Tri-State G&T Swings to Loss Amid Revenue Dip, Rising Costs

TL;DR

**Tri-State G&T is bleeding cash, with a Q2 net loss of $10.1 million, making it a clear sell for now.**

AI Summary

Tri-State Generation & Transmission Association, Inc. reported a net loss of $10.1 million for the three months ended June 30, 2025, a significant decline from the net income of $10.9 million in the prior-year period. For the six months ended June 30, 2025, the company posted a net loss of $1.5 million, a substantial decrease from the net income of $32.4 million for the same period in 2024. Total operating revenues for the three months ended June 30, 2025, were $387.8 million, down from $407.3 million in the comparable 2024 period, primarily due to a $19.5 million decrease in electric sales to member systems. Operating expenses increased to $397.9 million for the three months ended June 30, 2025, from $396.4 million in the prior year, driven by higher purchased power costs. The company's strategic outlook includes managing increased costs and navigating a challenging regulatory environment, as evidenced by the provision for rate refunds. The balance sheet shows total assets of $7.3 billion as of June 30, 2025, a slight increase from $7.2 billion at December 31, 2024, while total liabilities also increased to $5.9 billion from $5.8 billion over the same period. The company faces risks related to fluctuating energy prices and regulatory pressures impacting its rate stabilization efforts.

Why It Matters

Tri-State's shift to a net loss of $10.1 million for Q2 2025 and $1.5 million for the first half of 2025 signals financial strain that could impact its ability to invest in infrastructure and maintain competitive rates for its member systems. This performance, marked by a $19.5 million drop in electric sales to members, could lead to higher electricity costs for customers in its service areas, affecting household budgets and business operations. For investors, the negative net income and increasing operating expenses, particularly purchased power costs, highlight operational inefficiencies and potential long-term profitability challenges in a competitive energy market. The company's financial health is crucial for regional energy stability and its ability to transition to cleaner energy sources.

Risk Assessment

Risk Level: high — The company reported a net loss of $10.1 million for the three months ended June 30, 2025, a significant deterioration from a $10.9 million net income in the prior-year period. Furthermore, the six-month net loss of $1.5 million for 2025, compared to a $32.4 million net income in 2024, indicates a sustained negative trend in profitability, driven by decreased revenues and increased operating expenses.

Analyst Insight

Investors should consider reducing exposure to Tri-State Generation & Transmission Association, Inc. given the significant swing to a net loss and declining revenues. Monitor future filings for any signs of revenue recovery or cost control measures, as the current trend suggests ongoing financial challenges.

Financial Highlights

debt To Equity

N/A

revenue

$387.8M

operating Margin

N/A

total Assets

$7.3B

total Debt

N/A

net Income

-$10.1M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

-4.8%

Revenue Breakdown

Key Numbers

• $10.1M — Net Loss (Q2 2025) (Significant decline from $10.9M net income in Q2 2024)
• $1.5M — Net Loss (H1 2025) (Substantial decrease from $32.4M net income in H1 2024)
• $387.8M — Operating Revenues (Q2 2025) (Down from $407.3M in Q2 2024, a $19.5M decrease)
• $19.5M — Decrease in Electric Sales to Members (Primary driver of revenue decline in Q2 2025)
• $7.3B — Total Assets (June 30, 2025) (Slight increase from $7.2B at December 31, 2024)
• $5.9B — Total Liabilities (June 30, 2025) (Increased from $5.8B at December 31, 2024)

Key Players & Entities

• Tri-State Generation & Transmission Association, Inc. (company) — filer of the 10-Q
• $10.1 million (dollar_amount) — net loss for the three months ended June 30, 2025
• $10.9 million (dollar_amount) — net income for the three months ended June 30, 2024
• $1.5 million (dollar_amount) — net loss for the six months ended June 30, 2025
• $32.4 million (dollar_amount) — net income for the six months ended June 30, 2024
• $387.8 million (dollar_amount) — total operating revenues for the three months ended June 30, 2025
• $407.3 million (dollar_amount) — total operating revenues for the three months ended June 30, 2024
• $19.5 million (dollar_amount) — decrease in electric sales to member systems
• $7.3 billion (dollar_amount) — total assets as of June 30, 2025
• $5.9 billion (dollar_amount) — total liabilities as of June 30, 2025

