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Fostering Economic Development
A Generation and Transmission Cooperative Strategic Priority
January 2013
Contact: Brad Kitchens (sbkitchens@scottmadden.com)
Marc Miller (mdmiller@scottmadden.com)
2. Copyright © 2013 by ScottMadden. All rights reserved.
Introduction
This ScottMadden insight is the fourth in a series on “Five Strategic Priorities for Generation and Transmission
Cooperatives.”
Contents
Overview
Economic Impacts of Electric Cooperatives
Economic Development Today
Measuring Success
Planning and Executing an Effective Economic Development Program
Thinking Strategically
Contact Us
1
Gaining
Access to
Capital
Markets
Improving the
Effectiveness
of
Stakeholder
Management
Fostering
Economic
Development
Fostering
Economic
Development
Managing
Generation
Assets
Ensuring Grid
Security and
Reliability
Gaining
Access to
Capital
Markets
Improving the
Effectiveness
of
Stakeholder
Management
3. Copyright © 2013 by ScottMadden. All rights reserved.
Overview
2
Cooperatives can be powerful drivers of economic development for their communities. In spite of competing demands on
financial resources, economic development is a perennial top priority at best-in-class companies, with the most successful
sharing a few common characteristics
Visible and Accountable Leadership: Support for initiatives is maintained throughout the organization, leadership is accountable, and
progress is reviewed and communicated regularly
Consistent and Significant Resources: Every year substantial technical, financial, and human resources are dedicated to fostering
economic development
Focused and Measurable Objectives: Customized initiatives with clear goals are designed, based on a broad set of proven approaches
Required Commitment
Data and Analytical Resources
Site Selection/Certification:
Providing access to
geographic information
systems (GIS)
Economic Data: Providing
access to analysis of industry
sectors, demographic data,
economic trends, and electric
usage estimates
Publications: Publishing
documents or periodicals
addressing local or regional
economic concerns
Planning and Direct
Development
Engineering and Project
Management: Providing
engineering services for site
evaluation and planning or
project managers to navigate
the site development process
Energy Efficiency and
Environmental Projects:
Providing energy audits or
investing in environmental
projects
Industrial Parks/Speculative
Development: Financing and
constructing industrial parks or
properties to encourage
entities to relocate
Community and Industry
Collaboration
Funds: Creating funds for
economic development, job
creation, or the enhancement
of infrastructure
Grants: Awarding
development grants to
deserving entities
Incentives: Providing
businesses with incentives to
conserve or improve energy
efficiency
Educational Programs:
Working with local colleges to
create educational sessions or
comprehensive grant
programs
Impact
How Do Top Performing Companies Approach Economic Development?
4. Copyright © 2013 by ScottMadden. All rights reserved.
Economic Impacts of Electric Cooperatives
Economic Impact Direct1 Indirect1 Induced1 Total
Revenues ($M) $34,275 $4,039 $5,033 $43,347
Income ($M) $6,318 $2,035 $2,747 $11,100
Wages ($M) $3,757 $1,262 $1,552 $6,571
Employment (Jobs) 67,625 24,525 36,825 128,975
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Electric cooperatives contribute greatly to rural economies. Each year, more than 900 electric cooperatives nationwide
account for more than $40 billion in revenue, nearly 130,000 jobs, $6.6 billion in wages paid, and $11 billion in value-added
income (including direct, indirect, and induced).
Source(s): (1) University of Wisconsin Center for Cooperatives, Research on the Economic Impact of Cooperatives, 2009
National Rural Electric Cooperative Association, www.nreca.coop
Average Revenue per Cooperative by County
Electric Cooperatives Serve More Than 75% of the
United States Land Mass
5. Copyright © 2013 by ScottMadden. All rights reserved.
Site Selection/Certification:
Providing access to
geographic information
systems (GIS)
Economic Data: Providing
access to analysis of
industry sectors,
demographic data, economic
trends, and electric usage
estimates
Publications: Publishing
documents or periodicals
addressing local or regional
economic concerns
Engineering and Project Management:
Providing engineering services for site
evaluation and planning, or project managers
to navigate the site development process
Energy Efficiency and Environmental
Projects: Providing energy audits or investing
in environmental projects
Industrial Parks/Speculative Development:
Financing and constructing industrial parks or
properties to encourage entities to relocate
Funds: Creating funds for economic
development, job creation, or the
enhancement of infrastructure
Grants: Awarding development grants
to deserving entities
Incentives: Providing businesses with
incentives to conserve or improve
energy efficiency
Educational Programs: Working with
local colleges to create educational
sessions or comprehensive grant
programs
Economic Development Today
In the United States today, the mission of “rural electrification” is virtually complete as 99% of farms are electrified. As
such, electric cooperatives have shifted their focus from construction to operations. Accompanying this shift has been
the rise of standalone economic development programs at top-performing cooperatives. Well-designed economic
development programs employ one or more of the following methods:
