MINUTES SOUTHSIDE ELECTRIC COOPERATIVE MEETING OF THE BOARD OF DIRECTORS APRIL 16, 1:30 P.M. HEADQUARTERS BOARD ROOM

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1 MINUTES SOUTHSIDE ELECTRIC COOPERATIVE MEETING OF THE BOARD OF DIRECTORS APRIL 16, 1:30 P.M. HEADQUARTERS BOARD ROOM PRESENT: Frank W. Bacon (Chairman) Earl C. Currin, Jr. (Vice Chairman) Paul S. Bennett (Secretary) Herbert E. Winn (Treasurer) Dorsey L. Drawhorn Charles J. Friedl Michael A. Lobue Kristie Martin-Wallace William T. White John M. Boswell (General Counsel) Christine Marston (Minute Taker) STAFF: Jeffrey S. Edwards, President/CEO George A. Felts, VP of Engineering & Operations Services Danny J. Hammond, VP of Finance & Corporate Services Jean H. Morris, VP of Human Resources Allan A. Sharrett, VP of Public & Member Relations Dr. Frank Bacon presided and Dorsey Drawhorn gave the invocation. PREVIOUS MINUTES On motion made and seconded: The Minutes of the March 19, 2015 Board Meeting are approved as presented. ODEC REPORT The ODEC report was given by Earl Currin and Jeff Edwards. PRESIDENT/CEO S REPORT 1 MOTION CARRIED 1. The SEC Financial and Statistical report for March 2015 was reviewed and is attached to and made a part of the Minutes. 2. The Institute of Electrical & Electronics Engineers (IEEE) outage data and safety report for March 2015 were reviewed in detail: IEEE Outage Data a. System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) were below historical fiveyear values.

2 b. Customer Average Interruption Duration Index (CAIDI) was above historical five-year values. c. There were no power supply outages during the month. Safety Report a. No lost-time injuries reported in March b. There was one recordable injury; an employee was struck in the head by a falling tree branch and required stitches (the first limb knocked the employee s hardhat off and the second limb struck him) c. Total lost-time accumulated in March was 0 days d. As of March 31 st, employees have worked 636 days without a lost time injury. 3. Gaff n Go Lineman s Rodeo: a. SEC sponsored the Hurt man Rescue event at the competition b. More than 150 utility workers from 7 states gathered in Caroline County March 27 th & 28 th c. New event was the Gaff n Grill barbecue competition d. One of SEC s Gaff n Grill teams placed 3 rd in the grilling competition Friday, March 27 th e. The Gaff n Go Rodeo competition began on Saturday, March 28 th f. SEC had 13 employees participating in the rodeo and 6 employees judging g. SEC s journeyman lineman team, consisting of Brad Ashwell, Greg Ayers and Steve Carson, placed 1 st out of 30 teams in the Hurt Man Rescue and Pin Insulator Change-Out events and 3 rd in the Double Dead-End Insulator Change-Out event h. SEC s journeyman lineman team of Travis Layne, Brandon Rust and Ashley Tuck finished 5 th in the overall competition i. SEC s apprentice lineman Blake Poindexter placed 3 rd in the Hurt Man Rescue event and Will Southworth finished 7 th. j. Brandon Rust designed the logo for this year s t-shirts. 4. A small group of members from Powhatan voicing their concern over high bills, who contacted the news, never contacted the Cooperative. SEC contacted some of those members after airing of the newscast. Only one of them agreed to an energy audit at the time of the Board meeting. 5. On April 30 th at 7 p.m. SEC will hold a community meeting in Powhatan to provide information on energy efficiency and conservation and address any other concerns. 6. Day in the Life of a Lineman Program continues with 105 students who have participated thus far. 2

