Agenda - Monday, March 21, 2011 · 2018-01-03 · Board of Directors PO Box 1 Johnson City, TX 78636 Regular Meeting ~ Final Agenda ~ Call PEC Toll Free 1-888- 554-4732 Monday, March

Board of Directors PO Box 1

Johnson City, TX 78636

Regular Meeting www.pec.coop

~ Final Agenda ~ Call PEC Toll Free1-888- 554-4732

Monday, March 21, 2011 10:00 AM PEC Headquarters Auditorium

Board of Directors Page 1 Revised 3/16/2011

1. Call to Order and Roll Call

10:00 AM Meeting called to order on March 21, 2011 at PEC Headquarters Auditorium, 201 South Avenue F, Johnson City, TX.

2. Employee/Director Recognitions for Approval

A. (Resolution (ID # 1549)) Retirement of Marcella G. Smith, after 31 years of service.

3. Minutes Approval

A. Monday, February 21, 2011

4. Items from Members

5. Executive Session

A. Competitive Matters

B. Contracts

1. Change Order for Construction Projects

2. Amendment to the Interconnect Agreement

C. Real Estate Matters

1. Update on Purchase of Land

D. Legal Matters

1. Whistleblower Administrator Update

2. Federal Tax Accounting and Reporting and Vehicle Use

3. Litigation Update, including Threatened Litigation and Administrative Claims

4. Discussion, Action and Response to Gunter Litigation

5. Claims Against Former General Manager

6. Legal Analysis on Filed Legislation

Regular Meeting Agenda March 21, 2011


E. Personnel Matters

1. Defined Benefit and 401K Plan Design

2. Internal Auditor’s Benchmark Report on Call Center Operations

6. 1:00 PM - Reconvene to Regular Meeting

7. Items From Members

8. Items From Executive Session

9. Report on Monthly Power Supply

A. LCRA Power Supply Update

10. Report on Monthly Safety Performance

A. March Safety BOD Report

11. Report on Monthly Operations

A. Monthly Operations Report

12. Informational Items

A. Monthly Informational Items - February

Total Active Accounts 237,741 (net increase 271)

Total Memberships 200,183 (net increase 284)

Purchase Orders $ 2,801,377.20

Write-off of Uncollectible Accounts $ 119,858.87

Non-electrical Bad Debt Write-off $ 0.00

Power Bill (unaudited)

483,659,980 kWh Current month/yr $27,835,439.81 (includes LCRA & AEP)

486,500,517 kWh Previous year $31,790,912.45 (includes LCRA & AEP)

13. Chief Financial Officer

A. CFO - Monthly Reports

1. Reports on February 2011 Monthly Financials

B. CFO - Action Items/Other Items

1. (Resolution (ID # 1558)) Extension of Draw Period of CFC Bridge Loan; Authorization for Supplement to Sixth Supplemental Indenture

14. Audit Committee



A. AC - Reports

B. AC - Action Items/Other Items

1. (Resolution (ID # 1556)) Amendments to Internal and External Auditor Contracts

2. (Resolution (ID # 1557)) Engagement of External Auditor for LINKS Internal Controls Function

15. Compensation Committee

A. CC - Reports

B. CC - Action Items/Other Items

16. Energy Committee

A. EC - Reports

B. EC - Action Items/Other Items

1. Demand Side Resources Financial Incentive

17. Financial Strategies, Contracts, and Budget Committee

A. FSCB - Reports

B. FSCB - Action Items/Other Items

18. Governance, Bylaws and Legal Committee

A. GBL - Reports

1. GBL Minutes of 2-15-11

2. GBL Committee Meeting 3-14-11

3. Update on Elections

4. Update on LBJ Memorial Marker

B. GBL - Action Items/Other Items

1. (Resolution (ID # 1568)) Designation of Competitive Matter(s)

2. (Resolution (ID # 1569)) Communications Policy

3. (Resolution (ID # 1570)) Ballot Language for 2011 Elections



19. Items From Directors

Larry Landaker

A. (Resolution (ID # 1571)) Bylaw Amendments to Director Qualifications

B. Response to SB 1743

C. Annual Meeting Discussion

Chris Perry

D. Interim Integrated Resource Plan

Kathy Scanlon

E. (Resolution (ID # 1572)) Motion to Rescind February 2011 Resolution Regarding Issuance of RFP for Internal Audit Services

