10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-50039

OLD DOMINION ELECTRIC COOPERATIVE

(Exact name of registrant as specified in its charter)

VIRGINIA	23-7048405
(State or other jurisdiction of incorporation or organization)	(I.R.S.  employer identification no.)

4201 Dominion Boulevard, Glen Allen, Virginia	23060
(Address of principal executive offices)	(Zip code)

(804) 747-0592

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Larger accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act: NONE

The Registrant is a membership corporation and has no authorized or outstanding equity securities.

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:

Abbreviation or Acronym	Definition
ACES	Alliance for Cooperative Energy Services Power Marketing, LLC
Alstom	Alstom Power, Inc.
ASU	Accounting Standards Update
Clover	Clover Power Station
CO2	Carbon dioxide
EPC	Engineering, procurement, and construction
EPRS	Essential Power Rock Springs, LLC
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
GAAP	Accounting principles generally accepted in the United States
Louisa	Louisa Power Station
Marsh Run	Marsh Run Power Station
Mitsubishi	Mitsubishi Hitachi Power Systems Americas, Inc.
MW	Megawatt(s)
MWh	Megawatt hour(s)
NRECA	National Rural Electric Cooperative Association
North Anna	North Anna Nuclear Power Station
ODEC, We, Our, Us	Old Dominion Electric Cooperative
PJM	PJM Interconnection, LLC
RTO	Regional transmission organization
TEC	TEC Trading, Inc.
Virginia Power	Virginia Electric and Power Company
Wildcat Point	Wildcat Point Generation Facility
WOPC	White Oak Power Constructors
XBRL	Extensible Business Reporting Language

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OLD DOMINION ELECTRIC COOPERATIVE

INDEX

	Page Number
PART I.  Financial Information
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets – June 30, 2020 (unaudited) and December 31, 2019	4
Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital (unaudited) – Three and Six Months Ended June 30, 2020 and 2019	5
Condensed Consolidated Statements of Cash Flows (unaudited) – Six Months Ended June 30, 2020 and 2019	6
Notes to Condensed Consolidated Financial Statements	7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.  Controls and Procedures	25
PART II.  Other Information	26
Item 1.  Legal Proceedings	26
Item 1A.  Risk Factors	26
Item 5.  Other Information	27
Item 6.  Exhibits	28

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OLD DOMINION ELECTRIC COOPERATIVE

PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2020			December 31, 2019
	(in thousands)
	(unaudited)
ASSETS:
Electric Plant:
Property, plant, and equipment	$	2,522,395		$	2,531,986
Less accumulated depreciation		(943,892	)		(927,065	)
Net Property, plant, and equipment		1,578,503			1,604,921
Nuclear fuel, at amortized cost		14,941			20,705
Construction work in progress		42,132			31,462
Net Electric Plant		1,635,576			1,657,088
Investments:
Nuclear decommissioning trust		204,991			211,108
Unrestricted investments and other		2,506			5,380
Total Investments		207,497			216,488
Current Assets:
Cash and cash equivalents		42,914			3,469
Restricted cash and cash equivalents		24,349			24,230
Accounts receivable		11,638			12,422
Accounts receivable–members		83,734			101,185
Fuel, materials, and supplies		69,703			62,083
Deferred energy		20,591			3,548
Prepayments and other		3,596			4,702
Total Current Assets		256,525			211,639
Deferred Charges and Other Assets:
Regulatory assets		42,702			57,742
Other assets		16,897			26,287
Total Deferred Charges and Other Assets		59,599			84,029
Total Assets	$	2,159,197		$	2,169,244
CAPITALIZATION AND LIABILITIES:
Capitalization:
Patronage capital	$	447,549		$	441,311
Non-controlling interest		5,862			5,846
Total Patronage capital and Non-controlling interest		453,411			447,157
Long-term debt		1,118,114			1,117,867
Revolving credit facility		100,000			67,200
Total Long-term debt and Revolving credit facility		1,218,114			1,185,067
Total Capitalization		1,671,525			1,632,224
Current Liabilities:
Long-term debt due within one year		40,792			40,792
Accounts payable		75,948			147,916
Accounts payable–members		68,435			26,804
Accrued expenses		7,442			5,850
Total Current Liabilities		192,617			221,362
Deferred Credits and Other Liabilities:
Asset retirement obligations		176,400			173,669
Regulatory liabilities		108,372			117,483
Other liabilities		10,283			24,506
Total Deferred Credits and Other Liabilities		295,055			315,658
Commitments and Contingencies		—			—
Total Capitalization and Liabilities	$	2,159,197		$	2,169,244

The accompanying notes are an integral part of the condensed consolidated financial statements.

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OLD DOMINION ELECTRIC COOPERATIVE

CONDENSED CONSOLIDATED STATEMENTS OF REVENUES,

EXPENSES, AND PATRONAGE CAPITAL (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Operating Revenues	$	189,562		$	214,985		$	398,308		$	455,764
Operating Expenses:
Fuel		22,806			30,307			65,384			92,921
Purchased power		60,145			68,783			153,035			154,977
Transmission		33,006			41,851			66,922			83,369
Deferred energy		8,092			12,439			(17,043	)		2,452
Operations and maintenance		16,292			17,440			30,034			35,917
Administrative and general		10,308			14,680			22,164			27,037
Depreciation and amortization		17,502			17,193			35,024			34,332
Amortization of regulatory asset/(liability), net		(61	)		(7,819	)		(851	)		(17,179	)
Accretion of asset retirement obligations		1,365			1,384			2,730			2,768
Taxes, other than income taxes		2,427			2,389			4,849			4,835
Total Operating Expenses		171,882			198,647			362,248			421,429
Operating Margin		17,680			16,338			36,060			34,335
Other income (expense), net		(3	)		(35	)		(60	)		(2	)
Investment income		902			2,838			1,252			4,011
Interest charges, net		(15,455	)		(15,902	)		(30,992	)		(31,871	)
Income taxes		(3	)		(10	)		(6	)		(15	)
Net Margin including Non-controlling interest		3,121			3,229			6,254			6,458
Non-controlling interest		(7	)		(21	)		(16	)		(38	)
Net Margin attributable to ODEC		3,114			3,208			6,238			6,420
Patronage Capital - Beginning of Period		444,435			431,875			441,311			428,663
Patronage Capital - End of Period	$	447,549		$	435,083		$	447,549		$	435,083

The accompanying notes are an integral part of the condensed consolidated financial statements.

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OLD DOMINION ELECTRIC COOPERATIVE

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
	2020			2019
	(in thousands)
Operating Activities:
Net Margin including Non-controlling interest	$	6,254		$	6,458
Adjustments to reconcile net margin to net cash provided by operating activities:
Depreciation and amortization		35,024			34,332
Other non-cash charges		8,743			7,693
Change in current assets		11,721			(18,443	)
Change in deferred energy		(17,043	)		2,452
Change in current liabilities		13,943			(9,334	)
Change in regulatory assets and liabilities		12,927			(28,842	)
Change in other assets and other liabilities		(4,594	)		3,266
Net Cash Provided by/(Used for) Operating Activities		66,975			(2,418	)
Investing Activities:
Purchases of held to maturity securities		—			(2,875	)
Proceeds from sale of held to maturity securities		2,875			2,838
Purchases of available for sale securities		—			(56,703	)
Proceeds from sale of available for sale securities		—			56,666
Increase in other investments		(886	)		(3,013	)
Electric plant additions		(61,965	)		(21,428	)
Net Cash Used for Investing Activities		(59,976	)		(24,515	)
Financing Activities:
Debt issuance costs		(235	)		(257	)
Draws on revolving credit facility		349,225			70,000
Repayments on revolving credit facility		(316,425	)		(40,750	)
Net Cash Provided by Financing Activities		32,565			28,993
Net Change in Cash and Cash Equivalents and Restricted Cash and Cash Equivalents		39,564			2,060
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents - Beginning of Period		27,699			22,978
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents - End of Period	$	67,263		$	25,038

The accompanying notes are an integral part of the condensed consolidated financial statements.

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OLD DOMINION ELECTRIC COOPERATIVE

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our consolidated financial position as of June 30, 2020, our consolidated results of operations for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019.  The consolidated results of operations for the three and six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the entire year.  These financial statements should be read in conjunction with the financial statements and notes thereto included in our 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The accompanying financial statements reflect the consolidated accounts of Old Dominion Electric Cooperative and TEC.  We are a not-for-profit wholesale power supply cooperative, incorporated under the laws of the Commonwealth of Virginia in 1948.  We have two classes of members.  Our eleven Class A members are customer-owned electric distribution cooperatives engaged in the retail sale of power to member customers located in Virginia, Delaware, and Maryland.  Our sole Class B member is TEC, a taxable corporation owned by our member distribution cooperatives.  Our board of directors is composed of two representatives from each of the member distribution cooperatives and one representative from TEC. In accordance with Consolidation Accounting, TEC is considered a variable interest entity for which we are the primary beneficiary.  We have eliminated all intercompany balances and transactions in consolidation.  The assets and liabilities and non-controlling interest of TEC are recorded at carrying value and the consolidated assets were $5.9 million and $5.8 million as of June 30, 2020 and December 31, 2019, respectively.  The income taxes reported on our Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital relate to the tax provision for TEC.  As TEC is wholly-owned by our Class A members, its equity is presented as a non-controlling interest in our consolidated financial statements.

Our rates are set periodically by a formula that was accepted for filing by FERC, but are not regulated by the public service commissions of the states in which our member distribution cooperatives operate.  

We comply with the Uniform System of Accounts as prescribed by FERC.  In conformity with GAAP, the accounting policies and practices applied by us in the determination of rates are also employed for financial reporting purposes.

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported therein.  Actual results could differ from those estimates.  The impact that the COVID-19 pandemic will have on our consolidated results of operations, financial condition, and cash flows is uncertain.  We continue to actively manage our business to respond to this health crisis and will continue to evaluate the nature and extent of any impact.

We did not have any other comprehensive income for the periods presented.

2. Fair Value Measurements

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3).  In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy.  The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy.  Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

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The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: 

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2020		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	67,890	$	67,890	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		137,101		—		—		—
Unrestricted investments and other (3)		122		—		122		—
Derivatives - gas and power (4)		993		—		925		68
Total Financial Assets	$	206,106	$	67,890	$	1,047	$	68
Derivatives - gas and power (4)	$	9,766	$	8,255	$	1,511	$	—
Total Financial Liabilities	$	9,766	$	8,255	$	1,511	$	—

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December31,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	64,504	$	64,504	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		146,604		—		—		—
Unrestricted investments and other (3)		126		—		126		—
Derivatives - gas and power (4)		1,013		—		—		1,013
Total Financial Assets	$	212,247	$	64,504	$	126	$	1,013
Derivatives - gas and power (4)	$	24,125	$	17,109	$	7,016	$	—
Total Financial Liabilities	$	24,125	$	17,109	$	7,016	$	—

⁽¹⁾ For additional information about our nuclear decommissioning trust, see Note 4—Investments below.

⁽²⁾ Nuclear decommissioning trust includes investments measured at net asset value per share (or its equivalent) as a practical expedient and these investments have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Condensed Consolidated Balance Sheet.

⁽³⁾ Unrestricted investments and other includes investments that are related to equity securities.

⁽⁴⁾ Derivatives - gas and power represent natural gas futures contracts (Level 1 and Level 2) and financial transmission rights (Level 3).  Level 1 are indexed against NYMEX.  Level 2 are valued by ACES using observable market inputs for similar transactions.  Level 3 are valued by ACES using unobservable market inputs, including situations where there is little market activity.  Sensitivity in the market price of financial transmission rights could impact the fair value.  For additional information about our derivative financial instruments, see Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

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3. Derivatives and Hedging

We are exposed to market price risk by purchasing power to supply the power requirements of our member distribution cooperatives that are not met by our owned generation.  In addition, the purchase of fuel to operate our generating facilities also exposes us to market price risk.  To manage this exposure, we utilize derivative instruments.  See Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

Changes in the fair value of our derivative instruments accounted for at fair value are recorded as a regulatory asset or regulatory liability.  The change in these accounts is included in the operating activities section of our Condensed Consolidated Statements of Cash Flows.