3 7. Mountain Electric Cooperative is interested in developing a lineman program and has contacted SEC for assistance. 8. Southside Virginia Community College (SVCC) is interested in developing a preapprentice lineman program at the community college, and SEC is assisting them in this endeavor. There is grant money available to establish this program if the college decides to develop it. Jeff Edwards and Jean Morris will be attending a meeting at Mecklenburg Electric with SVCC to encourage development of a program at the community college level. 9. George Felts, VP of Engineering & Operations Services, completed the Management Internship Program (MIP) through the National Rural Electric Cooperative Association (NRECA). 10. Kristie Martin-Wallace attending the NRECA Directors Conference and shared information on Cyber Security. 11. SEC received a check in the amount of $7, from the Virginia, Maryland, Delaware Association of Electric Cooperatives (VMDAEC) which is a partial reimbursement on the Cooperative s portion of fees to litigate pole attachments before the State Corporation Commission (SCC). 12. SEC received the Tarheel Electric Membership Association s (TEMA) patronage capital check in the amount of $23, Distribution automation system communications failure are a result of interference on SEC s radio system caused by Central Virginia Electric Cooperative. They have turned their broadcast output up four times over the original output which is impacting the Cooperative s system. Jeff Edwards will be contacting Gary Woods President/CEO of Central Virginia to try and address this issue if George Felts is unsuccessful in working with his counterpart. 14. SEC s Scholarship Fund golf tournament is scheduled for July 10 th at The Manor in Farmville. NEW BUSINESS 1. SEC s Reliability Improvement Plan: a. Developed due to strategic planning goals created by the Board b. Plan tries to address reliability issues and establishes a plan of improvement to continue the trend of improvement c. Most typical Indices to compare: SAIDI how long on average is any member in your system without power in a given year measured in minutes SAIFI how many outages on average does any member in your system experience in a given year measured in number of events CAIDI how long does it typically take your cooperative to restore power once an outage occurs measured in minutes d. Data to benchmark against: Cooperative Finance Corporation Key Ratio Trend Analysis (KRTA) 3

4 National Rural Electric Cooperative Association (NRECA) Balanced Scorecard (SAIDI, SAIFI & CAIDI) NRECA Reliability Working Group e. When benchmarked with the NRECA Reliability Group in 2009, SEC was in the middle of the 4 th quartile performance group (poor performance 300 minutes) f. After a concerted effort toward improvement in reliability, SEC in 2013 was still in the middle of the 4 th quartile (201.2 minutes). This comparison was against cooperatives nationwide and was not reflective of cooperatives SEC s size, density or geographic location. In 2014, SEC improved its reliability with a reduction in outage minutes of 80. g. SEC s goal is to be in the middle of the 2 nd & 3 rd quartiles by 2020 h. System planning is directed at continued improvement of reliability i. The Reliability Improvement Plan sets the capital and maintenance goals and high level processes j. The Long Range Plan focused on supply and key system projects (reconditioning, voltage conversions, wire replacements) k. The Construction Work Plan focused on reliability projects (tied to real dollars) l. The main focus of the Reliability Improvement Plan: Maintain an aggressive Vegetation Management Plan Reduce/eliminate transmission and delivery outages (AEP & DVP) Reduce/eliminate substation outages (SEC side) Reduce/eliminate outages on worst performing feeders Investigate/develop plan for replacement of copper-weld wire m. Reconditioned approximately 13 circuits for better performance n. Best practices review: Build a relationship with eight cooperatives from the survey Review: Crew utilization, work crew efficiency Call-out, outage response Momentary outage monitoring Improved emergency restoration planning Perform another Vegetation Management process review (2016) On motion made and seconded: The Reliability Improvement Plan is approved as presented. MOTION CARRIED 4

