The past several months have been busy at Rolling Hills Electric Cooperative. We want to update you on the strategic plan and other financial items. If you have any questions, please contact me or any Board of Trustees member.
Implementing the Strategic Plan
On August 8, 2013, the Rolling Hills Electric Cooperative, Inc. membership voted to support the strategic plan Building for the Future. The strategic plan serves the best interest of members now and into the future by controlling costs, gaining efficiencies, and maintaining reliable service.
The strategic plan will construct a centrally-located main office facility. Satellite facilities for small teams of field personnel will be strategically located throughout the Rolling Hills service area.
All Rolling Hills members will begin to benefit from the strategic plan by the end of 2014 when a satellite facility will be established in Osborne. The Cooperative will begin to realize savings from more efficient and effective operations.
Satellite Facility: Osborne
The first step is to convert the existing Osborne site to a satellite field team facility for four linemen. The Osborne team will provide faster, more efficient service to Rolling Hills members in areas of Smith, Jewell, Osborne, Mitchell, Russell, and Lincoln counties.
The site has two metal buildings, and the smaller building will be removed. A combination shop, warehouse, and office building will be constructed to provide a secure and safe space for work and storage of equipment and materials. The intent is for the Osborne satellite facility to be operational by the end of 2014.
The project specifications are being finalized, and the project will be competitively bid. We estimate the Osborne satellite facility project to cost less than $400,000.
Central Facility: Beloit
Work is underway to identify potential sites for the centrally-located main facility in the Beloit area. The Board of Trustees will consider relevant options and information before making any decision. No decisions have been made at this time.
The Board of Trustees developed a preliminary project plan to design and construct the central facility. The specific facility design and cost will be determined as part of the project. A competitive bidding process will be used to select the contractors to design and construct the project. The central facility could be operational by the end of 2016.
What Other Cooperatives Are Building
Two Kansas electric cooperatives are building facilities now. Both cooperatives are using a design/build contractor. These projects have reported costs of $5 million and $8 million.
The $5 to $8 million range is within the estimates discussed with members during the strategic planning process. No decisions have been made about the Rolling Hills’ central facility design or cost. The plan is to work with a design contractor to create the optimum facility for current and future needs: the right facility at the right price.
Rolling Hills Financial Forecast
The Rolling Hills Board of Trustees and management create a financial forecast each year. The forecast is an important operating tool for the Cooperative.
Periodically, the Cooperative commissions a 10-year financial forecast. A 10-year forecast was prepared to include construction of the central facility in the 2016-17 timeframe. Operating from the central facility results in reduced expenses and efficiency gains, so that electric rates stabilize throughout the remaining years of the forecast.
Rolling Hills Rate Study
Periodically, Rolling Hills commissions an electric rate study to evaluate whether revenues are enough to pay for the costs to provide electric service. These costs include building and repairing electric distribution facilities, employee wages and benefits, and other overall costs of providing safe and reliable electricity to our members.
The rate study recommends adjustments to rates, based on projections of costs and electric usage during the study period. The last rate increase was in July 2010 at 6.25 percent.
Costs continue to rise across the electric industry. Fuel costs have increased substantially since 2010, which impact all aspects of Rolling Hills business.
In the coming months, the Board of Trustees will receive and consider the next rate study, and communicate with the members. Prior to any rate adjustment, a rate hearing will be scheduled where members can comment, likely in March or April 2014. The rate study will not include the cost of the central facility.
Rolling Hills Construction Work Plan
The current capital budget 4-year construction work plan is nearly $13 million, excluding FEMA work that is practically complete. The 2014-17 construction work plan is projected to be about $13 million. The construction work plans are mostly stay-in- business projects to keep the lights on, like replace aging poles and transformers. The 2014-17 construction work plan will have an additional $2.5 million specifically for system upgrades to the Lovewell and Hunter areas that must be addressed.
If you have questions about the plans at your Cooperative in 2014 and beyond, please give us a call. You can also read more about cost savings here.