4
Source(s): National Rural Electric Cooperative Association, www.nreca.coop
Community
and Industry
Collaboration
Planning and Direct
Development
Data and
Analytical
Resources
6. Copyright © 2013 by ScottMadden. All rights reserved.
Economic Development Today:
Data and Analytical Resources
Cooperatives typically provide prospective corporate customers with access to research studies, useful data, and other
analytical tools. These often include valuable information on industry sectors, economic impact studies, site selection
resources, and mapping applications. Examples include:
5
Source(s): Company websites
Examples:
•Wabash Valley Power Association offers a user-
friendly siting tool, where one can find sites based on
county, acreage, and/or square footage.
Site Selection/Certification
Leading cooperatives commonly offer online
geographic information system (GIS) maps, which
allow prospects to conduct online searches for the
site selection process. Some cooperatives create
certification programs intended to identify and
assess sites in their service areas.
•Hoosier Energy features an extremely
comprehensive website, where prospects can gather
information on demographic trends, local labor force
data, leading regional employers, education,
transportation, quality of life, and local utilities. Hoosier
also provides a library of pertinent case studies.
Economic Data
Many cooperatives provide valuable information
and online tools, often including analysis of
industry sectors, demographic data, site listings,
economic trends, electric usage cost estimates,
community comparisons, financing and incentives
information, template documents, and workforce
data.
•Associated Electric Cooperative published several
resource guides, including “Speculative Building
Resource Guide” and several others on topics such as
how to set up a 501(c)(3).
Publications
Industry-leading cooperatives sometimes self-
publish or fund the publication of periodicals or
resource documents addressing local, state, or
regional economic issues.
Examples:
Community
and Industry
Collaboration
Planning and Direct
Development
Data and
Analytical
Resources
7. Copyright © 2013 by ScottMadden. All rights reserved.
Economic Development Today:
Community and Industry Collaboration
Cooperatives spearhead development by funding projects within their communities. Often working with corporate
partners, cooperatives invest in renewable energy, provide capital for economic development, fund enhancements to
existing infrastructure, and award development grants to deserving entities. Cooperatives also support education and
civic programs. Examples include:
6
Examples:
•East River Electric Power Cooperative, Inc.
administrates the REED Fund, which offers
financing for projects involving infrastructure and
quality-of-life elements necessary to assist rural
communities to attract and retain businesses.
Funds
Cooperatives use revolving loan funds to
stimulate growth and leverage capital
investment within communities, and promote
economic expansion and job creation.
•Between 2009 and 2011, Corn Belt Power
Cooperative awarded $1.2 million in grants to
local entities through the USDA’s Rural Economic
Development Loan & Grant program.
Grants
Cooperatives sometimes offer outright grants,
either as a cash infusion or as a matching grant
to qualify for another state or federal grant.
•North Carolina Electric Membership
Corporation offers flexibility in rate design for
businesses that want to relocate to the state.
Incentives
Cooperatives offer incentive programs for
qualifying companies willing to make long-term
commitments to a region.
•Basin Electric Power Cooperative supports
Mitchell Technical Institute's Wind Turbine
Technology Program, which trains aspiring wind
energy technicians.
Educational Programs
Cooperatives commonly sponsor educational
programs, from basic information sessions to
vocational training.
Community
and Industry
Collaboration
Planning and
Direct
Development
Data and
Analytical
Resources
Source(s): Public Sources
8. Copyright © 2013 by ScottMadden. All rights reserved.
Economic Development Today:
Planning and Direct Development
Good economic development teams provide special programs and customized services to the communities and
corporations they serve. Planning can take on a variety of forms, from planning assistance and project management to
engineering services. Cooperatives also engage in direct development through various means, including constructing
industrial parks or setting up business “clusters.” Examples include:
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Source(s): Company websites, Public Sources
Examples:
•Georgia Electric Membership Corporation has
a staff of three project managers who work with
businesses relocating to the state to provide
customized, confidential information at no cost to
the business.
Engineering and Project Management
Some electric cooperatives provide project
managers to help prospective businesses
navigate the complicated site development
process.
