)

(I.R.S. Employer Identification
No.)

 

 

1100 West 116th Avenue

 

Westminster, Colorado

80234

(Address of principal executive offices)

(Zip Code)

 

(303) 452-6111

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No     (Note: The registrant is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), but voluntarily files reports with the Securities and Exchange Commission. The registrant has filed all Exchange Act reports for the preceding 12 months (or for such shorter period that the registrant was required to file such reports)).

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer     Accelerated filer     Non-accelerated filer     Smaller reporting company     Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  The registrant is a membership corporation and has no authorized or outstanding equity securities.

 

 

 

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

 

 

 

 

 

    

Page Number

PART I.  FINANCIAL INFORMATION 

 

Item 1. 

Financial Statements

 

 

Consolidated Statements of Financial Position as of September 30, 2019 (unaudited) and December 31, 2018

1

 

Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)

2

 

Consolidated Statements of Comprehensive Income — Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)

3

 

Consolidated Statements of Equity — Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)

4

 

Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2019 and 2018 (unaudited)

5

 

Notes to Unaudited Consolidated Financial Statements For the Three and Nine Months Ended September 30, 2019 and 2018

6

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4. 

Controls and Procedures

35

PART II.  OTHER INFORMATION 

 

Item 1. 

Legal Proceedings

35

Item 1A 

Risk Factors

36

Item 4. 

Mine Safety Disclosures

36

Item 6. 

Exhibits

36

SIGNATURES 

 

 

 

 

 

 

 

i

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report on Form 10‑Q contains “forward‑looking statements.”  All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate to occur in the future, including matters such as the timing of various regulatory and other actions, future capital expenditures, business strategy and development, construction or operation of facilities (often, but not always, identified through the use of words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “forecast,” “projection,” “target” and “outlook”) are forward‑looking statements.

Although we believe that in making these forward‑looking statements our expectations are based on reasonable assumptions, any forward‑looking statement involves uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by these forward‑looking statements.

 

 

 

ii

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

 

Tri-State Generation and Transmission Association, Inc.

Consolidated Statements of Financial Position

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

    

September 30, 2019

    

December 31, 2018

 

ASSETS

 

 

(unaudited)

 

 

 

 

Property, plant and equipment

 

 

 

 

 

 

 

Electric plant

 

 

 

 

 

 

 

In service

 

$

6,049,319

 

$

5,899,128

 

Construction work in progress

 

 

147,490

 

 

207,732

 

Total electric plant

 

 

6,196,809

 

 

6,106,860

 

Less allowances for depreciation and amortization

 

 

(2,607,309)

 

 

(2,499,376)

 

Net electric plant

 

 

3,589,500

 

 

3,607,484

 

Other plant

 

 

408,777

 

 

384,650

 

Less allowances for depreciation, amortization and depletion

 

 

(112,488)

 

 

(110,939)

 

Net other plant

 

 

296,289

 

 

273,711

 

Total property, plant and equipment

 

 

3,885,789

 

 

3,881,195

 

Other assets and investments

 

 

 

 

 

 

 

Investments in other associations

 

 

162,738

 

 

161,487

 

Investments in and advances to coal mines

 

 

18,098

 

 

18,928

 

Restricted cash and investments

 

 

24,344

 

 

10,606

 

Intangible assets, net of accumulated amortization

 

 

 —

 

 

3,662

 

Other noncurrent assets

 

 

9,303

 

 

9,022

 

Total other assets and investments

 

 

214,483

 

 

203,705

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

95,919

 

 

116,858

 

Restricted cash and investments

 

 

168

 

 

126

 

Deposits and advances

 

 

42,811

 

 

29,641

 

Accounts receivable—Members

 

 

109,565

 

 

107,572

 

Other accounts receivable

 

 

21,554

 

 

22,434

 

Coal inventory

 

 

51,961

 

 

55,883

 

Materials and supplies

 

 

96,729

 

 

93,786

 

Total current assets

 

 

418,707

 

 

426,300

 

Deferred charges

 

