Teri Viswanath: Welcome to Power Plays. This is CoBank’s podcast that helps electric co-ops make sense of the forces shaping their businesses and the rural communities they serve. Hello, I’m Teri Viswanath, your co-host, and today we wanted to try something a little different. We’re recording this episode right at the mid-year mark, and we wanted to step back and look at the major developments shaping 2026 and understand what they could mean for electric cooperatives, their membership, and the rural communities they serve. As always, I’m joined by my colleague and co-host, Tamra Reynolds. Hey, Tamra.
Tamra Reynolds: Hey, Teri. I think it’s always a good time to pause and reflect about what’s happened, what’s ahead of us, and think through how that all impacts the industries we serve at CoBank, and particularly on the infrastructure side and the electricity side. One thing I wanted to bring to everyone’s attention is we will have a new voice on the podcast going forward. I’m excited to be introducing Esther Simon. She’s a relationship manager on my team at CoBank. Esther, why don’t you introduce yourself and tell the folks a little bit about you?
Esther Simons: Thanks, Tamra. I am really excited to be here and be part of the conversation. I joined CoBank about two and a half years ago, and prior to that, served an electric distribution co-op in northern Minnesota and got to see a little bit of everything as a CFO, along with HR, or human resources, and information technology. In my time here working at CoBank, I have gotten to know some of the customers and borrowers that we work with and some of the challenges that they face. I think this is a really good time to check in and take a look at how the year has gone so far and what’s lying ahead for customers that we work with.
Viswanath: Hey, so let me start us off by framing where we’re headed. For this mid-year check-in, we’ve organized the conversation around six issues that we think will matter most to electric cooperatives in the back half of 2026. Listeners can expect a practical discussion of global events that hit hard locally, as well as other economic and policy-related pressures that directly impact the current operating environment for electric co-ops. The message I want to send to our listeners is that our goal with this podcast check in is not just to identify the headlines, but to connect those developments with what co-ops, their members, and rural communities are experiencing on the ground. We’re going to quickly cover geopolitical risk and inflation, FEMA and other regulatory changes, what grid resilience means today, and opportunities to reconsider broadband investment.
The first of the issues we want to tackle really is the conflict in the Middle East, which has dominated global headlines because of its implications for energy markets, shipping flows, and economic confidence. Even with a ceasefire and a planned formal signing later this week, the disruption has already sent aftershocks through the oil markets and global supply chains. For rural communities, those effects can show up quickly in higher fuel and transportation costs, tighter household budgets, and added pressure on the businesses and electric systems that support local economies.
While the world can look forward to recovering about 15%-20% of its usual supply of oil and liquefied natural gas, the market is pricing in relief that I don’t think is warranted.
Right now, Brent crude oil, the global benchmark, has slid below $80 a barrel, and it’s well under the $110 it was trading back in May. The traders may be getting ahead of themselves, and we see the market remaining tight for the remainder of the year.
Simons: Absolutely. I think that’s a great point. When you talk about the global economic situation that we’re in, I think that’s where you can start to tie it back to the rural electric co-ops that we work with because they start to feel that as well. When you talk about materials and supplies that they’re needing to run their businesses on a day-to-day basis, that all comes into play.
Viswanath: You’re absolutely right, and the ability to pay bills. When you have seen a price increase at the pump, for many Americans, when we think about energy costs, this is their number one energy cost is what they’re paying at the pump.
Reynolds: That’s a good point, Teri. We can sit and talk about what’s going on with Iran, but the reality is there’s still a conflict with Ukraine and Russia. That bleeds over into other affordability issues. We feel it largely in different segments of the ag side. You see it with policy concerns around trade. Overall, there’s a number of elements about global conflict that continue to cause pricing impacts and challenges at the rural level that are exacerbated relative to urban areas.
Viswanath: I promise the audience we didn’t share notes, but Esther, your number one issue happened to be very related to this issue, which is rising equipment and material costs, right?
Simons: Yes, definitely. That is something that we’ve seen impacts on. Certainly, I think when you look at an entire electric distribution system, inflation has impacted nearly every component.. When I think about an electric distribution system, I think about poles, wires, labor, things like switchgear and insulators, all the different parts and components. They cost significantly more than they did even just a few years ago.
You know, I was talking to a co-op recently that had seen some price increases on transformers. A transformer may cost something three years ago, and it costs significantly more today. When you think about just something as simple as a transformer, but you multiply that across the entire system that they’re maintaining and building, the financial impact, I think, of that becomes pretty real.
Viswanath: Yes. The timing, right, Esther, is really important because, as we think about the critical need for replacement, so about 70% of the grid is end-of-life. The components are 26 years or older. We’re seeing these inflationary pressures occur at a time that we’re seeing an uptick in replacement, not to mention the new bill that’s occurring to meet the demand ahead, all of which are putting upward pressure on prices.
Simons: Definitely. I think the other challenge that comes with prices is labor, of course. I think the labor component of that is sometimes not talked about as often. That’s a real challenge, especially when we’re working with co-ops in rural areas. That skill is in high demand, and it’s hard to come by. That competition, especially in rural areas, definitely has a financial impact as well.
