First Quarter ReportAs of and for the three months ended January 31, 2021

Arkansas Electric Cooperative Corporation

ORGANIZATIONArkansas Electric Cooperative Corporation (AECC) is a genera-

tion and transmission cooperative incorporated under the laws of the state of Arkansas, headquartered in Little Rock. AECC is the wholesale power supplier for 17 electric distribution coopera-tives (members) in Arkansas. Generation resources immediately available to AECC provide 4,391 MWs of capacity. The mission of AECC is to provide safe, affordable electric power and related services reliably and responsibly by assisting each of its members in improving the quality of life in the areas they serve. This is to be done at the lowest possible cost consistent with sound business practices.

RESULTS OF OPERATIONSAECC has two components of revenue: 1) an energy charge,

based on total members’ usage, which recovers certain variable and a portion of AECC’s fixed costs; and 2) a demand charge, based on each members’ peak demand for energy during the four summer months, which recovers a portion of AECC’s fixed costs. In addition, AECC is also able to recover the actual cost of fuel and purchased power through a fuel adjustment clause approved by the Arkansas Public Service Commission (APSC), along with a separate rider to recover the net of expenses and revenue related to participating in the energy markets of two separate Regional Transmission Organizations (RTO), explained more fully below.

“Operating revenues” for the three months ended January 31, 2021, increased approximately $9.8 million compared to the same period in 2020. The energy revenue component experi-enced an increase of $8.4 million. There are two reasons for the increase in energy revenue: 1) an increase in fuel and purchased power costs during the three months ended January 31, 2021, in the amount of $4.5 million, which was passed on to members through the fuel adjustment clause; and 2) a 2.4% increase in member megawatt hour consumption, which resulted in an addi-tional $3.9 million increase in energy revenue. AECC’s member peak demand is set using the rolling four summer months of June through September. The member peak demand decreased by 1.5% and resulted in a decrease in revenue in the amount of $0.6 million during the three months ending January 31, 2021, as compared to the same period in 2020. AECC is also allowed to recover transmission expenses for certain transmission-specific items incurred in excess of an approximate base of $5.0 million

per month. The transmission rider (TO/RTO Rider) recovered $15.7 million during the three months ended January 31, 2021, which was approximately $0.6 million more than the amount recovered during the same period in 2020. In addition, hourly energy sales in excess of hourly loads settled in the RTO markets along with transmission revenues received, and capacity sales increased by $1.4 million during that same period.

AECC participates in both the day-ahead and real-time energy markets operated by the Midcontinent Independent System Operator, Inc. (MISO) RTO, and the Southwest Power Pool (SPP) RTO. The MISO footprint includes the eastern two-thirds of Arkansas. The SPP footprint includes the western one-third of Arkansas. Both RTOs operate wholesale electricity markets and are federally-designated as the entities responsible for moving electricity within their designated regional footprints, which include large interstate areas. Both RTOs coordinate, control and monitor the electricity transmission grid within their foot-print pursuant to FERC-approved tariffs.

Because they are so interrelated to the services AECC provides to members, “operation and maintenance, generation”, “power purchased” and “operation and maintenance, transmission” are categories that are combined for comparative purposes. “Operation and maintenance, generation”, “power purchased” and “operation and maintenance, transmission” increased during the three months ended January 31, 2021, by $13.0 million, compared to the same period in 2020. The total cost of energy and transmission as a percentage of operating revenue was 79.1% and 76.4%, respectively, for the three months ended January 31, 2021 and 2020.

LIQUIDITY AND CAPITAL RESOURCESAs detailed in the “Interim Statements of Cash Flows” for

the three months ended January 31, 2021, net cash and cash equivalents decreased $20.9 million. The major components of this decrease were $40.0 million in patronage capital retirement to AECC’s members, $35.7 million of capital expenditures, $10.1 million in principal payments on long term debt, and a decrease of $15.6 million in the amount of funds held under the member line of credit. These decreases were offset by $70.0 million in proceeds related to AECC’s commercial paper program, and $9.2 million increase in cash from operations.

For the calendar year 2021, AECC has budgeted $97.4 million for capital expenditures. This amount includes $70.4 million for

generation and $27.0 million for transmission and other miscel-laneous general capital expenditures.

As part of AECC’s short-term liquidity program, it main-tains a $75.0 million perpetual line of credit with the National Rural Utilities Cooperative Finance Corporation, a $10.0 million committed line of credit with CoBank through September 6, 2021, and a $10.0 million uncommitted line of credit with Regions Bank with a maturity of November 2, 2022. Note: all line of credit facilities are unsecured. AECC uses advances from the member line of credit program to support daily cash needs.

