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Assessing the Ability of Rural Electric Cooperatives to Retire Capital Credits

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  • Royer, Jeffrey S.

Abstract

This paper assesses the ability of rural electric cooperatives to retire member equity under three strategies: (1) replacing equity with term debt to provide for an immediate one-time retirement of capital credits, (2) reducing the rate at which equity is accumulated and relying more on term debt to finance asset growth so margins can be used to accelerate the retirement of capital credits, and (3) adjusting the electric rate to generate additional mar-gins for retiring capital credits. Analyses suggest that the average distribution cooperative could employ these strategies to expand capital credits retirement substantially without weakening its financial condition.

Suggested Citation

  • Royer, Jeffrey S., 2016. "Assessing the Ability of Rural Electric Cooperatives to Retire Capital Credits," Journal of Cooperatives, NCERA-210, vol. 31.
    • Handle: RePEc:ags:jlcoop:244568
    DOI: 10.22004/ag.econ.244568
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    References listed on IDEAS

    as
    1. Eversull, E. Eldon, 2011. "Cooperative Financial Profile, 2008," Research Reports 280110, United States Department of Agriculture, Rural Development.
    2. Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives," Research Reports 180969, United States Department of Agriculture, Rural Development.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Agricultural Finance; Financial Economics;

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