Outstanding derivative instruments, excluding contracts accounted for as normal purchase/normal sale, were as follows:

		Quantity
		As of June 30,		As of December 31,
Commodity	Unit of Measure	2020		2019
Natural gas	MMBTU		65,990,000		73,560,000
Purchased power - financial transmission rights	MWh		6,087,751		5,771,291

The fair value of our derivative instruments, excluding contracts accounted for as normal purchase/normal sale, was as follows:

		Fair Value
		As of June 30,		As of December 31,
	Balance Sheet Location	2020		2019
		(in thousands)
Derivatives in an asset position:
Natural gas futures contracts	Other assets	$	925	$	—
Financial transmission rights	Other assets		68		1,013
Total derivatives in an asset position		$	993	$	1,013
Derivatives in a liability position:
Natural gas futures contracts	Other liabilities	$	9,766	$	24,125
Total derivatives in a liability position		$	9,766	$	24,125

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The Effect of Derivative Instruments on the Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital for the Three and Six Months Ended June 30, 2020 and 2019

	Amount of Gain						Location of	Amount of Gain (Loss) Reclassified
	(Loss) Recognized						Gain (Loss)	from Regulatory Asset/Liability
	in Regulatory						Reclassified	into Income for the
Derivatives	Asset/Liability for						from Regulatory	Three Months						Six Months
AccountedforUtilizing	Derivatives as of						Asset/Liability	Ended						Ended
Regulatory Accounting	June 30,						into Income	June 30,						June 30,
	2020			2019				2020			2019			2020			2019
	(in thousands)							(in thousands)
Naturalgasfuturescontracts	$	(12,638	)	$	(12,450	)	Fuel	$	(5,726	)	$	(2,104	)	$	(27,192	)	$	(9,906	)
Purchased power		68			704		Purchased power		(898	)		(2,037	)		(4,482	)		(5,402	)
Total	$	(12,570	)	$	(11,746	)		$	(6,624	)	$	(4,141	)	$	(31,674	)	$	(15,308	)

Our hedging activities expose us to credit-related risks.  We use hedging instruments, including forwards, futures, financial transmission rights, and options, to mitigate our power market price risks.  Because we rely substantially on the use of hedging instruments, we are exposed to the risk that counterparties will default in performance of their obligations to us.  Although we assess the creditworthiness of counterparties and other credit issues related to these hedging instruments, and we may require our counterparties to post collateral with us, defaults may still occur.  Defaults may take the form of failure to physically deliver purchased energy or failure to pay.  If a default occurs, we may be forced to enter into alternative contractual arrangements or purchase energy in the forward, short-term, or spot markets at then-current market prices that may exceed the prices previously agreed upon with the defaulting counterparty.

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4. Investments

Investments were as follows as of June 30, 2020 and December 31, 2019:

			Gross		Gross
			Unrealized		Unrealized			Fair		Carrying
Description	Cost		Gains		Losses			Value		Value
	(in thousands)
June 30, 2020
Nuclear decommissioning trust (1)
Debt securities	$	60,565	$	7,008	$	—		$	67,573	$	67,573
Equity securities		85,481		56,737		(5,117	)		137,101		137,101
Cash and other		317		—		—			317		317
Total Nuclear Decommissioning Trust	$	146,363	$	63,745	$	(5,117	)	$	204,991	$	204,991
Unrestricted investments
Debt securities	$	240	$	—	$	—		$	240	$	240
Total Unrestricted Investments	$	240	$	—	$	—		$	240	$	240
Other
Equity securities	$	111	$	11	$	—		$	122	$	122
Non-marketable equity investments		2,144		2,369		—			4,513		2,144
Total Other	$	2,255	$	2,380	$	—		$	4,635	$	2,266
										$	207,497
December 31, 2019
Nuclear decommissioning trust (1)
Debt securities	$	59,748	$	4,325	$	—		$	64,073	$	64,073
Equity securities		85,303		63,858		(2,557	)		146,604		146,604
Cash and other		431		—		—			431		431
Total Nuclear Decommissioning Trust	$	145,482	$	68,183	$	(2,557	)	$	211,108	$	211,108
Unrestricted investments
Government obligations	$	2,869	$	4	$	—		$	2,873	$	2,869
Debt securities		240		—		—			240		240
Total Unrestricted Investments	$	3,109	$	4	$	—		$	3,113	$	3,109
Other
Equity securities	$	110	$	15	$	—		$	125	$	125
Non-marketable equity investments		2,146		2,176		—			4,322		2,146
Total Other	$	2,256	$	2,191	$	—		$	4,447	$	2,271
										$	216,488

⁽¹⁾ Investments in the nuclear decommissioning trust are restricted for the use of funding our share of the asset retirement obligations of the future decommissioning of North Anna.  See Note 3 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.  Unrealized gains and losses on investments held in the nuclear decommissioning trust are deferred as a regulatory liability or regulatory asset, respectively.

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Contractual maturities of debt securities as of June 30, 2020, were as follows:

Description	Less than 1 year		1-5 years		5-10 years		More than 10 years		Total
	(in thousands)
Other (1)	$	—	$	—	$	67,573	$	—	$	67,573
Held to maturity		240		—		—		—		240
Total	$	240	$	—	$	67,573	$	—	$	67,813

⁽¹⁾ The contractual maturities of other debt securities are measured using the effective duration of the bond fund within the nuclear decommissioning trust.

5. Other

Wildcat Point Generation Facility

 We own Wildcat Point, a 973 MW (net capacity entitlement) natural gas-fueled combined cycle generation facility.  Wildcat Point achieved commercial operation on April 17, 2018.  In 2017, WOPC, a joint venture between PCL Industrial Construction Company and Sargent & Lundy, L.L.C., as EPC contractor, made a claim against Alstom and us for recovery of additional amounts under the EPC contract for Wildcat Point.  Additionally, in 2017, we filed a complaint alleging that WOPC breached the EPC contract.  Subsequently, the United States District Court for the Eastern District of Virginia ordered that the WOPC complaint against Alstom and us, our complaint against WOPC, and a separate complaint filed by WOPC against Mitsubishi, be consolidated.  In December 2019, ODEC and WOPC held formal settlement discussions and we recognized the probable impact of the settlement as of December 31, 2019, resulting in a $29.6 million increase to property, plant, and equipment.  On January 9, 2020, ODEC and WOPC settled their dispute and ODEC was dismissed as a party from the case.

Revolving Credit Facility

We maintain a revolving credit facility to cover our short-term and medium-term funding needs that are not met by cash from operations or other available funds.  Commitments under this syndicated credit agreement extend until February 28, 2025.  Available funding under this facility totals $500 million through March 3, 2022, and $400 million from March 4, 2022 through February 28, 2025.  As of June 30, 2020, we had outstanding under this facility $100.0 million in borrowings and a $0.5 million letter of credit.  As of December 31, 2019, we had outstanding under this facility $67.2 million in borrowings and a $0.5 million letter of credit.

Cash and Cash Equivalents

For purposes of our Condensed Consolidated Statements of Cash Flows, we consider all unrestricted highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within our Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in our Condensed Consolidated Statements of Cash Flows:

	As of June 30,
	2020		2019
	(in thousands)
Cash and cash equivalents	$	42,914	$	1,031
Restricted cash and cash equivalents		24,349		24,007
Total	$	67,263	$	25,038

Restricted cash and cash equivalents relates to funds held in escrow for payments related to the construction of Wildcat Point and in July 2020, the funds were released and paid to the contractors.  

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Revenue Recognition

Our operating revenues are derived from sales of power and renewable energy credits to our member distribution cooperatives and non-members.  We supply power requirements (energy and demand) to our eleven member distribution cooperatives subject to substantially identical wholesale power contracts with each of them.  We bill our member distribution cooperatives monthly and each member distribution cooperative is required to pay us monthly for power furnished under its wholesale power contract.  We transfer control of the electricity over time and our member distribution cooperatives simultaneously receive and consume the benefits of the electricity.  The amount we invoice our member distribution cooperatives on a monthly basis corresponds directly to the value to the member distribution cooperatives of our performance, which is determined by our formula rate included in the wholesale power contract.  We sell excess energy and renewable energy credits to non-members at prevailing market prices as control is transferred.

We sell excess purchased and generated energy to PJM, TEC, or third parties.  Sales to TEC consist of sales of excess energy that we do not need to meet the actual needs of our member distribution cooperatives.  TEC’s sales to third parties are reflected as non-member revenues.  For the three and six months ended June 30, 2020 and 2019, we had no sales to TEC and TEC had no sales to third parties.  

Our operating revenues for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Member distribution cooperatives
Sales to member distribution cooperatives, excluding renewable energy credit sales	$	183,863	$	206,803	$	388,028	$	441,128
Renewable energy credit sales to member distribution cooperatives		13		3		13		17
Total sales to member distribution cooperatives	$	183,876	$	206,806	$	388,041	$	441,145
Non-members
Sales to non-members, excluding renewable energy credit sales	$	5,686	$	6,947	$	10,163	$	13,199
Renewable energy credit sales to non-members		—		1,232		104		1,420
Total sales to non-members	$	5,686	$	8,179	$	10,267	$	14,619
Total operating revenues	$	189,562	$	214,985	$	398,308	$	455,764

Virginia CO₂ Regulation

On April 12, 2020, the governor of Virginia signed legislation that requires that all investor-owned utility generating facilities that emit CO₂ as a by-product of combustion close by December 31, 2045.  This includes the Clover generation facility, which we co-own with Virginia Power, an investor-owned utility.  However, if the reliability or security of providing electric service to customers is threatened, a petition may be made by Virginia Power to the Virginia State Corporation Commission requesting relief from the closure requirement.  Clover’s current depreciation rates are based on a useful life through 2050 and due to the uncertainty of the reliability requirements in the future, we have concluded that a change in useful life is not necessary at this time.  For further discussion of Virginia CO₂ Regulation, see “Regulation—Virginia CO₂ Regulation” in Part 1, Item 1 Business of our 2019 Annual Report on Form 10-K. 

6. New Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses in Financial Instruments.  FASB issued subsequent amendments to the initial guidance in November 2018 with ASU No. 2018-19, in April 2019 with ASU No. 2019-04, and in May 2019 with ASU No. 2019-05. The ASU amends the guidance on the impairment of financial instruments and adds an impairment model, known as the current expected credit loss (“CECL”) model.  The CECL model requires an entity to recognize its current estimate of all expected credit losses, rather than incurred losses, and applies to trade receivables and other receivables.  The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be

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presented as an offset to the amortized cost basis of the related financial asset.  The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and is applied using the modified-retrospective approach.  We adopted this standard for the fiscal year beginning January 1, 2020, and it did not have a material impact on our financial statements.

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.  The guidance provides temporary optional expedients and exceptions related to contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates.  The new guidance allows entities to elect not to apply certain modification accounting requirements, if certain criteria are met, to contracts affected by what the guidance calls reference rate reform.  An entity that makes this election would consider changes in reference rates and other contract modifications related to reference rate reform to be events that do not require contract remeasurement at the modification date or reassessment of a previous accounting determination.  The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition. The guidance is effective upon issuance and generally can be applied as of March 12, 2020 through December 31, 2022.  We are continuing to evaluate the impact of this standard on our financial statements.

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OLD DOMINION ELECTRIC COOPERATIVE

ITEM 2.  MANAGEMENT’S DISCUSSION 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 and regulatory actions and legal and administrative proceedings, changes in and compliance with environmental laws and policies, general credit and capital market conditions, weather conditions, the cost of commodities used in our industry, and unanticipated changes in operating expenses 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.  The impact that the COVID-19 pandemic will have on our consolidated results of operations, financial condition, and cash flows is uncertain.  We continue to actively manage our business to respond to this health crisis and will continue to evaluate the nature and extent of any impact.

Critical Accounting Policies

As of June 30, 2020, there have been no significant changes in our critical accounting policies as disclosed in our 2019 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 accounting for derivatives and hedging.

Basis of Presentation

The accompanying financial statements reflect the consolidated accounts of ODEC and TEC.  See Note 1—General in Notes to Condensed Consolidated Financial Statements in Part 1, Item 1.