AECC also has a $250.0 million commercial paper program, for general corporate purposes and the issuance of letters of credit. Its commercial paper program is supported by a five-year $250.0 million senior unsecured revolving facility with a maturity of March 19, 2025. On January 31, 2021, AECC had $159.9 million of outstanding commercial paper.

Standard and Poor’s (S&P) has assigned AECC an issuer credit rating of AA. Moody’s Investors Service (Moody’s) has assigned an Aa3 senior secured rating to AECC’s First Mortgage Obligation Series 2011 A & B private placement. AECC also has a senior secured rating of AA- by Fitch Ratings (Fitch). AECC’s short-term debt ratings are, A-1+, P-1 and F-1+ from S&P, Moody’s, and Fitch, respectively.

OTHER FINANCIAL INFORMATIONThe interim financial statements for January 31, 2021, and

2020, are unaudited. In the opinion of AECC management, the accompanying unaudited financial information furnished herewith reflects all adjustments (consisting primarily of normal recurring accruals) necessary for a fair statement of its financial position and its results of operations for the interim periods presented; however, the business of AECC is subject to rate changes, seasonal fluctuations in sales and other factors. Accordingly, the results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.

It is suggested that these interim financial statements be read in conjunction with financial statements and notes thereto included in AECC’s October 31, 2020 Annual Report.

Buddy Hasten, President/CEOArkansas Electric Cooperative Corporation

Arkansas Electric Cooperative CorporationBALANCE SHEETS

As of January 31, 2021 (Unaudited) and October 31, 2020

January 31, 2021 October 31, 2020

(Unaudited)

ASSETS (In Thousands) (In Thousands)

UTILITY PLANT:

Electric plant in service, at cost $ 2,662,132 $ 2,626,254

Construction work in progress 165,274 176,228

2,827,406 2,802,482

Less accumulated depreciation 1,364,331 1,350,520

Net utility plant 1,463,075 1,451,962

LONG-TERM INVESTMENTS:

Gas reserves 10,542 10,513

Deposit with RUS - restricted investment 3,883 3,844

Other 26,904 27,432

Total long-term investments 41,329 41,789

CURRENT ASSETS:

Cash and cash equivalents 77,047 97,921

Accounts receivable, members 68,305 51,437

Fuel inventories and prepaid fuel supply 36,569 36,881

Material and supply inventories 32,086 31,879

Prepaid warranty agreement 10,011 10,801

Other current assets 16,142 21,226

Total current assets 240,160 250,145

DEFERRED CHARGES 29,814 30,554

Total assets $ 1,774,378 $ 1,774,450

January 31, 2021 October 31, 2020

(Unaudited)

EQUITIES AND LIABILITIES (In Thousands) (In Thousands)

MEMBERS’ EQUITIES:

Membership fees $ 2 $ 2

Patronage capital 323,348 363,348

Accumulated margins 167,601 154,631

Other equities 118,140 118,140

Total members’ equities 609,091 636,121

LONG-TERM DEBT:

Federal Financing Bank 562,274 567,819

CoBank 40,293 40,976

CoBank, Unsecured 2,022 2,425

First Mortgage Obligation Series 2011 A & B 171,000 175,000

Total long-term debt 775,589 786,220

CURRENT LIABILITIES:

Notes payable, members 91,805 107,382

Notes payable, others 159,942 89,964

Current maturities of long-term debt 30,794 30,264

Accounts payable and other accrued liabilities 59,140 79,805

Accrued property taxes 10,864 8,357

Accrued interest 2,404 4,817

Total current liabilities 354,949 320,589

COMMITMENTS AND CONTINGENCIES

DEFERRED CREDITS 34,749 31,520

Total members’ equities and liabilities $ 1,774,378 $ 1,774,450

Arkansas Valley ElectricOzark Sam Davis Al Simpson

Ashley-Chicot ElectricHamburg Martha Pennington Rodney Chapman

C & L ElectricStar City Phil Wilson Greg Smith

Carroll ElectricBerryville Alan Hunnicutt Rob Boaz

Clay County ElectricCorning John Dalton David Smith

Craighead ElectricJonesboro Terry Rorex Brian Duncan

Farmers ElectricNewport Sam Houston Larry Bright

First ElectricJacksonville David Luebke Don Crabbe

Mississippi County ElectricBlytheville Neil Burge Brad Harrison

North Arkansas ElectricSalem Larry Goodwin Mel Coleman

Ouachita ElectricCamden Greg Goss Mark Cayce

Ozarks ElectricFayetteville Jerry Bolinger Mitchell Johnson

Petit Jean ElectricClinton Donnie Collins Michael Kirkland

Rich Mountain ElectricMena Mark Robbins Brad Castor

South Central Arkansas ElectricArkadelphia Ricky Francis Colby Wells

Southwest Arkansas ElectricTexarkana Warren Plyler Dion Cooper

Woodruff ElectricForrest City J. A. Wampler Michael Swan

MEMBER SYSTEMS AND BOARD OF DIRECTORSMartha Pennington, ChairmanDon Crabbe, Vice Chairman

