2Marketing to Cooperatives Milsoft Utility Solutions WORKSHOP MODERATORSJanine WeidowManager, External MarketingNRECASteve CollierVice President of Business DevelopmentMilsoft Utility Solutions
3Marketing to Cooperatives AGENDA8:00 am Welcome Remarks – Introduction/Goals8:30 Workshop Session: Electric Co-op 10110:00 The Cooperative Perspective12: Working Luncheon – NRECA Resources1:00 pm Doing Business with/Selling to Co-ops2: Discussion/Closing Remarks2:30 Adjourn
4Workshop Goal: Education Better understand cooperatives’ structure & operations.Hear cooperatives discuss how they do business with vendors.Learn about NRECA structure & operations.And how NRECA works with its sister organizations.And NRECA resources for Associate MembersHear successful vendors discuss doing business with co-ops.Get your questions answered.
5“The Electric Cooperatives’ National Trade Association” Marketing to Co-ops“The Electric Cooperatives’National Trade Association”
7National Rural Electric Cooperative Association Primary Focus: Rural Electric CooperativesDistribution CooperativesGeneration & Transmission (G&T) CooperativesStatewide / Regional Trade AssociationsProducts & Services Co-opsAffiliate Members (vendors)>99% of electric cooperatives are Members.
8Cooperative Research Network RE MagazineAdvertisingEditorial ContentConferencesFlagship conference = TechAdvantage & ExpoCooperative Research NetworkPart of NRECAAll NRECA Members benefitTouchstone Energy
9American Public Power Association Primary Focus: Public Power Systems Primary Focus: Public Power SystemsDivisions of local government: municipal, county, stateInclude other utilities: water & wastewater, gas, telecommJoint action agencies (like co-op G&Ts)Statewide / regional trade associationsAssociate Members (vendors)Municipal leagues & related government organizationsLess than half of public power systems are members.
10Public Power magazine Conferences DEED R&D network Advertising Editorial ContentConferencesFlagship Conference = Annual National Conference.Relatively small, limited exhibitor space & exposure.DEED R&D networkVoluntary, dues based.A minority of APPA Members participate.
11Home Town Connections is a for-profit affiliate APPA owns 64%, public power systems the remainder.Selects an exclusive preferred vendor in each category.Public power systems and trade associations are indirect marketing & sales channels.Charges a marketing fee and receives commission on sales to any public power system.Vendor partners discount products / services to APPA Members.
12Edison Electric Institute Primary Focus: “Shareholder-Owned” Electric Utilities,aka Investor-Owned Utilities (IOUs).International AffiliatesAssociate Members (vendors)Edison InstituteInstitute for Energy Efficiency>95% of IOUs are Members
13Publications & Conferences are not central to membership. Scant advertising, exhibitor opportunities or exposureElectric Power Research InstituteIndependent of EEIVoluntary, dues supportedAlso has co-op and public power members.
15Organized specifically to: Founded in 1942Organized specifically to:Overcome World War II shortages of electric construction materials,Obtain insurance coverage for newly constructed rural electric cooperatives, andMitigate wholesale power supply problems.