Reynolds: I think both of what you guys are saying is putting a finer point on the challenges with affordability and what that looks like. We continue to hear that from customers. On their own or in isolated instances, equipment costs, labor costs, and replacement costs of all the things that we think about when we think about systems is one thing. Then you have to also take it from the lens of, how do you recoup those costs? And what’s possible?
Also, from a policy perspective, if you have something from a regulatory perspective, how do you manage that aspect of this? What does that look like when you go to a commission or to-- in some cases, boards of directors may ask tougher questions than the commission. How does that flow through when you think about the overall impact to the system and being able to make strategic decisions that really highlight affordability and reliability, which are two of the main tenets that utilities overall and electric co-ops in particular focus on.
Viswanath: Tamra, do you think, just from your seat, I know you’ve been in the marketplace working with co-ops for quite a period of time. This environment that we’re in, the regulatory environment, it feels different. It feels like we’re in a much more muscular regulatory environment. That could be simply because costs are rising. With regulatory commissions, we’re seeing that every time a rate increase goes through, only 58% of the rate requests that are being proposed in front of regulators are actually being approved. This is a very different environment. I think we’re living in a changed environment with regard to the policies or the guardrails around the industry we work with.
Reynolds: Teri, I think you’re right. I think sometimes people have difficulty separating how they feel personally from what their role is, perhaps in the seat, from either a staff recommendations perspective or a commission chairperson perspective, too. When you feel personally like your dollar doesn’t go as far, that may bleed into how you show up at your job or how you show up in your role when it comes to deciding who carries the cost and who bears the obligation of some of those decisions.
I think it only is exacerbated by the fact that we are continuing to see, and this is my hot take issue is policy development when it comes to data centers. I think it’s hard for people to separate the cost of electricity and delivering that service with a whole new spectrum of customers that are potentially coming to the grid or potentially coming to the grid, and what that means for cost causation and being able to separate how that is recovered. To me, I think that’s a different challenge than some of these states have ever had to grapple with. It’s causing some confusion and maybe a little bit of pain.
Simon: You know, I think one consideration in every co-op that I’ve talked to that’s grappling with a large load, whether it’s a data center or a different large load that’s coming online that they haven’t experienced before, is their legacy member, their core membership, and how they protect their membership, especially with the changing demographics, from a load perspective, of what that load looks like along with the cost causation.
Reynolds: You’re right, Esther. I would add to it. I think that’s one element. The other thing is, what is the hyperscaler’s role in ownership of assets when you think about power supply? That’s an area where I think we have some yet-to-be-defined paths when you think about how states are handling some of these things. I was talking with a customer a couple of weeks ago that mentioned that their state, in particular, is proposing that these hyperscalers go out and build their own power or procure their own power and own it.
That has very different implications in terms of what a utility is and how that system operates relative to how it’s ever been thought of when you think of a large load or a commercial account or something like that, or industrial account. It really is bringing to bear some new thought processes around what are the intended and unintended consequences of making some of those calls for the sake of trying to split out cost causation from the equation.
Viswanath: The changing ownership pattern, I think, is ultimately going to influence where the power plants are going to be located, how materials and fuel will be sourced, and, to be honest with you, who benefits, right? I think this is really an important time. We’ve gone through iterations of new build cycles, but now to have the customer very closely be involved in actually building the power plants is going to change the dynamic within the industry.
There’s one issue I also think that’s coming up as we stick within this fairway and think about those guard rails or the regulatory environment. We’re fundamentally changing the way we think about the regulatory compact and the role of the federal government. We have seen pretty muscular policy overtures, especially from the Department of Energy. The ANOPR that was issued last year that directs the ISOs to figure out how to do direct connection with these large loads, pretty big deal.
The other happens to be really and fundamentally the protection as we think about the safety net that’s created by the federal government. One of the issues I brought up, or my second issue, is really FEMA reform, which has very real consequences to rural reliability. The FEMA reform at the moment is really moving on two different fronts. We have the White House initiative that really is intending to shift the financial burden to the states. Then we see a congressional bill that’s aiming to spin FEMA out of the Department of Homeland Security and speed up infrastructure funding.
This is really a critical issue for electric co-ops because the reduction and federal disaster funding really is going to leave local consumer-owned co-ops having to foot massive bills in the aftermath of storm and wildfire. This is really one of those issues that I think is our must-watch issue, especially as we start to see the ink dry on the recommendation. Right now, we’re in this protracted debate that’s not a great place for us to be in. We need to get to a policy deliverable on this, and especially because we’re sitting in June and, hey, hurricane season is already underway.
Reynolds: Yes, Teri. It’s one of those things that I know Esther and I have been watching pretty closely, particularly since the storms in North Carolina. Gosh, it feels like it’s been a few years now. That process is moving a little bit more slowly than we’d hoped, but it’s such a critical piece of how as a bank get comfortable with supporting customers as they’re trying to rebuild their systems or thinking about what the long-term replacement plan looks like. To get some of that settled, I know, will go a long way in giving-- I know the bank’s peace of mind and what the future looks like for co-ops and utilities as a whole when you think about providing one of those lifeline services that everyone needs.
