MINUTES SOUTHSIDE ELECTRIC COOPERATIVE MEETING OF THE BOARD OF DIRECTORS FEBRUARY 21, 12:30 P.M. HEADQUARTERS BOARD ROOM

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1 MINUTES SOUTHSIDE ELECTRIC COOPERATIVE MEETING OF THE BOARD OF DIRECTORS FEBRUARY 21, 12:30 P.M. HEADQUARTERS BOARD ROOM PRESENT: STAFF: Frank W. Bacon (Chair) Earl C. Currin, Jr. (Vice Chair) Charles J. Friedl (Treasurer) Brenda H. Johnson Kristie Martin-Wallace Clive C. Pettis, Sr. Sarah W. Saunders William T. White Frank F. Rennie (General Counsel) Christine Marston (Minute Taker) Jeffrey S. Edwards, President/CEO Danny J. Hammond, CFO Bradley V. Furr, VP of Operations George A. Felts, VP of Engineering Jason Loehr, VP of Finance & Corporate Services Jean H. Morris, VP of Human Resources Ronald O. White, VP of Member & Public Relations Dr. Frank Bacon presided and welcomed Sarah Saunders to the Board of Directors of SEC. Ron White gave the invocation. PREVIOUS MINUTES On motion made and seconded: The Minutes of the January 24, 2019 Board Meeting are approved. ODEC REPORT The ODEC report was given by Earl Currin. PRESIDENT/CEO S REPORT 1 MOTION CARRIED 1. The pre-audit SEC Financial and Statistical report for December 2018 was reviewed and is attached to and made a part of the Minutes. 2. The Cooperative s accounts receivable write-offs were reviewed: Accounts receivable write-offs from September 2018 through October 2018 equal $31, Year-to-date 2019 percent of write-offs is.18%.

2 On motion made and seconded: The accounts receivable write-offs in the amount of $31, are approved as presented. MOTION CARRIED 3. The Board was provided information regarding cybersecurity events during the month of January The Institute of Electrical & Electronics Engineers (IEEE) outage data and safety report for January 2019 were reviewed in detail: IEEE Outage Data a. System Average Interruption Duration Index (SAIDI) and Customer Average Interruption Duration Index (CAIDI) were below historical values for January. b. System Average Interruption Frequency Index (SAIFI) was above historical values for the month. c. There were no supply outages from Dominion Energy (DE) or Southside Electric Cooperative (SEC). d. There was one Appalachian Power Company (APCO) momentary supply interruption that impacted Meads Store, White House and Lone Gum on January 25 th. This event was caused by an AEP relaying issue. e. Major Event days were recorded on January 13 th & 14 th as a result of the ice/snow storm that hit the Cooperative s service territory. Safety Report a. There were no lost-time injuries in January. b. One lifting incident is being monitored and may become a recordable event. c. As of January 31 st, employees have worked 276 days without a lost time injury Reliability Review: a recorded the 2 nd highest SAIDI major event since The highest event in 2003 was Hurricane Isabel. b. System improvement and lower system SAIDI have continued since 2008 when major event days were first removed from the IEEE indices. c. SAIDI in 2018 was recorded as the 6 th highest over a 16-year period. After major events were removed it dropped to 9 th. The trend over this 16-year period shows improvement since Lowest SAIDI reported in 2017 at minutes. d. After all weather days were removed, except clear/calm days, from the 16- year IEEE indices the following Blue Sky trends are reported: SAIDI In 2016, SEC saw the lowest record of SAIDI minutes of SAIFI Since 2008, SEC has seen a reduction in the number of outages. 2

3 CAIDI Since 2009, SEC has seen a reduction in response time due to investment in the plant and automated switching with a reduction in personnel. e. IEEE indices comparisons for 2018: SEC saw a reduction in the average monthly SAIDI, especially during the June through August thunderstorm season. A significant reduction in monthly SAIFI was recorded during the June through October thunderstorm season. CAIDI has shown a reduction across all months except September and with automated switching now deployed, this average should continue to improve. f. Going forward, legacy outages may continue to impact the Cooperative s system from the multiple major events and extreme weather experienced in g. Most of the tree damage that has occurred on the system in 2018 is outside of rights-of-way due to rain, ice and wind events. 6. Net Metering Maps: a. Connected total of 145 net meters, one of them being a wind generator. Other installations are solar with no battery back-up. b. Bedford (40 meters) and Powhatan (19 meters) are leaders in solar installations for the Cooperative s service territory. c. More affluent counties have more net metering installations than other counties. d. Nottoway has an agricultural net metering account which produces more kilowatt hours. e. Net metering limit was 1% of maximum coincident peak load in the Cooperative footprint; approximately 32MW. f. Southern and Eastern counties reflect no real net metering impact. g. Net metering requests vary in size from a few hundred watts to 100kW range h. The Cooperative has received a considerable number of requests for net metering connections/deployment in the last 12 months. 7. Legislative Update: a. Board and staff met with Senators Chase & Sturtevant, Delegates Cox, Tyler & Wright, representatives from Senators Dance & Ruff s office and a representative from Delegate Fariss office. b. Top priority Bills and Activities: SB1346 Cooperative Reform Legislation: The Commissionapproved adoption program once one Cooperative has completed SCC proceeding and gained approval, another Cooperative may adopt the Commission-approved program with administrative filing. 3