Overview

We are a not-for-profit power supply cooperative owned entirely by our eleven Class A member distribution cooperatives and a Class B member, TEC.  We supply our member distribution cooperatives’ energy and demand requirements through a portfolio of resources including generating facilities, long-term and short-term physically-delivered forward power purchase contracts, and spot market purchases.  We also supply the transmission services necessary to deliver this power to our member distribution cooperatives.

Our results from operations for the three and six months ended June 30, 2020, were primarily impacted by the decreases in our total energy rate and PJM’s economic dispatch of our generating facilities.  Additionally for the three months ended June 30, 2020, purchased power expense decreased, and for the six months ended June 30, 2020, we experienced milder weather.  

• Total revenues from sales to our member distribution cooperatives decreased $22.9 million, or 11.1%, and $53.1 million, or 12.0%, for the three and six months ended June 30, 2020, respectively, as compared to the same periods in 2019, primarily as a result of the 18.8% and 21.8% decrease in energy revenues, respectively.  The decrease in energy revenues was primarily due to the 16.2% decrease in the average cost of energy for the three and six months ended June 30, 2020.  Additionally, energy sales in MWh to our member distribution cooperatives decreased 3.0% and 6.6%, respectively.  The decrease in energy revenues contributed to the $4.3 million and $19.5 million decrease in deferred energy expense, respectively.

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• Generation from our owned facilities decreased 19.6% and 24.5%, respectively, as compared to the same periods in 2019, primarily due to PJM’s economic dispatch.  The decrease in generation contributed to the $7.5 million, or 24.8%, and $27.5 million, or 29.6%, decrease in fuel expense, respectively.  

• Transmission expense decreased $8.8 million, or 21.1%, and $16.4 million, or 19.7%, respectively, as compared to the same period in 2019, due to changes in PJM charges for network transmission services.  

• Amortization of regulatory asset/(liability), net increased $7.8 million and $16.3 million, respectively, as compared to the same periods in 2019.  Amortization of the gain on the sale of Rock Springs and related assets reduced our demand costs by $9.5 million and $18.9 million for the three and six months ended June 30, 2019, respectively, and the gain was fully amortized by December 31, 2019.  See “Factors Affecting Results—Generating Facilities—Sale of Rock Springs Combustion Turbine Facility.”

• Purchased power expense, which includes the cost of purchased energy and capacity, decreased $8.6 million, or 12.6%, for the three months ended June 30, 2020, as compared to the same period in 2019, primarily due to the $8.5 million decrease in purchased energy expense.  Purchased energy expense decreased due to the 31.7% decrease in the average cost of purchased energy, partially offset by the 25.8% increase in the volume of purchased energy primarily as a result of decreased generation from our owned facilities.  The decrease in the average cost of purchased energy was partially due to the expiration of a long-term purchased power contract on May 31, 2020, that was replaced by lower cost purchased energy.  

We believe our results for the three and six months ended June 30, 2020, were not materially impacted by the outbreak in the United States of the COVID-19 pandemic.  We believe that other factors described above, such as the decrease in our total energy rate and the impact of milder weather, were the primary drivers of our results for the three and six months ended June 30, 2020.  However, we have taken some actions as a result of the pandemic.  We increased our cash balance as of March 31, 2020, by borrowing funds under our revolving credit facility due to uncertainties associated with the pandemic; however, during the second quarter of 2020, we reduced borrowings under our revolving credit facility and decreased our cash balance.  Our cash balance also increased as a result of our member distribution cooperatives’ increased prepayments of their wholesale power invoices from us.  We continue to closely monitor how the outbreak will affect our operations, results of operations, financial condition, and cash flows.  

Factors Affecting Results

Formula Rate

Our power sales are comprised of two power products – energy and demand.  Energy is the physical electricity delivered through transmission and distribution facilities to customers.  We must have sufficient committed energy available to us for delivery to our member distribution cooperatives to meet their maximum energy needs at any time, with limited exceptions.  This committed available energy at any time is referred to as demand.

The rates we charge our member distribution cooperatives for sales of energy and demand are determined by a formula rate accepted by FERC, which is intended to permit collection of revenues which will equal the sum of:

• all of our costs and expenses;

• 20% of our total interest charges (margin requirement); and

• additional equity contributions approved by our board of directors.

The formula rate identifies the cost components that we can collect through rates, but not the actual amounts to be collected.  With limited minor exceptions, we can change our rates periodically to match the costs we have incurred and we expect to incur without seeking FERC approval.  

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Energy costs, which are primarily variable costs, such as natural gas, nuclear, and coal fuel costs, and the energy costs under our power purchase contracts with third parties, are recovered through two separate rates, the base energy rate and the energy adjustment rate (collectively referred to as the total energy rate).  The base energy rate is developed annually to collect energy costs as estimated in our budget including amounts in the deferred energy account from the prior year.  As of January 1 of each year, the base energy rate is reset in accordance with our budget and the energy adjustment rate is reset to zero.  We can revise the energy adjustment rate during the year if it becomes apparent that the total energy rate is over-collecting or under-collecting our actual and anticipated energy costs.  Any revision to the energy adjustment rate requires board approval and that the resulting change to the total energy rate is at least 2%.  

Demand costs, which are primarily fixed costs, such as capacity costs under power purchase contracts with third parties, transmission expense, administrative and general expense, depreciation expense, interest expense, margin requirement, and additional equity contributions approved by our board of directors, are recovered through our demand rates.  The formula rate allows us to change the actual demand rates we charge as our demand-related costs change, without FERC approval, with the exception of nuclear decommissioning expense, which is a fixed number in the formula rate that requires FERC approval prior to any adjustment.  FERC approval is also needed to change account classifications currently in the formula or to add accounts not otherwise included in the current formula.  Additionally, depreciation studies are required to be filed with FERC for its approval if they would result in a change in our depreciation rates.  We collect our total demand costs through the following three separate rates:

• transmission service rate – designed to collect transmission-related and distribution-related costs;

• RTO capacity service rate – designed to collect capacity costs in PJM that PJM allocates to ODEC and all other PJM members; and

• remaining owned capacity service rate – designed to collect all remaining demand costs not billed and/or recovered under the transmission service and RTO capacity service rates.

As stated above, our margin requirements, and additional equity contributions approved by our board of directors are recovered through our demand rates.  We establish our demand rates to produce a net margin attributable to ODEC equal to 20% of our budgeted total interest charges, plus additional equity contributions approved by our board of directors.  The formula rate permits us to adjust revenues from the member distribution cooperatives to equal our actual total demand costs incurred, including a net margin attributable to ODEC up to 20% of actual interest charges, plus additional equity contributions approved by our board of directors.  We make these adjustments utilizing Margin Stabilization.  

We may revise our budget at any time to the extent that our current budget does not accurately reflect our costs and expenses or estimates of our sales of power.  Increases or decreases in our budget automatically amend the energy and/or the demand components of our formula rate, as necessary.  If at any time our board of directors determines that the formula does not recover all of our costs and expenses or determines a change in cost allocation methodology among our member distribution cooperatives is appropriate, it may adopt a new formula to meet those costs and expenses, subject to any necessary regulatory review and approval.  On June 26, 2020, we submitted an application to FERC to revise our formula rate for a change in cost allocation methodology of our remaining owned capacity service rate, to be effective January 1, 2021.  

As detailed in the table below, we utilized Margin Stabilization to increase revenues for the three and six months ended June 30, 2020, and for the three months ended June 30, 2019; and to reduce revenues for the six months ended June 30, 2019.

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Margin Stabilization adjustment	$	(7,642	)	$	(4,256	)	$	(7,007	)	$	5,523

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For further discussion of Margin Stabilization, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Margin Stabilization” in Item 7 of our 2019 Annual Report on Form 10-K.  

COVID-19 Pandemic

Impact on Results of Operations and Financial Condition

For the three and six months ended June 30, 2020, we do not believe there was a material impact attributable to the COVID-19 pandemic on our results of operations or financial condition.  

Our total revenues decreased $25.4 million, or 11.8%, and $57.5 million, or 12.6%, for the three and six months ended June 30, 2020, respectively, as compared to the same periods in the prior year.  The decreases were primarily due to the 16.2% decrease in our total energy rate to our member distribution cooperatives, effective January 1, 2020, and the milder weather in the first quarter of 2020.  

Our operating revenues are derived from sales of power and renewable energy credits to our member distribution cooperatives and non-members.  We supply power requirements (energy and demand) to our eleven member distribution cooperatives subject to substantially identical wholesale power contracts with each of them.  We sell excess power and renewable energy credits to non-members at prevailing market prices as control is transferred.  For the three and six months ended June 30, 2020, energy sales in MWh to our member distribution cooperatives decreased 3.0% and 6.6%, respectively, as compared to the same periods in the prior year.  We believe a portion of the decrease relates to weather.  In addition, the majority of our member distribution cooperatives’ loads are residential, which may be a factor in limiting the impact of the pandemic on our results of operations.  Although we cannot currently determine the portion of the decrease that may be attributable to the pandemic, we are continuing to evaluate the trends associated with the pandemic.  

Any decline in our member distribution cooperatives’ power requirements related to the COVID-19 pandemic would result in excess energy which we would sell to PJM, TEC, or third parties; or would result in a reduction of our spot market energy purchases.

The formula rate provides for the recovery of costs, margin requirement, and any additional equity contributions approved by our board of directors, from our member distribution cooperatives (see “—Formula Rate” above).  We operate on a cost plus specified margin basis; therefore, our net margin is not a function of total revenues.  Our margin requirement is equal to 20% of actual interest charges, plus additional equity contributions approved by our board of directors.  We bill our member distribution cooperatives monthly, and each member distribution cooperative is required to pay us monthly for power furnished under its wholesale power contract.  Our member distribution cooperatives’ ability to pay their invoices to us may be impacted by certain factors including high unemployment rates, government actions protecting customers from the disconnection of utilities, and increased commercial or industrial closures/bankruptcies.  Under an existing program, our member distribution cooperatives have the option to prepay their invoices from us or to extend payment of their invoices for 60 days.  As of June 30, 2020, prepayments totaled $68.3 million and extensions totaled $11.6 million.

We increased our cash balance as of March 31, 2020, by borrowing funds under our revolving credit facility due to uncertainties associated with the COVID-19 pandemic; however, during the second quarter of 2020, we reduced borrowings under our revolving credit facility and decreased our cash balance.  Our cash balance also increased as a result of our member distribution cooperatives’ increased prepayments of their wholesale power invoices from us.  

Workforce Considerations

ODEC is considered an essential service provider and due to the COVID-19 pandemic, we adjusted the schedules of our workforce for March through June 2020 at our owned generating facilities that we operate, specifically Wildcat Point, Louisa, and Marsh Run.  Although we have transitioned back to pre-pandemic schedules at our generating facilities, we have an ongoing contingency plan for staffing at these facilities.  Additionally, beginning in mid-March 2020, our headquarters personnel began telecommuting with no disruption in business operations and will continue telecommuting for a period of time in the future.  

In July 2020, the Commonwealth of Virginia issued the Emergency Temporary Standard Infectious Disease Prevention: SARS-CoV-2 Virus That Causes COVID-19 regulation.  All employers covered by this regulation must comply with mandatory requirements to protect employees from workplace exposure to COVID-19 and we are subject to

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this regulation for our operations located in Virginia.  We do not anticipate that compliance under this regulation will result in a material impact on our operations or costs.

Ongoing Considerations

We are continuing to monitor ways in which the COVID-19 pandemic could affect our operations, results of operations, financial condition, and cash flows.  The extent to which the pandemic will impact us is uncertain and will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the pandemic and the actions taken in response.  See “Part II Other Information—Item 1A. Risk Factors.”

Weather

Weather affects the demand for electricity.  Relatively higher or lower temperatures tend to increase the demand for energy to use air conditioning and heating systems, respectively.  Mild weather generally reduces the demand because heating and air conditioning systems are operated less.  Weather also plays a role in the price of energy through its effects on the market price for fuel, particularly natural gas.  