5 2. In preparation for the Old Dominion Electric Cooperative (ODEC) Annual Meeting, selection of directors and voting delegates are needed for the ODEC Board: a. Directors: Earl C. Currin, Jr. & Jeffrey S. Edwards b. Voting Delegate: Earl C. Currin, Jr. On motion made and seconded: The directors and voting delegate to the ODEC Board are reaffirmed and approved. MOTION CARRIED 3. In preparation for the VMDAEC Annual Meeting, selection of directors and a voting delegate are needed: a. Directors: Frank W. Bacon and Jeffrey S. Edwards b. Voting Delegate: Frank W. Bacon On motion made and seconded: The directors and voting delegate to the VMDAEC Board are reaffirmed and approved. MOTION CARRIED 4. During some of the organizational changes at the Cooperative last year, the Operations Supervisor position for both eastern and northern districts was combined. Management has determined a need for supervisors in each district and is asking for a budget amendment to allow hiring of a northern district Operations Supervisor, approximately $100,000 increase for salary and benefits for the remainder of On motion made and seconded: The budget amendment for approximately $100,000 is approved. UNFINISHED BUSINESS UNDER EXECUTIVE SESSION MOTION CARRIED The Board went into Executive Session at 2:57 p.m. to discuss the yearly evaluation of the President/CEO. All directors had completed a formal review process and returned the evaluation forms to the Board Chairman prior to the meeting. Upon return to regular session at 3:11 p.m. the Board announced that the CEO performance evaluation exceeded overall performance standards. Goals reviewed in the evaluation were established during the strategic planning process and include: Follow the Seven Cooperative Principles 5

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7 STATEMENT OF GENERAL FUNDS AND OTHER ASSETS March 31, 2015 General Fund Cash in Banks 8,109, General Funds Invested CFC - CTC's 2,201, CFC - Patronage Capital 1,868, Federated Insurance Corporation 243, VED Corporation Incorporated 66, TEC Trading Incorporated 622, Town of Hurt 1, Notes and Accounts Receivable Electric Consumer 13,301, Other Accounts Receivable 5,048, ,462, Material and Supplies in Stock 676, Construction Work in Progress to be Paid from Construction Funds 0.00 TOTAL 32,139, Construction Funds Available First Citizens Bank 0.00 NOTES STATISTICS CFC & FIRST CITIZENS BANK CFC RUS & FFB LINE OF CREDIT Allocation Under Notes 56,969, ,337, ,000, Advance to Date 56,969, ,337, ,300, Balance Available for Advance 21,699, Gross Obligations 60,360, ,011, ,300, Interest Paid This Year 772, , , Page 1 of 6

8 Southside Electric Cooperative For the Month Ending March 2015 Comparative Operating Statistics Y-T-D 2014 Y-T-D 2015 March 2015 New Services Connected Meters Removed Meters Reinstalled Services Idle, Excluding Seasonal Number of Services Retired Total Consumers Receiving Service Total Miles Energized ,051 4,265 4, ,820 55,159 55,159 8,188 8,221 8,221 Meters Installed - New Services January February March April May June July August September October November December Total Page 2 of 6

9 SOUTHSIDE ELECTRIC COOPERATIVE Revision: /09/2015 4:01:22 pm General Ledger Financial And Operating Report Electric Distribution Page: 1 INCOME STATEMENT FOR MAR Year - To - Date Period - To - Date Item Last Year This Year Budget Current Budget 1. Operating Revenue and Patronage Capital 38,411, ,005, ,956, ,020, ,833, Power Production Expense 3. Cost of Purchased Power 23,409, ,581, ,753, ,039, ,548, Transmission Expense , Regional Market Expense 6. Distribution Expense - Operation 954, , , , , Distribution Expense - Maintenance 2,816, ,881, ,070, ,038, , Customer Accounts Expense 561, , , , , Customer Service and Informational Expense 522, , , , , Sales Expense 75, , , , , Administrative and General Expense 1,430, ,529, ,488, , , Total Operation & Maintenance Expense (2 thru 11) 29,770, ,199, ,605, ,320, ,757, Depreciation & Amortization Expense 14. Tax Expense - Property & Gross Receipts 15. Tax Expense - Other 16. Interest on Long-Term Debt 17. Interest Charged to Construction - Credit 18. Interest Expense - Other 19. Other Deductions 20. Total Cost of Electric Service (12 thru 19) 21. Patronage Capital & Operating Margins (1 minus 20) 22. Non Operating Margins - Interest 23. Allowance for Funds Used During Construction 24. Income (Loss) from Equity Investments 25. Non Operating Margins - Other 26. Generation and Transmission Capital Credits 27. Other Capital Credits and Patronage Dividends 28. Extraordinary Items 29. Patronage Capital or Margins (21 thru 28) 2,317, ,421, ,395, , , , , , , , ,480, ,442, ,598, , , , , , , , ,934, ,440, ,979, ,619, ,215, ,477, ,565, ,976, , , , , , , , , , , , , , , , , , , ,00 40, ,763, ,968, ,217, , , Operating - Margin Non Operating - Margin Times Interest Earned Ratio - Operating Times Interest Earned Ratio - Net Times Interest Earned Ratio - Modified 4,763, ,968, ,217, , , Page 3 of /pro/rpttemplate/acct/2.32.1/gl/gl_standard_financial.xml.rpt Lynn