16Member-Elected Board of Directors 47 membersOne from each state with an electric cooperativeGlenn English – Chief Executive OfficerFormerly U.S. Representative, OklahomaHeadquartered in Arlington, VirginiaRS&I Division in Lincoln, Nebraska
17“THE NATIONAL ORGANIZATION DEDICATED TO REPRESENTING ELECTRIC COOPERATIVES AND THE CONSUMERS THEY SERVE”National leadership and member representation for legislative, regulatory, and public policy.Education and training programsInsurance, employee benefits and financial servicesTechnical expertise, advice and R&DElectrification assistance in developing countries around the worldNational branding and services
19“Poles, wires and meters” DISTRIBUTION MEMBERS“Poles, wires and meters”Electric distribution cooperatives and nonprofit associations, nonprofit corporations, public utility districts, and government corporations or authoritiesLocated in a state, territory, possession or commonwealth of the U.S.Engaged in furnishing electricity at retail to consumers
20GENERATION & TRANSMISSION MEMBERS Generate and resell wholesale power to their member utilitiesCooperatives, nonprofit associations, nonprofit corporations and public utility districtsLocated in a state, territory, possession or commonwealth of the United StatesEngaged in the marketing, generation and/or transmission of wholesale bulk electricity for sale to others for the purpose of resale
21TRADE & SERVICE ASSOCIATION MEMBERS Related organizations that are not actually engaged in the marketing, generation, transmission or distribution of electricitymembers are generation & transmission or distribution cooperative, associations, nonprofit corporations, public utility districtsLocated in a state, territory, possession or commonwealth of the United StatesEngaged in support of electric co-ops’ marketing, generation, transmission or distribution of electricity
22TRADE & SERVICE ASSOCIATION MEMBERS (cont) Unified advocacy to the general public, regulatory bodies and state legislatures on behalf of their membersVoluntarily membershipGoverned by member-elected representativesOffer desired servicesEducation & trainingPublish newspapers or magazines for membersGroup purchasingOther
23PRODUCT & SERVICE COOPERATIVE MEMBERS Cooperatively-owned organizationsMembers generally include NRECA membersObjectives are aligned with the objectives of NRECA.Provide products and services at better price, quality, terms, service than would be available elsewhereInsurance - FederatedBanking - NRUCFCData Processing – NISC, SEDCTelecommunications – NRTCTransformers & Equipment - UUS
24ASSOCIATE MEMBERS Companies doing business with NRECA members Includes:Utility equipment manufacturers, distributors, wholesalersConsulting / professional servicesIT & software products and servicesTelecomm products and servicesFinancial products and servicesConsumer products and servicesMany participate in TechAdvantage & Expo and advertise in Rural Electric Magazine.
25Other NRECA Organizations Marketing to Co-opsOther NRECA Organizations
26November 1962 - NRECA and the newly-established U. S November NRECA and the newly-established U.S. Agency for International Development (USAID) signed an inaugural cooperative agreement in the White House Oval Office in a ceremony witnessed by President John F. Kennedy. NRECA International, Ltd. was incorporated as a wholly owned subsidiary of NRECA in June 1972.
27HELPING DEVELOPING COUNTRIES ELECTRIFYY Original purpose: Share lessons learned from US rural electrification with developing countries around the world.Assisted development and deployment of rural electrification programs in over 40 countries.Support from USAID, U.S. Department of Agriculture, the World Bank, the UK Department for International Development (DFID), Asian Development Bank (ADB), and host country government agencies.
28“THE NATIONAL BRAND OF ELECTRIC COOPERATIVES” Voluntary membership for NRECA membersMore than 660 Touchstone Energy® cooperatives in 46 states are delivering electric power and energy to more than 30 million consumers.
29“THE POWER OF HUMAN CONNECTIONS” National promotion & advertisingTelevision ads on various channels including:Print ads in major national publications including:Advertising brand and collateral for member co-ops to use.
30NATIONWIDE SERVICES FOR MEMBERS’ CUSTOMERS Bill Consolidation and Energy Management ProgramTouchstone Energy® HomeEnergy Saver ProgramCo-op ConnectionsSites Across America.comEnergy education programsKids "Super Energy Saver" ProgramDiscovery School Program - Get Charged!
31NRECA“Monitor, evaluate & apply technologies that help electric cooperative utilities control costs, increase productivity, and enhance service to their consumer–members.”Results are available to all NRECA voting members.Online and printed studies, reports, newslettersWeb conferencesSeminars and presentations at conferencesPartners with US DOE, EPRI and other R&D organizations.Six Member Advisory Boards & an Industry Advisory GroupWe may need to move this slide to another section depending on when CRN can give their presentation. Details to come very soon….
32Principal areas of investigation include: NRECAPrincipal areas of investigation include:Clean coal and environmental-management technologiesRenewable and alternative energyEnd-use solutions that help the customer make better use of electricityDistribution system operations best practicesBroadband communications and information technologyTransmission capacity and securityWe may need to move this slide to another section depending on when CRN can give their presentation. Details to come very soon….
