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President's Message by Yates Adcock


The ElectraLite


September 2014


Consolidation Points to a Strong Cooperative


Last year at our annual member- ship meeting I reported to you that your trustees and the trustees of Central Rural Electric Cooperative were discussing the possible con- solidation of our two very similar, adjoining electric cooperatives. The guiding purpose was then, is now, and will remain, to jointly become a better servant for you, our member/ owners. A letter was sent to each Canadian Valley Electric Coopera- tive member, letting you know the two electric cooperatives were begin- ning a joint, formal study process of the potential savings and benefits of these two cooperatives becoming one. Central Rural Electric Cooperative simultaneously sent letters to all of its members providing them the same information about the possible con- solidation. We told you we expected this study process to take about a year to complete. Assuming the outcome of these formal, independent studies showed benefits to the members for consolidation, we would then bring the issue forward to be considered separately by the memberships of our two cooperatives for their direction on whether or not to proceed with the consolidation. Consolidation can only happen with the approval of both memberships.


We have had independent studies of consolidating CVEC and CREC into one cooperative performed by the National Rural Electric Utilities Cooperative Finance Corporation (CFC) and a separate study of the economics of consolidation by the C.H. Guernsey professional engineer- ing firm. These studies have not yet been formally adopted by the two trustee boards. It is expected this will be done as a part of the consolidation agreement that will be taken to the memberships assuming everything remains favorable for consolidation. The studies both show significant potential economic benefit from the


decision. While all of these entities have voiced their encouragement and support for the consolidation of CREC and CVEC, they all have their own issues that they want to be as- sured will not be adversely impacted by this consolidation. These entities include the Rural Utilities Service (RUS), the Cooperative Finance Corporation (CFC), CoBank, the Oklahoma Corporation Commission (OCC), Western Farmers Electric Co- operative (WFEC), wholesale power supplier of CVEC, and KAMO Power , wholesale power supplier of CREC. We are confident we will be able to formalize agreements with these enti-


"I believe the most important long term benefit of consoli- dation is not the potential $15 to $40 million savings over 10 years, but that together we are stronger, more responsive, more resilient electric cooperative utilities that can better face the challenges ahead in meeting the expectations of our members."


consolidation. The studies show a potential savings of from $15 million to $40 million over 10 years. These savings are not guaranteed. The sav- ings can only be achieved through the dedicated execution and performance by all trustees, members and employ- ees working together. The studies show consolidation makes these sav- ings possible.


So why not just take the question to both memberships now? A year ago that was exactly our plan. Dur- ing this year we have found we will need the formal approval of several other entities and agencies before we can take the question in a meaning- ful form to our memberships for their


ties that will address all issues that may be of concern. Before we could proceed with these approvals we need the formal consolidation plan that will be submitted to our members, final- ized by our boards to gain the formal support of these partners that need to be assured they, and the ones they answer to, will not be adversely im- pacted by the consolidation. We fully expect to get these approvals, but as of now, do not have them in place. It remains our plan and intent to take the consolidation issue to our re- spective members as soon as possible. Having not met our initial timeline, we are reluctant to set another date at Continued on page 3.


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