I believe that fate brought me to Cloverland. The day I decided to start looking for a new career opportunity was the day Cloverland posted the position. After reading about the history of Cloverland and researching the members they serve, I was excited at the opportunity to become part of the Cloverland family.Get to know Mike Heise
October is National Co-op Month when we celebrate the principles that make being part of a rural electric cooperative so unique. It’s an ideal time to inform our membership about all the innovation we’ve focused on over the past year. In addition to our steadfast mission to provide safe, reliable and affordable electricity, we’re always innovating. Continually working to make improvements to Cloverland’s infrastructure and seeking ways to conserve costs involves many exciting endeavors to ultimately benefit you – our 34,000 members across the Eastern Upper Peninsula (EUP). Here’s a summary of both new and ongoing initiatives:
BROADBAND ACTIVITY – As previously announced, Cloverland participated in the Rural Digital Opportunity Fund (RDOF) auction. The winner of RDOF funding in the Eastern Upper Peninsula is Atlantic Engineering Group (AEG) of Atlanta, GA. AEG is actively working with EUP entities to determine how they will roll out the program. We are working closely with AEG to support their installation needs. Cloverland is investigating the potential for ownership of our own fiberoptic system to advance our reliability and cybersecurity initiatives through direct communication with our substations. We are weighing the costs of ownership versus our current strategy of leasing from existing providers.
TARIFF REVIEW – Since acquiring Edison Sault Electric in 2010, Cloverland has maintained two rate books. To further unify our cooperative, we created a cross-functional team to review our tariffs and merge them as one rate book. This endeavor aligns well with a cost-of-service study planned for this fall. Co-ops typically conduct these studies every few years to assess how rates align with expenditures required to maintain reliable infrastructure. Cloverland’s last cost-of-service-study was completed in 2017. We aim to complete this study by the end of year, then assess results to update our rate structure in the first quarter of 2022.
ELECTRIC VEHICLE (EV) BATTERY CHARGING NETWORKS – Interest in deploying EV chargers across our service territory continues to rise. Since our current power supply contract penalizes us for demand, we do not have the ability to provide discounts and incentives at this time. However, we are connecting our members interested in EV chargers with the Michigan Department of Environment, Great Lakes and Energy (EGLE) to maximize their incentives. Our key accounts program is supporting members by connecting them with EV resources and helping them understand the technology so they can choose the right system for their needs. As part of our cost-of-service study, we will review the possibility of creating an EV rate.
INFRASTRUCTURE OPPORTUNITIES – Based on the increases in infrastructure grants for our country, Cloverland is working closely with our lobbying firm, as well as our member-partners in assessing what funding opportunities are available at the state and federal level to maximize the investment back into Cloverland’s system for repairs, efficiency and reliability.
HYDRO EFFICIENCY STUDY – Our hydro plant produces approximately one third of the power for our members. Despite periodic water flow restrictions set by the International Joint Commission and Corps of Engineers, we maximize the output of this historic facility to produce as many megawatt hours as possible. To ensure we are utilizing our hydro plant in the most efficient manner, we are conducting a study to examine its efficiency. Aside from clean energy, hydroelectricity has many benefits for our fuel mix – it saves us from having to purchase power at a much higher cost through our supply contract. The Corps of Engineers’ hydro facility produces approximately 20 percent of the energy for our system and combined with Cloverland’s hydro facility (approximately 30 percent), hydroelectricity covers nearly half of our energy supply for our EUP members.
POWER SUPPLY AND GENERATION – Midcontinent Independent System Operator (MISO) manages the power grid to ensure there is no collapse of infrastructure. Cloverland is a MISO participant meaning that the co-op pays MISO to manage the nodes where our power is delivered. In 2021, we have seen significant margin impact due to congestion at these nodes, so we are investigating a financial transmission rights concept to serve as an insurance program to alleviate variance in MISO bills through location marginal pricing (LMP) congestion pricing. Based on the supply (of generation) and demand for (load) electricity in each market, LMP is calculated in real time at thousands of market nodes. The LMP value is a calculated combination of the electricity price, congestion on the transmission grid and line losses.
