Innovative Energy Alliance Cooperative
Innovative Energy Alliance Cooperative Celebrates 10 years
On January 1, 2018 Innovative Energy Alliance Cooperative celebrated 10 years of being a helping hand to Mor-Gran-Sou Electric Cooperative and its members. Established in 2007 with neighboring cooperatives Roughrider Electric and Slope Electric, the alliance was created to share management services with the intention of reducing costs and allowing the respective boards of directors to retain local control. KEM Electric Cooperative joined the alliance in 2012.
In the cooperative spirit of working together for the greater good, the concept of sharing resources to streamline processes and add efficiencies gained momentum. The alliance expanded, adding key positions that were necessary at each of the cooperatives and could be shared. Just like the co-general managers, alliance employees were hired to split their time and talents among the four cooperatives.
Innovative Energy Alliance Cooperative has grown to 16 full-time employees including management. Positions range from the chief information officer and chief financial officer to accountants, engineers, human resource professionals, a safety coordinator and a communications coordinator.
Don Franklund has worked as co-general manager/chief executive officer (CEO) of the alliance since its inception. He says it’s important that members continue to identify Mor-Gran-Sou as their home cooperative. From the linemen in the fields to the office staff in Mandan, Flasher and Fort Yates, these employees are the face of Mor-Gran-Sou. The alliance employees you may see helping at an annual meeting are a secondary layer of employees who assist with larger or specialized projects.
“The alliance is a helping branch to your cooperative. We’re here for support,” Franklund says.
So, how exactly does Innovative Energy Alliance Cooperative work, and has it done what it set out to do — share services, gain efficiencies, and ultimately save the members of Mor-Gran-Sou money? Yes, says Mor-Gran-Sou Board Member Mark Doll, who was a founding board member for Innovative Energy Alliance Cooperative. “Our original goal was to share management services, and see where it would go down the road. It’s gone a long ways down the road,” he says. “As we went along, we found that sharing a lot of the other services was much more economical for all the co-ops.”
The formation of the Alliance
Back in 2007, Franklund had served as general manager/CEO for Mor-Gran-Sou for 13 years. He knew many of the cooperative’s rural areas were struggling with a declining membership, and Mor-Gran-Sou was seeing an increased cost of doing business. He said it was up to the area’s electric cooperatives to find innovative ways to prepare for the future. “We saw a changing rural landscape and were concerned about the future of our industry,” he said.
When Slope Electric's General Manager resigned to accept another job, the Slope board approached the boards of Mor-Gran-Sou and Roughrider, and suggested they form a temporary management alliance. “It was a bold step toward managing all of our cooperatives’ futures,” Franklund says.
The directors formed a Steering Committee by nominating two directors from each cooperative to serve and represent the interests of their memberships.
The committee hired Franklund and Clayton Hoffman, the former general manager/CEO of Oliver-Mercer Electric Cooperative, to lead the alliance. Oliver-Mercer was in the process of consolidating with West Plains Electric Cooperative, which served the Dickinson area and extended communities. The consolidation to become one cooperative, known as Roughrider Electric Cooperative, would become official the same day the alliance was incorporated as an LLC.
After a 20-month trial period, John Lee Njos, president of the Slope board at the time, says his fellow directors decided to make the management alliance permanent. “The management alliance has allowed us to do a better job of serving our members with technology Slope could not have afforded as a single cooperative. When teamed with Mor-Gran-Sou and Roughrider, we made it economically feasible,” he says.
To make the management alliance permanent, the three boards formed Innovative Energy Alliance, LLC, which employed two people: Franklund and Hoffman. They hired legal counsel and developed a new set of bylaws and policies for the newly formed entity. Then, each cooperative elected two board members to represent it on the alliance board. When the alliance board makes a decision, those directors take it back to their respective cooperatives for greater discussion or a vote.
The alliance allowed the three cooperatives to remain as separate businesses with their own identities, assets and obligations, and retain their authority. The only responsibility each respective cooperative board passed on was the ability to hire, terminate and evaluate the co-general managers/CEOs. This is the responsibility of the alliance board.
KEM joins Alliance
Population was also declining in their area and the cost of doing business was rising. KEM's longtime general manager had retired, and for several years after his resignation, the cooperative experienced general manager turnover.