33National Cooperative Business Network Organizations Marketing to Co-opsNational Cooperative Business Network Organizations
34FOR ELECTRIC COOPERATIVES INSURANCE EXCHANGEFOR ELECTRIC COOPERATIVESFounded in 1959Property & casualty insurance for rural electric co-ops in 40 states.Includes coverage for water, sewer, propane and natural gas, surge suppression, security systems and other cooperative business ventures.Phil Irwin, President
35“SERVICE | INTEGRITY | EXCELLENCE” Founded by NRECA, incorporated in 1969Original purpose was to develop independent financing to supplement / replace REAProvides banking services to more than 1,050 electric cooperative owners serving 32 million ultimate users.Also provides banking services to rural telephone utilities.Sheldon Petersen, Governor & CEO
36NATIONAL INFORMATION SOLUTIONS COOPERATIVE Merger of CADP & NCDC in 2000500+ electric & telco members in 47 statesAccounting & business services, customer information & billing services, e-commerce solutions, E&O solutions.Also provides CIS services to national retailers in cooperation with Touchstone Energy.Vern Dosch, CEO
37SOUTHEASTERN DATA COOPERATIVE 200+ electric members in 33 statesAccounting & business services, customer information & billing services, e-commerce solutions, E&O solutions.Ron Camp, CEO
38UNITED UTILITY SUPPLY 230 electric co-op members in 17 states Manufactures and sells distribution transformersDistributes electrical distribution supplies & equipmentRon Sheets, President
39“YOUR TELECOMMUNICATIONS COOPERATIVE” Founded 1986 by NRECA, NRUCFC and NTCATo provide telecommunications for internal use and for resale by rural electric and telephone utilities.Bob Phillips, CEOOriginal business was satellite television for members and affiliates eventually serving >2 million retail subscribersAlso offers IPTV, satellite broadband, AMR, SCADA, voice & data dispatch radio, MVNO mobile phone.
41COOPERATIVELY-OWNED BUSINESSES A business incorporated under local state law.1752, Benjamin Franklin forms Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, still in operation today1844, the Rochdale Equitable Pioneers Society opened a cooperative store on Toad Lane in Rochdale, England.Cooperatives are deemed to be not-for-profit and therefore usually tax-exempt.
42THE COOPERATIVE PRINCIPLES Voluntary & Open MembershipDemocratic Member ControlMember Economic ParticipationAutonomy & IndependenceEducation, Training & InformationCooperation Among CooperativesConcern for Community
43There are three kinds of cooperatives: Cooperatives usually form to provide products or services with greater economy, efficiency, quality or values than would otherwise be available.Often to achieve economies of scale or leverage of scope.There are three kinds of cooperatives:Consumer-ownedProducer-ownedEmployee-ownedElectric cooperatives are consumer-owned
44COOPERATIVES IN THE USOver 120 million people are members of 48,000 cooperatives.Nearly 10,000 U.S. credit unions have 84 million members and assets in excess of $600 billion.Well known national cooperatives include:USAA (customer-owned)ACE Hardware (employee-owned)Ocean Spray, Land O’ Lakes (producer-owned)
45More About Electric Cooperatives Marketing to Co-opsMore About Electric Cooperatives
46A Brief History of Electric Cooperatives FDR learned in 1930 that 80% of the US was electrified, but only 10% of rural America had electric service.FDR formed Rural Electrification Agency in 1934.Congress formed Rural Electrification Administration under USDA in 1935.Offered loan guarantees / low interest loans to qualified borrowers (not just cooperatives).Provided financial and engineering standards.USDA reorganized in 1994 and replace the REAwith the Rural Utilities Service (RUS).
47A Brief History of Electric Cooperatives RURAL ELECTRIC COOPERATIVESMost IOUs were not interested in the risks and low rate of return for extending rural electric service.Consumers banded together to form cooperative (consumer-owned) corporations to qualify for REA loans and loan guarantees.Within ten years of the REA being formed, 90% of rural Americans had electric service.