MONTHLY DEMAND MITIGATION – Cloverland continues to investigate ways to lower our monthly demand as its impact is significant on our electric rates. To compound matters, during the summer months, Cloverland is required to pay a minimum threshold from a capacity standpoint as part of our long-term power supply agreement. For June, July and August, Cloverland is obligated to pay this minimum based on a formula rate. In essence, we are required to pay for capacity that we are not using due to our contract terms. We are working to reduce this annual burden as its impacts remain in effect through the end of our contract (2029).
SOLAR PROJECT – Public Utility Regulatory Policies Act (PURPA) is a federal act that allowed us to include Heritage Solar Farm (Pickford) on our system. Cloverland continues to fully implement this project as part of our energy portfolio and maximize its benefits.
As a member of a democratically controlled cooperative, you are welcome to voice your concerns and questions to your district’s directors. Our board meetings continue to be open to our members or you can voice your comments through our website: https://www.cloverland.com/about-us/board-of-directors/board-meetings/
I hope this summary informs you about the great work our 118 employees endeavor to do each day. We’re proud to serve the EUP and celebrate your membership with Cloverland during National Co-op Month and beyond!
With greater focus on energy costs in the Upper Peninsula, we want to remind our members why Cloverland Electric is different––because we’re a cooperative. Our business model sets us apart from other utilities because we adhere to seven guiding cooperative principles that reflect core values of honesty, transparency, equity, inclusiveness and service to the greater good of the community.
Electric cooperatives, including Cloverland, have a unique and storied place in our country’s history. We democratized the American dream by bringing electricity to rural areas when for profit electric companies determined the effort too costly. Back then, cities were electrified, and rural areas were not, creating the original rural-urban divide. Newly established electric lines helped power economic opportunity in rural areas. Today, that spirit of equity and inclusion is a vital part of our co-op DNA.
Equal access for all
When our electric co-op was founded, each member contributed an equal share to gain access to electricity that benefited individual families as well as the larger local community. Each member had an equal vote in co-op matters. That sense of equity and inclusion is still how we operate today. Cloverland was built by and belongs to the diverse communities and consumer-members we serve. Membership is open to everyone in our service territory, regardless of race, religion, age, disability, gender identity, language, political perspective or socioeconomic status.
By virtue of paying your electric bill each month, you’re a member of the co-op, and every member has an equal voice and vote when it comes to co-op governance. This ties back to our guiding principles of equitable economic participation and democratic control of the co-op.
We encourage all members to vote in Cloverland’s director elections every May. We invite all members to call-in and participate in monthly board meetings.
We know members of our community have different needs and perspectives, and we welcome diverse views on all issues under consideration by the co-op. The more viewpoints we hear, the better we are able to reflect the needs of all corners of our community.
While our top priority is providing safe, reliable and affordable energy, we also want to be a catalyst for good in our community. Since we are your local electric cooperative, co-op revenues stay right here in our community. In turn, we invest in our diverse community base through scholarship programs, charitable giving, educational programs and more. We strive to make long-term decisions that improve and enrich the communities we serve.
While today’s world is radically different than it was when Cloverland was founded in 1938, our original seven cooperative values remain just as relevant today. We recognize that today’s co-op members expect more, and my pledge to you–– the members we proudly serve––is to promote a cooperative culture of inclusion, diversity and equity for all.
One of the factors we all enjoy most about the Eastern Upper Peninsula (EUP) is the natural scenery that surrounds us. We are fortunate to have so many trees that offer beauty, shade and a habitat for birds and wildlife. We know our members appreciate our EUP community for many of the same reasons. At Cloverland Electric, we strive to balance maintaining beautiful surroundings and ensuring a reliable power supply by keeping power lines clear in rights of way (ROW).
While we recognize and appreciate the beauty of trees, there are three main benefits to tree trimming in ROW areas: safety, reliability and affordability. However, before detailing these reasons, let me explain how a “right of way” may impact you. A right of way is the land we use to construct, maintain, replace or repair underground and overhead power lines. Rights of way enable the co-op to provide clearance from trees and other obstructions that could hinder the power line installation, maintenance or operation. ROW areas are typically on public lands or located near a business or home. Regardless, Cloverland must be able to maintain the power lines above and below the ROW. The overall goal of our vegetation management program is to provide reliable power to our members while maintaining the beauty of our community. Proactive vegetation management benefits coop members in three tangible ways.
