In Tipmont’s 2025 Annual Report, we noted that our balance sheet reflects the capital-intensive nature of electric and fiber infrastructure.
That’s an important point because providing reliable electricity and fast fiber internet requires long-term infrastructure investments — poles, wires, substations, meters, fiber-optic lines, switches, routers and more.
Those investments are not made lightly. They are guided by a disciplined borrowing strategy designed to protect reliability, support growth and keep costs manageable for the members who own Tipmont.
Here’s what that means for you.
Why Tipmont borrows
Like all utilities, Tipmont has two primary ways to pay for infrastructure: the rates members pay and the money we borrow.
Borrowing helps avoid asking today’s members to pay all at once for assets that will serve our communities for decades — such as a substation or fiber network that may serve members for 30 to 40 years. Financing those assets over time helps ensure that members who benefit from them over time also help pay for them over time.
That approach also supports rate stability. Over the last 10 years, Tipmont has held electric rate increases below general inflation — while continuing to make necessary system investments to support growth and reliability.
A note on growth: When member growth creates the need for a new substation, upgraded lines or other system improvements, Tipmont has a responsibility to serve that need. Borrowing helps spread those long-term costs over the life of the assets.
Keeping borrowing costs low
One of the strongest signs of Tipmont’s disciplined borrowing strategy is our blended interest rate.
In 2025, Tipmont’s blended interest rate remained stable at 3.76%. According to Cooperative Finance Corporation’s Key Ratio Trend Analysis (KRTA), that is below the national cooperative median of 3.81% and well below the Indiana median of 4.17%.
That matters because even small differences in interest rates can add up over time. By maintaining a low blended borrowing rate, Tipmont helps reduce the long-term cost of financing essential infrastructure.
Another positive sign: Most of Tipmont’s long-term debt comes through government or cooperative lending programs designed for electric cooperatives. These programs often provide access to lower-cost, long-term financing. Only 18.64% of Tipmont’s long-term debt is non-government debt, compared with a national cooperative median of 62.98%.
Debt payments remain manageable
Lenders use financial measures to evaluate whether a cooperative can comfortably meet its obligations. Two important measures are TIER and debt service coverage.
TIER measures how many times net income covers interest expense. In 2025, Tipmont’s TIER was 1.38. While lower than 2024’s 1.85, it remained above the 1.25 benchmark that lenders generally require on average over time.
Debt service coverage measures the ability to cover both principal and interest payments. In 2025, Tipmont’s debt service coverage was 1.70. In simple terms, this means Tipmont generated about $1.70 for every $1 required for principal and interest payments — more than enough cash flow to meet debt obligations.
These results show that 2025 was a tighter financial year — largely due to higher power costs, depreciation and interest — but Tipmont continued to operate with positive coverage and responsible financial control.
Growth helps support the strategy
Tipmont is also growing faster than many peer cooperatives, which helps support long-term financial stability.
In 2025:
- Average consumers served increased to 31,539, up 2.2% from 2024.
- Kilowatt-hour sales increased 5.2% to 587 million kWh.
- Net new services grew 3.02%, compared with a national cooperative median of 0.83% in the KRTA.
Since 2021, Tipmont also has connected 4,022 new electric meters.
Growth does require investment. But it also expands the revenue base that supports those investments over time.
One encouraging metric: Tipmont’s long-term debt per kWh sold decreased slightly in 2025, from 30.7 cents to 30.5 cents. In plain language, Tipmont sold more electricity relative to its long-term debt — a positive sign that growth and usage are helping support the balance sheet.
Broadband is beginning to contribute financially
Tipmont’s fiber buildout was one of the largest investments in our cooperative’s history. It also reached members faster than originally planned — four years ahead of the original 2028 schedule.
Now that the most capital-intensive phase has stabilized, broadband is beginning to show positive financial results.
In 2025, Tipmont’s overall broadband operations produced a net margin of $207,941, improving from a loss of $89,342 in 2024. On-footprint broadband performed especially well, generating about $8.76 million in revenue and a positive margin of about $600,000 — far ahead of the original business plan, which projected a loss of about $1.74 million for that segment in year seven.
That is an important part of the debt story. The fiber investment increased leverage, but it also created a long-term revenue-producing asset that is now helping strengthen Tipmont’s overall financial position. As the major fiber construction phase ends, Tipmont expects new borrowing needs to moderate, allowing more cash flow to support debt reduction and equity strength.
Tipmont is actively reducing leverage over time
In plain language, reducing leverage means relying less on debt over time. We are actively working to reduce leverage over time through:
- Disciplined capital planning
- Careful cost control
- Stable revenue from electric growth
- Continued broadband performance
- Strategic use of low-cost financing
- Deferring some discretionary actions, such as a general capital credit retirement, while focusing on strengthening equity
In 2025, Tipmont still retired $1.2 million in capital credits to the estates of deceased members. However, a general retirement for all members was deferred so the cooperative could continue to prioritize debt reduction and equity strength.
The bottom line for members
Tipmont’s debt is higher than it was before the fiber buildout and higher than some peer cooperatives. But that debt is tied to essential, long-lived infrastructure that supports reliable electric service, fast fiber internet, economic development and future growth.
More importantly, Tipmont is managing that debt with discipline.
Our borrowing costs remain low. Our debt payments remain manageable. Our membership and electric sales continue to grow. Broadband is now contributing positive margins. And the most capital-intensive phase of the fiber buildout is behind us.
As a member-owned cooperative, every financial decision at TIpmont is made with your long-term interests in mind. Borrowing is not simply about taking on debt. Done responsibly, it is a tool that helps Tipmont build and maintain the infrastructure our members need — while keeping service reliable and costs as stable as possible.
