KRTAHow this report can bring value to your cooperative

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Created and Owned by America’s Electric Cooperative Network

Changes to the KRTA Report- Added a Modified Blended Interest Rate Ratio

- Separate report available on CFC website- Will show median and count but no rankings for all

peer groups

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Tool Pak

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TVA Peer Group- TVA has an excellent power supply peer group

- 2013 there were 42 system reporting in the peer group

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How I Used the KRTA Report

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KRTA AnalysisTwo ways (of many) that I think the KRTA can bring value…

1.Internal Control Tool

2.Identify SWOT’s

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Internal Control Looking for anomalies

Go through the entire report and identifying questions

Smell Test

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Internal ControlWith major change comes the opportunity for existing issues to be brought to light or new issues to be created.

– CIS/FIS Conversions– AMI Conversions– Turnover/Personnel Changes/Retirements– New Auditors

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KRTA AnalysisExamples of findings from KRTA Report

– Capitalizing payroll– Employee time entry– Tax Allocations

- Accounting procedures

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Example

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Example

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ExampleWrite-offs

This is an example of where the change in state rank told more than the ratio itself.

Ratio 59 Amount Written Off as a % of Operational RevenueYear Ratio State Rank04 0.43 905 0.37 1206 0.48 607 0.30 1108 0.20 1009 0.42 810 0.62 511 0.73 212 0.78 113 0.62 1

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Summarize Internal Control– Any break from the norm should be investigated

– Remember the “smell test”

– Your rank can tell you a lot

– Any ratio that leaves you at one end of the scale or the other is one you might want to focus on.

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SWOT– Strengths: Areas that are identified as strengths need to be

communicated to the Board and membership. Co-ops do not “brag” enough (reliability, cost, rates)

– Weaknesses: Often items that are partly outside your control. Need to be analyzed as a management team and strategies developed for improvement

– Opportunities: Areas where management thinks improvement can be made inside a strategic window

– Threats: Identify areas that might be subject to negative change (power costs, labor)

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Strengths1. Things we are doing well

– Financial– Blended interest rates– Sales related

2. Things that have improved – Write-off’s– Line loss– Reliability

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Weaknesses What are the inherent weaknesses of our coop that

are outside our control– Density– Load– Expense related

Informs Directors there are on management’s radar while also informing directors that some things are out of managements control

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Opportunities Help strengthen management’s case for allocating

resources– Write-off’s– Overtime– Expenses– Losses

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Threats What issues are on the horizon? Where is the coop now and where might we end

up?– Power cost– Large commercial sales– Financial– Rates– Equity

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Summary Communicate - Get the conversation started

Plant seeds

No surprises

Thank YouQuestions?