Heating and cooling degree days are measurement tools used to quantify the need to utilize heating or cooling, respectively, for a building.  Heating degree days are calculated as the number of degrees below 60 degrees in a single day.  Cooling degree days are calculated as the number of degrees above 65 degrees in a single day.  In a single calendar day, it is possible to have multiple heating degree and cooling degree days.  

The heating and cooling degree days for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2020		2019		Change			2020		2019		Change
Heating degree days		205		37		454.1	%		1,714		2,016		(15.0	)%
Cooling degree days		285		415		(31.3	)		285		415		(31.3	)

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Power Supply Resources

We provide power to our members through a combination of our interests in Wildcat Point, a natural gas-fired combined cycle generation facility; North Anna, a nuclear power station; Clover, a coal-fired generation facility; two natural gas-fired combustion turbine facilities (Louisa and Marsh Run); diesel-fired distributed generation facilities; and physically-delivered forward power purchase contracts and spot market energy purchases.  Our energy supply resources for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in MWh and percentages)
Generated:
Wildcat Point	584,733	21.9	%	740,847	27.7	%	1,495,568	25.8	%	2,133,662	35.3	%
North Anna	458,477	17.2		455,395	17.1		950,391	16.4		856,782	14.2
Clover	68,829	2.6		31,148	1.2		133,481	2.3		147,237	2.4
Louisa	41,253	1.5		99,835	3.7		47,934	0.8		155,465	2.6
Marsh Run	71,066	2.7		194,740	7.3		83,876	1.4		297,549	4.9
Distributed Generation	430	—		465	—		643	—		762	—
Total Generated	1,224,788	45.9		1,522,430	57.0		2,711,893	46.7		3,591,457	59.4
Purchased:
Other than renewable:
Long-term and short-term	706,937	26.5		487,163	18.3		1,410,197	24.3		1,026,421	16.9
Spot market	538,888	20.2		462,482	17.3		1,244,673	21.5		1,009,448	16.7
Total Other than renewable	1,245,825	46.7		949,645	35.6		2,654,870	45.8		2,035,869	33.6
Renewable (1)	196,767	7.4		197,400	7.4		434,835	7.5		423,786	7.0
Total Purchased	1,442,592	54.1		1,147,045	43.0		3,089,705	53.3		2,459,655	40.6
Total Available Energy	2,667,380	100.0	%	2,669,475	100.0	%	5,801,598	100.0	%	6,051,112	100.0	%

⁽¹⁾ Related to our contracts from renewable facilities from which we obtain renewable energy credits.  We sell these renewable energy credits to our member distribution cooperatives and non-members.

Generating Facilities

Our operating expenses, and consequently our rates to our member distribution cooperatives, are significantly affected by the operations of our generating facilities, which are under dispatch control of PJM.  For further discussion of PJM, see “Business—Power Supply Resources—PJM” in Item 1 of our 2019 Annual Report on Form 10-K.  

Operational Availability

The operational availability of our owned generating resources for the three and six months ended June 30, 2020 and 2019, was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Wildcat Point		80.5	%		74.1	%		87.8	%		86.3	%
North Anna		94.3			94.6			97.2			88.9
Clover		45.2			38.8			58.3			60.2
Louisa		93.5			89.8			95.4			94.2
Marsh Run		86.6			92.5			93.3			96.1

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Capacity Factor

The output of Wildcat Point, North Anna, and Clover for the three and six months ended June 30, 2020 and 2019, as a percentage of maximum dependable capacity rating of the facilities, was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Wildcat Point		27.1	%		35.8	%		34.8	%		52.0	%
North Anna		95.6			95.0			99.2			89.9
Clover		7.4			2.5			7.2			8.0

Sale of Rock Springs Combustion Turbine Facility

On September 14, 2018, we sold our interest in Rock Springs and related assets to EPRS for $115 million.  Prior to the sale, we and EPRS had each individually owned two natural gas-fired combustion turbine units and a 50% undivided interest in related common facilities at Rock Springs.  The transaction resulted in a gain of $42.7 million, which our board of directors approved to defer as a regulatory liability.  We amortized $5.0 million of the gain in 2018 and the remaining $37.7 million was amortized ratably in 2019.

Sales to Member Distribution Cooperatives

Revenues from sales to our member distribution cooperatives are a function of our formula rate for sales of power and sales of renewable energy credits to our member distribution cooperatives, and our member distribution cooperatives’ customers’ requirements for power.  See “Factors Affecting Results—Formula Rate” above.

Sales to Non-members

Revenues from sales to non-members consist of sales of excess purchased and generated energy and sales of renewable energy credits.  We primarily sell excess energy to PJM under its rates for providing energy imbalance service.  Excess energy is the result of changes in our purchased power portfolio, differences between actual and forecasted needs, and changes in market conditions.  

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Results of Operations

Operating Revenues  

Our operating revenues are derived from sales of power and renewable energy credits to our member distribution cooperatives and non-members.  Our operating revenues and energy sales in MWh by type of purchaser for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Revenues from sales to:
Member distribution cooperatives
Energy revenues	$	80,372	$	98,928		$	179,293	$	229,134
Renewable energy credits		13		3			13		17
Demand revenues		103,491		107,875			208,735		211,994
Total revenues from sales to member distribution cooperatives		183,876		206,806			388,041		441,145
Non-members:
Energy revenues		5,665		6,951			10,142		13,143
Renewable energy credits		—		1,233			104		1,420
Demand revenues		21		(5	)		21		56
Total revenues from sales to non-members		5,686		8,179			10,267		14,619
Total operating revenues	$	189,562	$	214,985		$	398,308	$	455,764
Energy sales to:	(in MWh)
Member distribution cooperatives		2,335,722		2,408,315			5,209,114		5,577,953
Non-members		315,182		233,831			552,141		435,439
Total energy sales		2,650,904		2,642,146			5,761,255		6,013,392
Average cost of energy to member distribution cooperatives (per MWh)	$	34.41	$	41.08		$	34.42	$	41.08
Average total cost to member distribution cooperatives (per MWh)	$	78.72	$	85.87		$	74.49	$	79.09

Member Distribution Cooperatives

For the three and six months ended June 30, 2020, total revenues from sales to our member distribution cooperatives were $22.9 million, or 11.1%, and $53.1 million, or 12.0%, lower, respectively, as compared to the same periods in 2019.  Energy revenues decreased $18.6 million, or 18.8%, and $49.8 million, or 21.8%, respectively, primarily due to the 16.2% decrease in the average cost of energy for the three and six months ended June 30, 2020.  Additionally, energy sales in MWh to our member distribution cooperatives decreased 3.0% and 6.6%, respectively.  Demand revenues decreased $4.4 million, or 4.1%, and $3.3 million, or 1.5%, respectively.

The following table summarizes the changes to our total energy rate which were implemented to address the differences in our realized as well as projected energy costs:

Date	% Change
January 1, 2019		(1.3	)
January 1, 2020		(16.2	)

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Operating Expenses

The following is a summary of the components of our operating expenses for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Fuel	$	22,806		$	30,307		$	65,384		$	92,921
Purchased power		60,145			68,783			153,035			154,977
Transmission		33,006			41,851			66,922			83,369
Deferred energy		8,092			12,439			(17,043	)		2,452
Operations and maintenance		16,292			17,440			30,034			35,917
Administrative and general		10,308			14,680			22,164			27,037
Depreciation and amortization		17,502			17,193			35,024			34,332
Amortization of regulatory asset/(liability), net		(61	)		(7,819	)		(851	)		(17,179	)
Accretion of asset retirement obligations		1,365			1,384			2,730			2,768
Taxes, other than income taxes		2,427			2,389			4,849			4,835
Total Operating Expenses	$	171,882		$	198,647		$	362,248		$	421,429

Our operating expenses are comprised of the costs that we incur to generate and purchase power to meet the needs of our member distribution cooperatives, and the costs associated with any sales of power to non-members.  Our energy costs generally are variable and include fuel expense, the energy portion of our purchased power expense, and the variable portion of operations and maintenance expense.  Our demand costs generally are fixed and include the capacity portion of our purchased power expense, transmission expense, the fixed portion of operations and maintenance expense, administrative and general expense, and depreciation and amortization expense.  Additionally, all non-operating expenses and income items, including investment income and interest charges, net, are components of our demand costs.  See “Factors Affecting Results—Formula Rate” above.

Total operating expenses decreased $26.8 million, or 13.5%, and $59.2 million, or 14.0%, for the three and six months ended June 30, 2020, respectively, as compared to the same periods in 2019, primarily as a result of decreases in fuel expense, transmission expense, deferred energy expense, and for the three months ended June 30, 2020, purchased power expense, partially offset by the increase in amortization of regulatory asset/(liability), net.  

• Fuel expense decreased $7.5 million, or 24.8%, and $27.5 million, or 29.6%, for the three and six months ended June 30, 2020, respectively, primarily as a result of the 19.6% and 24.5%, respectively, decrease in generation from our owned facilities primarily due to PJM’s economic dispatch.  

• Transmission expense decreased $8.8 million, or 21.1%, and $16.4 million, or 19.7%, for the three and six months ended June 30, 2020, respectively, due to changes in PJM charges for network transmission services.  

• Deferred energy expense, which represents the difference between energy revenues and energy expenses, decreased $4.3 million and $19.5 million, respectively, for the three and six months ended June 30, 2020.  For the three months ended June 30, 2019 and 2020, we over-collected $8.1 million and $12.4 million, respectively.  For the six months ended June 30, 2020, we under-collected $17.0 million and for the six months ended June 30, 2019, we over-collected $2.5 million.  For further discussion on deferred energy, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Deferred Energy” in Item 7 of our 2019 Annual Report on Form 10-K.

• Amortization of regulatory asset/(liability), net increased $7.8 million and $16.3 million, for the three and six months ended June 30, 2020, respectively.  For the three and six months ended June 30, 2019, we amortized $9.5 million and $18.9 million, respectively, of the gain on the sale of Rock Springs and related assets.

23

• Purchased power expense, which includes the cost of purchased energy and capacity, decreased $8.6 million, or 12.6%, for the three months ended June 30, 2020, primarily due to the $8.5 million decrease in purchased energy expense.  Purchased energy expense decreased due to the 31.7% decrease in the average cost of purchased energy, partially offset by the 25.8% increase in the volume of purchased energy primarily as a result of decreased generation from our owned facilities.

Other Items

Interest Charges, Net

The primary factors affecting our interest charges, net are issuance of indebtedness, scheduled payments of principal on our indebtedness, interest charges related to our revolving credit facility, and capitalized interest.  The major components of interest charges, net for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Interest on long-term debt	$	(14,500	)	$	(15,025	)	$	(29,001	)	$	(30,051	)
Interest on revolving credit facility		(723	)		(202	)		(1,684	)		(352	)
Other interest		(348	)		(815	)		(506	)		(1,699	)
Total interest charges		(15,571	)		(16,042	)		(31,191	)		(32,102	)
Allowance for borrowed funds used during construction		116			140			199			231
Interest charges, net	$	(15,455	)	$	(15,902	)	$	(30,992	)	$	(31,871	)

Net Margin Attributable to ODEC

Net margin attributable to ODEC, which is a function of our total interest charges plus any additional equity contributions approved by our board of directors, was relatively flat for the three and six months ended June 30, 2020, as compared to the same periods in 2019.

Financial Condition

The principal changes in our financial condition from December 31, 2019 to June 30, 2020, were caused by decreases in accounts payable and accounts receivable–members, and increases in accounts payable–members, revolving credit facility, and deferred energy.

• Accounts payable decreased $72.0 million due to the decrease in construction-related payables primarily as a result of the Wildcat Point settlement and power purchase payables.  

• Accounts receivable–members decreased $17.5 million due to the $15.6 million decrease in wholesale power invoices for June 2020 as compared to December 2019 and the $8.9 million decrease in member distribution cooperatives’ extended payment balances, partially offset by the $7.0 million owed to us by our member distribution cooperatives under Margin Stabilization.

• Accounts payable–members increased $41.6 million due to the $53.1 million increase in member prepayments partially offset by the $7.2 million decrease in the amounts owed to our member distribution cooperatives under Margin Stabilization and the $4.3 million patronage capital retirement.