Ross Fischer

F. RFP for Internal Audit Services

Patrick Cox

G. Review of Board Meetings and Committee Meetings

20. Items from General Counsel

A. Bylaw Amendments to Director Qualifications and Disqualifications Provisions

21. Chief Executive Officer

A. CEO - Reports

1. Acknowledgement of Receipt of Disclosure Statement of Conflict of Interest

2. Legislative Report

3. Employee Visits Update

B. CEO - Action Items/Other Items

C. Announcements

22. Future Items for Board Consideration

23. Future Meetings

A. Announce April Regular Board Meeting scheduled for 10 am on April 18, 2011 at the PEC Headquarters.

24. Adjourn

Board of Directors Meeting: 03/21/11 10:00 AM

PO Box 1Johnson City, TX 78636

Sponsors:

RESOLUTION (ID # 1549) DOC ID: 1549

Updated: 3/8/2011 1:57 PM by Renee Oelschleger Page 1

Subject: Marcella G. Smith Retirement Resolution

Submitted By: Theresa Owens

Department: Human Resources

Background:

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Pedernales Electric Cooperative, Inc.Regular MeetingMarch 21, 2011

RESOLUTION (ID # 1549)

Retirement of Marcella G. Smith, after 31 years of service.

The State of TexasCounty of Blanco

Whereas, Marcella G. Smith will retire from her employment with Pedernales Electric Cooperative, Inc. after faithfully and competently serving the members of PEC in various capacities for 31 years; and,

Whereas, Marcella G. Smith has successfully applied her considerable energy, experience, and knowledge to providing the Members of Pedernales Electric Cooperative, Inc. with reliable electric service; and,

Whereas, in the course of her employment, Marcella G. Smith has earned the friendship and respect of the Directors, Employees, and Members of Pedernales Electric Cooperative, Inc. for whom and with whom she has worked; and,

Whereas, Marcella G. Smith’s experience and willingness to serve will be sorely missed by the Members, Employees, and Board of Directors of Pedernales Electric Cooperative, Inc.; and,

Whereas, the Board of Directors of Pedernales Electric Cooperative, Inc. of Johnson City, Texas, thinks it fit and proper that a Resolution be passed and spread upon the minutes recognizing the contributions made by Marcella G. Smith;

Now, Therefore, be it resolved by the Board of Directors of Pedernales Electric Cooperative, Inc. of Johnson City, Texas, that all Members, Employees, Officers, and Directors of Pedernales Electric Cooperative, Inc. hereby express their great appreciation to Marcella G. Smith and their gratitude for the incalculable service rendered by Marcella G. Smith to her fellow employees and friends of Pedernales Electric Cooperative, Inc., and,

Be It Further Resolved that this resolution be delivered to Marcella G. Smith.

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Board of Directors PO Box 1


Regular Meeting www.pec.coop

~ Minutes ~ Call PEC Toll Free

1-888- 554-4732

Monday, February 21, 2011 10:00 AM PEC Headquarters Auditorium


1. Call to Order and Roll Call

10:00 AM Meeting called to order on February 21, 2011 at PEC Headquarters Auditorium, 201 South Avenue F, Johnson City, TX.

Attendee Name Title Status ArrivedCristi Clement District 1 Director/Secretary-Treasurer Present 10:00 AMKathryn Scanlon District 3 Director Present 10:00 AMChris Perry District 4 Director/Vice President Present 10:00 AMRoss Fischer District 5 Director Present 10:00 AMLarry Landaker District 6 Director/President Present 10:00 AMDr. Patrick Cox District 7 Director Present 10:00 AM

2. Employee/Director Recognitions for Approval

A. (Resolution (ID # 1522)) Retirement of Karen S. Ivy, after 16 years of service.

Following a brief employee highlight, Acting CEO Luis A. Garcia, read the resolution recognizing Karen S. Ivy. He also stated that both the framed resolution and the clock on display will be presented to Karen S. Ivy in recognition for her years of service.

3. Committee Recognitions for Approval

A. (Resolution (ID # 1533)) EAC Former Member Recognition

Director Dr. Patrick Cox recognized Karl R. Rabago for his service for the Energy Advisory Committee.

4. Minutes Approval

A. Monday, January 24, 2011 Regular Meeting

B. Saturday, January 29, 2011 Special Meeting

C. Sunday, January 30, 2011 Special Meeting

D. Monday, February 07, 2011 Emergency Special Meeting

E. Tuesday, February 08, 2011 Special Meeting

F. Monday, February 14, 2011 Special Meeting

5. Items from Members

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Regular Meeting Minutes February 21, 2011


During the morning session of the Regular Board meeting, the following members spoke on topics including but not limited to the following:

Lee Grote - asked Board to look at excessive fees charged for upgrading service to home, and gave the example of removing and adding poles to property.