Sam Houston, SecretaryDavid Smith, Treasurer

1 Cooperative Way, PO Box 194208Little Rock, Arkansas 72219-4208

(501) 570-2200Internet: http://www.aecc.com

Management Team

President/CEO

Buddy Hasten

VP/CFO

David Frankenberg

VP and General Counsel

Lori L. Burrows

VP Planning and Market Operations

Andrew Lachowsky

VP and Chief Technology Officer

Robert McClanahan

VP Power Production and Delivery

Steve Metcalf

VP Public Affairs and Member Services

Sandra Byrd

VP Human Resources and Strategy

Maria Smedley

Arkansas Electric Cooperative Corporation

ARKANSAS ELECTRIC COOPERATIVE CORPORATIONINTERIM STATEMENTS OF OPERATIONS

For the three months ended January 31, 2021 and 2020 (Unaudited)

Three Months Ended 2021 2020 (In Thousands)

OPERATING REVENUES $ 203,811 $ 193,990 OPERATING EXPENSES: Operation and maintenance, generation 54,061 49,276 Power purchased 68,598 61,174 Operation and maintenance, transmission 38,565 37,801 Administrative and general 7,681 7,891 Depreciation 14,006 14,507 Interest 8,051 11,580 Total operating expenses 190,962 182,229

MARGIN FROM OPERATIONS 12,849 11,761 INTEREST INCOME, NET 152 504 OTHER (LOSS) INCOME (30) 72

NET MARGIN $ 12,971 $ 12,337

ARKANSAS ELECTRIC COOPERATIVE CORPORATIONINTERIM STATEMENTS OF CASH FLOWS

For the three months ended January 31, 2021 and 2020 (Unaudited)

Three Months Ended 2021 2020 (In Thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Margin $ 12,971 $ 12,337 Adjustments to reconcile net margin to net cash provided by operating activities- Depreciation 14,006 14,507 Amortization of gas reserves (28) (15) Allocation of patronage from associated organizations (13) (40) Interest on Deposit with RUS - Cushion of Credit (39) (454) Changes in operating assets and liabilities- Accounts receivable, members (16,868) (9,107) Fuel inventories and prepaid fuel supply 312 (5,588) Material and supply inventories (208) (3,249) Other current assets 5,874 10,545 Deferred charges 740 4,814 Accounts payable and other accrued liabilities (10,021) (9,718) Other deferred credits 2,430 (827) Net cash provided by operating activities 9,156 13,205 CASH FLOWS FROM INVESTING ACTIVITIES: Sales of other investments 1,340 492 Capital expenditures (35,671) (31,437) Net cash used in investing activities (34,331) (30,945) CASH FLOWS FROM FINANCING ACTIVITIES: Net payments on notes payable (15,578) (21,298) Proceeds on notes payable, other 69,979 19,995 Principal payments on long-term debt (10,100) (10,373) Redemption of patronage capital (40,000) (20,000) Net cash provided by (used in) financing activities 4,301 (31,676) Net decrease in cash and cash equivalents (20,874) (49,416) CASH AND CASH EQUIVALENTS, beginning of period 97,921 154,496 CASH AND CASH EQUIVALENTS, end of period $ 77,047 $ 105,080

Selected Financial Highlights

As of January 31, 2021 and October 31, 2020

January 31, October 31, 2021 2020

Equity as aPercent of Assets 34.33% 35.85% Debt/Equity Ratio 1.32 1.28 Current Ratio 0.68 0.78 Margins for Interest Ratio 2.81 2.65 Debt Service Coverage Ratio 1.96 2.23 Average Cost of Long-term Debt 3.545% 3.549%

Revenue Per MWH Sold

$55

$50

$45

$40

Mills

Jan-20 Apr-20 Jul-20 Oct-20 Jan-21Quarter Ended

Rate 1 Total Member Total Sales

50.8

48.6

51.1

45.9 45.5

46.0

49.1

48.5

51.1

46.9

49.2

52.5

49.7

50.6

47.2