4 8. Operations Update: This bill has passed the House Commerce & Labor Committee and is currently on the House floor for passage. HB2547 Net Metering Reform: NEM cap adjustment, allows for third-party Power Purchase Agreements and allows cooperatives to better recover distribution costs. The bill passed both the House and the Senate and is on its way to Governor Northam for signature. Broadband: - Legislation passed the House and Senate ensuring VMDAEC has a seat on the Governor s Broadband Advisory Council. - Delegate Byron and Senator Edwards have reached agreement on the number of legislators on the Council. - Approves operation of the Council through The Governor has requested $50 million in the budget. The House and Senate are leaning toward closer to $25 million. a. New overhead (OH) construction work orders activity was up 72.3% for the month from the last 3 months. b. All districts continue to see more new underground (UG) construction work orders activity than OH work orders each month. c. Service order activity was in line with historical numbers for the month of January. d. Outage activity (minutes) with major event days removed were in line with historical data: Central 91 Eastern 39 Northern 19 Western 65 e. January outage causes were affected primarily by isolated thunderstorms producing damaging winds and lightning: Trees 63% (accounted for 262 individual outages) Weather 20% (accounted for 88 outages) Fault/Failure 5% Unknown 4% Public 3% Animals 2% Decay/Age 2% Maintenance/Planned 1% Power Supply <1% Other <1% 4

5 f. Monthly switching savings: SAIDI realized minutes (85%) SAIDI saved by automation (SCADA) switching minutes (5%) SAIDI saved by manual switching minutes (10%) g. Construction Work Plan projects update: Stoddart Substation is complete Evergreen Substation is complete Lake Chesdin Circuit 2 anticipated to complete the OH sections by June 1, 2019 and the UG section by September 30, h. Monthly Fleet Expense for December includes all parts and labor but excludes vehicle sales, fuel, depreciation and insurance. Expenses are up slightly due to Penske taking over the fleet and bringing it up to standard. i. Fleet cost per mile: Pickup & SUV $0.21 Service Trucks $0.61 Small Buckets $0.61 Underground $2.36 due to large repairs Line Truck $2.63 due to large repairs Large Bucket $ A Broadband analysis will be provided to the Board during next month s meeting. 10. All Strategic Plan interviews have been scheduled for March 14 th. Brad Kitchens from Scott Madden will be the facilitator. 11. The Gravette property in Blackstone was bought by a couple who have no intention of developing the land. 12. National Rural Electric Cooperative Association (NRECA) certificates were presented to Dr. Bacon and Dr. Currin for renewing their Director Gold Certification. NEW BUSINESS 1. In preparation for the Virginia, Maryland, Delaware Association of Electric Cooperative (VMDAEC) Annual meeting a selection of a voting delegate and alternate are needed: Voting Delegate: Frank Bacon Alternate: Jeffrey Edwards On motion made and seconded: LEGAL REPORT The VMDAEC voting delegate and alternate are approved as reappointed. 5 MOTION CARRIED 1. Summary judgment arguments were heard in the O Connell case in Campbell county on February 5, The judge has taken the case under advisement, and the trial date of March 15 th was continued to early September due to the member being out of the country.

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7 STATEMENT OF GENERAL FUNDS AND OTHER ASSETS December 31, 2018 General Fund Cash in Banks 10,910, General Funds Invested CFC - CTC's 2,134, CFC - Patronage Capital 2,795, Federated Insurance Corporation 427, TEC Trading Incorporated 622, Town of Hurt 1, Notes and Accounts Receivable Electric Consumer 8,747, Other Accounts Receivable 5,464, ,103, Material and Supplies in Stock 2,251, Construction Work in Progress to be Paid from Construction Funds 0.00 TOTAL 33,355, Construction Funds Available First Citizens Bank 0.00 NOTES STATISTICS CFC RUS & FFB COBANK CFC, COBANK & FIRST CITIZENS BANK Balance Available for Advance 33,000, Gross Obligations 57,365, ,187, ,767, Interest Paid This Year 2,817, ,148, , , Page 1 of 6