FAQ

Risk Factors

• Challenging Regulatory Environment [high — regulatory]: The company faces a challenging regulatory environment, as evidenced by the provision for rate refunds. This indicates potential for regulatory actions that could impact revenue or require adjustments to pricing, affecting financial stability.
• Fluctuating Energy Prices [medium — market]: Tri-State is exposed to risks associated with fluctuating energy prices. This volatility can impact purchased power costs, a key driver of operating expenses, and affect the predictability of revenue from sales.
• Increased Operating Expenses [medium — financial]: Operating expenses increased to $397.9 million in Q2 2025 from $396.4 million in Q2 2024, driven by higher purchased power costs. This trend puts pressure on margins and profitability.
• Rate Stabilization Efforts [medium — financial]: The company's efforts to stabilize rates are impacted by regulatory pressures and cost fluctuations. This suggests a delicate balance between operational costs, member needs, and regulatory compliance.

Industry Context

Tri-State operates in the electric services sector, a highly regulated industry characterized by significant capital investments in generation and transmission infrastructure. The industry is undergoing a transition towards cleaner energy sources, facing challenges from fluctuating fuel costs, evolving environmental regulations, and the need to maintain grid reliability and affordability for its member cooperatives.

Regulatory Implications

The company's operations are heavily influenced by regulatory bodies. The mention of a 'challenging regulatory environment' and 'provision for rate refunds' suggests potential scrutiny over pricing, cost recovery, and compliance with evolving energy policies, which could impact future earnings and operational flexibility.

What Investors Should Do

1. Monitor Purchased Power Costs
2. Analyze Regulatory Developments
3. Evaluate Revenue Trends

Key Dates

• 2025-06-30: End of Second Quarter and Six-Month Period — Reporting period for the 10-Q filing, showing a net loss of $10.1 million for the quarter and $1.5 million for the six months.
• 2025-08-08: Filing Date of 10-Q — Indicates the official release of the company's financial performance for the period ending June 30, 2025.

Glossary

Provision for Rate Refunds

An amount set aside by a utility company to cover potential refunds to customers, often due to regulatory decisions or over-collection of charges. (Indicates potential regulatory challenges and financial adjustments Tri-State may need to make.)

Purchased Power Costs

The expenses incurred by a utility for buying electricity from other power generators or wholesale markets. (A significant driver of operating expenses, as highlighted by the increase in Q2 2025.)

Member Systems

Entities that are part of Tri-State's cooperative structure, typically local electric distribution cooperatives that purchase power from Tri-State. (Sales to these systems are a primary source of revenue, and a decrease here impacts overall financial performance.)

Year-Over-Year Comparison

Compared to the prior year, Tri-State has experienced a significant downturn in financial performance. Q2 2025 reported a net loss of $10.1 million, a stark contrast to the $10.9 million net income in Q2 2024. Similarly, the first six months of 2025 resulted in a $1.5 million net loss, down from a $32.4 million net income in the same period of 2024. Operating revenues declined by 4.8% in Q2 2025 due to lower sales to member systems, while operating expenses rose slightly, driven by increased purchased power costs, exacerbating the profitability decline.

Filing Documents

• tris-20250630.htm (10-Q) — 1180KB
• tris-2025630ex4110_supp48.htm (EX-4.1) — 178KB
• tris-20250630xexx311x10xq.htm (EX-31.1) — 10KB
• tris-20250630xexx312x10xq.htm (EX-31.2) — 10KB
• tris-20250630xexx321x10xq.htm (EX-32.1) — 5KB
• tris-20250630xexx322x10xq.htm (EX-32.2) — 5KB
• tris-20250630xex95x10xq.htm (EX-95) — 57KB
• 0001637880-25-000038.txt ( ) — 7839KB
• tris-20250630.xsd (EX-101.SCH) — 75KB
• tris-20250630_cal.xml (EX-101.CAL) — 126KB
• tris-20250630_def.xml (EX-101.DEF) — 275KB
• tris-20250630_lab.xml (EX-101.LAB) — 767KB
• tris-20250630_pre.xml (EX-101.PRE) — 522KB
• tris-20250630_htm.xml (XML) — 1026KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Statements of Financial Position (Unaudited) 1 Consolidated Statements of Operations (Unaudited) 2 Consolidated Statements of Comprehensive Income (Unaudited) 3 Consolidated Statements of Equity (Unaudited) 4 Consolidated Statements of Cash Flows (Unaudited) 5 Notes to Unaudited Consolidated Financial Statements 6 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 37 Item 4.

