Cooperative Energy Installs GTreasury Solution

Evolving to a Dedicated Treasury Management System (TMS) by GTreasury 

As Cooperative Energy Treasury Analyst and Application Specialist Brian Harris explains, “Cooperative Energy’s financial strategy is to spread its capital costs over the long term so that the rate effect to members is minimal. Tracking those costs is a large task as the Cooperative Energy financing portfolio contains in excess of 150 separate securities, or loan notes, across 15 lenders, each with its own rate and amortization schedule.” 

Cooperative Energy first attempted to keep track of its daily cash position manually, using Excel spreadsheets and hoping, as Harris puts it, “that some formula did not get deleted, that some file did not get moved, or one of the manual inputs was keyed incorrectly.” 

The Cooperative’s first step towards automation was an upgrade of its entire Oracle ERP system.  The upgrade worked reasonably well in most of its modules, but the treasury management module was not up to the task even after a lengthy installation by a team of outside consultants.   

The federal government, as guarantor of much of Cooperative Energy’s debt instruments, had a number of highly-detailed and specialized methods of interest calculation and requirements for reporting. Cooperative Energy staff spent many hours each month-end, making adjustments and re-calculating accruals. The database did not have sufficient flexibility. It did not deliver the needed clarity both to meet reporting requirements and to communicate in a timely fashion with Cooperative Energy lenders and staff. 

A solution geared specifically to treasury management was in order. A few industry piers and professional colleagues, recommended looking into GTreasury as a software solution. After an evaluation period and onsite demos, Cooperative Energy elected to install GTreasury to track its long-term debt.  GTreasury is the only major TMS solution provider that offers its products on both an installed basis and as a cloud- based Software-as-a-Service (SaaS). 

Increased Accuracy, Timely Reporting, and Improved Customer Service

The GTreasury system for tracking financial instruments has allowed Cooperative Energy to deliver improved service and increased efficiency to its 11 Member systems.  It has also helped Cooperative Energy better manage its financing costs, thanks to the system’s accurate reporting, forecasting, and analytical powers. 

“The GTreasury system is very flexible,” states Harris. “We can create calendars and utilize balances created from each security. We also set up a prepayment program for our Members, and it does a good job of tracking that. All of the Member power bills are due on the 20th of each month, so there used to be just one time in the month when we would receive all of our revenues.” 

“The prepayment program lets Members pay us earlier if they want. We pay them an interest rate, a base rate plus a spread, which is several basis points better than they could get in a commercial paper investment. We, in turn, have better cash flow for paying our own bills at a rate less than our cost of borrowing on lines of credit.” 

“The GTreasury system tells us everything we need to make this program work for everybody.  The calculations of the accruals, the interest, balances and reporting are extremely accurate. We need to know and track how much we have in pre-payments and how much is still due on the 20th. We no longer need to do all those month-end adjustments and re-calculations. It is all very clear to us.” 

“Our Members are enthusiastic about the prepayment program. We now receive more than 50 percent of our revenues prior to the due date. It could be possible to manage all this within spreadsheets, but there is a lot more maintenance and much more chance for error.” 

The monthly, quarterly and year-end closes are also much improved with GTreasury’s automation.  Each participating Member receives an updated statement each month, showing interest calculations and payment forecasts. Each quarter-end, Cooperative Energy develops schedules for current maturities of every financial instrument on its books. Annually, the system reports on outstanding balances as well as interest paid out and accrued. 

“We have 30-year debt that we can forecast for 30 years, sorted both by loan and by lender, without having to go to different spreadsheets and having to link certain cells to other spreadsheets,” says Harris. 

“When we set future rates and prepare forecasts for the acquisition of new financing, we can look at and analyze our revenues, cash outflows, and debt service payments. We set our rates to reflect only the cost of supplying wholesale energy and a key part of that is our cost of financing. When we maintain our desired margins, it improves our credit rating and gets us favorable financing rates.” 

Installation Works Best for Cooperative Energy 

The Cooperative Energy treasury department is lean and efficient, with three staff professionals reporting to a director.  The Cooperative also has a highly skilled IT staff, and it has invested well in its infrastructure to enable the in-house hosting of many other applications in addition to the treasury management system. 

“We like doing it in-house, rather than SaaS, for several reasons.  First, working on the install has made us better users of the system. We understand where it is all coming from and how it works, so we can troubleshoot anything on our own rather than calling on GTreasury,” explains Harris. “Also from a cyber security perspective, in-house hosting is the preferred method for our software implementations.” 

Cooperative Energy has also set up its own testing environment. They can refresh it at any time, at their own convenience, and perform their own testing rather than having tests done in an off-site environment. 

Upgrades to the GTreasury software go smoothly.  GTreasury worked with Cooperative Energy staff to restructure and standardize the file structure on Cooperative Energy’s servers. Upgrades that used to take two full days to complete now take no more than a half day, with new software and patches downloaded to Cooperative Energy’s FTP server. 

Making a Difference, not a Profit 

Electric cooperatives like Cooperative Energy, which are owned by their Members, strive to make a difference rather than a profit.  The automated GTreasury system is an indispensable tool for Cooperative Energy as it makes that difference. The clear and accurate financial information and efficient financial operations based on that information enable Cooperative Energy to carry out its mission: to deliver reliable and affordable energy to its Members in a safe and environmentally-responsible manner by focusing on the core values of Member focus; transparency and responsiveness; fiscal, regulatory and environmental compliance; safety and reliability; and to serve as a trusted and value-adding resource for Member-owners.