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Associated Electric Cooperative, Inc.

Notes to Consolidated Financial Statements
December 31, 2022 and 2021
(In Thousands of Dollars)

Investments

Debt securities held by Associated are classified and recorded in the accompanying consolidated
financial statements as follows:

Classified as Description Recorded at
Held to maturity Certain debt securities that management has Amortized cost
(HTM) the positive intent and ability to hold to
maturity

Available for Securities not classified as HTM or trading Fair value, with changes in fair
sale value, including earnings, except
deferred compensation funds,
which are adjusted through the
liability

All Associated’s equity securities are classified as available for sale. Associated measures equity
securities held in trust for deferred compensation benefits at fair value with changes recognized as
part of the accrued deferred compensation benefit and are included in other restricted and
designated assets and other deferred liabilities on the accompanying consolidated balance sheets.
Associated measures other equity securities at fair value with changes recognized in net margin.
Realized gains and losses are computed based on the difference between amortized costs and
proceeds received on a specific security identification basis.

Cash and Cash Equivalents

All unrestricted investments with an original maturity of three months or less are considered to be
cash equivalents and are stated at cost, which approximates fair value. At December 31, 2022 and
2021, Associated’s cash and cash equivalents balance was $172,655 and $184,172, respectively.

Designated Cash and Cash Equivalents

When the Board designates certain cash and cash equivalents for specific purposes, Associated
considers the amounts to be designated. The Board may un-designate the amounts in the future.
All designated investments with an original maturity of three months or less are considered cash
equivalents and are stated at cost, which approximates fair value. Designated cash and cash
equivalents consist of funds reserved for the Generation, Environmental and Insurance Reserve
Fund and member revenue subject to refund. At December 31, 2022 and 2021, Associated’s
designated cash and cash equivalents balance was $70,482 and $130,482, respectively.

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