• Revolving credit facility increased $32.8 million due to increased borrowings under this facility.  We borrowed funds under this facility to increase our cash balance due to uncertainties associated with the COVID-19 pandemic.  

• Deferred energy increased $17.0 million as a result of the under-collection of our energy costs in 2020.  The deferred energy balance was an under-collection of $3.5 million and $20.6 million at December 31, 2019, and June 30, 2020, respectively.

24

Liquidity and Capital Resources

Sources

Cash generated by our operations, periodic borrowings under our revolving credit facility, and occasional issuances of long-term debt provide our sources of liquidity and capital.  We continue to evaluate our sources of liquidity and the appropriate level of cash on hand and will continue to monitor and adjust as necessary to meet our forecasted needs.  We have no major new construction projects planned requiring capital and do not anticipate issuing additional long-term debt.

Operations

During the first six months of 2020, our operating activities provided cash flows of $67.0 million and during the first six months of 2019 our operating activities used cash flows of $2.4 million.  Operating activities in 2020 were primarily impacted by the $11.7 million change in current assets, the $17.0 million change in deferred energy, the $13.9 million change in current liabilities, and the $12.9 million change in regulatory assets and liabilities.

Revolving Credit Facility

We maintain a revolving credit facility to cover our short-term and medium-term funding needs that are not met by cash from operations or other available funds.  Commitments under this syndicated credit agreement extend through February 28, 2025.  Available funding under this facility totals $500 million through March 3, 2022, and $400 million from March 4, 2022 through February 28, 2025.  As of June 30, 2020, we had outstanding under this facility $100.0 million in borrowings and a $0.5 million letter of credit.  As of December 31, 2019, we had outstanding under this facility $67.2 million in borrowings and a $0.5 million letter of credit.  

Financings

We fund the portion of our capital expenditures that we are not able to fund from operations through borrowings under our revolving credit facility and financings in the debt capital markets.  These capital expenditures consist primarily of the costs related to the development, construction, acquisition, or improvement of our owned generating facilities.

Uses

Our uses of liquidity and capital relate to funding our working capital needs, investment activities, and financing activities.  Substantially all our investment activities relate to capital expenditures in connection with our generating facilities.  We expect that cash flows from our operations, borrowings under our revolving credit facility, and financings in the debt capital markets will be sufficient to meet our currently anticipated future operational and capital requirements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

No material changes occurred in our exposure to market risk during the second quarter of 2020.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management, including the President and Chief Executive Officer, and Senior Vice President and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures.  Based upon that evaluation, the President and Chief Executive Officer, and Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that all material information required to be filed in this report has been made known to them in a timely matter.  We have established a Disclosure Assessment Committee comprised of members from senior and middle management to assist in this evaluation.  There have been no material changes in our internal controls over financial reporting or in other factors that could significantly affect such controls during the past fiscal quarter.  We have not identified any adverse impact on our internal controls over financial reporting despite most of our headquarters personnel telecommuting due to the COVID-19 pandemic.  The design of our processes and controls allows for compliance with remote and secure access to necessary financial information.  We are continually monitoring and assessing the COVID-19 pandemic to minimize any impact on the design and operating effectiveness of our internal controls.

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OLD DOMINION ELECTRIC COOPERATIVE

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Recovery of Costs from PJM

In 2014, we filed a petition at FERC seeking recovery from PJM of approximately $14.9 million of unreimbursed costs, which were incurred during the first quarter of 2014 related to the dispatch of our combustion turbine facilities. In 2015, FERC denied our petition, we filed a request for rehearing, and FERC issued an order granting rehearing for the limited purpose of FERC's further consideration of the matter.  In 2016, FERC denied our request for rehearing and, on June 15, 2018, the United States Court of Appeals for the District of Columbia Circuit denied our Petition for Review.  PJM removed the matter to United States District Court for the Eastern District of Virginia in July of 2019 and filed a motion to dismiss.  In 2019, we filed a motion to remand the matter to state court.  On March 31, 2020, the United States District Court for the Eastern District of Virginia granted PJM’s motion to dismiss and denied our motion to remand.  We filed a notice of appeal to the United States Court of Appeals for the Fourth Circuit on jurisdictional grounds and are awaiting the court’s decision.  We continue to pursue recovery as a separate breach of an oral contract claim in the Circuit Court for the County of Henrico in the Commonwealth of Virginia.  We have not recorded a receivable related to this matter.

Other Matters

Other than the issues discussed above and certain other legal proceedings arising out of the ordinary course of business that management believes will not have a material adverse impact on our results of operations or financial condition, there is no other litigation pending or threatened against us.

ITEM 1A.  RISK FACTORS

Our business and operations, and the operations of our member distribution cooperatives and suppliers, have been and will be impacted by the COVID-19 pandemic and could be similarly impacted by like events in the future.

The recent outbreak of COVID-19 has been declared by the World Health Organization to be a pandemic and has spread across the world, including the United States.  Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing and difficult to predict, the impact on our operations and financial performance cannot be determined at this time.  We expect that the longer the period of economic and global supply chain disruptions continue, the greater the risk that there could be a material adverse impact on our operations, financial condition, results of operations, and cash flows.  

ODEC is considered an essential service provider and due to this pandemic we are prepared to adjust the schedules of our workforce at our owned generating facilities that we operate, specifically Wildcat Point, Louisa, and Marsh Run and have a contingency plan for staffing at these facilities.  We have ownership interests in North Anna and Clover that are operated by Virginia Power, which has taken similar measures.  Beginning in mid-March 2020, our headquarters personnel began telecommuting with no disruption in business operations and will continue telecommuting for a period of time in the future.  There can be no assurance that these measures will fully protect us from the impact of COVID-19.

Economic conditions, including a significant increase in unemployment, expiration of federal or state support programs, and state government orders prohibiting disconnection of utilities during a state of emergency, as a result of the COVID-19 pandemic, may make it difficult for some customers of our member distribution cooperatives to pay their power bills.  These economic conditions could ultimately affect the timeliness of our member distribution cooperatives’ cash flows and potentially the timing of their payments to us.  Our member distribution cooperatives’ ability to collect their costs from their members may have an impact on our financial condition and cash flows.  

As the impact of the COVID-19 pandemic on our operations and the economy evolves, we will continue to assess our liquidity needs.  A continued worldwide disruption in the availability of credit could materially affect future access to our sources of liquidity.  Adverse changes in our credit ratings may require us to provide credit support for some of our

26

obligations and could negatively impact our liquidity and our ability to access capital. Conditions in the financial and credit markets also may limit the availability of funding or increase the cost of funding, which could adversely affect our operations, financial condition, results of operations, and cash flows.  

Sustained deterioration in the financial markets could adversely affect the value of our nuclear decommissioning trust and the NRECA Retirement Security Plan, a noncontributory, defined benefit pension plan qualified under Section 401, in which our employees participate.  The decline in the value of these funds could ultimately necessitate significantadditional contributions by us.

In addition to the risk factor above and other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in Part I, Item 1A of our 2019 Annual Report on Form 10-K, which could affect our business, financial condition, results of operations, and cash flows.  The risks described in our Annual Report on Form 10-K are not the only risks facing us.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations, and cash flows.  

ITEM 5.  OTHER INFORMATION

Virginia CO₂ Regulation

On April 12, 2020, the governor of Virginia signed legislation that requires that all investor-owned utility generating facilities that emit CO₂ as a by-product of combustion close by December 31, 2045.  This includes the Clover generation facility, which we co-own with Virginia Power, an investor-owned utility.  However, if the reliability or security of providing electric service to customers is threatened, a petition may be made by Virginia Power to the Virginia State Corporation Commission requesting relief from the closure requirement.  Clover’s current depreciation rates are based on a useful life through 2050 and due to the uncertainty of the reliability requirements in the future, we have concluded that a change in useful life is not necessary at this time.  For further discussion of Virginia CO₂ Regulation, see “Regulation—Virginia CO₂ Regulation” in Part 1, Item 1 Business of our 2019 Annual Report on Form 10-K. 

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ITEM 6.  EXHIBITS

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C.  § 1350
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C.  § 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

28

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OLD DOMINION ELECTRIC COOPERATIVE
		Registrant
Date: August 11, 2020		/s/ BRYAN  S. ROGERS
		Bryan S. Rogers
		Senior Vice President and Chief Financial Officer
		(Principal financial officer)

29

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Marcus M. Harris, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Old Dominion Electric Cooperative;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2020

/s/ MARCUS  M. HARRIS

Marcus M. Harris

President and Chief Executive Officer

(Principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Bryan S. Rogers, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Old Dominion Electric Cooperative;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2020

/s/ BRYAN  S. ROGERS

Bryan S. Rogers

Senior Vice President and Chief Financial Officer

(Principal financial officer)

EX-32.1

Exhibit 32.1

OLD DOMINION ELECTRIC COOPERATIVE

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Old Dominion Electric Cooperative (the “Company”) on Form 10-Q for the period ending June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marcus M. Harris, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 11, 2020
	/s/ MARCUS  M. HARRIS
	Marcus M. Harris
	President and Chief Executive Officer
	(Principal executive officer)

EX-32.2

Exhibit 32.2

OLD DOMINION ELECTRIC COOPERATIVE

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Old Dominion Electric Cooperative (the “Company”) on Form 10-Q for the period ending June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan S. Rogers, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 11, 2020
	/s/ BRYAN  S. ROGERS
	Bryan S. Rogers
	Senior Vice President and Chief Financial Officer
	(Principal financial officer)

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2020 shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	OLD DOMINION ELECTRIC COOPERATIVE
Entity Central Index Key	0000885568
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity File Number	000-50039
Entity Tax Identification Number	23-7048405
Entity Address, Address Line One	4201 Dominion Boulevard
Entity Address, City or Town	Glen Allen
Entity Address, State or Province	VA
Entity Incorporation, State or Country Code	VA
Entity Address, Postal Zip Code	23060
City Area Code	(804)
Local Phone Number	747-0592
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding	0

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Electric Plant:
Property, plant, and equipment	$ 2,522,395	$ 2,531,986
Less accumulated depreciation	(943,892)	(927,065)
Net Property, plant, and equipment	1,578,503	1,604,921
Nuclear fuel, at amortized cost	14,941	20,705
Construction work in progress	42,132	31,462
Net Electric Plant	1,635,576	1,657,088
Investments:
Nuclear decommissioning trust	204,991	211,108
Unrestricted investments and other	2,506	5,380
Total Investments	207,497	216,488
Current Assets:
Cash and cash equivalents	42,914	3,469
Restricted cash and cash equivalents	24,349	24,230
Accounts receivable	11,638	12,422
Accounts receivable–members	83,734	101,185
Fuel, materials, and supplies	69,703	62,083
Deferred energy	20,591	3,548
Prepayments and other	3,596	4,702
Total Current Assets	256,525	211,639
Deferred Charges and Other Assets:
Regulatory assets	42,702	57,742
Other assets	16,897	26,287
Total Deferred Charges and Other Assets	59,599	84,029
Total Assets	2,159,197	2,169,244
CAPITALIZATION AND LIABILITIES:
Patronage capital	447,549	441,311
Non-controlling interest	5,862	5,846
Total Patronage capital and Non-controlling interest	453,411	447,157
Long-term debt	1,118,114	1,117,867
Total Capitalization	1,671,525	1,632,224
Current Liabilities:
Long-term debt due within one year	40,792	40,792
Accounts payable	75,948	147,916
Accounts payable–members	68,435	26,804
Accrued expenses	7,442	5,850
Total Current Liabilities	192,617	221,362
Deferred Credits and Other Liabilities:
Asset retirement obligations	176,400	173,669
Regulatory liabilities	108,372	117,483
Other liabilities	10,283	24,506
Total Deferred Credits and Other Liabilities	295,055	315,658
Commitments and Contingencies
Total Capitalization and Liabilities	2,159,197	2,169,244
Revolving credit facility	100,000	67,200
Total Long-term debt and Revolving credit facility	$ 1,218,114	$ 1,185,067