49Electric Co-op Facts864 distribution cooperatives and 66+ generation and transmission cooperatives serve:Over 40 million people across 47 states15.5 million+ residences1.8 million commercial accounts138,792 industrial (less than 1% of the total)+ industrial accounts17.5 million meters2,500 of 3,141 counties in the U.S.
50Electric Co-op Facts Assets worth $100 billion Own and maintain 2.5 million line miles42% of the nation’s electric distribution linescovering ¾ of the nation's landmassDeliver 10% of total kilowatt hrs sold in the U.S. each yeargenerate nearly 5% of total electricity produced in the U.S. each yearSpend nearly $9 billion annually on products and services needed to operate their systemsEmploy nearly 67,000 people
51Electric Co-op Facts Rural Electric Cooperatives Only 16 of 47 states with electric regulatory authorities regulate some aspects of electric co-ops' operationsRates are reviewed and approved by local Board of DirectorsRate Objectives of Utility: covering costs/expenses
52DISTRIBUTION COOPERATIVES RESELL POWER Electric Co-op FactsDISTRIBUTION COOPERATIVES RESELL POWERPurchase wholesale powerA handful of distribution cooperatives generate some powerG&Ts provide about 40% of power purchased by distribution cooperativesFull and partial requirements contractsDistribution cooperatives obtain the remainder of their wholesale power from a variety of other sources
53SOME ELECTRIC COOPERATIVES ALSO OFFER Electric Co-op FactsSOME ELECTRIC COOPERATIVES ALSO OFFERCommunity development & revitalization projectsImprovement of rural water and sewer systemsAssist in delivery of health care and educationInternet service provider (ISP)PropaneNatural gasPremises security monitoring & controlHVAC equipment & service
54COOPERATIVE COMPARISONS Electric Co-op FactsCOOPERATIVE COMPARISONSPedernales (TX) is largest with 230,000 meters.Alaska Village serves the largest land area of any electric utility in the world with only 7,400 meters.Gila River Community Utility Authority is the smallest with 26 meters.I-N-N (AK) is the next smallest with 296 meters.Average size = 19,000 metersMedian size = 12,500 metersRio Grande (TX) is the sparsest with <2 meters / line mile(national average = 7 meters / line mile)
55Comparing Electric Co-ops to Other Electric Utilities Marketing to Co-opsComparing Electric Co-opsto Other Electric Utilities
56Division of Activities – America’s Electric Utilities
58Cooperatives Compared With Other Electric Utilities: Co-op sales grew twice as fast as the totalelectric industry average in 2000.Customers Per Mile of LineRevenues Per Mile of LineCooperatives6.6$8,500Investor-Owned34$59,000Municipals44$72,000
64Understanding Electric Cooperatives Marketing to Co-opsUnderstanding Electric Cooperatives
65Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICSThey are customer-owned, not-for-profit, principle-based.Their primary focus is cost, not profit.They are extremely sensitive to individual customers.Staff roles are broader & duties overlap. Their have distinctive practices & vocabulary.
66Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICSBusiness is very relationship based, more personal, less formal.Cooperatives nationwide are a tight knit community.Individual cooperatives are locally controlled, operate like a family, are very independent. Co-ops prefer that you already work well with other co-ops.
67Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICS (cont.)Most electric cooperatives share many characteristicsBut, no two electric cooperatives are just alike.What most impacts a co-op’s view of planning & operations?SizeGrowthLoad factorWholesale power costC&I customersCommunity demographicsLeadership
71How Co-ops Buy Products & Services Cooperatives vs. MunicipalsRUS procurement rules (CFR 1726)Government procurement rulesRUS borrowers must purchase from approved materials list
72How Co-ops Buy Products & Services Common purchasing practices5 vendors or less (few suppliers)3 bids – orally requested90% of purchasing activities are manual transactionsPublic bid opening not required unless a large power plantSupply chain management decisions by committee, ORPurchasing responsibilities are split among several functionsThis is an old slide..I wasn’t sure if you could use this or not so I left it in…delete if you feel its out of date.So find the “center of influence” for your product or service
73How Co-ops Buy Products & Services Advantages for the supplier:Co-ops are easy to work with – less bureaucraticCo-ops are dependable and pay on timeCo-ops are usually willing to pay for JIT deliveries and other value added servicesCo-ops are known to be honest and loyalThis is an old slide..I wasn’t sure if you could use this or not so I left it in…delete if you feel its out of date.
