EMPIRE DISTRICT ELECTRIC CO Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Empire District Electric Co performed this year. Instead of digging through complex filings, I’ve broken down the key points so you can see the company’s health and where it is headed.

1. What does this company do and how did they perform?

Empire District Electric Co (doing business as "Liberty") provides electricity, natural gas, and water to about 218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas. It is a subsidiary of Algonquin Power & Utilities Corp.

This report focuses on Empire District Bondco, LLC. This is a special entity created to recover $143.5 million in costs from the 2021 Winter Storm Uri. The company issued low-interest bonds to cover these fuel and power costs. Customers pay these back over 15 years through a specific "storm recovery charge" on their bills. This year, the entity successfully collected these charges and paid its debts on time.

2. Financial performance

Because this is a financing vehicle, it doesn't earn traditional profit. Its success depends on its ability to pay off the $143.5 million in bonds. This year, the company collected enough money from customer bills to cover all required interest and principal payments. It met all its regulatory requirements without needing extra cash from the parent utility.

3. Major wins and challenges

The biggest win was the smooth management of the storm recovery charges. These remained stable even as regional energy prices rose. The company also passed its annual regulatory audit, confirming that it followed all Missouri Public Service Commission rules. There were no issues with regulators, meaning the cash flow backing the bonds remains secure.

4. Financial health

The company is a "bankruptcy-remote" entity. This means its assets are legally separated from its parent company, Algonquin. Independent auditors confirmed that the company followed all rules for managing the bonds. The company keeps a dedicated account for customer payments, which acts as a safety net. This protects bondholders even if the parent utility faces financial trouble.

5. Key risks

The main risk is regulatory. The Missouri Public Service Commission can adjust the storm recovery charges each year. If they delay or deny an adjustment, it could affect the timing of debt payments. Also, the company relies on Liberty’s billing systems. If those systems fail, it could slow down cash flow. Finally, while the company is legally protected, it is still indirectly linked to the parent company’s overall financial health.

6. Leadership changes

The company updated its leadership to better align with Liberty’s operations:

• Tim Wilson became President in January 2025. His experience in electric operations ensures he understands the assets generating the revenue.
• Fraser McNamee became Treasurer and Secretary in September 2025. His background at Algonquin helps streamline financial reporting.

7. Future outlook

The company remains focused on paying off the $143.5 million bond debt. With a 15-year schedule, the company expects steady, predictable cash flow through 2037. There are no plans for new bond issues. The strategy remains strictly focused on managing the existing debt.

Investor Takeaway: If you are looking for stability, this entity functions like a predictable, regulated utility "pass-through." Because the debt is tied to specific customer charges and protected by a bankruptcy-remote structure, the primary focus for an investor is the ongoing regulatory support from the Missouri Public Service Commission. As long as those charges remain approved, the cash flow for these bonds is designed to be highly consistent.