First and foremost, we care about our members and put their safety and that of our lineworkers above all else. Overgrown vegetation and trees pose a risk to power lines. For example, if trees are touching power lines in our members’ yards, they can pose grave danger to families. If children can access those trees, they can potentially climb into a danger zone. Electricity can arc, or jump, from a power line to a nearby conductor like a tree. A proactive approach also diminishes the chances of fallen branches or trees during severe weather events that make it more complicated and dangerous for lineworkers to restore power.
One of the greatest benefits of a smart vegetation management program is reliability. Strategic tree trimming reduces the frequency of downed trees on lines causing power outages. Generally speaking, healthy trees don’t fall on power lines, and clear lines don’t cause problems. Proactive trimming and pruning keep lines clear to promote reliability.
Last fall, we commissioned a study to evaluate our vegetation management program which includes 3,000 miles of primary overhead ROW and 1002 circuits across our five-county service territory that has been traditionally maintained on a seven-year cycle. The study determined our system would benefit from a fiveyear cycle. As a result, we increased our tree trimming from an average of 250-275 miles annually to 415 miles of ROW starting this year.
As you know, Cloverland is a not-for-profit cooperative, which means we strive to keep our costs in check to keep our rates affordable. This factor extends to our approach to vegetation management. If trees grow too close to power lines, the potential for costly repairs also increases. Effective tree trimming and other vegetation management efforts keep costs down for everyone. Our E.U.P. community is a special place. We appreciate the beauty trees afford, yet we also know our community depends on us to provide reliable energy. Through vegetation management, we are better able to keep power lines clear, prepare for future weather events and secure the reliability of our grid.
If you’re like most Americans, you’re interested in saving money on energy costs and doing your part to help the environment. Wouldn’t it be great if you could do both? Well, you can!
It’s through a concept called “beneficial electrification.” This utility industry term means the innovations in energy technologies are creating new ways to use electricity instead of on-site fossil fuels, such as propane, natural gas and fuel oil, in a way that reduces overall emissions and energy costs. Beneficial electrification makes especially good sense with Cloverland Electric Cooperative’s low rates (the third lowest in the Upper Peninsula and the lowest among all electric cooperatives in Michigan.)
In essence, by virtue of being plugged into the grid, the environmental performance of electric devices improves over time. As Cloverland and other utilities shift to more options that include renewable energy sources to make existing generation technologies cleaner, electricity will require less fossil fuel per kilowatt-hour of energy produced. Electrons that flow through our wires come from two renewable sources – Cloverland’s hydro plant and the Corps of Engineers’ hydro plant located at the Soo Locks.
So, here’s how this concept impacts you. It means that electric appliances such as your water heater, clothes dryer, oven and even your lawn care equipment have the potential to become greener. When Cloverland takes advantage of advances in technology and the market at the generation point (how the electricity is produced), it means those efficiencies are inherently passed along to you, the consumer-member.
Electricity is getting cleaner.
Since large appliances have a typical lifespan of about 10 years, it means that you can benefit from the flexibility of the grid in addition to the increased efficiency of the particular appliance. In other words, the high-efficiency electric oven you have today could be powered by renewable sources in the near future. It would not be the case with gas appliances where you are essentially locked into the technology of that gas appliance for a 10-year lifespan.
As Cloverland can tap into more renewable options in the future, your electric appliance has the potential to become greener and more energy-efficient. The only way you would be able to benefit from this trend is through an electric appliance.
Small steps to help the environment.
For consumers and homeowners looking for more environmentally-friendly options, choosing electric appliances, tools and cars over those powered by fossil fuels is an easy solution. Whether through electric lawnmowers, blowers and weed whackers (plugin or rechargeable) or through electric water heaters and other appliances, beneficial electrification is a means to reducing greenhouse gases and helping our environment. It can also translate into a better quality of life. For example, when you can trade the loud rumble of a gas-powered mower or blower for the quiet efficiency of electric versions, you eliminate exhaust emissions and unpleasant noise.