 

 

 

 

 

 

Regulatory assets

 

 

462,038

 

 

437,377

 

Prepayment—NRECA Retirement Security Plan

 

 

28,205

 

 

31,837

 

Other

 

 

49,928

 

 

46,453

 

Total deferred charges

 

 

540,171

 

 

515,667

 

Total assets

 

$

5,059,150

 

$

5,026,867

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

Capitalization

 

 

 

 

 

 

 

Patronage capital equity

 

$

1,076,503

 

$

1,015,754

 

Accumulated other comprehensive income

 

 

174

 

 

375

 

Noncontrolling interest

 

 

110,602

 

 

110,169

 

Total equity

 

 

1,187,279

 

 

1,126,298

 

Long-term debt

 

 

3,068,693

 

 

3,109,301

 

Total capitalization

 

 

4,255,972

 

 

4,235,599

 

Current liabilities

 

 

 

 

 

 

 

Member advances

 

 

12,378

 

 

13,988

 

Accounts payable

 

 

104,987

 

 

105,009

 

Short-term borrowings

 

 

227,182

 

 

204,145

 

Accrued expenses

 

 

29,678

 

 

40,285

 

Current asset retirement obligations

 

 

2,294

 

 

2,183

 

Accrued interest

 

 

47,761

 

 

32,070

 

Accrued property taxes

 

 

28,300

 

 

28,582

 

Current maturities of long-term debt

 

 

80,161

 

 

95,757

 

Total current liabilities

 

 

532,741

 

 

522,019

 

Deferred credits and other liabilities

 

 

 

 

 

 

 

Regulatory liabilities

 

 

128,439

 

 

137,369

 

Deferred income tax liability

 

 

17,173

 

 

18,098

 

Asset retirement obligations

 

 

65,990

 

 

54,589

 

Other

 

 

48,928

 

 

50,266

 

Total deferred credits and other liabilities

 

 

260,530

 

 

260,322

 

Accumulated postretirement benefit and postemployment obligations

 

 

9,907

 

 

8,927

 

Total equity and liabilities

 

$

5,059,150

 

$

5,026,867

 

 

The accompanying notes are an integral part of these consolidated financial statements.

1

Tri-State Generation and Transmission Association, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

    

2019

    

2018

    

2019

    

2018

    

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Member electric sales

 

$

358,586

 

$

353,487

 

$

942,175

 

 

942,916

 

Non-member electric sales

 

 

28,339

 

 

31,004

 

 

71,843

 

 

62,925

 

Other

 

 

12,128

 

 

13,666

 

 

39,540

 

 

38,337

 

 

 

 

399,053

 

 

398,157

 

 

1,053,558

 

 

1,044,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased power

 

 

103,525

 

 

106,166

 

 

252,948

 

 

271,187

 

Fuel

 

 

67,374

 

 

67,840

 

 

204,271

 

 

168,081

 

Production

 

 

48,619

 

 

52,558

 

 

148,457

 

 

165,750

 

Transmission

 

 

42,305

 

 

40,291

 

 

122,329

 

 

122,255

 

General and administrative

 

 

12,978

 

 

6,398

 

 

35,887

 

 

22,923

 

Depreciation, amortization and depletion

 

 

40,590

 

 

38,977

 

 

116,879

 

 

118,620

 

Coal mining

 

 

1,675

 

 

637

 

 

7,824

 

 

637

 

Other

 

 

4,640

 

 

3,897

 

 

12,154

 

 

11,317

 

 

 

 

321,706

 

 

316,764

 

 

900,749

 

 

880,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins

 

 

77,347

 

 

81,393

 

 

152,809

 

 

163,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

1,364

 

 

1,323

 

 

4,156

 

 

3,762

 

Capital credits from cooperatives

 

 

1,186

 

 

1,272

 

 

4,520

 

 

5,472

 

Other

 

 

14,314

 

 

1,466

 

 

16,226

 

 

3,609

 

 

 

 

16,864

 

 

4,061

 

 