XML

Condensed Consolidated Statements Of Revenues, Expenses, And Patronage Capital (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Operating Revenues	$ 189,562	$ 214,985	$ 398,308	$ 455,764
Type of Revenue [Extensible List]	us-gaap:ElectricityMember	us-gaap:ElectricityMember	us-gaap:ElectricityMember	us-gaap:ElectricityMember
Operating Expenses:
Fuel	$ 22,806	$ 30,307	$ 65,384	$ 92,921
Purchased power	60,145	68,783	153,035	154,977
Transmission	33,006	41,851	66,922	83,369
Deferred energy	8,092	12,439	(17,043)	2,452
Operations and maintenance	16,292	17,440	30,034	35,917
Administrative and general	10,308	14,680	22,164	27,037
Depreciation and amortization	17,502	17,193	35,024	34,332
Amortization of regulatory asset/(liability), net	(61)	(7,819)	(851)	(17,179)
Accretion of asset retirement obligations	1,365	1,384	2,730	2,768
Taxes, other than income taxes	2,427	2,389	4,849	4,835
Total Operating Expenses	171,882	198,647	362,248	421,429
Operating Margin	17,680	16,338	36,060	34,335
Other income (expense), net	(3)	(35)	(60)	(2)
Investment income	902	2,838	1,252	4,011
Interest charges, net	(15,455)	(15,902)	(30,992)	(31,871)
Income taxes	(3)	(10)	(6)	(15)
Net Margin including Non-controlling interest	3,121	3,229	6,254	6,458
Non-controlling interest	(7)	(21)	(16)	(38)
Net Margin attributable to ODEC	3,114	3,208	6,238	6,420
Patronage Capital - Beginning of Period	444,435	431,875	441,311	428,663
Patronage Capital - End of Period	$ 447,549	$ 435,083	$ 447,549	$ 435,083

XML

Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities:
Net Margin including Non-controlling interest	$ 6,254	$ 6,458
Adjustments to reconcile net margin to net cash provided by operating activities:
Depreciation and amortization	35,024	34,332
Other non-cash charges	8,743	7,693
Change in current assets	11,721	(18,443)
Change in deferred energy	(17,043)	2,452
Change in current liabilities	13,943	(9,334)
Change in regulatory assets and liabilities	12,927	(28,842)
Change in other assets and other liabilities	(4,594)	3,266
Net Cash Provided by/(Used for) Operating Activities	66,975	(2,418)
Investing Activities:
Purchases of held to maturity securities		(2,875)
Proceeds from sale of held to maturity securities	2,875	2,838
Purchases of available for sale securities		(56,703)
Proceeds from sale of available for sale securities		56,666
Increase in other investments	(886)	(3,013)
Electric plant additions	(61,965)	(21,428)
Net Cash Used for Investing Activities	(59,976)	(24,515)
Financing Activities:
Debt issuance costs	(235)	(257)
Draws on revolving credit facility	349,225	70,000
Repayments on revolving credit facility	(316,425)	(40,750)
Net Cash Provided by Financing Activities	32,565	28,993
Net Change in Cash and Cash Equivalents and Restricted Cash and Cash Equivalents	39,564	2,060
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents - Beginning of Period	27,699	22,978
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents - End of Period	$ 67,263	$ 25,038

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General

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

General

1. General

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our consolidated financial position as of June 30, 2020, our consolidated results of operations for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019.  The consolidated results of operations for the three and six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the entire year.  These financial statements should be read in conjunction with the financial statements and notes thereto included in our 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The accompanying financial statements reflect the consolidated accounts of Old Dominion Electric Cooperative and TEC.  We are a not-for-profit wholesale power supply cooperative, incorporated under the laws of the Commonwealth of Virginia in 1948.  We have two classes of members.  Our eleven Class A members are customer-owned electric distribution cooperatives engaged in the retail sale of power to member customers located in Virginia, Delaware, and Maryland.  Our sole Class B member is TEC, a taxable corporation owned by our member distribution cooperatives.  Our board of directors is composed of two representatives from each of the member distribution cooperatives and one representative from TEC.  In accordance with Consolidation Accounting, TEC is considered a variable interest entity for which we are the primary beneficiary.  We have eliminated all intercompany balances and transactions in consolidation.  The assets and liabilities and non-controlling interest of TEC are recorded at carrying value and the consolidated assets were $5.9 million and $5.8 million as of June 30, 2020 and December 31, 2019, respectively.  The income taxes reported on our Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital relate to the tax provision for TEC.  As TEC is wholly-owned by our Class A members, its equity is presented as a non-controlling interest in our consolidated financial statements.

Our rates are set periodically by a formula that was accepted for filing by FERC, but are not regulated by the public service commissions of the states in which our member distribution cooperatives operate.  

We comply with the Uniform System of Accounts as prescribed by FERC.  In conformity with GAAP, the accounting policies and practices applied by us in the determination of rates are also employed for financial reporting purposes.

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported therein.  Actual results could differ from those estimates.  The impact that the COVID-19 pandemic will have on our consolidated results of operations, financial condition, and cash flows is uncertain.  We continue to actively manage our business to respond to this health crisis and will continue to evaluate the nature and extent of any impact.

We did not have any other comprehensive income for the periods presented.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

2. Fair Value Measurements

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3).  In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy.  The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy.  Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: 

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2020		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	67,890	$	67,890	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		137,101		—		—		—
Unrestricted investments and other (3)		122		—		122		—
Derivatives - gas and power (4)		993		—		925		68
Total Financial Assets	$	206,106	$	67,890	$	1,047	$	68
Derivatives - gas and power (4)	$	9,766	$	8,255	$	1,511	$	—
Total Financial Liabilities	$	9,766	$	8,255	$	1,511	$	—

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December31,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	64,504	$	64,504	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		146,604		—		—		—
Unrestricted investments and other (3)		126		—		126		—
Derivatives - gas and power (4)		1,013		—		—		1,013
Total Financial Assets	$	212,247	$	64,504	$	126	$	1,013
Derivatives - gas and power (4)	$	24,125	$	17,109	$	7,016	$	—
Total Financial Liabilities	$	24,125	$	17,109	$	7,016	$	—

⁽¹⁾ For additional information about our nuclear decommissioning trust, see Note 4—Investments below.

⁽²⁾ Nuclear decommissioning trust includes investments measured at net asset value per share (or its equivalent) as a practical expedient and these investments have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Condensed Consolidated Balance Sheet.

⁽³⁾ Unrestricted investments and other includes investments that are related to equity securities.

⁽⁴⁾ Derivatives - gas and power represent natural gas futures contracts (Level 1 and Level 2) and financial transmission rights (Level 3).  Level 1 are indexed against NYMEX.  Level 2 are valued by ACES using observable market inputs for similar transactions.  Level 3 are valued by ACES using unobservable market inputs, including situations where there is little market activity.  Sensitivity in the market price of financial transmission rights could impact the fair value.  For additional information about our derivative financial instruments, see Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

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Derivatives And Hedging

6 Months Ended

Jun. 30, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives And Hedging

3. Derivatives and Hedging

We are exposed to market price risk by purchasing power to supply the power requirements of our member distribution cooperatives that are not met by our owned generation.  In addition, the purchase of fuel to operate our generating facilities also exposes us to market price risk.  To manage this exposure, we utilize derivative instruments.  See Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

Changes in the fair value of our derivative instruments accounted for at fair value are recorded as a regulatory asset or regulatory liability.  The change in these accounts is included in the operating activities section of our Condensed Consolidated Statements of Cash Flows.

Outstanding derivative instruments, excluding contracts accounted for as normal purchase/normal sale, were as follows:

		Quantity
		As of June 30,		As of December 31,
Commodity	Unit of Measure	2020		2019
Natural gas	MMBTU		65,990,000		73,560,000
Purchased power - financial transmission rights	MWh		6,087,751		5,771,291

The fair value of our derivative instruments, excluding contracts accounted for as normal purchase/normal sale, was as follows:

		Fair Value
		As of June 30,		As of December 31,
	Balance Sheet Location	2020		2019
		(in thousands)
Derivatives in an asset position:
Natural gas futures contracts	Other assets	$	925	$	—
Financial transmission rights	Other assets		68		1,013
Total derivatives in an asset position		$	993	$	1,013
Derivatives in a liability position:
Natural gas futures contracts	Other liabilities	$	9,766	$	24,125
Total derivatives in a liability position		$	9,766	$	24,125

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital for the Three and Six Months Ended June 30, 2020 and 2019

	Amount of Gain						Location of	Amount of Gain (Loss) Reclassified
	(Loss) Recognized						Gain (Loss)	from Regulatory Asset/Liability
	in Regulatory						Reclassified	into Income for the
Derivatives	Asset/Liability for						from Regulatory	Three Months						Six Months
AccountedforUtilizing	Derivatives as of						Asset/Liability	Ended						Ended
Regulatory Accounting	June 30,						into Income	June 30,						June 30,
	2020			2019				2020			2019			2020			2019
	(in thousands)							(in thousands)
Naturalgasfuturescontracts	$	(12,638	)	$	(12,450	)	Fuel	$	(5,726	)	$	(2,104	)	$	(27,192	)	$	(9,906	)
Purchased power		68			704		Purchased power		(898	)		(2,037	)		(4,482	)		(5,402	)
Total	$	(12,570	)	$	(11,746	)		$	(6,624	)	$	(4,141	)	$	(31,674	)	$	(15,308	)

Our hedging activities expose us to credit-related risks.  We use hedging instruments, including forwards, futures, financial transmission rights, and options, to mitigate our power market price risks.  Because we rely substantially on the use of hedging instruments, we are exposed to the risk that counterparties will default in performance of their obligations to us.  Although we assess the creditworthiness of counterparties and other credit issues related to these hedging instruments, and we may require our counterparties to post collateral with us, defaults may still occur.  Defaults may take the form of failure to physically deliver purchased energy or failure to pay.  If a default occurs, we may be forced to enter into alternative contractual arrangements or purchase energy in the forward, short-term, or spot markets at then-current market prices that may exceed the prices previously agreed upon with the defaulting counterparty.

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Investments

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

Investments

4. Investments

Investments were as follows as of June 30, 2020 and December 31, 2019:

			Gross		Gross
			Unrealized		Unrealized			Fair		Carrying
Description	Cost		Gains		Losses			Value		Value
	(in thousands)
June 30, 2020
Nuclear decommissioning trust (1)
Debt securities	$	60,565	$	7,008	$	—		$	67,573	$	67,573
Equity securities		85,481		56,737		(5,117	)		137,101		137,101
Cash and other		317		—		—			317		317
Total Nuclear Decommissioning Trust	$	146,363	$	63,745	$	(5,117	)	$	204,991	$	204,991
Unrestricted investments
Debt securities	$	240	$	—	$	—		$	240	$	240
Total Unrestricted Investments	$	240	$	—	$	—		$	240	$	240
Other
Equity securities	$	111	$	11	$	—		$	122	$	122
Non-marketable equity investments		2,144		2,369		—			4,513		2,144
Total Other	$	2,255	$	2,380	$	—		$	4,635	$	2,266
										$	207,497
December 31, 2019
Nuclear decommissioning trust (1)
Debt securities	$	59,748	$	4,325	$	—		$	64,073	$	64,073
Equity securities		85,303		63,858		(2,557	)		146,604		146,604
Cash and other		431		—		—			431		431
Total Nuclear Decommissioning Trust	$	145,482	$	68,183	$	(2,557	)	$	211,108	$	211,108
Unrestricted investments
Government obligations	$	2,869	$	4	$	—		$	2,873	$	2,869
Debt securities		240		—		—			240		240
Total Unrestricted Investments	$	3,109	$	4	$	—		$	3,113	$	3,109
Other
Equity securities	$	110	$	15	$	—		$	125	$	125
Non-marketable equity investments		2,146		2,176		—			4,322		2,146
Total Other	$	2,256	$	2,191	$	—		$	4,447	$	2,271
										$	216,488

⁽¹⁾ Investments in the nuclear decommissioning trust are restricted for the use of funding our share of the asset retirement obligations of the future decommissioning of North Anna.  See Note 3 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.  Unrealized gains and losses on investments held in the nuclear decommissioning trust are deferred as a regulatory liability or regulatory asset, respectively.

