Helping Southern Minnesota Municipal Power Agency improve financial planning processes and better manage funding and reserves using FRST
“In order to properly configure the FRST™ model, MCR had to thoroughly understand our drivers and business model. It never ceases to amaze me that MCR staff quickly figured out our business model.
There’s no doubt FRST™ has enabled us to have a much better handle on our financial metrics and requirements, and the ability to articulate those requirements to the Board and to regulators.”
—John Winter, Director of Finance and Accounting
Background
Southern Minnesota Municipal Association (SMMPA) was using an outdated, database-oriented financial planning tool to develop its long-range financial plans and rate forecasts. The planning tool was a “black box” system that required the system vendor to make all logic changes. In addition, the tool required manual loading of production cost forecast data, which created bottlenecks in the planning process as well as potential for data input errors. With the goal of fixing these planning issues and improving their ability to quickly create and analyze asset and financing scenarios, SMMPA asked MCR for help.
Solution
MCR worked with SMMPA to install the Financial and Regulatory Strategy Tool (FRSTTM) financial planning model. The base planning model was implemented in just eight weeks and included seamless integration with SMMPA’s production cost model, financial accounting system and other input sources. We developed a customized financing capability to enable specific bond funding for unique categories of capital spending. Additional financing logic was implemented to allow planners to target the use of reserve funds under various scenarios.
Results
The FRSTTM model has significantly enhanced SMMPA’s financial forecasting capabilities. The company’s planners can now make model logic changes without relying on an outside vendor. The planning process is more efficient with automated interfaces for production cost, accounting and other sources of data. Planners now have the custom financing capabilities they need to enable the company to plan funding and reserves that reflect how they manage the business.