Controls and Procedures

Controls and Procedures 37

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 37 Item 4. Mine Safety Disclosures 37 Item 6. Exhibits 38

SIGNATURES

SIGNATURES i Table of Contents GLOSSARY The following abbreviations and acronyms used in this quarterly report on Form 10-Q are defined below: Abbreviations or Acronyms Definition 2022 Revolving Credit Agreement Amended and Restated Credit Agreement, dated as of April 25, 2022, between us and CFC, as administrative agent 2023 ERP our 2023 Electric Resource Plan filed with the COPUC ASC Accounting Standards Codification ASU Accounting Standards Update Basin Basin Electric Power Cooperative Board Board of Directors BYOR Bring Your Own Resource CFC National Rural Utilities Cooperative Finance Corporation CoBank CoBank, ACB Colowyo Coal Colowyo Coal Company L.P., a subsidiary of ours COPUC Colorado Public Utilities Commission D.C. Circuit Court of Appeals United States Court of Appeals for the District of Columbia Circuit DSR Debt Service Ratio (as defined in our Master Indenture) ECR Equity to Capitalization Ratio (as defined in our Master Indenture) EPA Environmental Protection Agency FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission Fitch Fitch Ratings Inc. FPA Federal Power Act, as amended GAAP Accounting principles generally accepted in the United States IRA Inflation Reduction Act of 2022 kWh kilowatt hour LPEA La Plata Electric Association, Inc. Master Indenture Master First Mortgage Indenture, Deed of Trust and Security Agreement, dated effective as of December 15, 1999, between us and U.S. Bank Trust Company, National Association, as successor trustee MBPP Missouri Basin Power Project Members our Utility Members and Non-Utility Members MPEI Mountain Parks Electric, Inc. Moody's Moody's Investors Services, Inc. MW megawatt MWh megawatt hour Non-Utility Members our non-utility members NRPPD Northwest Rural Public Power District New ERA Program USDA's Empowering Rural America Program OATT Open Access Transmission Tariff Renewable Revolving Credit Agreement Renewable Revolving Credit Agr

FORWARD-LOOKING STATEMENTS

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, future resources and generation portfolio, future use of deferred revenue, business strategy, member withdraws and development, construction, operation, or closure 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. iv Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Tri-State Generation and Transmission Association, Inc. Consolidated Statements of Financial Position (Unaudited) (dollars in thousands) June 30, 2025 December 31, 2024 ASSETS Property, plant and equipment Electric plant In service $ 5,813,087 $ 5,701,182 Construction work in progress 424,029 368,473 Total electric plant 6,237,116 6,069,655 Less allowances for depreciation and amortization ( 2,901,720 ) ( 2,838,877 ) Net electric plant 3,335,396 3,230,778 Other plant 958,438 958,993 Less allowances for depreciation, amortization and depletion ( 822,756 ) ( 770,270 ) Net other plant 135,682 188,723 Total property, plant and equipment 3,471,078 3,419,501 Other assets and investments Investments in other associations 190,802 192,680 Investments in and advances to coal mines 1,726 1,711 Restricted cash and investments 2,307 3,436 Intangible assets, net 33,766 39,556 Other noncurrent assets 14,119 18,407 Total other assets and investments 242,720 255,790 Current assets Cash and cash equivalents 181,507 229,357 Restricted cash and investments 1,266 744 Deposits and advances 35,080 38,180 Accounts receivable—Utility Members 95,565 85,450 Other accounts receivable 24,317 28,727 Coal inventory 107,256 95,511 Materials and supplies 116,720 110,775 Total current assets 561,711 588,744 Deferred charges Regulatory assets 801,455 816,541 Other 60,699 51,735 Total deferred charges 862,154 868,276 Total assets $ 5,137,663 $ 5,132,311 EQUITY AND LIABILITIES Capitalization Patronage capital equity $ 898,371 $ 912,922 Accumulated other comprehensive loss 1,206 965 Noncontrolling interest 130,330 130,498 Total equity 1,029,907 1,044,385 Long-term debt 2,870,023 2,857,346 Total capitalization 3,899,930 3,901,731 Current liabilities Utility Member advances 5,024 5,128 Accounts payable 172,758 158,176 Short-term borrowings 44,754 100 Accrued expenses 28,879 42,705 Current asset retirement and environmenta

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