ODEC's Net Margin Soars 215% Amid Rising Energy Costs

TL;DR

**ODEC's massive net margin surge proves their cost management strategy is paying off, making them a solid bet in the utility space.**

AI Summary

Old Dominion Electric Cooperative (ODEC) reported a significant increase in net margin for the nine months ended September 30, 2025, reaching $28.41 million, up from $9.01 million in the prior year, representing a 215% increase. Operating revenues also saw a substantial rise to $972.20 million for the nine-month period in 2025, compared to $839.87 million in 2024, an increase of 15.75%. This revenue growth was driven by higher fuel and purchased power expenses, which increased by $55.97 million (36.9%) and $121.79 million (44.7%) respectively, for the nine months ended September 30, 2025. The cooperative's total assets decreased slightly to $2.15 billion as of September 30, 2025, from $2.17 billion at December 31, 2024. ODEC reduced its revolving credit facility borrowings to $50.0 million from $65.0 million, indicating improved liquidity. Key risks include exposure to market price risk for purchased power and fuel, managed through derivative instruments, and credit-related risks from hedging counterparties. The strategic outlook focuses on managing energy costs and maintaining financial stability for its member distribution cooperatives.

Why It Matters

This significant jump in ODEC's net margin and operating revenues signals robust financial health for the cooperative, which directly impacts its eleven Class A member distribution cooperatives in Virginia, Delaware, and Maryland. For investors in the broader utility sector, ODEC's ability to manage rising fuel and purchased power costs while increasing profitability offers a positive case study in a volatile energy market. Employees benefit from a stable and growing organization, while customers of member cooperatives could see more predictable rates due to ODEC's improved financial position. In a competitive landscape, ODEC's strong performance underscores the resilience of cooperative models in the energy sector.

Risk Assessment

Risk Level: medium — The risk level is medium due to ODEC's significant exposure to market price risk for purchased power and fuel, as stated in Note 3, and the inherent credit-related risks from hedging counterparties. While ODEC uses derivative instruments to manage this exposure, a default by a counterparty could force them to purchase energy at higher market prices, impacting financial stability.

Analyst Insight

Investors should consider ODEC's strong financial performance, particularly the 215% increase in net margin, as a positive indicator of operational efficiency and effective cost management. Monitor future filings for sustained profitability and any shifts in energy market conditions or regulatory changes that could impact their derivative strategies.

Financial Highlights

revenue

$972.20M

total Assets

$2.15B

net Income

$28.41M

revenue Growth

+15.75%

Revenue Breakdown

Key Numbers

• $28.41M — Net Margin attributable to ODEC (Increased by 215% for the nine months ended September 30, 2025, from $9.01 million in 2024.)
• $972.20M — Operating Revenues (Increased by 15.75% for the nine months ended September 30, 2025, from $839.87 million in 2024.)
• $207.67M — Fuel Operating Expenses (Increased by $55.97 million (36.9%) for the nine months ended September 30, 2025, from $151.71 million in 2024.)
• $394.32M — Purchased Power Operating Expenses (Increased by $121.79 million (44.7%) for the nine months ended September 30, 2025, from $272.53 million in 2024.)
• $50.0M — Revolving Credit Facility Borrowings (Decreased from $65.0 million at December 31, 2024, indicating improved liquidity.)
• $332.46M — Nuclear Decommissioning Trust (Increased from $292.64 million at December 31, 2024, reflecting growth in restricted investments.)
• $102.54M — Natural Gas Futures Contracts (MMBTU) (Quantity of outstanding natural gas futures contracts as of September 30, 2025.)
• $8.35M — Purchased Power - Financial Transmission Rights (MWh) (Quantity of outstanding financial transmission rights as of September 30, 2025.)