24,902

 

 

12,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of amounts capitalized

 

 

38,030

 

 

38,377

 

 

113,954

 

 

115,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(77)

 

 

(151)

 

 

(231)

 

 

(453)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net margins including noncontrolling interest

 

 

56,258

 

 

47,228

 

 

63,988

 

 

61,324

 

Net income attributable to noncontrolling interest

 

 

(1,113)

 

 

(830)

 

 

(3,239)

 

 

(2,454)

 

Net margins attributable to the Association

 

$

55,145

 

$

46,398

 

$

60,749

 

$

58,870

 

 

The accompanying notes are an integral part of these consolidated financial statements.

2

Tri-State Generation and Transmission Association, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

    

2019

    

2018

    

2019

    

2018

    

Net margins including noncontrolling interest

 

$

56,258

 

$

47,228

 

$

63,988

 

$

61,324

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of unrealized gain on securities available for sale included in net margin

 

 

 —

 

 

 —

 

 

 —

 

 

(159)

 

Amortization of prior service cost (credit)

 

 

(10)

 

 

(20)

 

 

13

 

 

(59)

 

Unrecognized prior service cost

 

 

 —

 

 

 —

 

 

(214)

 

 

 —

 

Other comprehensive income (loss)

 

 

(10)

 

 

(20)

 

 

(201)

 

 

(218)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) including noncontrolling interest

 

 

56,248

 

 

47,208

 

 

63,787

 

 

61,106

 

Net comprehensive income attributable to noncontrolling interest

 

 

(1,113)

 

 

(830)

 

 

(3,239)

 

 

(2,454)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to the Association

 

$

55,135

 

$

46,378

 

$

60,548

 

$

58,652

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3

Tri-State Generation and Transmission Association, Inc.

Consolidated Statements of Equity (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

 

Nine Months Ended September 30, 

 

    

2019

    

2018

    

    

2019

    

2018

Patronage capital equity at beginning of period

 

$

1,021,358

 

$

1,015,492

 

 

$

1,015,754

 

$

1,003,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net margins attributable to the Association

 

 

55,145

 

 

46,398

 

 

 

60,749

 

 

58,870

Patronage capital equity at end of period

 

 

1,076,503

 

 

1,061,890

 

 

 

1,076,503

 

 

1,061,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss) at beginning of period

 

 

184

 

 

(408)

 

 

 

375

 

 

(210)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for unrealized gain on securities available for sale included in net margin

 

 

 —

 

 

 —

 

 

 

 —

 

 

(159)

Amortization of prior service cost (credit)

 

 

(10)

 

 

(20)

 

 

 

13

 

 

(59)

Unrecognized prior service cost

 

 

 —

 

 

 —

 

 

 

(214)

 

 

 —

Accumulated other comprehensive income (loss) at end of period

 

 

174

 

 

(428)

 

 

 

174

 

 

(428)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest at beginning of period

 

 

110,841

 

 

110,061

 

 

 

110,169

 

 

111,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net comprehensive income attributable to noncontrolling interest

 

 

1,113

 

 

830

 

 

 

3,239

 

 

2,454

Equity distribution to noncontrolling interest

 

 

(1,352)

 

 

(1,555)

 

 

 

(2,806)

 

 

(4,413)

Noncontrolling interest at end of period

 

 

110,602

 

 

109,336

 

 

 

110,602

 

 

109,336

Total equity at end of period

 

$

1,187,279

 

$

1,170,798

 

 

$

1,187,279

 

$

1,170,798

 

The accompanying notes are an integral part of these consolidated financial statements.