10 SOUTHSIDE ELECTRIC COOPERATIVE Revision: /09/2015 4:01:23 pm General Ledger Financial And Operating Report Electric Distribution Page: 1 BALANCE SHEET FOR MAR 2015 Last Year This Year Variance ASSETS AND OTHER DEBITS 1. Total Utility Plant in Service 296,490, ,306, ,816, Construction Work in Progress 8,088, ,050, , Total Utility Plant (1 + 2) 304,578, ,357, ,779, Accum. Provision for Depreciation and Amort. 82,754, ,661, ,907, Net Utility Plant (3-4) 221,823, ,695, ,871, Non-Utility Property (Net) 37, , , Invest. in Subsidiary Companies Invest. in Assoc. Org. - Patronage Capital 43,308, ,312, ,004, Invest. in Assoc. Org. - Other - General Funds 2,462, ,445, , Invest. in Assoc. Org. - Other - Nongeneral Funds Invest. in Economic Development Projects Other Investments 1,030, ,065, , Special Funds Total Other Property & Investments (6 thru 13) 46,838, ,858, ,020, Cash - General Funds 2,726, ,109, ,383, Cash - Construction Funds - Trustee Special Deposits Temporary Investments Notes Receivable (Net) Accounts Receivable - Sales of Energy (Net) 11,787, ,301, ,513, Accounts Receivable - Other (Net) 2,497, ,048, ,551, Renewable Energy Credits Material and Supplies - Electric & Other 678, , , Prepayments 320, , , Other Current and Accrued Assets 6,630, ,493, , Total Current and Accrued Assets (15 thru 25) 24,639, ,094, ,454, Regulatory Assets 630, , , Other Deferred Debits 6,389, ,718, , Total Assets and Other Debits ( thru 28) 300,321, ,853, ,531, Page 4 of /pro/rpttemplate/acct/2.32.1/gl/gl_standard_financial_bal_sheet.xml.rpt Lynn

11 SOUTHSIDE ELECTRIC COOPERATIVE Revision: /09/2015 4:01:23 pm General Ledger Financial And Operating Report Electric Distribution Page: 2 BALANCE SHEET FOR MAR 2015 Last Year This Year Variance LIABILITIES AND OTHER CREDITS 30. Memberships 228, , Patronage Capital 94,045, ,667, ,622, Operating Margins - Prior Years Operating Margins - Current Year 4,763, ,968, , Non-Operating Margins Other Margins and Equities 135, , , Total Margins & Equities (30 thru 35) 99,171, ,992, ,820, Long-Term Debt - RUS (Net) 17,678, ,153, , Long-Term Debt - FFB - RUS Guaranteed 91,160, ,229, ,068, Long-Term Debt - Other - RUS Guaranteed Long-Term Debt - Other (Net) 60,308, ,609, ,699, Long-Term Debt - RUS Econ. Devel. (Net) Payments - Unapplied Total Long-Term Debt (37 thru 41-42) 169,148, ,992, ,844, Obligations Under Capital Leases - Noncurrent Accumulated Operating Provisions 115, , Total Other Noncurrent Liabilities ( ) 115, , Notes Payable 13,800, ,300, ,500, Accounts Payable 6,660, ,549, , Consumers Deposits 2,539, ,720, , Current Maturities Long-Term Debt 6,483, ,378, , Current Maturities Long-Term Debt - Econ. Devel Current Maturities Capital Leases Other Current and Accrued Liabilities 1,945, ,491, , Total Current & Accrued Liabilities (47 thru 53) 31,429, ,440, ,011, Regulatory Liabilities Other Deferred Credits 457, ,313, ,855, Total Liab. & Other Credits ( thru 56) 300,321, ,853, ,531, Current Assets To Current Liabilities 0.78 to to 1 Margins and Equities To Total Assets % % Long-Term Debt To Total Utility Plant % % Page 5 of /pro/rpttemplate/acct/2.32.1/gl/gl_standard_financial_bal_sheet.xml.rpt Lynn