Contractual maturities of debt securities as of June 30, 2020, were as follows:

Description	Less than 1 year		1-5 years		5-10 years		More than 10 years		Total
	(in thousands)
Other (1)	$	—	$	—	$	67,573	$	—	$	67,573
Held to maturity		240		—		—		—		240
Total	$	240	$	—	$	67,573	$	—	$	67,813

⁽¹⁾ The contractual maturities of other debt securities are measured using the effective duration of the bond fund within the nuclear decommissioning trust.

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Other

6 Months Ended

Jun. 30, 2020

Other [Abstract]

Other

5. Other

Wildcat Point Generation Facility

 We own Wildcat Point, a 973 MW (net capacity entitlement) natural gas-fueled combined cycle generation facility.  Wildcat Point achieved commercial operation on April 17, 2018.  In 2017, WOPC, a joint venture between PCL Industrial Construction Company and Sargent & Lundy, L.L.C., as EPC contractor, made a claim against Alstom and us for recovery of additional amounts under the EPC contract for Wildcat Point.  Additionally, in 2017, we filed a complaint alleging that WOPC breached the EPC contract.  Subsequently, the United States District Court for the Eastern District of Virginia ordered that the WOPC complaint against Alstom and us, our complaint against WOPC, and a separate complaint filed by WOPC against Mitsubishi, be consolidated.  In December 2019, ODEC and WOPC held formal settlement discussions and we recognized the probable impact of the settlement as of December 31, 2019, resulting in a $29.6 million increase to property, plant, and equipment.  On January 9, 2020, ODEC and WOPC settled their dispute and ODEC was dismissed as a party from the case.

Revolving Credit Facility

We maintain a revolving credit facility to cover our short-term and medium-term funding needs that are not met by cash from operations or other available funds.  Commitments under this syndicated credit agreement extend until February 28, 2025.  Available funding under this facility totals $500 million through March 3, 2022, and $400 million from March 4, 2022 through February 28, 2025.  As of June 30, 2020, we had outstanding under this facility $100.0 million in borrowings and a $0.5 million letter of credit.  As of December 31, 2019, we had outstanding under this facility $67.2 million in borrowings and a $0.5 million letter of credit.

Cash and Cash Equivalents

For purposes of our Condensed Consolidated Statements of Cash Flows, we consider all unrestricted highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within our Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in our Condensed Consolidated Statements of Cash Flows:

	As of June 30,
	2020		2019
	(in thousands)
Cash and cash equivalents	$	42,914	$	1,031
Restricted cash and cash equivalents		24,349		24,007
Total	$	67,263	$	25,038

Restricted cash and cash equivalents relates to funds held in escrow for payments related to the construction of Wildcat Point and in July 2020, the funds were released and paid to the contractors.  

Revenue Recognition

Our operating revenues are derived from sales of power and renewable energy credits to our member distribution cooperatives and non-members.  We supply power requirements (energy and demand) to our eleven member distribution cooperatives subject to substantially identical wholesale power contracts with each of them.  We bill our member distribution cooperatives monthly and each member distribution cooperative is required to pay us monthly for power furnished under its wholesale power contract.  We transfer control of the electricity over time and our member distribution cooperatives simultaneously receive and consume the benefits of the electricity.  The amount we invoice our member distribution cooperatives on a monthly basis corresponds directly to the value to the member distribution cooperatives of our performance, which is determined by our formula rate included in the wholesale power contract.  We sell excess energy and renewable energy credits to non-members at prevailing market prices as control is transferred.

We sell excess purchased and generated energy to PJM, TEC, or third parties.  Sales to TEC consist of sales of excess energy that we do not need to meet the actual needs of our member distribution cooperatives.  TEC’s sales to third parties are reflected as non-member revenues.  For the three and six months ended June 30, 2020 and 2019, we had no sales to TEC and TEC had no sales to third parties.  

Our operating revenues for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Member distribution cooperatives
Sales to member distribution cooperatives, excluding renewable energy credit sales	$	183,863	$	206,803	$	388,028	$	441,128
Renewable energy credit sales to member distribution cooperatives		13		3		13		17
Total sales to member distribution cooperatives	$	183,876	$	206,806	$	388,041	$	441,145
Non-members
Sales to non-members, excluding renewable energy credit sales	$	5,686	$	6,947	$	10,163	$	13,199
Renewable energy credit sales to non-members		—		1,232		104		1,420
Total sales to non-members	$	5,686	$	8,179	$	10,267	$	14,619
Total operating revenues	$	189,562	$	214,985	$	398,308	$	455,764

Virginia CO₂ Regulation

On April 12, 2020, the governor of Virginia signed legislation that requires that all investor-owned utility generating facilities that emit CO₂ as a by-product of combustion close by December 31, 2045.  This includes the Clover generation facility, which we co-own with Virginia Power, an investor-owned utility.  However, if the reliability or security of providing electric service to customers is threatened, a petition may be made by Virginia Power to the Virginia State Corporation Commission requesting relief from the closure requirement.  Clover’s current depreciation rates are based on a useful life through 2050 and due to the uncertainty of the reliability requirements in the future, we have concluded that a change in useful life is not necessary at this time.  For further discussion of Virginia CO₂ Regulation, see “Regulation—Virginia CO₂ Regulation” in Part 1, Item 1 Business of our 2019 Annual Report on Form 10-K. 

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Pronouncements

6. New Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses in Financial Instruments.  FASB issued subsequent amendments to the initial guidance in November 2018 with ASU No. 2018-19, in April 2019 with ASU No. 2019-04, and in May 2019 with ASU No. 2019-05. The ASU amends the guidance on the impairment of financial instruments and adds an impairment model, known as the current expected credit loss (“CECL”) model.  The CECL model requires an entity to recognize its current estimate of all expected credit losses, rather than incurred losses, and applies to trade receivables and other receivables.  The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset.  The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and is applied using the modified-retrospective approach.  We adopted this standard for the fiscal year beginning January 1, 2020, and it did not have a material impact on our financial statements.

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.  The guidance provides temporary optional expedients and exceptions related to contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates.  The new guidance allows entities to elect not to apply certain modification accounting requirements, if certain criteria are met, to contracts affected by what the guidance calls reference rate reform.  An entity that makes this election would consider changes in reference rates and other contract modifications related to reference rate reform to be events that do not require contract remeasurement at the modification date or reassessment of a previous accounting determination.  The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition. The guidance is effective upon issuance and generally can be applied as of March 12, 2020 through December 31, 2022.  We are continuing to evaluate the impact of this standard on our financial statements.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: 

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2020		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	67,890	$	67,890	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		137,101		—		—		—
Unrestricted investments and other (3)		122		—		122		—
Derivatives - gas and power (4)		993		—		925		68
Total Financial Assets	$	206,106	$	67,890	$	1,047	$	68
Derivatives - gas and power (4)	$	9,766	$	8,255	$	1,511	$	—
Total Financial Liabilities	$	9,766	$	8,255	$	1,511	$	—

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December31,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Nuclear decommissioning trust (1)	$	64,504	$	64,504	$	—	$	—
Nuclear decommissioning trust - net asset value (1)(2)		146,604		—		—		—
Unrestricted investments and other (3)		126		—		126		—
Derivatives - gas and power (4)		1,013		—		—		1,013
Total Financial Assets	$	212,247	$	64,504	$	126	$	1,013
Derivatives - gas and power (4)	$	24,125	$	17,109	$	7,016	$	—
Total Financial Liabilities	$	24,125	$	17,109	$	7,016	$	—

⁽¹⁾ For additional information about our nuclear decommissioning trust, see Note 4—Investments below.

⁽²⁾ Nuclear decommissioning trust includes investments measured at net asset value per share (or its equivalent) as a practical expedient and these investments have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Condensed Consolidated Balance Sheet.

⁽³⁾ Unrestricted investments and other includes investments that are related to equity securities.

⁽⁴⁾ Derivatives - gas and power represent natural gas futures contracts (Level 1 and Level 2) and financial transmission rights (Level 3).  Level 1 are indexed against NYMEX.  Level 2 are valued by ACES using observable market inputs for similar transactions.  Level 3 are valued by ACES using unobservable market inputs, including situations where there is little market activity.  Sensitivity in the market price of financial transmission rights could impact the fair value.  For additional information about our derivative financial instruments, see Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

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Derivatives And Hedging (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule Of Outstanding Derivative Instruments

Outstanding derivative instruments, excluding contracts accounted for as normal purchase/normal sale, were as follows:

		Quantity
		As of June 30,		As of December 31,
Commodity	Unit of Measure	2020		2019
Natural gas	MMBTU		65,990,000		73,560,000
Purchased power - financial transmission rights	MWh		6,087,751		5,771,291

Schedule Of Fair Value Of Derivative Instruments

The fair value of our derivative instruments, excluding contracts accounted for as normal purchase/normal sale, was as follows:

		Fair Value
		As of June 30,		As of December 31,
	Balance Sheet Location	2020		2019
		(in thousands)
Derivatives in an asset position:
Natural gas futures contracts	Other assets	$	925	$	—
Financial transmission rights	Other assets		68		1,013
Total derivatives in an asset position		$	993	$	1,013
Derivatives in a liability position:
Natural gas futures contracts	Other liabilities	$	9,766	$	24,125
Total derivatives in a liability position		$	9,766	$	24,125

Schedule Of Derivative Instruments On The Statement Of Revenues, Expenses, And Patronage Capital

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital for the Three and Six Months Ended June 30, 2020 and 2019

	Amount of Gain						Location of	Amount of Gain (Loss) Reclassified
	(Loss) Recognized						Gain (Loss)	from Regulatory Asset/Liability
	in Regulatory						Reclassified	into Income for the
Derivatives	Asset/Liability for						from Regulatory	Three Months						Six Months
AccountedforUtilizing	Derivatives as of						Asset/Liability	Ended						Ended
Regulatory Accounting	June 30,						into Income	June 30,						June 30,
	2020			2019				2020			2019			2020			2019
	(in thousands)							(in thousands)
Naturalgasfuturescontracts	$	(12,638	)	$	(12,450	)	Fuel	$	(5,726	)	$	(2,104	)	$	(27,192	)	$	(9,906	)
Purchased power		68			704		Purchased power		(898	)		(2,037	)		(4,482	)		(5,402	)
Total	$	(12,570	)	$	(11,746	)		$	(6,624	)	$	(4,141	)	$	(31,674	)	$	(15,308	)

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Investments (Tables)

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

Schedule Of Investments

Investments were as follows as of June 30, 2020 and December 31, 2019:

			Gross		Gross
			Unrealized		Unrealized			Fair		Carrying
Description	Cost		Gains		Losses			Value		Value
	(in thousands)
June 30, 2020
Nuclear decommissioning trust (1)
Debt securities	$	60,565	$	7,008	$	—		$	67,573	$	67,573
Equity securities		85,481		56,737		(5,117	)		137,101		137,101
Cash and other		317		—		—			317		317
Total Nuclear Decommissioning Trust	$	146,363	$	63,745	$	(5,117	)	$	204,991	$	204,991
Unrestricted investments
Debt securities	$	240	$	—	$	—		$	240	$	240
Total Unrestricted Investments	$	240	$	—	$	—		$	240	$	240
Other
Equity securities	$	111	$	11	$	—		$	122	$	122
Non-marketable equity investments		2,144		2,369		—			4,513		2,144
Total Other	$	2,255	$	2,380	$	—		$	4,635	$	2,266
										$	207,497
December 31, 2019
Nuclear decommissioning trust (1)
Debt securities	$	59,748	$	4,325	$	—		$	64,073	$	64,073
Equity securities		85,303		63,858		(2,557	)		146,604		146,604
Cash and other		431		—		—			431		431
Total Nuclear Decommissioning Trust	$	145,482	$	68,183	$	(2,557	)	$	211,108	$	211,108
Unrestricted investments
Government obligations	$	2,869	$	4	$	—		$	2,873	$	2,869
Debt securities		240		—		—			240		240
Total Unrestricted Investments	$	3,109	$	4	$	—		$	3,113	$	3,109
Other
Equity securities	$	110	$	15	$	—		$	125	$	125
Non-marketable equity investments		2,146		2,176		—			4,322		2,146
Total Other	$	2,256	$	2,191	$	—		$	4,447	$	2,271
										$	216,488

⁽¹⁾ Investments in the nuclear decommissioning trust are restricted for the use of funding our share of the asset retirement obligations of the future decommissioning of North Anna.  See Note 3 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.  Unrealized gains and losses on investments held in the nuclear decommissioning trust are deferred as a regulatory liability or regulatory asset, respectively.