4

 

Tri-State Generation and Transmission Association, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 

 

 

  

2019

  

2018

    

Operating activities

 

 

 

 

 

 

 

Net margins including noncontrolling interest

 

$

63,988

 

$

61,324

 

Adjustments to reconcile net margins to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation, amortization and depletion

 

 

116,879

 

 

118,620

 

Amortization of intangible asset

 

 

3,662

 

 

5,493

 

Amortization of NRECA Retirement Security Plan prepayment

 

 

4,029

 

 

4,029

 

Amortization of debt issuance costs

 

 

1,773

 

 

2,210

 

Impairment loss - Nucla

 

 

37,067

 

 

 —

 

Deferred Nucla impairment loss

 

 

(37,067)

 

 

 —

 

Capital credit allocations from cooperatives and income from coal mines over refund distributions

 

 

(486)

 

 

(1,493)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(155)

 

 

(18,721)

 

Coal inventory

 

 

3,922

 

 

(27,040)

 

Materials and supplies

 

 

(2,943)

 

 

(1,854)

 

Accounts payable and accrued expenses

 

 

3,418

 

 

(8,734)

 

Accrued interest

 

 

15,691

 

 

17,696

 

Accrued property taxes

 

 

(282)

 

 

684

 

Other

 

 

(7,581)

 

 

(13,791)

 

Net cash provided by operating activities

 

 

201,915

 

 

138,423

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

Purchases of plant

 

 

(149,396)

 

 

(199,261)

 

Changes in deferred charges

 

 

(6,277)

 

 

(1,547)

 

Proceeds from other investments

 

 

65

 

 

64

 

Net cash used in investing activities

 

 

(155,608)

 

 

(200,744)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Changes in Member advances

 

 

(5,351)

 

 

257

 

Payments of long-term debt

 

 

(91,884)

 

 

(73,943)

 

Proceeds from issuance of long-term debt

 

 

34,910

 

 

60,000

 

Debt issuance costs

 

 

(13)

 

 

 —

 

Increase in short-term borrowings, net

 

 

23,036

 

 

61,530

 

Retirement of patronage capital

 

 

(11,101)

 

 

(4,852)

 

Equity distribution to noncontrolling interest

 

 

(2,806)

 

 

(4,413)

 

Other

 

 

(257)

 

 

(1,545)

 

Net cash provided by (used in) financing activities

 

 

(53,466)

 

 

37,034

 

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash and investments

 

 

(7,159)

 

 

(25,287)

 

Cash, cash equivalents and restricted cash and investments – beginning

 

 

127,590

 

 

150,965

 

Cash, cash equivalents and restricted cash and investments – ending

 

$

120,431

 

$

125,678

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

 

$

103,782

 

$

102,916

 

Cash paid for income taxes

 

$

 —

 

$

 —

 

 

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

Change in plant expenditures included in accounts payable

 

$

(873)

 

$

67

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5

Tri-State Generation and Transmission Association, Inc.

Notes to Unaudited Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2019 and 2018

 

NOTE 1 – PRESENTATION OF FINANCIAL INFORMATION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2018 filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Our consolidated financial position as of September 30, 2019, results of operations for the three and nine months ended September 30, 2019 and 2018, and cash flows for the nine months ended September 30, 2019 and 2018 are not necessarily indicative of the results that may be expected for an entire year or any other period.

 

The accompanying financial statements reflect the consolidated accounts of Tri-State Generation and Transmission Association, Inc. (“Tri-State”, “we”, “our”, “us” or “the Association”), our wholly-owned and majority-owned subsidiaries, and certain variable interest entities for which we or our subsidiaries are the primary beneficiaries. See Note 17 – Variable Interest Entities. Our consolidated financial statements also include our undivided interests in jointly owned facilities.

 

We are a taxable wholesale electric power generation and transmission cooperative, incorporated under the laws of the State of Colorado in 1952. As of September 30, 2019, we had two classes of members – all requirements electric members known as the Class A members and non-utility members. For our Class A members, we provide electric power to our forty-three electric distribution member systems (“Member(s)”) pursuant to long-term wholesale electric service contracts. On September 3, 2019, a membership agreement with a non-utility member, MIECO, Inc., became effective and we notified the Federal Energy Regulatory Commission (“FERC”) of such. The admission of the new member that was not an electric cooperative or governmental entity resulted in us no longer being exempt from FERC wholesale rate regulation pursuant to the Federal Power Act. Our sole non-utility member supplies natural gas to several of our generation facilities located in New Mexico and Colorado. We have eliminated all significant intercompany balances and transactions in consolidation.