How we’re doing our part to help the environment
As the overall energy sector continues to evolve, Cloverland is striving to take advantage of the advances in technology and the opportunities of the market as our current power supply contract allows. This means Cloverland can leverage the flexibility of the grid to offer a wider range of renewable power selections as we continue to bring safe, reliable and affordable power to our community.
We also promote energy efficiency through programs like Michigan-energy.org, which includes rebates for appliances to save you money. In addition, through our free SmartHub app, we offer our members a convenient way to manage and monitor their daily energy use.
We care about our community because we live here too. I hope you’ll reach out to Cloverland Electric, your trusted energy partner, to learn about ways to reduce your energy use. When you participate in the energy efficiency programs and incentives we offer, you’re doing your part to save energy and better our environment. While each member’s reduction might seem minimal, together, small changes add up to significant savings of money and emissions. That means a brighter future
This New Year is likely a welcome and refreshing start after a highly challenging year for all of us. Certainly, 2020 evolved with continual change through the pandemic, yet Cloverland Electric remained steadfast in our mission to keep members powered with safe and reliable service. Most of us spent more time at home last year, and as a result, likely consumed more energy. Our cooperative is fortunate to maintain low rates that have held steady since 2017.
Take a look at how Cloverland’s rates compare to other utilities in the Upper Peninsula.
In society today, many people don’t think much about the electricity they use. They expect lights to turn on when they flip the switch and all their electronics to function daily. Since electricity is so abundant, it’s common not to think much about it. The only time we really think about electricity is when the power goes out or perhaps when the monthly bill arrives.
Given how electricity powers our modern lifestyle every day, it’s a great value, especially when compared to other common services and expenses. For example, think back to the cost of a gallon of gasoline 20 years ago. Consider the cost of groceries or a cup of your favorite specialty coffee from a few years back. In comparison, the cost of electricity has remained largely flat, unlike most other consumer goods.
Like many of you, I have a cell phone to stay connected, and I subscribe to cable channels so I can enjoy more viewing options. Many of us consider these necessities for modern day life. We can see what we’re getting for our money and we pay the price for those services. In contrast, when we use electricity, we don’t necessarily “see” all that we’re getting for our money.
Considering what electricity does for us, it’s a tremendous value for our quality of life as well as our budgets. For comparison, consider that the average rent increase was nearly 4 percent (from 2014-2019) according to the Bureau of Labor Statistics Consumer Price Index (CPI). The cost of medical care was increased 3 percent during this time and education was not too far behind at 2.6 percent. So, where did electricity rank? According to the CPI, electricity increased by less than half a percentage point, 0.4 percent.
Considering electricity is something that we all use around the clock, I’m very proud of our team of 115 employees who work hard daily to maintain a strong track record to assure that our members have access to the electricity they need, while maintaining the lowest cost possible. At the same time, we are striving to increase our service reliability by reducing outages to the best of our ability. Since trees are the primary cause of outages in our service territory, we are stepping up our vegetation management program by increasing our tree trimming schedule to better manage key problem areas. We are continually working to improve our operations to ensure a smarter grid, adding generation where possible, all while maintaining some of the lowest rates in the state.
Cloverland provides the reliable service you expect and deserve as valued members of the co-op. As your trusted energy provider, we want to help you save energy and money. We recognize the past year was challenging for many of our business, farm and residential members and we’re here to help. If you have questions about your account or are looking for ways to save energy, please contact our Energy Optimization team at 877-296-4319. Cloverland Electric is your electric co-op and our sole purpose is to serve you and the needs of our community. That’s everyday value.
2020 will no doubt mark a memorable year in the history books for all of us. Despite the setback, the pandemic imposed on our original plans to start this decade, the change in how we worked allowed us to shift efforts to planning and focusing more strategically on our priorities once we could fully resume normal operations.
Here is a summary of the positive progress our cooperative made this year:
- Financial gains – Cloverland continues to make strides towards a stronger financial foundation. We managed the cooperative utilizing operating revenue to avoid taking on additional debt. We have also paid off all short-term debt that was utilized due to the Thanksgiving 2019 and New Year’s 2020 storms.
