Hooker, OK, October 10, 2005 — Tri-County Electric Cooperative has signed a definitive agreement to purchase electric service territory from Xcel Energy, the two companies announced October 6, 2005. Tri-County will acquire service territory in Beaver, Boise City, Goodwell, Guymon, Keyes and Texhoma, OK, Elkhart, KS, and Texhoma, TX. The transaction is expected to close in 2006 upon completion of all regulatory approvals.
Once the transaction is complete, current Xcel Energy customers in the acquired service territories will become member-owners of Tri-County and have the benefits of cooperative ownership, including voting rights, board representation and the opportunity for patronage capital refunds, the margins of a cooperative that are returned to members over time. Under the proposed acquisition, base rates for both Tri-County and Xcel Energy customers are expected to remain unchanged for the foreseeable future.
“Tri-County has served the Oklahoma panhandle for more than 60 years, and we are excited to welcome these communities into our cooperative,” said Jack Perkins, CEO of Tri-County Electric.
According to Perkins, affected Xcel Energy employees will be offered positions within Tri-County, subject to the cooperative’s normal hiring practices. No layoffs are anticipated and most current and new employees will continue to perform their normal day-to-day jobs uninterrupted.
“We are proud to have served these communities for so many years, and we are confident that Tri-County will continue to offer quality service to customers in the area. This change in ownership will be largely transparent to the customer,” said Dick Kelly, president and CEO of Xcel Energy.
The combined utility will serve 22,000 customer accounts, roughly doubling the size of Tri-County. The acquisition also will improve the cooperative’s efficiency through increased density of members on the system. Today, Tri-County serves an average of 2.6 meters per mile; the Oklahoma territory it will acquire serves an average of 29.1 meters per mile. This higher density will provide the cooperative with increased economies of scale in operations expense, purchasing power and supplies.
Moreover, the current Tri-County and affected Xcel Energy service territories are contiguous. The communities served by Xcel Energy are surrounded by Tri-County territory. As a result, the cooperative will incur little marginal cost to serve the new territory.
The purchase will be financed by a loan to Tri-County from the National Rural Utilities Cooperative Finance Corp. (CFC), a not-for-profit finance cooperative that serves electric cooperatives and their subsidiaries. The CFC, which has $19 billion in loan assets, regularly finances cooperative acquisitions such as this. The new revenue generated from the additional customer base will repay the loan.