ARC Power Underground Infrastructure Services (AUIS) - Five Year Business Plan
Executive Summary
American Rural Cooperative Power (ARC Power) was established to support cooperative energy, transmission, broadband, and infrastructure initiatives through a member-owned generation and transmission organization headquartered in Sault Ste. Marie, Michigan.
This plan proposes the creation of a wholly owned subsidiary:
ARC Underground Infrastructure Services (AUIS)
The objective is to build a vertically integrated construction organization capable of supporting:
- Fiber deployment
- Smart grid construction
- Underground electric distribution
- Utility relocations
- Island connectivity projects
- River and water crossings
- Regional infrastructure development
The organization will initially support ARC members while creating long-term revenue opportunities across the Upper Peninsula, Tribal Nations, municipal utilities, and rural broadband providers.
Strategic Rationale
ARC Power was designed to provide flexibility around energy, broadband, transmission, and infrastructure development.
The Upper Peninsula presents unique challenges:
- Large geographic territory
- Remote communities
- Numerous river crossings
- Significant island populations
- Ongoing broadband expansion efforts
- Aging infrastructure
- Growing demand for resiliency
Developing an in-house underground construction capability creates a long-term strategic asset capable of serving multiple infrastructure sectors simultaneously.
Five Year Vision
By Year Five, AUIS will become the premier cooperative-owned underground infrastructure contractor in the Great Lakes region, supporting:
- Electric cooperatives
- Tribal Nations
- Municipal utilities
- Broadband providers
- State infrastructure projects
- Federal infrastructure programs
Target operating territory:
- Michigan Upper Peninsula
- Northern Lower Michigan
- Wisconsin border communities
- Great Lakes island systems
Phase 1 (Year 1): Foundation
Capital Investment
| Asset | Cost |
|---|---|
| Two Small HDD Rigs | $1,000,000 |
| One Medium HDD Rig | $1,500,000 |
| Vacuum Excavator | $700,000 |
| Locating Equipment | $150,000 |
| Mud Mixing Systems | $400,000 |
| Trucks and Trailers | $1,250,000 |
| Shop Facility & Yard | $1,000,000 |
Total Capital
$6.0 Million
Staffing
| Position | Count |
|---|---|
| General Manager | 1 |
| HDD Supervisor | 1 |
| Drill Operators | 3 |
| Laborers | 6 |
| Utility Locator | 1 |
| Mechanic | 1 |
| Administrator | 1 |
Year 1 Operating Budget
| Category | Cost |
|---|---|
| Payroll & Benefits | $1.8M |
| Fuel | $350K |
| Insurance | $250K |
| Maintenance | $400K |
| Training | $150K |
| Administration | $300K |
Total Operating Cost
$3.25 Million
Revenue Target
$3.0 Million
Primary work:
- Internal ARC projects
- Broadband construction
- Utility road crossings
- Service installations
Phase 2 (Year 2): Regional Expansion
Additional Capital
| Asset | Cost |
|---|---|
| Medium HDD Rig | $1.5M |
| Additional Vacuum Truck | $1.0M |
Additional Capital
$2.5 Million
Operating Budget
$4.2 Million
Revenue Target
$6 Million
New services:
- Broadband backbone construction
- Municipal utility boring
- Cooperative utility projects
- Smart grid conduit installation
Phase 3 (Year 3): Major Crossing Capability
Additional Capital
| Asset | Cost |
|---|---|
| Large HDD Rig | $3.5M |
| High Capacity Mud Recycling Plant | $1.5M |
Additional Capital
$5.0 Million
Operating Budget
$6.0 Million
Revenue Target
$10 Million
Project Types:
- Major river crossings
- Island feeder construction
- Broadband middle mile facilities
- Tribal utility infrastructure
Phase 4 (Year 4): Regional Infrastructure Contractor
Additional Capital
| Asset | Cost |
|---|---|
| Pipe Inventory | $750K |
| Support Fleet Expansion | $1.25M |
Additional Capital
$2.0 Million
Operating Budget
$7.5 Million
Revenue Target
$14 Million
Revenue Mix:
| Segment | Share |
|---|---|
| Electric Utility | 40% |
| Broadband | 40% |
| External Contracts | 20% |
Phase 5 (Year 5): Full Operational Platform
Equipment Fleet
| Equipment Type | Quantity |
|---|---|
| Small HDD Rigs | 3 |
| Medium HDD Rigs | 2 |
| Large HDD Rigs | 1 |
| Vacuum Excavators | 3 |
| Mud Systems | 3 |
Staffing
Approximately 35 employees.
Annual Operating Budget
$9 Million
Annual Revenue Target
$18 Million to $22 Million
EBITDA Target
$4 Million to $7 Million
Five Year Financial Summary
Capital Investment
| Year | Investment |
|---|---|
| Year 1 | $6.0M |
| Year 2 | $2.5M |
| Year 3 | $5.0M |
| Year 4 | $2.0M |
Total Capital
$15.5 Million
Projected Revenue
| Year | Revenue |
|---|---|
| Year 1 | $3M |
| Year 2 | $6M |
| Year 3 | $10M |
| Year 4 | $14M |
| Year 5 | $20M |
Five-Year Revenue
$53 Million
Strategic Benefits for ARC Power
The primary value is not directional drilling itself.
The larger value comes from controlling construction of:
- Electric distribution facilities
- Broadband infrastructure
- Smart grid infrastructure
- Island connectivity projects
- Utility modernization programs
- Future transmission projects
A construction subsidiary provides the physical delivery mechanism needed to execute those strategies.
Long-Term Vision
By 2031, ARC Underground Infrastructure Services becomes a cooperative-owned infrastructure platform capable of:
- Building broadband networks.
- Supporting electric modernization.
- Enabling smart-grid deployment.
- Improving island connectivity.
- Providing cost-stabilization benefits to members.
- Generating revenue from external infrastructure projects.
The resulting model positions ARC Power as both an infrastructure developer and infrastructure builder, creating a durable competitive advantage across the Great Lakes region.
Planning Note
All financial amounts in this concept plan are preliminary planning estimates, not vendor quotes, audited projections, or commitments. Equipment specifications, staffing, utilization, contract pipeline, financing, permitting, insurance, and geotechnical risk should be validated through a formal feasibility study before an investment decision.