Key Players & Entities

• OLD DOMINION ELECTRIC COOPERATIVE (company) — registrant
• TEC Trading, Inc. (company) — consolidated entity and Class B member
• FERC (regulator) — Federal Energy Regulatory Commission, which accepted ODEC's formula rate
• North Anna Nuclear Power Station (company) — source of asset retirement obligations for nuclear decommissioning trust
• Alliance for Cooperative Energy Services Power Marketing, LLC (company) — values Level 2 and Level 3 derivatives for ODEC
• New York Mercantile Exchange (company) — index for Level 1 natural gas futures contracts
• Virginia (person) — state of incorporation and where Class A members operate
• Delaware (person) — state where Class A members operate
• Maryland (person) — state where Class A members operate

FAQ

Risk Factors

• Market Price Risk for Purchased Power and Fuel [medium — market]: ODEC is exposed to fluctuations in the market prices of purchased power and fuel. These risks are managed through the use of derivative instruments, which themselves carry counterparty credit risk.
• Counterparty Credit Risk [medium — financial]: The cooperative faces credit-related risks from its hedging counterparties. A default by a counterparty could lead to financial losses for ODEC.
• Cybersecurity Threats [medium — operational]: Disruptions due to cybersecurity threats or incidents are a stated risk. This could impact operations and financial condition.
• Regulatory and Legal Actions [medium — regulatory]: Changes in federal and state legislative, regulatory, or executive actions, as well as legal and administrative proceedings, pose risks. Compliance with environmental regulations is also a factor.
• Commodity Cost and Availability [medium — market]: The cost and availability of commodities used in the industry can impact ODEC's operations and financial performance.
• Unanticipated Operating Expenses [low — operational]: Unforeseen increases in operating expenses, including supply chain and tariff matters, can affect financial results.

Industry Context

Old Dominion Electric Cooperative operates within the regulated utility sector, specifically as a power supply cooperative serving member distribution cooperatives. The industry is characterized by significant capital investment in generation and transmission infrastructure, and is increasingly influenced by evolving energy policies, fuel price volatility, and the transition towards cleaner energy sources. Cooperatives like ODEC focus on reliable and cost-effective energy supply for their members.

Regulatory Implications

ODEC is subject to federal and state regulations governing utility operations, including environmental standards and energy market rules. Changes in these regulations, such as those related to emissions or renewable energy mandates, could impact operating costs and strategic decisions. Compliance with these evolving regulatory landscapes is a continuous challenge.

What Investors Should Do

1. Monitor fuel and purchased power cost trends.
2. Assess the effectiveness of ODEC's hedging strategies.
3. Evaluate ODEC's liquidity position.

Glossary

Patronage Capital

A form of equity unique to cooperatives, representing the members' ownership interest and reflecting retained earnings allocated to members. (ODEC's results of operations are presented in the context of patronage capital, indicating its cooperative structure.)

Derivative Instruments

Financial contracts whose value is derived from an underlying asset, group of assets, or benchmark. Used for hedging price risks. (ODEC uses these to manage market price risk for purchased power and fuel, but they introduce counterparty credit risk.)

Revolving Credit Facility

A type of credit line that allows a company to borrow, repay, and re-borrow funds up to a certain limit over a specified period. (ODEC reduced its borrowings on this facility, indicating improved liquidity.)

Financial Transmission Rights (FTRs)

Financial instruments used in electricity markets to hedge against congestion costs on transmission lines. (ODEC holds FTRs, indicating a strategy to manage transmission cost volatility.)

Natural Gas Futures Contracts

Agreements to buy or sell a specific quantity of natural gas at a predetermined price on a future date. (ODEC utilizes these contracts to manage natural gas price volatility.)

Class A and Class B Members

Different categories of member ownership in a cooperative, often with distinct rights and responsibilities. (ODEC is owned by eleven Class A member distribution cooperatives and one Class B member, TEC.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, ODEC reported a substantial 215% increase in net margin to $28.41 million, compared to $9.01 million in the prior year. Operating revenues also grew by 15.75% to $972.20 million, primarily due to higher fuel and purchased power expenses, which rose by 36.9% and 44.7% respectively. Total assets saw a slight decrease to $2.15 billion from $2.17 billion at year-end 2024, while revolving credit facility borrowings were reduced, indicating a strengthening liquidity position.

