Cooperatives face unique governance challenges. Because of their special nature they must confront and reconcile the interests of many stakeholders and do so while serving their members and maintaining transparency. This calls for an effective stakeholder management plan. This ScottMadden insight is the last in a series on “Five Strategic Priorities for Generation and Transmission Cooperatives.” The report summary can be found here: http://www.scottmadden.com/insight/516/five-strategic-priorities-for-generation-and-transmission-cooperatives.html. To learn more, please visit www.scottmadden.com.

1. Copyright © 2013 by ScottMadden. All rights reserved.
Improving the Effectiveness of
Stakeholder Management
A Generation and Transmission Cooperative Strategic Priority
February 2013
Contact: Amita Gurbani (amitagurbani@scottmadden.com)
Brad Kitchens (sbkitchens@scottmadden.com)
Marc Miller (mdmiller@scottmadden.com)

2. Copyright © 2013 by ScottMadden. All rights reserved.
This ScottMadden insight is the last in a series on “Five Strategic Priorities for Generation and Transmission
Cooperatives.”
Contents
 Overview
 A Key Enabler for the Other Strategic Priorities
 Effective Stakeholder Management
 Thinking Strategically
 Contact Us
Introduction
1
Gaining
Access to
Capital
Markets
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
Cooperatives face unique governance challenges: because of their special nature they must confront and reconcile the
interests of many stakeholders and do so while serving their members and maintaining transparency. This calls for an
effective stakeholder management plan.
2
Cooperatives Face a Balancing Act …
 Promotes transparency and collaboration among stakeholders and
the utility
 Incorporates stakeholder input into strategic planning decisions
 Fosters stakeholder understanding of planning constraints and
viewpoints
 Establishes stakeholder “buy-in” and support of the planning process
 Increases support from policy and rate-making authorities
…That Calls for an Effective Stakeholder Management Plan
 Conflicting stakeholder expectations and
financial and strategic constraints combine to
form a challenging landscape
Expectations Constraints
Higher material and
labor costs
Decreases in demand
Aging infrastructure
and regulatory
uncertainty
Volatile commodity
prices
Investment in
renewable energy
Environmental
improvements
Sustained earnings
growth
Low rates and
reliable power
Clean Energy
Advocates
Environmental
Advocates
Academia
Members Customers
Generation
Partners
Governments at
All Levels
Financial
Analysts
Stakeholder
Engagement
Chambers of
Commerce
Misc. Business
Interests

4. Copyright © 2013 by ScottMadden. All rights reserved.
A Key Enabler for the Other Strategic Priorities
3
Effective stakeholder management is essential to managing generation assets and gaining access to capital markets.
Fostering
Economic
Development
Managing
Generation
Assets
Ensuring Grid
Security and
Reliability
Gaining
Access to
Capital
Markets
Improving the
Effectiveness
of
Stakeholder
Management
Managing Generation Assets
 Constructive relationships with FERC and EPA are essential for involvement in decision making and adaptability
to impending orders/regulations
 Demand-side strategies have become increasingly important as the cost of traditional power sources increases
due to stringent new environmental regulations. This requires active engagement with numerous stakeholders
serving diverse and complex interests
 Proactive engagement with customers and customer advocacy groups helps create buy-in and market penetration
for demand-side strategies
Gaining Access to Capital Markets
 Credit rating agencies consider stakeholder management capabilities when rating G&T cooperatives
 S&P, Moody’s, and Fitch evaluate a G&T cooperative’s health based on regulatory relationships, rate-making
flexibility, and relationship of management with board of directors, among other factors
 Good credit ratings are key to securing low-cost funding from capital markets that are required by G&T
cooperatives to meet rising property, plant, and equipment/capital expenditure, often including significant
environmental upgrades

