1. KRTA How this report can bring value to your cooperative

2. 2 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

3. 3 Created and Owned by America’s Electric Cooperative Network Tool Pak

4. 4 Created and Owned by America’s Electric Cooperative Network TVA Peer Group - TVA has an excellent power supply peer group -2013 there were 42 system reporting in the peer group

5. 5 Created and Owned by America’s Electric Cooperative Network How I Used the KRTA Report

6. 6 Created and Owned by America’s Electric Cooperative Network KRTA Analysis Two ways (of many) that I think the KRTA can bring value… 1. Internal Control Tool 2. Identify SWOT’s

7. 7 Created and Owned by America’s Electric Cooperative Network Internal Control  Looking for anomalies  Go through the entire report and identifying questions  Smell Test

8. 8 Created and Owned by America’s Electric Cooperative Network Internal Control With 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

9. 9 Created and Owned by America’s Electric Cooperative Network KRTA Analysis Examples of findings from KRTA Report –Capitalizing payroll –Employee time entry –Tax Allocations - Accounting procedures

10. 10 Created and Owned by America’s Electric Cooperative Network Example

11. 11 Created and Owned by America’s Electric Cooperative Network Example

12. 12 Created and Owned by America’s Electric Cooperative Network Example Write-offs This is an example of where the change in state rank told more than the ratio itself.

13. 13 Created and Owned by America’s Electric Cooperative Network 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.

14. 14 Created and Owned by America’s Electric Cooperative Network 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)

15. 15 Created and Owned by America’s Electric Cooperative Network Strengths 1. Things we are doing well –Financial –Blended interest rates –Sales related 2. Things that have improved –Write-off’s –Line loss –Reliability

16. 16 Created and Owned by America’s Electric Cooperative Network 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

17. 17 Created and Owned by America’s Electric Cooperative Network Opportunities  Help strengthen management’s case for allocating resources –Write-off’s –Overtime –Expenses –Losses

18. 18 Created and Owned by America’s Electric Cooperative Network 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

19. 19 Created and Owned by America’s Electric Cooperative Network Summary  Communicate - Get the conversation started  Plant seeds  No surprises

20. Thank You Questions?