How GMs, Boards and CFOs Utilize the KRTA

CDPAA March 2015 Meeting

Ty Harrell, CFC RVP for MS and TN

3/19/15

Ty Harrell - Introduction Born and Raised in Canton, MS

Wife of 17 years – Stacy

4 year old son – Houston

Ole Miss Rebel

Worked at the MS Statewide for 9 years– Plan Administrator of the Health Insurance Plan– Controller– Facilitator of MS Coop’s Accounting/HR & IT

Supervisor Training

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NCAA

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KRTA

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KRTA – Key Ratio Trend Analysis

One of the most utilized and valued CFC products / services

145 ratios whose results are computed using Coop Form 7 reported numbers

Tracks 5 years of Coop history for each ratio reported

Shows medians and coop ranking for each peer group for each ratio

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KRTA – Ratio Categories

1) Base

2) Financial

3) Revenue and Margins

4) Sales

5) Controllable Expenses

6) Fixed Expenses

7) Total Expenses

8) Employees

9) Growth

10)Plant

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KRTA Ratio Categories

There are ratios that will speak to each department of the coop.

My job here today is to relay what I think are the “Most Valuable” ratios for the two entities that have to incorporate “all” departments:

–General Manager / CEO–Board of Directors

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GM’s Top KRTA Concerns

Financial Strength Indicators – are these improving or declining and why? (Tier, MDSC, Equity as a % of Assets).

Cash – do ratios reflect true cash position of the coop and why or why not? (Current Ratio)

Load Mix – does increase/decrease bring up any concerns or needs for future consideration (Residential, Sm & Lg Commercial per total KWH sold)

Board – what story about the coop’s overall KRTA position stands out? How to relay that story effectively to the Board.

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“Most Valuable” KRTA Ratios in each group for GM’s

Base – Total KWH Sold (2)

Financial – Equity as a % of Assets (16)

Revenue and Margins – Operating Margins per KWH Sold (47)

Sales – Residential, Sm & Lg KWH sold per Total KWH sold (69,72,73)

Controllable Expenses – Total Controllable Expenses per KWH Sold (86)

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“Most Valuable” KRTA Ratios in each group for GM’s

Fixed Expenses - (3) – Power Cost per KWH Sold (88), Power Cost per KWH Purchased (89) & Power Cost as a % of Revenue (90)

Total Expenses – Total Cost of Service (minus power costs) per Total KWH Sold (105)

Employees – Overtime Hours/Total Hours (111)

Growth – Annual Growth in Total KWH Sold (114)

Plant – Line Loss (139)

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“Most Valuable” KRTA Ratios for Board Members

Base Ratios – summarizes the personality of your coop. Track annual progress of these.

-Total Consumers Served -Total KWH Sold

-Total Utility Plant -Total Number of Employees

-Total miles of line- I would add -

Average Consumers per Mile

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“Most Valuable” KRTA Ratios for Board Members

Financial Ratios – Do an annual review of the most valuable ratios; Also emphasize the Financial Ratios that most impact your coop

-Tier -MDSC -Equity as a % of Assets

-Blended Interest Rate -Current Ratio-Rate of Return on Total

Capitalization

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“Most Valuable” KRTA Ratios for Board Members

All Other Ratios – Your Individual Coop’s Personality will dictate what other ratios are valuable to ensure your Board has the Pertinent Information to make Informed Decisions.

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Trends in KRTA Ratios

Total KWH Sold

Equity as a % of Assets

Blended Interest Rates

Average Residential Usage KWH per Month

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