12 Statements of Cash Flows Southside Electric Cooperative Cash flows from operating activities Period ended Period ended March 31, 2015 March 31, 2014 Electric revenue received $ 37,443,533 $ 34,251,875 Power supply paid (24,242,653) (21,530,982) Operating expenses paid (7,116,927) (6,567,294) Interest received 30,105 5,057 Interest paid (1,443,584) (1,480,683) FEMA monies received 348,548 Cash flows provided by operating activities 4,670,474 5,026,521 Cash flows from investing activities Investment in electric plant,net (2,787,801) (2,733,913) Proceeds from disposal of plant 130,417 Installment loans issued (375,423) (198,870) Investment in CRC (10,000) Proceeds from retirement of CTC's 14,104 Cash flows used in investing activities (3,032,807) (2,928,679) Cash flows from financing activities Proceeds from lines of credit Payments on lines of credit (3,500,000) Proceeds from long term debt 7,000,000 Principal payments on long term debt (1,928,147) (1,585,460) Capital credits paid to members, net (102,292) (93,378) Proceeds from capital credits 10,788 18,071 Deposits collected from customers 9,473 57,607 Net change in memberships Cash flows provided by financing activities 1,490,037 (1,602,910) Net change in cash 3,127, ,932 Cash at December 31, 2014 and ,981,750 2,231,107 Cash at March 31, 2015 and 2014 $ 8,109,454 $ 2,726,039

13 CLASS OF SERVICE No. Receiving Service a. No. Minimum Bills d. Avg. No. Receiving Service e. kwh Sold Cumulative f. Amount Cumulative g. 1. Residential Sales (excl seas.) 52,971 85,310,625 9,412, , ,701,518 34,902, Residential Sales Seasonal 3. Irrigation Sales 4. Comm. & Ind 1000 KVA or Less 1,837 4,670, , ,834 14,576,875 1,752, Comm. & Ind Over 1000 KVA 14 6,551, , ,331,286 1,640, Public St. & Highway Lighting 7. Other Sales to Public Authority 337 4,702, , ,645,547 1,404, Sales for Resale - REA Borr. 9. Sales for Resale - Other PART D. CONSUMER SALES AND REVENUE DATA March 2015 kwh Sold b. THIS MONTH Amount c. YEAR-TO-DATE 10. (1 thru 9) 55, ,236,294 10,904, , ,255,226 39,699, Other Electric Revenue xxxxxxxxxxxx xxxxxxxxxxxx 115,797 xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 306, Total ( ) xxxxxxxxxxxx xxxxxxxxxxxx 11,020,231 xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 40,005,528 PART D. CONSUMER SALES AND REVENUE DATA ITEM THIS MONTH YEAR-TO-DATE THIS MONTH YEAR-TO-DATE a. ITEM b. a. b. 1. Net kwh Generated Office Use , , kwh Purchased ,130, ,669, Total unaccounted For 3. Interchange kwh - Net Total kwh (1 thru 3) ,130, ,669,485 (4 less 5 & 6), Percent System Loss (7/4)x100.. (16,343,085) (19.20) 4,716, Maximum Demand (kw) , , Total kwh - Sold ,236, ,255, Month When Maximum Demand Occurred... February 2015 Page 6 of 6