- Improved equity ratio – As equity ratio is essentially our credit rating in the cooperative world, improving it is vital to our success. In 2019, we improved our ratio from roughly 20% to 22.5% and in 2020, we increased our ratio to nearly 25.5% year to date (October).
- Capital credits distribution – We paid out $500,000 in capital credits in 2020 to members on record with Cloverland in 1993. The last time Cloverland paid out capital credits was 2016, and we continue to work toward a sustainable program to pay out capital credits annually.
- Strategic studies – In 2020, Cloverland commissioned three important studies to help direct our activities and inform our decisions for long-term planning. These studies included a review of our SCADA system, right-of-way & vegetation maintenance program and an analysis of the capital needs for our hydroelectric facility.
- Power supply enhancements – We made strides in examining opportunities to bring financial value to the membership through effective management of our power supply.
- Broadband review – We analyzed the opportunity for a broadband program and applied for federal funding through the Rural Digital Opportunity Fund. Cloverland continues to investigate the possibility of a cooperative broadband system.
- Executive transition – Aaron Wallin’s departure in September allowed us to restructure the Chief Financial Officer (CFO) and power marketing role. I am pleased to name Lisa Castilho as Cloverland’s next CFO. With change comes opportunity and I look forward to working with Lisa to continue strengthening our financial structure.
- Charitable giving – Our non-profit entity, Cloverland Cares, officially launched with the mission to support E.U.P. food banks and scholarships to benefit our members seeking advanced education at E.U.P. schools. We received a $10,000 grant through CoBank and will continue to generate funds through members who opt-in to round up their bills each month. If you wish to contribute, I invite you join our efforts to give back to the communities we serve by opting-in to Cloverland Cares.
- Co-op family – Finally, I am proud of the way our staff of 115 employees in five divisions across the Eastern Upper Peninsula continually adapted throughout the pandemic. Although our work circumstances shifted with necessary precautions to keep everyone healthy, we remained steadfast in our goal to provide our members with safe, reliable and affordable electricity.
2020 has been a remarkable year in many respects. Regardless of the great uncertainty imposed by the pandemic, as an essential workforce, we remain committed to keeping you powered through a historical year.
Wishing all Cloverland members a safe and healthy holiday season!
October is National Co-op Month and I applaud both our employees and members for all the ways you have adapted to change. Seven months ago, we never used the word COVID and now this five-letter word has dramatically changed our lives. However, our 115 employees continue to work hard to make sure your lights are on during this trying time. While COVID restricted some of our construction activity, we shifted attention to planning efforts to allow our cooperative to continue making positive progress.
One of our key goals is providing reliable service to our members. One factor that truly makes the U.P. beautiful also hinders reliability: trees. In July, we commissioned a study to review our vegetation management program, which currently covers 88 circuits over a seven-year period to trim trees along our 4,000 miles of power lines. The study will provide Cloverland with best practices for a successful program and determine program costs that allow for greater budget control. We expect this study to be completed by October.
Another item we are reviewing is the use of technology to better respond to outages. Cloverland purchased a SCADA (Supervisory Control and Data Acquisition) system a few years ago that is not fully optimized yet. We retained a consultant with the expertise to fully implement the system for an in-depth analysis of our electric grid in real-time.
One of Cloverland’s greatest assets is our hydroelectric plant. This iconic facility has been operational for nearly 120 years and continues to bring Cloverland members value through one of the lowest per kWh rates in Michigan. Cloverland periodically performs an assessment of the hydro plant to determine necessary improvements. Our previous facility audit is outdated so the board of directors authorized staff to perform an assessment in 2020. We commissioned the study in July, and it is scheduled to be complete by year-end. This study will help staff better budget capital improvements to provide a long- term impact.
Together, these three studies will help us better understand the financial needs necessary to continually improve our infrastructure. It also informs our decisions with up-to-date data so we can plan and budget accordingly. It’s all part of fulfilling our mission to provide you, our members, with safe, reliable, and affordable energy.