Ernest Altgelt - commented on Ric Sternberg's video "GreenDreams - Pedernales Electric Coop Revolution, and a secretive CEO job search; asked for assurance that the CEO contract has been fully reviewed by Board.

Linda McDonald - asked Board to reexamine the line extension policy.

Merle L. Moden - commented that the Competitive Matters Policy on the agenda is too broadly written.

Mary Ann Raesener - commented that the financial information is not provided in a way that is useful, asked that the organizational structure be examined, and hoped that CEO will be given all information and support to make necessary changes going forward.

Richard Florence - commented that a cost reduction program has not been implemented and gave the example of funds paid to TEC.

6. Appointment of New CEO

President Larry Landaker introduced Pedernales Electric Cooperative's new Chief Executive Officer RB Sloan. Both President Landaker's introductory statement and Chief Executive Officer RB Sloan's acceptance statement are attached.

President Larry Landaker recognized Luis Garcia and Aisha Hagen for their contributions as Acting Chief Executive Officer and Acting General Counsel during the interim period.

A. Introductory and Acceptance Statements

B. (Resolution 2010-147) Resolution Announcing the Chief Executive Officer

Following the vote, President Larry Landaker announced that the Board would stand in recess until 1:30 pm.

RESULT: ADOPTED [UNANIMOUS]

MOVER: Dr. Patrick Cox, District 7 Director

SECONDER: Ross Fischer, District 5 Director

AYES: Clement, Scanlon, Perry, Fischer, Landaker, Cox

7. Executive Session

A. Competitive Matters:

B. Contracts:

1. Change Orders for Construction Projects

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C. Real Estate Matters:

1. Purchases of Land

D. Personnel Matters:

1. Briefing on the Defined Benefit and 401K Plan Design

E. Legal Matters:

1. Whistleblower Administrator Update

2. Litigation Update, Including Threatened Litigation

3. Gunter Litigation

4. Update on Sentencing of Former General Manager

8. 1:00 PM - Reconvene to Regular Meeting

The Board resumed in open session at 1:33 pm.

9. Items From Executive Session

1. (Resolution 2010-148) Change Orders For Construction Projects


MOVER: Cristi Clement, District 1 Director/Secretary-Treasurer

SECONDER: Kathryn Scanlon, District 3 Director


2. (Resolution 2010-149) Purchases of Real Estate For Substation Construction Projects





10. Items From Members

During the afternoon session of the Regular Board meeting, the following members spoke on topics including but not limited to the following:

Paul Langston - passed on speaking since Mr. Sloan was not present.

11. Report on Monthly Safety Performance

A. February 2011 Safety Report

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Deputy General Manager Paul Hilgers presented the Safety Report for January 2011 as included in the Board package. In addition, he reported on the work of the safety committee, staff's attendance at OSHA certification training, and upcoming Safety Manager interviews.

12. Report on Monthly Power Supply

Power Supply Manager Dale Jones reported on items including January's power purchases of 474,637,000 KW hours, a peak demand of 1,152 mega watts on January 21 at 7:15 am, the February power cost adjustment of 7 mils, and the Energy Emergency Alert event on February 2, 2011.

13. Report on Monthly Operations

A. Monthly Operations Report

Deputy General Manager Paul Hilgers provided a summary of the rolling blackouts that occurred on February 2, 2011 and our participation as required by ERCOT's Energy Emergency Alert. In addition, Mr. Hilgers reported that LCRA utilized our Consert Pilot Program to control some of the load. The emergency scroll posted on the PEC website and additional forms for future notifications were discussed.

President Larry Landaker acknowledged the presence of the new CEO RB Sloan and offered member Paul Langston an opportunity to address Mr. Sloan since Mr. Langston passed on speaking earlier during the afternoon Items from Members. Mr. Langston welcomed CEO RB Sloan and spoke of well paid employees and executives, the Bennie Fuelberg era, then wished him good luck.

Communications Manager Michael Racis reported on the communications for members on the rolling blackouts. In addition to posts to the website, the Cooperative immediately used twitter, issued press releases, and called radio stations. In the future PEC will expand in social media and e-mailing members. Staff is working on legalities and technicalities so that the Cooperative will be able to use those forms as well.