5. Copyright © 2013 by ScottMadden. All rights reserved.
A Key Enabler for the Other Strategic Priorities
(Cont’d)
4
Effective stakeholder management is essential to ensuring grid security and reliability and 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
Ensuring Grid Security and Reliability
 Active regulatory relationships are vital to an effective compliance model
 Open communication with NERC and regional reliability councils provides flexibility to adapt to evolving
rulemaking and enforcement
 Organizational compliance programs need to monitor changing standards, update procedures, and train personnel
on an ongoing basis
 Smart grid technologies, microgrids, and distributed generation are adding stakeholders to the security and
reliability puzzle
Fostering Economic Development
 Community involvement is key to understanding shifting priorities and aligning efforts with the objectives of local
government entities and priorities of members and citizens
 Many cooperatives feel a special obligation to better their communities, thereby benefitting their members
 Opportunities to collaborate with communities and customers should be explored and maximized. Examples
include fundraising for economic development, development grants, incentives for energy conservation,
partnership with local educational institutions, providing professional services for local planning and development
management, etc.

6. Copyright © 2013 by ScottMadden. All rights reserved.
Effective Stakeholder Management
A structured process for engaging key cooperative stakeholders is critical to success in planning efforts and executing
complex projects.
5
An effective stakeholder management plan builds stakeholder confidence by
providing an integrated framework for decision making.
Stakeholder Management Plan
 Effective stakeholder management is based on the ability to:
— Identify and prioritize stakeholders
— Understand stakeholder expectations
— Manage expectations through tailored communications
and engagement strategies
 Stakeholders can be categorized based on interest and power to
influence
Plan
Engage
Collaborate
Execute
Report
Refine
Constant
Stakeholder
Communication
Effective Stakeholder Communication Strategy
 When executing complex projects, G&T cooperatives should rely
on a structured, planned communication strategy that engages
numerous stakeholders
 The first step in an effective communication strategy is identifying
communication objectives that align with goals and objectives set
by the organization
 A G&T cooperative should decide and document how and when
different stakeholders need to be involved
— Providing plenty of opportunity for public and internal
input from key constituents during the planning process
ensures effective and efficient vetting of issues
 An effective communication strategy involves an iterative process
of planning, collaboration, and transparent communication

7. Copyright © 2013 by ScottMadden. All rights reserved.
In today’s dynamic and challenging environment, it is more important than ever to ask the right questions and truly
understand the implications of the answers.
 Have we identified our stakeholders and their expectations?
 How engaged are our stakeholders in the organization’s major undertakings?
 Do we have a pre-planned, structured approach for addressing stakeholder expectations?
 Have we developed a documented framework for information gathering and decision-making that is tailored for each identified
constituent/audience?
 Do we schedule and hold regular “touch points” with constituents appropriate to their interests and power?
 Do we have a formal, structured process for soliciting and processing feedback?
 Are we involved in the community?
 Build a structured stakeholder management plan that has a documented communication strategy tailored for each identified
stakeholder group
 Maintain constructive relationships with federal regulatory agencies such as FERC, EPA, NERC and regional reliability councils
 Structure compliance programs that continuously evolve as a result of changing standards
 Proactively manage and influence the perception of credit rating agencies regarding the organization’s stakeholder management
capabilities
 Build a formal community involvement program that monitors shifting priorities of local government entities, members, and citizens
and enhances visibility of the organization by identifying collaborative opportunities best suited to meet the long-term goals and
objectives of the organization
 Adopt performance measures that quantify progress against pre-determined goals
 Include stakeholder management in the enterprise governance structure for large projects
Thinking Strategically
6
Possible Goals for Organization
Practical Questions for Management

8. Copyright © 2013 by ScottMadden. All rights reserved.
Contact Us
For more information on improving the effectiveness of stakeholder management, please contact us.
7
Brad Kitchens
President and CEO
ScottMadden, Inc.
3495 Piedmont Rd, Bldg 10
Suite 805
Atlanta, GA 30305
Phone: 404-814-0020
sbkitchens@scottmadden.com
Amita Gurbani
Senior Associate
ScottMadden, Inc.
2626 Glenwood Ave
Suite 480
Raleigh, NC 27608
Phone: 919-781-4191
amitagurbani@scottmadden.com
Marc Miller
Director
ScottMadden, Inc.
3495 Piedmont Rd, Bldg 10
Suite 805
Atlanta, GA 30305
Phone: 404-814-0020
mdmiller@scottmadden.com