8 Southside Electric Cooperative For the Month Ending December 2018 Comparative Operating Statistics Y-T-D 2017 Y-T-D 2018 December 2018 New Services Connected Meters Removed Meters Reinstalled Services Idle, Excluding Seasonal Number of Services Retired Total Consumers Receiving Service Total Miles Energized ,331 2, ,135 2, ,537 3,737 3, ,309 56,561 56,561 8,268 8,290 8,290 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: /12/2019 8:05:39 am General Ledger Financial And Operating Report Electric Distribution Page: 1 INCOME STATEMENT FOR DEC Year - To - Date Period - To - Date Item Last Year This Year Budget Current Budget 1. Operating Revenue and Patronage Capital 108,770, ,430, ,076, ,865, ,811, Power Production Expense 3. Cost of Purchased Power 61,138, ,080, ,530, ,185, ,344, Transmission Expense 58, , , , , Regional Market Expense 6. Distribution Expense - Operation 5,626, ,139, ,982, ,830, ,867, Distribution Expense - Maintenance 10,823, ,276, ,476, ,776, , Customer Accounts Expense 1,993, ,146, ,161, , , Customer Service and Informational Expense 2,702, ,652, ,859, , , Sales Expense 534, , , , , Administrative and General Expense 5,661, ,792, ,365, , , Total Operation & Maintenance Expense (2 thru 11) 88,539, ,748, ,039, ,897, ,327, 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) 10,488, ,724, ,921, , , ,611, ,611, ,211, ,918, ,313, , , , , , , , , , , , ,418, ,501, ,403, ,042, ,256, ,352, ,928, , , , , , , , , , , , , ,221, ,083, , , , , , , , , ,480, ,079, ,067, , , Operating - Margin Non Operating - Margin Times Interest Earned Ratio - Operating Times Interest Earned Ratio - Net Times Interest Earned Ratio - Modified 6,480, ,079, ,067, , , Page 3 of /pro/rpttemplate/acct/2.43.1/gl/gl_standard_financial.xml.rpt Lynn

10 SOUTHSIDE ELECTRIC COOPERATIVE Revision: /12/2019 8:05:41 am General Ledger Financial And Operating Report Electric Distribution Page: 1 BALANCE SHEET FOR DEC 2018 Last Year This Year Variance ASSETS AND OTHER DEBITS 1. Total Utility Plant in Service 358,956, ,490, ,534, Construction Work in Progress 5,404, ,328, ,923, Total Utility Plant (1 + 2) 364,360, ,819, ,458, Accum. Provision for Depreciation and Amort. 107,579, ,117, ,538, Net Utility Plant (3-4) 256,781, ,701, ,079, Non-Utility Property (Net) 25, , , Invest. in Subsidiary Companies Invest. in Assoc. Org. - Patronage Capital 47,438, ,772, ,334, Invest. in Assoc. Org. - Other - General Funds 2,536, ,563, , Invest. in Assoc. Org. - Other - Nongeneral Funds Invest. in Economic Development Projects Other Investments 697, , , Special Funds Total Other Property & Investments (6 thru 13) 50,697, ,065, ,368, Cash - General Funds 4,360, ,910, ,549, Cash - Construction Funds - Trustee Special Deposits Temporary Investments Notes Receivable (Net) , , Accounts Receivable - Sales of Energy (Net) 7,169, ,747, ,577, Accounts Receivable - Other (Net) 7,981, ,464, ,517, Renewable Energy Credits Material and Supplies - Electric & Other 2,169, ,251, , Prepayments 182, , , Other Current and Accrued Assets 8,799, ,091, , Total Current and Accrued Assets (15 thru 25) 30,664, ,629, ,965, Regulatory Assets Other Deferred Debits 4,380, ,472, , Total Assets and Other Debits ( thru 28) 342,522, ,869, ,346, Page 4 of /pro/rpttemplate/acct/2.43.1/gl/gl_standard_financial_bal_sheet.xml.rpt Lynn

