Johnson City, Texas
Texas-based Pedernales Electric Cooperative enjoys the distinction of being the largest electric distribution co-op in the United States. It serves over 275,000 members spread among 24 counties in the Texas hill country west of Austin and is constantly adding to its 21,000 miles of power lines.
Keeping up with ongoing population growth and the associated demand on their electric distribution system is the single biggest challenge faced by Chief Executive Officer John Hewa and his board of directors.
“We need to make sure that we’re growing in a wise and economical manner,” Hewa says. “It’s one thing to take on growth and be able to manage it safely and securely. It’s another thing to grow in a way that maximizes economies of scale and benefits the entire cooperative. That is one of our top priorities here at PEC.”
Pedernales could need as much as a half billion dollars for its capital investments over the next five years, and Hewa wanted a dependable lender that could provide reliable and efficient financing. The co-op’s relationship with CoBank began in March 2016 with the establishment of a $200 million revolving line of credit, which was followed by an additional term loan commitment of $100 million in November.
“We’re thrilled about our relationship with CoBank,” says Hewa. “We know that today and into the future our capital needs are substantial, and we want to know we have the right partners at the table, to make sure we are as economical as we can be for the membership.”
One important initiative for Pedernales is an on-bill financing program for solar energy, allowing members to pay for renewable energy enhancements through a surcharge on their monthly electric bills. “We want to benefit members who want to make that investment,” Hewa says. “At the same time, we want to make sure we’re not subsidizing those investments with other members’ dollars.”
Pedernales and CoBank’s Knowledge Exchange Division are even collaborating on a research project, a case study on Pedernales members’ solar initiative. “We’re very proud of the fact that our relationship with Pedernales goes far beyond financing,” says Rob West, executive vice president of infrastructure banking at CoBank. “We have established a true partnership with them.”