Systems Engineering Manager Robert Peterson stated that the January Operations Update was included in the Board Package. Mr. Peterson highlighted that only five feeders remain in the inspection phase of the feeder maintenance program and expect those to be completed by end of March. Mr. Peterson reported construction was completed on 100 feeders, pole inspections were completed on 1,460 poles with reject rates of 30 poles, outages for the month 511 effecting 14,844 members, SAIDI for the month was 1.54 minutes, and SAIDI rolling 12 month ending January 31 was 38 minutes. There were no appreciable outages due to the cold weather.

14. Informational Items

A. Monthly Informational Items - January

Total Active Accounts 237,470 (net increase 473)

Total Memberships 199,899 (net increase 357)

Purchase Orders $ 3,081,423.67

Write-off of Uncollectible Accounts $ 135,471.76

Non-electrical Bad Debt Write-off $ 6,607.98

Power Bill (unaudited)

474,636,648 kWh Month/year $27,847,040.49 (includes LCRA & AEP)

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488,486,384 kWh Previous year $31,824,065.27 (includes LCRA & AEP)

15. Chief Financial Officer

A. CFO - Monthly Reports

1. Reports on January 2011 Monthly Financials

Chief Financial Officer Mike Vollmer reported on the consolidated balance sheet, operating revenues and expenses, gross margins, statement of cash flows, debt service coverage, budget comparisons, invoices paid over $10,000 and statistical reports for January 2011. Mr. Vollmer reviewed the availability of the $35 million Reserve Fund and $13 million Contingency Fund held with CFC and shown on the balance sheet. The allowance for uncollectible accounts continues to go down.

Mr. Vollmer stated that Director Scanlon asked a question regarding electric sales and cost of power. Mr. Vollmer stated that he needed additional information on kilowatt hours to answer the question completely, but would get back to the Board on this item.

B. CFO - Action Items/Other Items

16. Audit Committee

A. AC - Reports

Director Kathy Scanlon reported that the committee met on January 28 resulting in no action items. The committee received a LINKS update from the new project manager Zubin Billimoria, and an update on 2010 Internal Audit Plan. Bridgepoint would like to start interviewing managers and directors to determine area of concentration for the 2011 audit.

B. AC - Action Items/Other Items

17. Compensation Committee

A. CC - Reports

Director Ross Fischer stated there was nothing to report.

B. CC - Action Items/Other Items

18. Energy Committee

A. EC - Reports

Director Chris Perry reported that the committee met on February 11 resulting in no action items. The committee received a report from staff on the application of the new cost effectiveness standard for the Energy Efficiency Program and plans for additional analysis of the program. Director Perry also reported that the committee discussed the two vacancies on Energy Advisory Committee, received an update on Distributive Generation Pilot Program, and discussed the development of a PEC Rate Policy to guide the development of a new cost of service study and a new rate design.

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1. Approved Energy Committee December 2010 Minutes

B. EC - Action Items/Other Items

19. Executive Search Committee

A. ESC - Reports

B. ESC - Action Items/Other Items

1. (Resolution 2010-141) Dissolution of the Executive Search Committee


MOVER: Larry Landaker, District 6 Director/President

SECONDER: Dr. Patrick Cox, District 7 Director


20. Financial Strategies, Contracts, and Budget Committee.

A. FSCB - Reports

Director Cristi Clement reported that the committee met on February 14, and due to the Special Board Meeting held that morning, some of the committee's agenda was deferred. Deferred items included a contract tracking update, RFP for ten year load and forecast study, franchise agreement, and credit card payment options. The committee discussed the bridge loan and an installment plan for collection of deposits. Assistant General Manager James Blanton reported that staff studied the deferral of deposits and found that three of thirteen other cooperatives defer those payments. Based on the findings, and after requiring deposits for 3 1/2 months with most complaints being received from disconnects, not from new members joining the system, staff's recommendation to the committee is to continue moving forward with collection of deposits with a stipulation that in 90 days, we return to the Board with other options to deferring those deposits.

1. Financial Strats January 5, 2011 Minutes

B. FSCB - Action Items/Other Items

1. (Resolution 2010-142) Installment Plan for Collection of Deposits

Following some additional discussion about deferring the collection of deposits, the Board voted on the resolution. At 2:40 pm, President Larry Landaker announced the Board would take a five minute recess.