74The Co-op Supply Chain Engineering planning Purchase need Suppliers contactedQuotesreceivedSupplierselectedOrder typed& transmittedWarehouseReviewPrice &DeliveryThis is an old slide..I wasn’t sure if you could use this or not so I left it in…delete if you feel its out of date.InvoicereceivedSupplierPaidOrder shippedor backorderreleasedWarehousereceivesReceiving copy issent to purchasing&/or A/P
76How Co-ops Buy Products & Services What Co-ops BuyLine transformers (20%)Conductor (18%)Poles, towers, etc (13%)Station equipment (11%)The big 4 account 2/3 of the spend!
77How Co-ops Buy Products & Services The Supplier’s roleLong standing relationships – mutual trustProducts priced on a case-by-case basisStocking/Consignment/JIT programsLittle long-term planning
78Areas of Potential Improvement Some co-ops manage their supply chain, some don’tGrowing focus on supply chain cost performance and measurementGroup buying, standardization, etc. can reduce costsAlmost ½ of all co-ops are unwilling to join with other co-ops in the purchase or storage of materialsNormally utilize short-term forecasting3 bids and a cloud of dust – preferred methodInventory turnover varies based on vendor alliances vs. self managementThis is an old slide..I wasn’t sure if you could use this or not so I left it in…delete if you feel its out of date.
79Decision Influences Having other co-ops as customers Understanding what a co-op is and how co-ops operateSuccessful track recordAppearances at NRECA conferences/showsCustomer Support/Tech Support
80Panel recommendations: Show success with other co-ops (if not a co-op, then a similar sized electric utility)Understand what a co-op IS and what a co-op is ABOUTDemonstrate a willingness to work with the co-op, even if they’re not hugeCreate a relationshipCustomer ServiceThis slide may need to be re-worked a bit.
81How do co-ops find information? Shows/Conferences (mostly NRECA)Trade Magazines (RE, T&D,…)Web sitesGOSSIPTalking with counterparts at other co-op shows, meetings, schools
82Staying Informed Reading publications such as: Rural Electric Magazine Transmission & DistributionElectrical WorldUtility AutomationEnergy ITPC MagazineNetworking with other cooperatives.Keeping informed on technology projects ongoing at cooperatives.
83Staying Informed Attending trade shows Distributech NRECA TechAdvantage® Conference & ExpoIEEE Rural Electric Power ConferenceIEEE Transmission & DistributionOther specialty conferences and shows (GITA Autovation, CS Week)
85Rural Electric Magazine Mission is to help readers become more informed participants in the electric utility industry and in the business life of their co-ops and local communities.With nearly 26,000 subscribers, RE Magazine has the widest circulation among employees of electric co-ops of any utility industry magazine.Two-thirds of those readers make or affect purchasing decisions.
86NRECA PublicationsTwo major publications inform and educate members, decision makers and the interested public:Rural Electric Magazine, published monthlyElectric Co-op TODAY, a weekly newspaper
87Rural Electric Magazine Help readers become more informed about new technologies, products and services through monthly technical articles and special issues and sections. Technical ArticlesCo-op TechSolutionsUtility Marketplace
88Rural Electric Magazine Special Issues/SectionsTechAdvantage® and Expo Preview (usually February)“Connections” Supplement (April and October)Buyers Guide (May)Directory of Electric Co-ops (July)Advertiser’s Study (September)
89Rural Electric Magazine Associate Members can help by supplying RE with examples how they work with co-ops to improve their utility operations and enhance customer service.Check for upcoming topics in the printed media kit or at the RE Magazine Web site:Contact us three months ahead of the issue date.