Schedule Of Contractual Maturities Of Debt Securities

Contractual maturities of debt securities as of June 30, 2020, were as follows:

Description	Less than 1 year		1-5 years		5-10 years		More than 10 years		Total
	(in thousands)
Other (1)	$	—	$	—	$	67,573	$	—	$	67,573
Held to maturity		240		—		—		—		240
Total	$	240	$	—	$	67,573	$	—	$	67,813

⁽¹⁾ The contractual maturities of other debt securities are measured using the effective duration of the bond fund within the nuclear decommissioning trust.

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Other (Tables)

6 Months Ended

Jun. 30, 2020

Other [Abstract]

Reconciliation of Cash and Cash Equivalents and Restricted Cash and Cash Equivalents Reported Within Condensed Consolidated Balance Sheet and Shown in Condensed Consolidated Statement of Cash Flows

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within our Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in our Condensed Consolidated Statements of Cash Flows:

	As of June 30,
	2020		2019
	(in thousands)
Cash and cash equivalents	$	42,914	$	1,031
Restricted cash and cash equivalents		24,349		24,007
Total	$	67,263	$	25,038

Schedule of Operating Revenue

Our operating revenues for the three and six months ended June 30, 2020 and 2019, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Member distribution cooperatives
Sales to member distribution cooperatives, excluding renewable energy credit sales	$	183,863	$	206,803	$	388,028	$	441,128
Renewable energy credit sales to member distribution cooperatives		13		3		13		17
Total sales to member distribution cooperatives	$	183,876	$	206,806	$	388,041	$	441,145
Non-members
Sales to non-members, excluding renewable energy credit sales	$	5,686	$	6,947	$	10,163	$	13,199
Renewable energy credit sales to non-members		—		1,232		104		1,420
Total sales to non-members	$	5,686	$	8,179	$	10,267	$	14,619
Total operating revenues	$	189,562	$	214,985	$	398,308	$	455,764

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General - Additional Information (Details) $ in Thousands	Jun. 30, 2020 USD ($) member_class member representative	Dec. 31, 2019 USD ($)
Number of classes of members | member_class	2
Number of Class A members | member	11
Number of representatives from each Class A member on the board of directors | representative	2
Number of representatives from each Class B member on the board of directors | representative	1
Consolidated assets | $	$ 2,159,197	$ 2,169,244
VIE's
Consolidated assets | $	$ 5,900	$ 5,800

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Fair Value Measurements (Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Thousands		Jun. 30, 2020	Dec. 31, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets		$ 206,106	$ 212,247
Total Financial Liabilities		9,766	24,125
Nuclear Decommissioning Trust [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1]	67,890	64,504
Nuclear Decommissioning Trust - Net Asset Value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1],[2]	137,101	146,604
Unrestricted Investment And Other [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[3]	122	126
Derivatives - Gas And Power [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[4]	993	1,013
Total Financial Liabilities	[4]	9,766	24,125
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets		67,890	64,504
Total Financial Liabilities		8,255	17,109
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Nuclear Decommissioning Trust [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1]	67,890	64,504
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Nuclear Decommissioning Trust - Net Asset Value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1],[2]	0	0
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Unrestricted Investment And Other [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[3]	0	0
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Derivatives - Gas And Power [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Liabilities	[4]	8,255	17,109
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets		1,047	126
Total Financial Liabilities		1,511	7,016
Significant Other Observable Inputs (Level 2) [Member] | Nuclear Decommissioning Trust [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nuclear Decommissioning Trust - Net Asset Value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[1],[2]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Unrestricted Investment And Other [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[3]	122	126
Significant Other Observable Inputs (Level 2) [Member] | Derivatives - Gas And Power [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[4]	925
Total Financial Liabilities	[4]	1,511	7,016
Significant Unobservable Inputs (Level 3)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets		68	1,013
Significant Unobservable Inputs (Level 3) | Derivatives - Gas And Power [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Financial Assets	[4]	$ 68	$ 1,013

[1] For additional information about our nuclear decommissioning trust, see Note 4—Investments below.

[2] Nuclear decommissioning trust includes investments measured at net asset value per share (or its equivalent) as a practical expedient and these investments have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Condensed Consolidated Balance Sheet.

[3] Unrestricted investments and other includes investments that are related to equity securities.

[4] Derivatives - gas and power represent natural gas futures contracts (Level 1 and Level 2) and financial transmission rights (Level 3). Level 1 are indexed against NYMEX. Level 2 are valued by ACES using observable market inputs for similar transactions. Level 3 are valued by ACES using unobservable market inputs, including situations where there is little market activity. Sensitivity in the market price of financial transmission rights could impact the fair value. For additional information about our derivative financial instruments, see Note 1 of the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.

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Derivatives And Hedging (Schedule Of Outstanding Derivative Instruments) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2020 MMBTU MWh	Dec. 31, 2019 MMBTU MWh
Natural Gas [Member]
Derivative [Line Items]
Quantity | MMBTU	65,990,000	73,560,000
Financial Transmission Rights [Member]
Derivative [Line Items]
Quantity | MWh	6,087,751	5,771,291

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Derivatives And Hedging (Schedule Of Fair Value Of Derivative Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Total derivatives in an asset position	$ 993	$ 1,013
Total derivatives in a liability position	9,766	24,125
Natural Gas Future Contracts [Member] | Other Assets [Member]
Derivatives, Fair Value [Line Items]
Total derivatives in an asset position	925
Natural Gas Future Contracts [Member] | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Total derivatives in a liability position	9,766	24,125
Financial Transmission Rights [Member] | Other Assets [Member]
Derivatives, Fair Value [Line Items]
Total derivatives in an asset position	$ 68	$ 1,013

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Derivatives And Hedging (Schedule Of Derivative Instruments On The Statement Of Revenues, Expenses, And Patronage Capital) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Regulatory Asset/Liability for Derivatives	$ (12,570)	$ (11,746)	$ (12,570)	$ (11,746)
Amount Of Gain (Loss) Reclassified from Regulatory Asset/Liability into Income	(6,624)	(4,141)	(31,674)	(15,308)
Natural Gas Future Contracts [Member] | Fuel [Member] | Operating Expense Fuel [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Regulatory Asset/Liability for Derivatives	(12,638)	(12,450)	(12,638)	(12,450)
Amount Of Gain (Loss) Reclassified from Regulatory Asset/Liability into Income	(5,726)	(2,104)	(27,192)	(9,906)
Financial Transmission Rights [Member] | Purchased Power [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Regulatory Asset/Liability for Derivatives	68	704	68	704
Amount Of Gain (Loss) Reclassified from Regulatory Asset/Liability into Income	$ (898)	$ (2,037)	$ (4,482)	$ (5,402)

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Investments (Schedule Of Investments) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Schedule of Invested Securities [Line Items]
Equity, Cost	$ 2,144	$ 2,146
Equity Method Investment Gross Unrealized Gains	2,369	2,176
Equity, Fair Value	4,513	4,322
Other, Cost	2,255	2,256
Other Gross Unrealized Gains	2,380	2,191
Other, Fair Value	4,635	4,447
Total Other	2,266	2,271
Total Investments	207,497	216,488
Total Nuclear Decommissioning Trust	204,991	211,108
Held to maturity investments	240
Debt Securities [Member]
Schedule of Invested Securities [Line Items]
Held to maturity investments	240	240
Held to maturity investments, Fair Value	240	240
Unrestricted Investments [Member]
Schedule of Invested Securities [Line Items]
Held to maturity investments	240	3,109
Held to maturity investments, Gross Unrealized Gains		4
Held to maturity investments, Fair Value	240	3,113
Government Obligations [Member]
Schedule of Invested Securities [Line Items]
Held to maturity investments		2,869
Held to maturity investments, Gross Unrealized Gains		4
Held to maturity investments, Fair Value		2,873
Nuclear Decommissioning Trust [Member]
Schedule of Invested Securities [Line Items]
Investments, Debt securities, Cost	60,565	59,748
Investments, Debt securities, Gross Unrealized Gains	7,008	4,325
Investments, Debt securities	67,573	64,073
Investments, Equity securities, Cost	85,481	85,303
Investments, Equity securities, Gross Unrealized Gains	56,737	63,858
Investments, Equity securities, Gross Unrealized Losses	(5,117)	(2,557)
Investments, Equity securities	137,101	146,604
Investments, Cash and other	317	431
Investments, Cost	146,363	145,482
Investments, Gross Unrealized Gains	63,745	68,183
Investments, Gross Unrealized Loss	(5,117)	(2,557)
Total Nuclear Decommissioning Trust	204,991	211,108
Other [Member]
Schedule of Invested Securities [Line Items]
Investments, Equity securities, Cost	111	110
Investments, Equity securities, Gross Unrealized Gains	11	15
Total Investments	$ 122	$ 125

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Investments (Schedule Of Contractual Maturities Of Debt Securities) (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Investments [Abstract]
Other debt securities, 5-10 years	$ 67,573
Other debt securities, Total	67,573
Held to maturity securities, Less than 1 year	240
Held to maturity securities, 5-10 years	0
Held to maturity investments	240
Contractual maturities of securities, Less than 1 year	240
Contractual maturities of securities, 5-10 years	67,573
Contractual maturities of securities, Total	$ 67,813

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Other - Additional Information (Details)	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($) MW	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Public Utilities General Disclosures [Line Items]
Sales to TEC	$ 0		$ 0
Sales to Non member	0		$ 0
Revolving Credit Facility
Public Utilities General Disclosures [Line Items]
Line of credit outstanding	100,000,000	$ 100,000,000		$ 67,200,000
Revolving Credit Facility | Through March 3, 2022 [Member]
Public Utilities General Disclosures [Line Items]
Credit facility, maximum borrowing capacity	500,000,000	500,000,000
Revolving Credit Facility | March 4, 2022 through February 28, 2025 [Member]
Public Utilities General Disclosures [Line Items]
Credit facility, maximum borrowing capacity	400,000,000	400,000,000
Letter of Credit [Member]
Public Utilities General Disclosures [Line Items]
Line of credit outstanding	$ 500,000	$ 500,000		500,000
Wildcat Point [Member]
Public Utilities General Disclosures [Line Items]
Power facility output | MW		973
Increase in property, plant and equipment				$ 29,600,000

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Other - (Reconciliation of Cash and Cash Equivalents and Restricted Cash and Cash Equivalents Reported Within Balance Sheet and Cash Flows) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Cash And Cash Equivalents [Abstract]
Cash and cash equivalents	$ 42,914	$ 3,469	$ 1,031
Restricted cash and cash equivalents	24,349	24,230	24,007
Cash, cash equivalents, restricted cash and cash equivalents	$ 67,263	$ 27,699	$ 25,038	$ 22,978

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Other - (Schedule of Operating Revenues) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Other [Abstract]
Sales to member distribution cooperatives, excluding renewable energy credit sales	$ 183,863	$ 206,803	$ 388,028	$ 441,128
Renewable energy credit sales to member distribution cooperatives	13	3	13	17
Total sales to member distribution cooperatives	183,876	206,806	388,041	441,145
Sales to non-members, excluding renewable energy credit sales	5,686	6,947	10,163	13,199
Renewable energy credit sales to non-members		1,232	104	1,420
Total sales to non-members	5,686	8,179	10,267	14,619
Total operating revenues	$ 189,562	$ 214,985	$ 398,308	$ 455,764
Type of Revenue [Extensible List]	us-gaap:ElectricityMember	us-gaap:ElectricityMember	us-gaap:ElectricityMember	us-gaap:ElectricityMember