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RESULT: ADOPTED [4 TO 2]


SECONDER: Chris Perry, District 4 Director/Vice President

AYES: Cristi Clement, Kathryn Scanlon, Chris Perry, Ross Fischer

NAYS: Larry Landaker, Dr. Patrick Cox

21. Governance, Bylaws and Legal Committee.

At 2:49 pm, President Larry Landaker announced the meeting was back in session.

A. GBL - Reports

1. GBL Committee Minutes 1-10-11

Director Dr. Patrick Cox reported that the January 10th committee minutes as in the package, included the proposed ballot language which would be brought back to the Board in March.

2. Report on GBL Committee Meeting 2-15-11

3. Ballot Language for Election Methodology

Director Dr. Cox asked that the Board review the language. Director Dr. Cox also reported that the committee would be working with staff on communications and the ballot language was submitted to Election Services Corporation (ESC) for review and recommendation.

Special Counsel Pete Slover added that staff tried to be neutral and undirective when describing these three propositions, and same care should be given when developing the communications strategy. Mr. Slover also added that ESC had reviewed the ballot language, and Cox Smith will review after final committee action but before it is presented to the Board in March.

B. GBL - Action Items/Other Items

1. (Resolution 2010-143) Competitive Matters Policy

Director Dr. Patrick Cox moved that the resolution on Competitive Matters Policy be approved. Director Ross Fischer seconded the motion. Following a discussion and review of the items included in Exhibit A, Dr. Cox requested that if the directors have specific questions, to send those to committee, so they could make sure the Cooperative conforms with state law and our own requirements. Director Chris Perry moved to table the resolution to invite member comment and place back before the committee for further consideration. Director Kathy Scanlon seconded the motion. The directors voted unanimously to table the matter.

RESULT: TABLED [UNANIMOUS]

MOVER: Chris Perry, District 4 Director/Vice President



2. (Resolution 2010-144) Amendment to Delegation of Authority Regarding General Counsel

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SECONDER: Cristi Clement, District 1 Director/Secretary-Treasurer


3. (Resolution 2010-145) Amendment to Bylaws Regarding Grant of Easements, Rights-of-way or Licenses

Director Dr. Patrick Cox moved that the Bylaws Amendment on Easements and Rights of Way be approved. Director Kathy Scanlon seconded. Following some discussion regarding the line extension policy, President Larry Landaker announced at 3:40 pm that the Board would take a three minute recess. The Board reconvened the meeting at 3:45 pm.

Director Chris Perry questioned if this policy should be placed for member comment.Following some discussion regarding member comment on the issue, Director Chris Perry motioned to table the resolution for a period of 60 days to allow for member comment and that the resolution as drafted be presented to the members on the Cooperative's website. Director Cristi Clement seconded the motion. Directors voted 4-2 to table the motion with Kathy Scanlon and Ross Fischer opposed.

RESULT: TABLED [4 TO 2]



AYES: Cristi Clement, Chris Perry, Larry Landaker, Dr. Patrick Cox

NAYS: Kathryn Scanlon, Ross Fischer

4. (Resolution 2010-146) Method of Considering Director Qualifications Bylaws Amendment

Director Dr. Cox stated that the committee did not take the item up for consideration and he believed it would be coming up as the next item.

22. Items from General Counsel

A. (Resolution 2010-150) Amendment to Bylaws Regarding Director Qualifications and Director Disqualifications

Following some discussion of the language offered in the resolution, Director Ross Fischer moved to table this resolution and refer back to counsel for clarifying language. Director Dr. Patrick Cox seconded the motion. Directors voted unanimously to table the resolution. Special Counsel Pete Slover asked the directors to send their thoughts to the General Counsel.


MOVER: Ross Fischer, District 5 Director



23. Items From Directors

Ross Fischer

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A. The Scope of Internal Audit Contract and Its Relation to the Cooperative’s Purchasing Policy

Director Ross Fischer reviewed the scope and duration of Bridgepoint's contract, provided a timeline of events, and questioned how it related to the Cooperative's Purchasing Policy. He also questioned how the Audit Committee can assign tasks to Bridgepoint for the current year with their contract expiring in March 31, 2011, and has anyone thought of issuing a request for proposals for these services. Following some discussion, Director Fischer offered a resolution.

B. Direct Purchasing Staff to Issue an RFP for Internal Audit Services for the Current Fiscal Year.

Director Ross Fischer moved that the Purchasing Staff be directed to issue an RFP for Internal Audit Services for the current fiscal year. Director Dr. Patrick Cox seconded the motion. Following some discussion, the question was called. The directors voted 4-2 with Directors Kathy Scanlon and Cristi Clement opposed. Director Ross Fischer left the meeting at 4:30 pm.