Knowing they needed stability - and seeing the alliance thriving after five years of service, the KEM board approached the alliance board and asked if they would consider an additional partner. Based on the cooperative’s proximity, it made sense. The alliance board agreed to a temporary trial period in 2012, and on January 1, 2013, KEM joined the alliance on a permanent basis.
Dean Dewald, former chairman and current director on the KEM board, says the co-general managers brought steadiness and strength to the board room, office and membership. In addition, the benefits of having shared equipment and manpower has brought tremendous benefits. “There is absolutely no way, as small as we are, that we could have afforded a portion of the alliance employees and their services,” he says. “Before we were part of the alliance, when we had an engineering issue, we had to hire contract employees who would need to take time to become familiar with a project before they could assist. Now, we have those employees in-house, and they are familiar with our Co-op and projects.”
Dewald explains how the shared services work - one day an employee might work in the Linton area, and the next in the Bowman area. Local means anywhere in the four cooperative service areas for alliance employees. Dewald also notes that because the jobs are specialized, alliance employees have a unique set of skills.
Changes in management and name
The beginning of 2013 marked the addition of KEM joining the alliance, and also the retirement of Co-General Manager Hoffman, who retired with 30 years of cooperative service. In an interview conducted at the end of 2012, he said the five years he spent with Franklund managing the alliance were a wonderful way to end his career. “It has been fulfilling to expand on a new management concept that improved the skill level at the co-ops, and at the same time reduced costs,” he said.
Chris Baumgartner, the former manager of member relations for Basin Electric Power Cooperative, was hired to replace Hoffman. He worked for the alliance for five years, in which he says he experienced personal and professional growth, learning, cooperation and friendship. He was then called back to Basin Electric, where he again works; this time as senior vice president of member services and administration.
The alliance board of directors hired Travis Kupper, the alliance’s chief financial officer, to fill the co-general manager/CEO position beginning January 1, 2018. He has 19 years of cooperative experience, and understands the strengths and challenges the cooperatives face within the alliance family.
In November 2016, Innovative Energy Alliance, LLC converted to Innovative Energy Alliance Cooperative. The LLC was officially dissolved at the annual meeting on Feb. 10, 2017. In addition, Mor-Gran-Sou, Roughrider and Slope also own WDUS Holdings, LLC, which includes 3C Construction and West Dakota Utility Services (WDUS). They have been managing this group since 2010.
Ten years ago, Innovative Energy Alliance Cooperative was formed to share management services with the intention of reducing costs and gaining efficiencies by sharing equipment and employees; all while allowing cooperatives to retain local control.
A question directors and managers are regularly asked is, “What have we saved?” “As an engineer, I’m a numbers guy and I keep doing the math,” says Franklund. “Not giving up any services we have now - perhaps buying portions of them, but doing everything we are doing now - for the average co-op to do it, would cost about $400,000 to $500,000 a year, each. “We estimate among the four co-ops, we save $1.5 million a year,” he continues. “I’ve been told I’m light because I haven’t taken into account, ‘What is the idea exchange worth? What is the exchange of equipment and inventory and everything else?’ I was told to add another half million on top of that, for a savings of more than $2 million a year. I can sleep at night when I say $1.5 million.”
That savings doesn’t include the synergy of working together. On transmission line projects, the four cooperatives can bring equipment and manpower together - quickly going from 10 linemen to 50 linemen who can start and finish a large project in a day, if needed - reducing potential outage time to the member-owners. Or, if Roughrider in Dickinson employs an expert in advanced meter-reading technology and KEM has an apprentice meter man, the two can work together to share information. The alliance has taken the cooperative principle of education, training and information to another level.
“These are the kinds of things the alliance allows us to do. That’s where the value is for the member at the end of the line,” Franklund says.
Mor-Gran-Sou Board Member Mark Doll says the alliance has done much more than saved money - it might have saved a cooperative as its members know it today. “Without the alliance, we probably would not be Mor-Gran-Sou anymore. The two snow and ice storms in 2010 nearly wiped us out. We might have been able to remain a basic co-op without the additional services in safety, human resources, engineering and more - and we still would have had to manage our rates,” he says. “The alliance has allowed us to share equipment and employees, and reduce our expenses. As the alliance grows, Mor-Gran-Sou continues to save.”
|Don Franklund||Travis Kupper|