When the Daviess-Martin County Rural Electric Membership Corporation (DMREMC) board and staff wanted to make infrastructure improvements while also implementing a bolder capital credits retirement schedule, they turned to CFC to help lay out a long-range plan that would accomplish both goals.
Over the past 18 months, CFC staff have helped DMREMC with several financial planning projects, including a revenue requirements study, a 10-year financial forecast and an equity management plan, that culminated in a new strategic plan finalized late last year.
10-Year Financial Forecast, Equity Management Plan Are Key
Headquartered in Loogootee, Indiana, DMREMC provides service to more than 7,000 members in Daviess, Martin and neighboring counties in southern Indiana. The cooperative is also one of CFC’s most recent members to refinance debt from another lender to become a 100 percent CFC borrower. “That was a very easy decision,” Arvin remarks.
“Our management team and board wanted to improve our distribution system, modernize our transportation fleet and retire capital credits in a more aggressive fashion over the next decade,” explains DMREMC CFO and Manager of Corporate Services Mike Arvin. “The 10-year financial forecast and equity management plan that CFC provided were key elements of our new strategic plan, which is designed to maintain our financial strength while keeping our members’ rates and tariffs as low as possible.”
CFC Can Help Co-ops Determine a Long-Range Plan
CFC’s strategic facilitation services help member cooperatives develop a structured approach to identifying and dealing with a variety of long-range issues. “CFC was great to work with, and we were very satisfied with the high level of professionalism and service we received,” Arvin says.
CFC’s annual Key Ratio Trends Analysis (KRTA) report also helped direct DMREMC’s efforts. “We utilize the KRTA every year to compare DMREMC’s operating results to our peers,” Arvin remarks. “The KRTA was instrumental in the strategic planning process, enabling us to make informed decisions on where we should be allocating out time and effort.”
DMREMC has also tapped CFC’s Regulatory Affairs Group to help put together a revenue requirements study. “It had been several years since we had done a cost-of-service study, and the first part of that process was to complete a revenue requirements study,” recalls Arvin. Staff were pleased to learn the results indicated no rate changes were needed in 2019.
He adds: “We will certainly rely on the professional help of CFC when we undertake the process again.”
Planning Is a Benefit of Your CFC Membership
DMREMC interviewed other consulting groups before selecting CFC for its financial planning projects. “The CFC team provided the professionalism and leadership we needed and also saved us a lot of money,” Arvin explains. “We are always focused on keeping our members’ costs as low as possible.”
DMREMC believes the various consulting and planning services offered by CFC to its members are an important benefit of membership. “All distribution co-ops are looking to get great advice and leadership from their trusted consultants, and we receive that from the CFC team,” Arvin concludes.
Contact your CFC regional vice president to discuss which financial planning services may benefit your cooperative.