Innovative Energy Alliance Cooperative
Established in 2007 with neighboring cooperatives Mor-Gran-Sou, Roughrider, and Slope Electric Cooperatives, the alliance was created to share management services with the intention of reducing costs and allowing the respective boards of directors to retain local control. KEM Electric Cooperative joined the alliance in 2012.
In the cooperative spirit of working together for the greater good, the concept of sharing resources to streamline processes and add efficiencies gained momentum. The alliance expanded, adding key positions that were necessary at each of the cooperatives and could be shared. Just like the co-general managers, alliance employees were hired to split their time and talents among the four cooperatives.
Members at the end of the line primarily know their local, hometown cooperative. From the linemen in the field to customer service representatives in the office, local employees with boots on the ground are the first line of service at each cooperative, respectively. Alliance employees are a secondary layer of employees who assist with larger or specialized projects.
Evolution and Progress
ü Back in 2007, many rural electric cooperatives were struggling with a declining membership and an increased cost of doing business. To survive, they needed to find innovative ways to prepare for the future. When Slope Electric's general manager resigned, the Slope board approached the boards of Mor-Gran-Sou and Roughrider and suggested they form a temporary management alliance. “It was a bold step toward managing all of our cooperatives’ futures,” says Co-General Manager/CEO Don Franklund.
ü An alliance would allow the cooperatives to remain as separate businesses with their own identities, assets, and obligations, and retain their authority. The only responsibility each respective cooperative board passed on would be the ability to hire, terminate, and evaluate the co-general managers/CEOs. This would be the responsibility of the alliance board.
ü The three co-ops agreed to a 20-month trial period. Seeing success, the boards made it permanent by forming Innovative Energy Alliance, LLC, which employed two people: Co-General Managers/CEOs Don Franklund and Clayton Hoffman. They hired legal counsel and developed bylaws and policies. Each cooperative elected two board members to represent it on the alliance board. When the alliance board makes a decision, those directors take it back to their respective cooperatives for discussion.
ü KEM Electric Cooperative joined the alliance on a temporary basis in 2012. On Jan. 1, 2013, KEM made it permanent.
ü Co-General Manager/CEO Clayton Hoffman retired in January 2013.
ü Chris Baumgartner replaced Hoffman from May 2013 to July 2017, when he resigned to return to Basin Electric Power Cooperative.
ü Innovative Energy Alliance, LLC was converted to Innovative Energy Alliance Cooperative in November 2016. The LLC was officially dissolved at the annual meeting on Feb. 10, 2017.
ü Former alliance CEO Travis Kupper was hired as co-general manager/CEO in December 2017. He started January 2018.
ü Roughrider, Slope, and Mor-Gran-Sou also own WDUS Holdings, LLC, which includes 3C Construction LLC, West Dakota Utility Services and Maintenance Solutions Cooperative. They have managed this group since 2010.
ü The alliance grows by evolution. When it makes more sense to proceed together than alone, we do it.
ü A question directors and managers are regularly asked is, what is the cost savings? “Not giving up any services we have now - perhaps buying portions of them, but doing everything we are doing now - for the average co-op to do it, would cost about $400,000 to $500,000 a year, each,” says Franklund. “We estimate among the four co-ops, we save at least $1.5 million a year.”
That savings doesn’t include the synergy of working together. On transmission line projects, the four cooperatives can bring equipment and manpower together - quickly going from 10 linemen to 50 linemen who can start and finish a large project in a day, if needed - reducing potential outage time to the member-owners.