•Old Dominion Electric Cooperative launched
Mid-Atlantic Broadband Cooperative to deploy a
fiber-optic backbone to help spur economic
development in rural Southern Virginia. Millions of
dollars of corporate investment have been made
in the area as a direct result of the new services.
Non-related Co-ops or For-Profit
Subsidiaries
Either by careful consideration or in reaction to
a problem or crisis (e.g., no buyer for a popular
local business, social problem), acquiring or
forming a non-related subsidiary or co-op.
•Southern Maryland Electric Cooperative has
processed more than 1 million discounts for high-
efficiency compact fluorescent light bulbs in less
than three years and has dispatched nearly 5,000
aging appliances for recycling.
Energy Efficiency and Environmental
Projects
Often due to regulation, cooperatives
sometimes provide energy audits and
weatherization services, or invest in
environmental projects.
•Prairie Power, Inc. constructed Baldwin Field
Business Park-Spec Building, a 40,000 sq. ft.
building available for sale or long-term lease.
Industrial Parks/Speculative Development
Financing and constructing industrial parks or
other speculative property to encourage
commercial and industrial entities to relocate.
Community
and Industry
Collaboration
Planning and
Direct
Development
Data and
Analytical
Resources
9. Copyright © 2013 by ScottMadden. All rights reserved.
won
• Created
• Retained
• It can be problematic to say that a
non-business entity (such as an
electric co-op or state agency)
“created” a job. It is becoming
customary to say that a non-
business entity “fueled” a job
Jobs
• Private
• Economic development
organization
• Other
• It is becoming more popular to
cite how much funding comes
from private versus public
sources
Leveraged Funds
• Safety
• Education quality and
opportunity
• Environmental quality
• Cultural and recreational
amenities
• Poverty reduction
• Quality of life is dependent on
environmental and cultural factors.
It is largely related to the specific
area of the country
Quality of Life
Measuring Success
Metrics or key performance indicators can be established to measure the success of an electric cooperative’s economic
development program.
8
Commonly Used Metrics
Source(s): International Economic Development Council, www.iedconline.org, personal communication; W. Edwards Deming
10. Copyright © 2013 by ScottMadden. All rights reserved.
Planning and Executing an Effective Economic
Development Program
Top-performing cooperatives are establishing robust standalone economic development programs, with the most
successful sharing a few common characteristics.
9
Visible and Accountable
Leadership
Support for initiatives is
maintained throughout the
organization, leadership is
accountable, and progress is
reviewed and communicated
regularly
- Documented accountabilities
- Agenda item
- Included in Annual Report
Consistent and Significant
Resources
Every year, substantial
technical, financial, and
human resources are
dedicated to fostering
economic development
- Executive-level position
- Adequate resources to
facilitate siting and relocation
process
Focused and Measurable
Objectives
Customized initiatives, with
clear goals, are designed
based on a broad set of
proven approaches
- Peer benchmarking
- Goals that include metrics
- Tracking metrics
ToolsDefinition
11. Copyright © 2013 by ScottMadden. All rights reserved.
Thinking Strategically
In today’s dynamic and challenging environment, it is more important than ever to ask the right questions and understand
the implication of the answers.
10
Is support for initiatives maintained throughout the organization, and is leadership accountable for clear objectives?
Are substantial resources (technical, financial, and human) dedicated to fostering economic development?
Considering the company’s current position and goals, are resources best focused on supplementing data and analytical tools,
or on developing more customized opportunities for collaborating with community and industry?
How can more sophisticated planning and development services (for instance the provision of project management and
strategic planning assistance for both industry and communities) be initiated to create immediate impact?
Practical Questions for Management
Possible Goals for the Organization
Identify new objectives where the organization may be most benefitted by new grants or direct investments, and perform an
external assessment of options
Create customized initiatives, with focused and measureable objectives, and ensure each initiative has a single senior-level
owner and/or champion
Establish a formal and annual process for the review, evaluation, and dedication of specific resources to support economic
development
12. Copyright © 2013 by ScottMadden. All rights reserved.
Contact Us
ScottMadden has undertaken numerous consulting projects for cooperatives across the country. If you are interested in
learning more about fostering economic development, please contact us.
Marc Miller
Director
ScottMadden, Inc.
3495 Piedmont Rd, Bldg 10
Suite 805
Atlanta, GA 30305
Phone: 404-814-0020
mdmiller@scottmadden.com
Brad Kitchens
President and CEO
ScottMadden, Inc.
3495 Piedmont Rd, Bldg 10
Suite 805
Atlanta, GA 30305
Phone: 404-814-0020
sbkitchens@scottmadden.com
11