 

Jointly Owned Facilities

 

We own undivided interests in two jointly owned generation facilities that are operated by the operating agent of each facility under joint facility ownership agreements with other utilities as tenants in common. These projects include the Yampa Project (operated by us) and the Missouri Basin Power Project (“MBPP”) (operated by Basin Electric Power Cooperative (“Basin”)). Each participant in these agreements receives a portion of the total output of the generation facilities, which approximates its percentage ownership. Each participant provides its own financing for its share of each facility and accounts for its share of the cost of each facility. The operating agent for each of these projects allocates the fuel and operating expenses to each participant based upon its share of the use of the facility. Therefore, our share of the plant asset cost, interest, depreciation and other operating expenses is included in our consolidated financial statements.

 

6

Our share in each jointly owned facility is as follows as of September 30, 2019 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

                  

  

Electric

  

 

 

  

Construction

 

 

Tri-State

 

Plant in

 

Accumulated

 

Work In

 

 

Share

 

Service

 

Depreciation

 

Progress

Yampa Project - Craig Generating Station Units 1 and 2

 

24.00

%  

$

396,111

 

$

243,788

 

$

65

MBPP - Laramie River Station

 

27.13

%

 

487,049

 

 

297,800

 

 

3,961

Total

 

 

 

$

883,160

 

$

541,588

 

$

4,026

 

 

 

NOTE 2 – ACCOUNTING FOR RATE REGULATION

 

We are subject to the accounting requirements related to regulated operations. In accordance with these accounting requirements, some revenues and expenses have been deferred at the discretion of our Board of Directors (“Board”) if it is probable that these amounts will be refunded or recovered through future rates. Prior to September 3, 2019, our Board had sole budgetary and rate-setting authority. On September 3, 2019, we became a  FERC jurisdictional public utility and our Board’s rate setting authority is now subject to FERC approval. Regulatory assets are costs that we expect to recover from our Members based on rates approved by the applicable authority. Regulatory liabilities represent probable future reductions in rates associated with amounts that are expected to be refunded to our Members based on rates approved by the applicable authority. We recognize regulatory assets as expenses and regulatory liabilities as operating revenue, other income, or a reduction in expense concurrent with their recovery in rates.

 

Regulatory assets and liabilities are as follows (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31,

 

 

    

2019

    

2018

 

Regulatory assets

 

 

 

 

 

 

 

Deferred income tax expense (1)

 

$

17,173

 

$

18,098

 

Deferred prepaid lease expense – Springerville Unit 3 Lease (2)

 

 

84,287

 

 

86,005

 

Goodwill – J.M. Shafer (3)

 

 

49,857

 

 

51,994

 

Goodwill – Colowyo Coal (4)

 

 

37,453

 

 

38,227

 

Deferred debt prepayment transaction costs (5)

 

 

143,088

 

 

149,559

 

Deferred Holcomb expansion impairment loss (6)

 

 

93,494

 

 

93,494

 

Deferred Nucla impairment loss (7)

 

 

36,686

 

 

 —

 

Total regulatory assets

 

 

462,038

 

 

437,377

 

 

 

 

 

 

 

 

 

Regulatory liabilities

 

 

 

 

 

 

 

Interest rate swap - unrealized gain (8)

 

 

 —

 

 

8,576

 

Interest rate swap - realized gain (9)

 

 

3,861

 

 

4,215

 

Deferred revenues (10)

 

 

82,006

 

 

82,006

 

Membership withdrawal (11)

 

 

42,572

 

 

42,572

 

Total regulatory liabilities

 

 

128,439

 

 

137,369

 

Net regulatory asset

 

$

333,599

 

$

300,008

 

 

(1)

A regulatory asset or liability associated with deferred income taxes generally represents the future increase or decrease in income taxes payable that will be received or settled through future rate revenues.

