Planning - A Key to the Future Dan Kessler, Regional Vice President ORECA Director Workshop June 2,...

Planning - A Key to the Future

Dan Kessler, Regional Vice President

ORECA Director WorkshopJune 2, 2015

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Planning-A Key to the Future

· Question to Consider – What are some suggestions from CFC, and from

us, for cooperatives to position themselves for continued success in the future?

· Compilation of best practices and experiences throughout the national cooperative network

· Not universal – these are suggestions that may or may not be appropriate for your cooperative

· Purpose is to provoke thought and debate

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Keys to Future Success

1. It begins with Strategic Financial Planning

2. Engineering fundamentals & Planning…

3. Focus on Employees and Directors…

4. Plan for an appropriate Financial Balance

5. Develop a Plan for Accountability…

6. Create an Engaged and Loyal membership

7. Embrace Technology…

8. Attend to Diversified Services9. Others…

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Strategic Financial Planning is a Key…· Strategic planning

– Proactive management vs issue d’jour– Sets corporate direction for future– Regular check ups on plan’s progress

Modify as the environment change

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Strategic Financial Planning Why do it?

· More Complex· Less Predictable· Need for Planning

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Strategic Financial PlanningTraditional Responsibilities

· load forecasting· energy/demand forecasting· construction planning· budgeting· tariff design· program development

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Strategic Financial PlanningToday’s Cooperative’s…

· demographic changes· changing member needs· new roles or services· deregulation, re-regulation,

competition· renewable resource emphasis, cost of

energy· war on terrorism, disaster planning

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Strategic Financial PlanningBoards & Management must:

· Think critically!· Ask constantly:

- Where are we now?

- Where are we going? - How will we get there?

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Strategic Financial Planning

· Develop · Implement· Update

“Chart the Course”

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Strategic Financial PlanningWhat is it?

· Mission · Vision· SWOT Analysis· Strategic Initiative’s/Goals· Strategies· Action Plans/Implementation

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Strategic Financial Planning

· When you decide to get started?

- Discuss the need to plan and expectations…

- Who’s involved?

- Develop Board Policy…

- Set meeting dates with appropriate audience…

- Involvement of staff…

- Develop a “draft” plan…

- Get final approval/adoption…

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Strategic Financial Planning

· CFC will Facilitate Strategic Financial Planning as necessary…

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Engineering Fundamentals…

· Providing reliable electric service– Load forecasting (Power Requirements studies)– Long-range engineering planning– Construction planning – Planning for storms and emergencies (LoC’s,

etc.)– System maintenance practices

· Meeting increased expectations of

members – Large commercial loads/ Key Accounts – Consumers want 24/7 reliabilityBalancing With Financial Realities!

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Focus on Directors & Employees · Increase competence – a continuous

process· Recognize expectations of changing

generations

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Adapt for generational differencesRetiring Baby Boomers

(1946 – 1964)About 86 million

· 75% of baby boomers plan to continue working in some capacity according to a study by AARP.

· Flexible work schedules and leaves of absences to allow more leisure time.

· Individual contracts to accommodate varying compensation and fringe benefit requirements

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Adapt for generational differencesGeneration X

(1965 – 1980)

50 million (36% drop!)

· Skeptical, Pragmatic, practical, Self-reliant, individualistic, reject rules.

· Best led by competence and require consistent feedback

· Work, life balance: Time away from work is as important as the career

· Two career families

· Not as likely to relocate for a job.

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Adapt for generational differences

Generation Y (Millennials)

(1980 – 2000) Approximately 76 million

· Feeling of empowerment, security, and optimism.

· Make up over 20% of today’s population.

· Racially and ethnically diverse

· Extremely independent: divorce, latchkey parenting, day care, single parents, technological revolution.

· “When Generations Collide”

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Focus on Director’s and Employee’s (cont.)

· Expect professionalism· Compensation tied to corporate goals· Succession Planning

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Plan for Financial Balance· Financial best practices and

policies· Equity Management (3 decision

points) - Capital Expenditures (growth) - Capital Credit Retirements - Margins (TIER Goals)· Electric rates (Cost of Service)· Financial Forecast (Compass)· Debt Portfolio Management· Budgeting (Budget Pro)· Utilize (other) tools: financial

presentations, KRTA’s, CFC Staff…

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Plan for Accountability from…· Board (self-evaluation, board goals)· CEO/GM

– Updated job-descriptions, clear expectations– Evaluations…

· Executive team/ Key Staff· Vendors· Consultants· Affiliated organizations

– G&T– Statewide association– National associations

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Engaged & Loyal Membership

· Communicate with your members · Survey the members

– Understand members’ increasing expectations– Understand members’ changing sophistication

· Educate your members · Be open with members/ Listen to them… · Treat members as “owners”

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Embrace Technology…· New ways to gather data· Make better decisions· Track results· Safety issues· Provide Additional Services· Add convenience

Better Service/Value For Your Members!

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· Ask why you want to provide this business and/or service

- Does it align with our mission, core business goals and skills of staff?

- Does the business provide value to electric members?· Complete a solid business plan· Analyze and track performance· Make changes as necessary· Comprehensive exit plan

Diversified Services

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Summary - Planning begins with…1. Strategic financial planning…

2. Engineering fundamentals and planning…

3. Focus on employees and directors…

4. Plan to achieve financial balance

5. Develop accountability…

6. Create an engaged and loyal membership

7. Embrace Technology…

8. Attend to diversified services

9. Others…

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Questions & Discussion

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We Appreciate Being Your Financial Partner!

Thank You!