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Not Your Average Electric Cooperative

Industry expert calls BEC "different and on track."

KM Consulting president Kim Mikkelsen brought power industry expertise and co-op experience to her April 3 meeting with BEC. She provided examples of techniques for performing financial assessments and suggestions for maintaining a healthy co-op long-term.

Mikkelson reported that she often points to BEC best practices when she teaches classes and consults with co-ops across the country. It was useful to discuss how to continue and improve those processes.

Expert’s advice: "In some areas you are unusual and ahead of the curve. Keep it up." There was serious discussion of BEC practices that may seem unsettling for some co-ops and groundbreaking for others. Mikkelsen’s observations included:

• BEC is the most transparent co-op most people likely will ever see—among the top handful in the country. Very few co-ops have bylaws and policies that require sharing all information not deemed legally confidential. The co-op world is moving in that direction, slowly.

• BEC has two consecutive power supply contracts that extend through October 2027 with low fixed power costs and excellent terms. Independent power supply contracts

are extremely rare among distribution co-ops. Most co-ops belong to a Generation and Transmission Cooperative (G&T) or a Power Marketing Administration (PMA) like the Western Area Power Administration (WAPA) or Bonneville Power Administration (BPA) that own power resources and provide distribution cooperatives long-term wholesale electricity contracts. For at least ten years, BEC will pay significantly lower power costs from wholesale power suppliers than it would as a G&T member. PMA contracts are not available to BEC.

• BEC financial management tools and reports are comprehensive, understandable and, with the forecast model, responsive to what-if questions and planning. All are vailable at http://bit.ly/bec2018budget.

• The BEC risk management approach that examines alternatives is unusual and has improved analysis and decision-making.

• The BEC commitment to member communication is extraordinary and member involvement contributes expertise and generates support.

• The BEC board, management, employees and members understand the budget and financial strategy. This provides effective checks and balances to protect member interests.

• Plans for increased investment in the plant after completion of the meter upgrade project is wise and will address an issue most Montana co-ops face: inadequate long-term planning for plant investment as assets age and are depreciated.

BEC Bylaws define member rights, require transparency and limit board trustees to five three-year terms. One goal for the meeting with our consultant was to provide a forum for members, including potential board members, to learn the details of BEC practices, plans and challenges. For those who missed the meeting, the consultant presentation is available at http://bit.ly/coopfundamentals.

Over the past five years, Kim Mikkelsen’s expertise and co-op experience have helped BEC track finances, improve decision making and accurately evaluate strategic opportunities. Her presentation in April was informative and on target for everyone attending—the board and risk management committee members, management, employees and members at-large. Thinking about issues from our different perspectives launched excellent discussion of best practices and potential opportunities. We will take many "brainstormed" ideas forward for further consideration and we will continue to engage the expertise we need to help us make well informed decisions for our members."

Julie Lindgren, President, BEC Board of Trustees

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