(2)

Represents deferral of the loss on acquisition related to the Springerville Generating Station Unit 3 (“Springerville Unit 3”) prepaid lease expense upon acquiring a controlling interest in the Springerville Unit 3 Partnership LP (“Springerville Partnership”) in 2009. The regulatory asset for the deferred prepaid lease expense is being amortized to depreciation, amortization and depletion expense in the amount of $2.3 million annually through the 47-year period ending in 2056 and recovered from our Members in rates.

(3)

Represents goodwill related to our acquisition of Thermo Cogeneration Partnership, LP in December 2011. Goodwill is being amortized to depreciation, amortization and depletion expense in the amount of $2.8 million annually through the 25-year period ending in 2036 and recovered from our Members in rates.

7

(4)

Represents goodwill related to our acquisition of Colowyo Coal Company LP (“Colowyo Coal”) in December 2011. Goodwill is being amortized to depreciation, amortization and depletion expense in the amount of $1.0 million annually through the 44-year period ending in 2056 and recovered from our Members in rates.

(5)

Represents transaction costs that we incurred related to the prepayment of our long-term debt in 2014. These costs are being amortized to depreciation, amortization and depletion expense in the amount of $8.6 million annually over the 21.4-year period ending in 2036 and recovered from our Members in rates.

(6)

Represents deferral of the impairment loss related to development costs, including costs for the option to purchase development rights for the expansion of the Holcomb Generating Station. Beginning January 2020, the deferred impairment loss is expected be amortized to other operating expenses in the amount of $4.7 million annually over the 20-year period ending in 2039 and recovered from our Members in rates.

(7)

In July 2019, the Board took action for the early retirement of the Nucla Generating Station and the deferral of any impairment loss in accordance with accounting for rate regulation. In conjunction with the early retirement, we recognized an impairment loss of $37.1 million during the third quarter of 2019. On September 19, 2019, the Nucla Generating Station was officially retired from service. The deferred impairment loss is being amortized to depreciation, amortization and depletion expense over the 3.3-year period ending in December 2022 and recovered from our Members in rates.

(8)

Represented deferral of an unrealized gain related to the change in fair value of a forward starting interest rate swap that was entered into in 2016 in order to hedge interest rates on anticipated future borrowings. This interest rate swap was terminated in June 2019 with no gain or loss being realized.

(9)

Represents deferral of a realized gain of $4.6 million related to the October 2017 settlement of a forward starting interest rate swap. This realized gain was deferred as a regulatory liability and is being amortized to interest expense over the 12-year term of the First Mortgage Obligations, Series 2017A and refunded to Members through reduced rates when recognized in future periods.

(10)

Represents deferral of the recognition of non-member electric sales revenues. These deferred non-member electric sales revenues will be refunded to Members through reduced rates when recognized in non-member electric sales revenue in future periods.

(11)

Represents the deferral of the recognition of other income recorded in connection with the withdrawal of a former Member from membership in us. This deferred membership withdrawal income will be refunded to Members through reduced rates when recognized in other income in future periods.

 

 

NOTE 3 – INVESTMENTS IN OTHER ASSOCIATIONS  

 

Investments in other associations include investments in the patronage capital of other cooperatives and other required investments in the organizations. Our investment in a cooperative increases when a cooperative allocates patronage capital credits to us and it decreases when we receive a cash retirement of the allocated capital credits from the cooperative. A cooperative allocates its patronage capital credits to us based upon our patronage (amount of business done) with the cooperative.

 

Investments in other associations are as follows (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

 

    

2019

    

2018

 

Basin Electric Power Cooperative

 

$

118,115

 

$

118,115

 

National Rural Utilities Cooperative Finance Corporation - patronage capital

 

 

11,761

 

 

11,704

 

National Rural Utilities Cooperative Finance Corporation - capital term certificates

 

 

15,953

 

 

16,018

 

CoBank, ACB

 

 

10,201

 

 

9,062

 

Western Fuels Association, Inc.

 

 

2,408