Simons: Definitely. As I’m listening to this conversation, I’m thinking about the members in those communities after a disaster or a storm. What they’re not thinking about is what is the FEMA formula or what is the paperwork that needs to be done. They’re thinking about, “When can I get power back on? My goodness, we’ve just had this disaster.” The co-ops show up with the mission of getting that power back on. I think it’s always nice to see if there’s some alignment that can happen between what the electric co-op’s mission is, what the member needs, and then ultimately what can happen with FEMA.
Viswanath: Esther, that was a really important point was not necessarily just getting the funding to put back the same system, but grid resilience was top of mind for you.
Simons: Absolutely. I think grid resiliency is something that I’ve had quite a few conversations about. I think it’s something that co-ops are facing. As you talked about earlier, the aging infrastructure that’s in place, how can we move forward and make sure that the grid is not only as strong as it is today, but stronger into the future, especially with the dynamic loads and frankly, large loads coming online. How do we maintain that reliability — and increase reliability?
Ultimately, I think members expect reliability, and data centers demand it. It’s not necessarily whether reliability and grid resilience matters, but I think it’s a matter of how much is it going to cost and who’s willing to pay for it? That’s something that’s on the top of mind of a lot of co-ops, certainly, that I’ve talked to recently.
Reynolds: Esther, when I think about it too, it’s always been important. It seems to be more important than ever when you think about some of the additional services that these businesses in these rural communities rely on, and these homes rely on. When you think about internet, and you think about high-speed connectivity, right? That amplified the reliability factor in many cases. When I think about it, sometimes people would rather sit in the dark and have a connection than they would perhaps have both.
The reality is you can’t get one to work without the other. I think there’s some value in being responsive and providing that, whether that’s an investment you’re making and thinking about hardening your system, or whether it’s managing an issue that occurs in some regions of the country like wildfire and wind, and some of those things that can be devastating. I think this just continues to become more and more important as time goes on.
Viswanath: Tamra, I know that many of our co-ops, when they think about the smart investments that really strengthen their communities, some have defined this in a very broad way, which actually includes being able to provide broadband service. You mentioned that this is really an inflection point for the investments that were made bridging the rural gap. What did you mean by that?
Reynolds: Teri, it’s one of the things I called out to my team back in January, I don’t know if Esther remembers that, but we’re at a point where you’ve got, I’ll say projects, but broadband businesses that have grown, they have been fully built out, and you’re still striving for additional subscribers in some cases. There are a lot that are very successful. There are some that are wishing that they could maybe optimize what they’re doing so that they could continue to repay the investment that they’ve made to make these communities thrive and have access to high-speed internet in a way that they never have before. Then you’ve got, I would say, a fraction of folks that, for one reason or another, things maybe just hadn’t panned out the way they’d planned.
We’re in this window where the margin for error is tighter than it’s ever been when you think about the success of some of these businesses, and particularly with electric co-ops, where you have, in a lot of cases, not-for-profit mindsets on the co-op side, and you have for-profit, competitive businesses within broadband. How do you balance those two while keeping in mind that interest rates are higher, labor is higher, and the investment costs for things like head-end units and fiber, if you’re still building, are going to other areas that maybe you got BEAD money for?
Those decisions and the success rate of those gets harder to hit when you have more factors at play that bleed into profitability. For me, that’s something I’ve been watching since January, knowing that a lot of people are continuing to think about, “Where do we take this project? When is the right time to let it go if it needs to be let go of? What does that look like for the business? What is our contingency plan if we don’t want to continue to operate this?” It’s one that’s top of mind for me and one that I know a lot of people are starting to ask us questions about.
Viswanath: That’s really helpful. We’ve covered a large amount of territory here, how do we take this information and really utilize it if we’re a co-op for the balance of the year? Any suggestions there?
Simons: When you look at the headwinds facing the industry, one thing that I always think of when I think of headwinds are also opportunities. There’s definitely some pretty great investments that are being made in communities and in systems in all of these areas. I think it can be a transformational time in the industry. I do think that all of them require careful consideration, and I think, ultimately, success, whether it’s your fiber business, your electric business, or working through a disaster, it always comes back to disciplined planning, execution, and leadership.
Viswanath: That’s helpful. Tamra, your thoughts?
Reynolds: I would agree with all that Esther said. I think you’ve got a number of resources at your disposal when it comes to partners like CoBank, helping you think through choices, and certainly you have key initiatives that are important to your particular co-op and its members. Being really attuned to how you have to pivot and be thoughtful around what is coming your way and using strategic planning as a tool, I think is incredibly helpful to do that. Continuing to lean into those options and resources and really putting your members first when you think about all the things that you have to do to keep the lights on, so to speak.
Viswanath: Hey, guys, this has been fun. Esther, so great to have you joining our podcast team, so great to have you with us. I hope, for our audience, all of you will stay with us next month. We’re going to focus in on cybersecurity. It is top of mind. It is mission-critical for our electric co-ops because a cyber incident can disrupt the essential power delivery that we talked about and turn into a major financial event. I hope all of you will tune in then, and thanks for joining us today.