90Rural Electric Magazine: NRECA Contacts Co-op Tech and Utility Marketplace: Bill Koch, (206) ,Solutions: John Lowrey, (217) ,“CONNECTIONS”: Nancy McMahen, (800) ,Editor: Perry Stambaugh, (703) ,Advertising: Danielle Burton, (301) ,Contact us anytime to discuss how your product or service helps electric co-ops do a better job for their consumers
91NRECA Conferences and Expos Overview of NRECA’s Conferences and Expos
93Identifying Conference Topics and Speakers Electric Cooperative Business NetworkAccess e-communities of electric cooperative employees to identify key issues, objectives, and potential speakers for conferencesNRECA inputYear-round input welcome, especially on hot topics and new technologiesCall for Presentations-6-9 months before each conference
94Participants Have Told Us: They like to hear co-op success storiesThey like to hear directly from the co-opsCase studiesThey do NOT prefer to hear sales talksThey want practical information to take home. This is the way they can sell ideas to management.BOTTOM LINE: The more success stories you have with co-ops, the higher your chances are to get the word out about your products.
97Associate Member Benefits Increased exposure to electric utility decision-makersAccess to electric utility industry informationValuable networking opportunitiesPotential for sales, partnering and other business alliances
98Types of MembershipsNRECA offers you a choice of three associate membership levels designed to fit the needs of your company and your business:Silver Associate MemberGold Associate MemberPlatinum Associate Member
99Exposure Benefits for Associate Members Subscription to Rural Electric MagazineAnnual Subscription to Electric Co-op TodayDesignation in the Annual Network Services/Associate Membership DirectoryDesignation in our Annual Buyer's GuideAccess to NRECA Conferences and SeminarsAssociate Member Logo for Print AdvertisingCertificate of Associate MembershipLink to NRECA's Home PageI&FS BenefitsAccess to NRECA member databaseListing In NRECA’s Buyers Guide2010 Network Services/Associate Membership DirectoryRural Electric Magazine — Utility Marketplace sectionCONNECTIONS: RE Magazine SupplementListing in NRECA’s Membership Directory – Published in July issue of RE Magazine
100Exposure Benefits for Gold and Platinum Associate Members All Silver Associate Member benefits, plus:Discounts on Space at TechAdvantage® Expo:VIP Suite at TechAdvantage® ExpoDiscounts on Full-Page, Four-Color Ads in RE MagazineOne complimentary registration to the CEO Leadership ConferenceOne complimentary registration to the Marketing to Co-ops Workshop
101Exposure Benefits for Platinum Associate Members All Silver Associate Member Benefits, plus:Complimentary Space and Discounts on Space at TechAdvantage® ExpoVIP Suite at TechAdvantage® ExpoOne Free Full-Page, Four-Color Ad in RE MagazineOne Free ½-Page, Black & White Ad in RE MagazinePlatinum Associate Membership Plaque$12,000 Annual Dues
103Doing Business With Cooperatives Panel Discussion Marketing to Co-opsDoing Business With CooperativesPanel Discussion
104Vendor Panel Members of panel have spent years working with co-ops Are Platinum Associate Members and Affiliate Members of NRECAAll have extensive knowledge of co-op business practices, sales cycles and business needs
105Final Points: Selling to Co-ops Assist - don’t pesterUnderstand position and perspectiveDo homework for the co-opBe available - not underfootPrice to co-op pocketbookProduce what you promiseProvide Excellent Customer Service
106Appendix: Resource Information 2007/2008 NRECA Annual ReportAbout NRECA BrochureAssociate Member Brochure and web site on nreca.coopTouchstone Energy® web site on2010 TechAdvantage Exhibitor Prospectus2009 Connect Exhibitor Prospectus2009 New and Emerging Technologies Exhibitor Prospectus (for information only)CONNECTIONS Supplement InformationRural Electric Magazine Media Kit
107Final Points - Selling To Co-ops Final Questions?