Like most cooperatives with a spring Annual Meeting of the Members, Cloverland Electric transitioned to a virtual meeting this year due to the COVID-19 pandemic. I wanted to provide the highlights that CFO and Director of Power Marketing and Regulatory Affairs, Aaron Wallin, and I shared with our members in our June 4 Virtual Annual Meeting of the Members:
- Despite seven storms that classified as major events in 2019, our cooperative’s financial performance grew stronger. Our equity ratio improved to nearly 23% (closer to the target equity ratio of 27.5% set in our 2018 strategic planning) which gives us greater capacity to borrow money for capital expenditures with less interest. Financial health is critical to our cooperative for debt/creditworthiness and credit support towards power supply. In 2019, we also reduced outstanding debt by $7.2 million and accumulated no new debt. We have managed our finances to generate one of the best years in Cloverland’s history – without raising rates.
- In 2019, Cloverland employees achieved zero lost-time injuries nor any OSHA recordable injuries, even through a series of storms that wreaked havoc across our E.U.P. service territory.
- In accordance with our 2019 strategic vision, we looked inward to improve our cooperative with a review of our power supply, assessed generation opportunities, implemented purchasing policies for better control, and created a sustainable way to pay out capital credits. Looking outward, we added a new key accounts specialist role for greater focus on our key accounts and economic development opportunities for our area. To this end, we are currently researching the potential to bring broadband access to our service territory.
- Cloverland has been participating in statewide electric utility activities to ensure safe, reliable service throughout the pandemic. To ensure reliable service and further assist our members, we reviewed our mutual aid contracts, looked for funding opportunities, launched Cloverland Cares as a charitable non-profit, and extended the disconnect date for non-payment.
- To improve operational efficiency and reliability, we initiated 2020 studies for our vegetation management program, hydro facility, and a SCADA system review.
- Our 2020 strategic vision continues to focus on assessing our power supply options and exploring generation opportunities that provide significant financial and reliability benefits.
Although the pandemic temporarily shifted our priorities, it has not disrupted our momentum to seek new opportunities while growing our U.P. partnerships and initiatives. I look forward to keeping our members updated on all of these exciting initiatives for our cooperative.
Michael (Mike) Heise
While there is no scientific support for the belief that bad things “come in threes,” in my first year at Cloverland, it seems to hold true. Last November’s storm knocked out power to thousands of our members over Thanksgiving. The New Year’s ice and windstorm caused interruptions to more than half our members. Now we are in the midst of a pandemic which has not been seen in a century.
Storm events come and go and the outcome can be dealt with swiftly with minor impact to our members. The COVID-19 pandemic holds many unknowns, making it difficult to determine how to manage it with any certainty. Unlike a storm, this pandemic does not allow us to send our tremendous crews into a ferocious storm to clear trees and restore power. The restoration of our communities and livelihoods for our members is certainly on the forefront of our minds.
To ensure your co-op could meet the challenges presented from the pandemic’s onset, we established an internal COVID-19 task force whose efforts continue daily. Focusing on the safety of our members and staff, we quickly implemented teleworking and social distancing protocols while providing safe and reliable service. We continue to monitor and adapt operations according to state and federal recommendations.
It has been Cloverland’s practice to follow state guidelines for disconnecting services for non-payment (traditionally April 15). As that date rapidly approached, Cloverland extended the disconnect of services for non-payment until at least April 30 to align with the President’s social distancing directive. Shortly after that extension, Cloverland modified the date through the end of May as the pandemic showed no signs of letting up, and the Governor’s Executive Orders for social distancing were expanded.
As a not-for-profit electric co-op, our rates are designed to keep costs low for our members, yet still allow us to meet minimum borrowing requirements after subtracting operating costs. It means our margins (or “profit” for investor-owned utilities) are typically minimal. Despite the challenge, staff is working closely with MECA, NRECA, MPSC, USDA/RUS, and state and federal representatives to identify every available resource to help members impacted by this pandemic. We are working closely with our board of directors to monitor developments and seek opportunities to balance our financial requirements with those of our members.
To get through this challenging time, it will require efforts by all. If it is difficult to pay your electric bill, I urge you to contact our member services team (Monday through Friday, 8 a.m. to 4:30 p.m. at (800) 562-4953 to discuss flexible payment options and resources for assistance. Recently, President Trump signed a $2 trillion-dollar package providing financial support to those impacted by COVID-19. Cloverland published guidance for those in need through our website, social media channels, and member services team. We will continue to refine guidance as additional programs become available. It is important that members who have an immediate need utilize available government programs first. If possible, consider making partial payments on your balance to avoid a large multi-month balance when the pandemic subsides.