11 SOUTHSIDE ELECTRIC COOPERATIVE Revision: /12/2019 8:05:41 am General Ledger Financial And Operating Report Electric Distribution Page: 2 BALANCE SHEET FOR DEC 2018 Last Year This Year Variance LIABILITIES AND OTHER CREDITS 30. Memberships 232, , Patronage Capital 103,363, ,838, ,525, Operating Margins - Prior Years -6,480, ,480, Operating Margins - Current Year 6,480, ,079, , Non-Operating Margins Other Margins and Equities 1,242, ,449, , Total Margins & Equities (30 thru 35) 104,838, ,600, ,762, Long-Term Debt - RUS (Net) Long-Term Debt - FFB - RUS Guaranteed 122,718, ,462, ,743, Long-Term Debt - Other - RUS Guaranteed Long-Term Debt - Other (Net) 66,486, ,775, , Long-Term Debt - RUS Econ. Devel. (Net) Payments - Unapplied Total Long-Term Debt (37 thru 41-42) 189,204, ,238, ,033, Obligations Under Capital Leases - Noncurrent Accumulated Operating Provisions 115, , , Total Other Noncurrent Liabilities ( ) 115, , , Notes Payable 21,500, ,500, Accounts Payable 9,679, ,542, , Consumers Deposits 2,192, ,202, , Current Maturities Long-Term Debt 8,251, ,082, , Current Maturities Long-Term Debt - Econ. Devel Current Maturities Capital Leases Other Current and Accrued Liabilities 1,413, ,193, , Total Current & Accrued Liabilities (47 thru 53) 43,037, ,021, ,016, Regulatory Liabilities Other Deferred Credits 5,327, ,960, ,366, Total Liab. & Other Credits ( thru 56) 342,522, ,869, ,346, Current Assets To Current Liabilities 0.71 to to 1 Margins and Equities To Total Assets % % Long-Term Debt To Total Utility Plant % % Page 5 of /pro/rpttemplate/acct/2.43.1/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 December 31, 2018 December 31, 2017 Electric revenue received $ 122,069,124 $ 109,500,282 Power supply paid (70,288,665) (60,381,321) Operating expenses paid (29,329,396) (25,539,578) Interest received 128, ,052 Interest paid (6,942,017) (6,223,069) Cash flows provided by operating activities 15,637,104 17,467,366 Cash flows from investing activities Investment in electric plant,net (10,523,690) (17,108,599) Contributions in aid of construction 1,918,219 2,657,119 Costs of removal (1,322,987) (1,625,656) Proceeds from disposal of plant 395,171 88,239 Installment loans issued (1,195,783) (1,526,703) Proceeds from retirement of CTC's 18,383 17,207 Cash flows used in investing activities (10,710,687) (17,498,393) Cash flows from financing activities Proceeds from lines of credit 6,500,000 Payments on lines of credit (21,500,000) Proceeds from long term debt 32,900,000 6,000,000 Principal payments on long term debt (9,035,662) (8,722,948) Capital credits paid to members, net (2,752,136) (2,487,151) Proceeds from capital credits 2,000,358 1,003,831 Deposits collected from customers 9,878 (120,249) Net change in memberships 745 1,430 Cash flows provided by financing activities 1,623,183 2,174,913 Net change in cash 6,549,600 2,143,886 Cash at December 31, 2017 and ,360,481 2,216,595 Cash at December 31, 2018 and 2017 $ 10,910,081 $ 4,360,481

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.) 54,195 74,712,839 10,377, , ,110, ,657, Residential Sales Seasonal 3. Irrigation Sales 4. Comm. & Ind 1000 KVA or Less 1,952 4,595, , ,945 59,391,573 6,727, Comm. & Ind Over 1000 KVA 19 7,071, , ,592,220 5,621, Public St. & Highway Lighting 7. Other Sales to Public Authority 395 4,420, , ,855,474 5,309, Sales for Resale - REA Borr. 9. Sales for Resale - Other PART D. CONSUMER SALES AND REVENUE DATA December 2018 THIS MONTH YEAR-TO-DATE kwh Sold b. Amount c. 10. (1 thru 9) 56,561 90,800,071 11,787, , ,949, ,315, Other Electric Revenue xxxxxxxxxxxx xxxxxxxxxxxx 77,901 xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 1,114, Total ( ) xxxxxxxxxxxx xxxxxxxxxxxx 11,865,830 xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 121,430,185 ITEM PART D. CONSUMER SALES AND REVENUE DATA THIS MONTH YEAR-TO-DATE a. ITEM b. THIS MONTH a. YEAR-TO-DATE b. 1. Net kwh Generated Office Use ,184 2,691, kwh Purchased ,785,910 1,029,626, Total unaccounted For 3. Interchange kwh - Net (4 less 5 & 6), ,749,655 50,985, Total kwh (1 thru 3) ,785,910 1,029,626, Percent System Loss (7/4)x Total kwh - Sold ,800, Maximum Demand (kw) ,949, Month When Maximum Demand Occurred , ,487 January 2018 Page 6 of 6