CEO’s Report: Planning for a new reality

May 1, 2019

It seems like just yesterday we were embarking on the strategic planning process to set long-term goals for Heartland along with methods to achieve them.

After almost a year of collecting and organizing information, the Heartland board approved our strategic plan in October 2016. The plan was designed to guide our path forward. It updated our mission and vision statements, outlined three major goals we planned to achieve in the next three to five years and provided direction on how we would achieve those goals.

The plan consisted of several parts, including our company’s aspiration, a market assessment including an analysis of our strengths, weaknesses, opportunities and threats, our mission, vision and goals.

The plan approved in 2016 revolved around a future where Heartland’s generation would outweigh our load by a significant margin. This was evident in our market assessment and thus our long-term goals were aimed at remedying this problem.

In 2018 we saw several years of hard work come to fruition with the sale of our portion of the Missouri Basin Power Project, most notably our 51 MW share of Laramie River Station. That sale led to most of the goals of our strategic plan being accomplished less than three years from the plan’s approval.

The sale resulted in most components of the plan becoming obsolete. While some elements such as our mission and vision are still relevant, a market assessment today would look much different. A smaller coal concentration decreases our regulatory risk and divesting of an older resource reduces costs associated with upgrades and maintenance.

The three long-term goals outlined in the previous plan included stabilizing rates, enhancing customer relations and maintaining sound financial health. Divesting of LRS largely led to the accomplishment of the first goal as we look forward to long-term rate stability. We believe our second goal will always be ongoing as we will never stop working to ensure we have positive and meaningful relationships with our customers. It took several years to get Heartland’s financial house in order and the divestiture not only allows us to maintain that status, but it also led to a rating upgrade from Moody’s Investor Services.

Today, we are in the process of re-vamping our strategic plan to center around our new reality, one where a future of excess generation and potential rate increases doesn’t loom before us.

But, as we work to re-write our plan, the most important thing to remember is this isn’t just Heartland’s strategic plan. It is a plan for our customers as well.

A strategic plan is designed to be something we can refer to often to make sure we are making decisions in line with the desired future of our company. But we want Heartland’s desired future state to be something everyone can agree on. Stakeholder input is vital to ensure a comprehensive and effective plan.

Over the next few months we will be gathering input from all of Heartland’s stakeholders including board, staff and customers. We will be starting at our Annual Meeting on May 9th where we will hold round-table discussions, allowing customers to help determine what Heartland’s future should look like.

We hope to provide at least a preliminary, if not final, report on our updated strategic plan at our Summer Conference July 17th.

We look forward to preparing a plan that focuses not on the challenges we face, but the opportunities, and hearing from each of our customers as we continue this process.