Filing Documents

• ck0000885568-20250930.htm (10-Q) — 1962KB
• ck0000885568-ex31_1.htm (EX-31.1) — 11KB
• ck0000885568-ex31_2.htm (EX-31.2) — 12KB
• ck0000885568-ex32_1.htm (EX-32.1) — 15KB
• ck0000885568-ex32_2.htm (EX-32.2) — 15KB
• 0001193125-25-276681.txt ( ) — 6733KB
• ck0000885568-20250930.xsd (EX-101.SCH) — 553KB
• ck0000885568-20250930_htm.xml (XML) — 1545KB

Financial Information

PART I. Financial Information

Financial Statements

Item 1. Financial Statements Condensed Consolidated Balance Sheets – September 30, 2025 (unaudited) and December 31, 2024 4 Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital (unaudited) – Three and Nine Months Ended September 30, 2025 and 2024 5 Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, 2025 and 2024 6 Notes to Condensed Consolidated Financial Statements 7

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 23

Controls and Procedures

Item 4. Controls and Procedures 23

Other Information

PART II. Other Information 24

Legal Proceedings

Item 1. Legal Proceedings 24

Risk Factors

Item 1A. Risk Factors 24

Other Information

Item 5. Other Information 24

Exhibits

Item 6. Exhibits 25 3 OLD DOMINION ELECTRIC COOPERATIVE PART 1. FINANCI AL INFORMATION

FINANC IAL STATEMENTS

ITEM 1. FINANC IAL STATEMENTS CONDENSED CONSOLIDA TED BALANCE SHEETS September 30, 2025 December 31, 2024 (in thousands) (unaudited) ASSETS: Electric Plant: Property, plant, and equipment $ 2,604,331 $ 2,590,904 Less accumulated depreciation ( 1,275,715 ) ( 1,227,806 ) Net Property, plant, and equipment 1,328,616 1,363,098 Nuclear fuel, at amortized cost 14,045 13,554 Construction work in progress 115,876 92,499 Net Electric Plant 1,458,537 1,469,151 Investments: Nuclear decommissioning trust 332,457 292,641 Unrestricted investments and other 2,202 2,249 Total Investments 334,659 294,890 Current Assets: Cash and cash equivalents 71,460 40,689 Accounts receivable 4,138 4,557 Accounts receivable–members 123,705 118,202 Fuel, materials, and supplies 106,861 131,218 Prepayments and other 13,967 21,509 Total Current Assets 320,131 316,175 Deferred Charges and Other Assets: Regulatory assets 10,805 38,975 Other assets 21,677 45,851 Total Deferred Charges and Other Assets 32,482 84,826 Total Assets $ 2,145,809 $ 2,165,042 CAPITALIZATION AND LIABILITIES: Capitalization: Patronage capital $ 528,812 $ 500,407 Non-controlling interest 6,894 6,774 Total Patronage capital and Non-controlling interest 535,706 507,181 Long-term debt 875,162 874,893 Revolving credit facility 50,000 65,000 Total Long-term debt and Revolving credit facility 925,162 939,893 Total Capitalization 1,460,868 1,447,074 Current Liabilities: Long-term debt due within one year 49,041 49,041 Accounts payable 80,307 90,231 Accounts payable–members 51,262 67,352 Accrued expenses 19,131 5,392 Deferred energy 61,934 100,806 Total Current Liabilities 261,675 312,822 Deferred Credits and Other Liabilities: Asset retirement obligations 215,060 209,872 Regulatory liabilities 2

MANAGEMENT'S D ISCUSSION AND ANALYSIS

ITEM 2. MANAGEMENT'S D ISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Caution Regarding Forward-looking Statements Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements regarding matters that could have an impact on our business, financial condition, and future operations. These statements, based on our expectations and estimates, are not guarantees of future performance and are subject to risks, uncertainties, and other factors. These risks, uncertainties, and other factors include, but are not limited to: general business conditions; demand for energy; federal and state legislative, regulatory or executive actions, and legal and administrative proceedings; changes in and compliance with laws and regulations, including with respect to environmental matters; general credit and capital market conditions; weather conditions; the cost and availability of commodities used in our industry; disruption due to cybersecurity threats or incidents; and unanticipated changes in operating expenses, including supply chain and tariff matters, and capital expenditures. Our actual results may vary materially from those discussed in the forward-looking statements as a result of these and other factors. Any forward-looking statement speaks only as of the date on which the statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which the statement is made even if new information becomes available or other events occur in the future. Critical Accounting Policies As of September 30, 2025, there have been no significant changes in our critical accounting policies as disclosed in our 2024 Annual Report on Form 10-K. These policies include the accounting for regulated operations, deferred energy, margin stabilization, accounting for asset retirement and environmental obligations, and accoun

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