This COVID-19 pandemic came with no playbook, yet working together in true co-op spirit, we will get through this unprecedented time in our history. I am proud to serve all 33,500 members of our co-op and thank you for your continued understanding and support.
Michael (Mike) Heise
I recently heard a great motivational speech by professional athlete Tim Tebow that focused on how outcomes can vary when we make decisions that are based on our emotions versus our convictions. The message he was conveying is that most people tend to live their lives basing decisions on their emotions which can be negatively biased if we are tired or had a bad day. However, if we all lived our lives driven by our convictions, imagine what we could accomplish together.
At the September 2019 strategic retreat with the board of directors, Cloverland staff recommended modifying the cooperative’s vision and mission statement to better align with the priorities being established for the cooperative. Vision and mission statements are both necessary for establishing goals and priorities for an organization. A vision statement is what an organization aspires to and the mission statement describes how the organization will ultimately get there. Together, these statements serve as the guiding principles for an organization when considering all business decisions.
At the January 2020 regular meeting of the board, the directors approved the following amended vision and mission statements:
Vision: Cloverland Electric Cooperative, through local control, will improve the quality of life for its members by proactively managing their unique energy needs.
Mission: Cloverland Electric Cooperative is a not-for-profit, member-owned utility focused on delivering exceptional services through the generation and safe delivery of reliable and affordable energy solutions that encourages growth, foster innovation, and strengthen the communities we serve.
Working closely with the board of directors, the cooperative is making great strides in improving transparency, highlighting the value of local generation, improving our financial position, and considering the expansion of member programs. As we usher in a new decade, and new era, the changes to our vision and mission provide a renewed focus on the strengths of our member-owned organization as well as our conviction for serving the unique energy needs of our members to help strengthen the communities we serve.
With our corrected “20-20 vision” and Cloverland’s renewed conviction to upholding our cooperative guiding principles, we can do great things together! This New Year’s storm was a great example of the value of a cooperative. On behalf of the organization, I would like to take this opportunity to thank our members for the outpouring of support as we dealt with a storm of historic proportions.
Michael (Mike) Heise
Cloverland’s message in its 2018 Annual Report was entitled “Strength in Numbers.” The message delivered the board’s renewed focus on the cooperative’s long-term financial health. Toward that purpose, the board and management team developed financial and operational goals measured by standard industry metrics to guide decision making and establish a strong financial foundation. At the heart of the established goals were the overriding cooperative goals of providing safe, reliable, and affordable electricity.
Budget Highlights – It Starts With a Map
As Suze Orman is credited with saying “It’s impossible to map out a route to your destination if you don’t know where you’re starting from.” The board recognized that the cooperative’s debt position was costing hundreds of thousands per year in unnecessary interest expense and hindering its ability to spend the funds necessary to maintain its system. With a focus on debt reduction, as measured by an increase in the cooperative’s equity ratio toward a goal of 30%, the board approved a 2019 budget that focused spending on improving long term reliability, without increasing the rates paid by our members. In the 2019 Annual Report (to be released April 2020), we are anticipating announcing financial results that surpassed expectations.
For 2020, we look to continue along the same path of financial improvement with a focus on long-term reliability. With 45 percent of all outages caused by trees on lines, we have increased our vegetation management budget with a goal of managing nearly 4,000 miles of distribution lines on a seven-year cycle. Also, we will conduct a right-of-way study to determine where we can identify greater efficiencies while controlling the cost of our vegetation management plan. The cooperative will also complete studies to assess the efficiency and condition of the hydroelectric plant focusing on maximizing efficiency cost-effectively.
With these specific goals in mind, Cloverland’s Board of Directors unanimously approved the 2020 budget at the October 2019 meeting. This budget will allow Cloverland to continue to build on the financial progress of 2019 while continuing our efforts to improve the reliability of our system. While we are proud of the progress made so far, we recognize there is more road yet to travel.
Capital Credits – Returning Your Investment
In consultation with senior management, the board elected not to retire capital credits in 2019. The board and management understand that retirement of capital credits, which represents a return of funds members have paid to support the cooperative’s growth, is an important facet of cooperative membership and a measure of success. However, funding capital credits by increasing an already heavy debt burden is not a sensible strategy. This factor is why Cloverland staff, working closely with the board, has a goal to fund capital credit retirements without negatively impacting the long-term goal of an optimal equity ratio. With expected strong financial performance in 2019 and a budget that continues to strengthen the financial foundation, we have budgeted $500,000 for capital credit retirement for 2020. While this amount is less than what is needed to revolve equity capital on a 30-year cycle, it is a strong first step toward a consistent and sustainable capital credit retirement program.
Michael (Mike) Heise
It’s hard to believe how fast the past nine months have gone by. Since starting In February, I’ve been working to gain a better understanding of the unique energy needs of our members and the ways In which we can better meet them In the future. It’s amazing what we learn by simply listening and observing. Both are crucial to our operation as a co-op, so we can deliver the best services to you.
Listening improves understanding, builds trust, strengthens relationships, and fosters cooperation. It also helps us to strategically plan for the future in a way that best serves the needs of a changing membership demographic.
In September, the board of directors, members of our senior leadership team, and myself participated in a very productive strategic planning session to develop goals and objectives that will reshape our co-op. In the coming months, senior leadership will continue to work with the board of directors to evaluate the needs of the members and ensure they are taken into account as we move forward.
Ultimately, our goal is to provide exceptional service through the generation and safe delivery of reliable and affordable energy solutions. That’s why we’re reviewing a variety of strategic opportunities that will strengthen the co-op’s financial position and enable it to better serve you.
Using a ‘nothing is off the table’ approach, we can consider all opportunities and determine how they best align with our long-range goals and objectives.
As we move forward, it’s important that we hear from you and you share your thoughts and ideas with us. I welcome your calls and emails and so do your district directors.
We also encourage you to attend our monthly board meetings to express concerns, ask questions, or simply listen and learn more about your co-op. When we understand the needs of our membership, we’re in a better position to deliver results that do not disappoint.
As the end of the year rapidly draws near, I am excited for the new year and moving forward with a strategic plan with you in mind. Meantime, from our family of employees, and the board of directors, we wish you a safe and enjoyable holiday season.
Michael (Mike) Heise
Every October, cooperatives from all sectors across the country celebrate National Cooperative Month. The purpose of this annual celebration is to recognize the cooperative difference and allow Cloverland Electric Cooperative to highlight our purpose.
Celebrating National Cooperative Month showcases our unique business model, which is based on the Seven Cooperative Principles: Voluntary and Open Membership; Democratic Member Control; Members’ Economic Participation; Autonomy and Independence; Education, Training, and Information; Cooperation Among Cooperatives; and Concern for Community.
For co-op employees and members that are familiar with the principles, the month of October is a great opportunity to renew our connection to each other and the purpose of our co-op.
To celebrate National Cooperative Month, look for a variety of programs we offer – from energy optimization savings to time-saving services like Auto Pay plus promotional contests to celebrate – you – our members.
In the U.S., there are more than 29,000 co-ops serving in every single industry. Many co-ops from different sectors join together during the month of October to promote the benefits that cooperatives provided to their members and the communities they serve.
There are more co-ops in our local community than most people realize. Soo Co-op Credit Union, Parker’s Ace Hardware, Les Cheneaux Area Artisan Cooperative, Soo Co-op Nursery, plus agricultural co-ops, food co-ops, and more. Last month, we featured a Marquette Brewery Club that used the co-op business model to open a brewery. Co-ops are even represented on the shelves at our local grocery stores, such as Land O’Lakes, Welch’s, Organic Valley, Cabot Cheese, Sunkist, Ocean Spray, and many more.
According to the latest data, more than 130 million people belong to a co-op in the U.S. alone, and co-ops employ more than 2 million Americans.
This factor speaks to the heart of why we must take every opportunity to celebrate and to promote the value of the cooperative business model. Participate in these celebrations by purchasing co-op products and look to do business with co-ops right here in our local community. We celebrate you as an active member of Cloverland Electric Cooperative!
Michael (Mike) Heise