Director Cristi Clement asked staff how quickly the RFP could be done. Assistant General Manager James Blanton stated it would be difficult, but can test the market and see how quickly we can get a response. Directors also questioned if the same should be done with Cox Smith. An RFP was not done for legal services for the current year. Acting CEO Luis Garcia stated that we do not have a set term agreement with Cox Smtih and can go to competitive services at anytime. Director Cristi Clement asked for a legal decision if we were in violation of the Procurement Policy and if anything was being erroneously being done by having an engagement letter done on an annual basis for professional services.

At 4:38 pm President Larry Landaker announced the Board would take a three minute break and when they returned would go to the SAP presentation.




AYES: Chris Perry, Ross Fischer, Larry Landaker, Dr. Patrick Cox

NAYS: Cristi Clement, Kathryn Scanlon

Patrick Cox

C. Review of Board Meetings and Committee Meetings

Director Dr. Patrick Cox deferred this item until the next meeting.

24. Chief Executive Officer

A. CEO - Reports

1. SAP Presentation

President Larry Landaker called the meeting back to order at 4:43 pm. Sparta's Executive Vice President Aasim Hasan, presented an update on the LINKS program. Mr. Hasan began his report by identifying this was the first of three educational sessions with the Board, with the first session being an introduction to SAP. Mr. Hasan also reported that all the sessions would provide information to PEC Board on SAP, provide insight into what's coming in terms of LINKS, and provide insight to the broader utilities market trends, but would not cover LINKS details or specifics on any single process. After Mr. Hasan reviewed the agenda for today's presentation, President Larry Landaker asked that he give specifics on how we are doing, and the issues

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being confronted.

Mr. Hasan reported that LINKS would be going live in two phases, the first phase in Sept 2011, and the second phase in March 2012. Mr. Hasan stated that the Cooperative is just over the middle of realization for Phase 1, which is scheduled for completion at end of April. He also reported that the Cooperative is done with the majority of functionalities being built, and unit testing is going well. In a program of this size there would always some challenges and issues, but nothing that would cause large problems. Mr. Hasan cautioned that the battle testing is a couple of months away.

Mr. Hasan answered questions regarding training for staff and core team; Deloitte as an integrator; the working relationship between the core team, Deloitte and Sparta; the risks; and possible change orders for new programs not built into original blueprint of system. SAP Educational Session pamphlets were distributed.

2. Legislative Report

Acting Chief Executive Officer Luis A. Garcia reported that the Legislative session had began, and one of the requirements of the Cooperative's Legislative Policy is for the CEO to report back to the Board. More focus has been on the current State budget than on many other the programs. The PEC service area is represented by 7 Senators and 14 Representatives. He also reported that staff will be analyzing and reporting to the Board next month about House Bill 611, which impacts the ability of LCRA to provide engineering services to outside entities other than themselves. The deadline for filing bills and joint resolutions is March 11. Acting CEO Luis A. Garcia reported that last week he, Deputy General Manager Paul Hilgers, and Acting General Counsel Aisha Hagen attended a TEC Legislative Rally, and met with Rep. Isaac, Rep. Hilderbran, Rep. Workman, and the staffs of Rep. Aycock, Rep Miller, Senator Wentworth, Senator Watson, and Senator Fraser's office. We were reminded that a governance bill has not been filed but could be. Acting CEO Luis A. Garcia reported that we have not retained any outside lobbying services at this time.

Acting CEO Luis A. Garcia reviewed the procedures in monitoring legislative matters, including monitoring Telicon, sending summations, and interacting with TEC to stay informed of the activities they are monitoring. Director Chris Perry inquired how many bills is TEC tracking. Staff did not know, but offered to get the answer.

3. Acknowledgement of Receipt of Disclosure Statements of Conflict of Interest

Acting CEO Luis A. Garcia reported that the executed disclosure statements and conflicts of interests forms from managers are included in the Board package and will be included in the minutes.

4. Corporate Website Update

President Larry Landaker announced that the Website Update would be postponed.

B. CEO - Action Items/Other Items

C. Announcements

25. Future Items for Board Consideration

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26. Future Meetings

A. Announce March Regular Board Meeting scheduled for 10 am on March 21, 2011 at the PEC Headquarters.

27. Adjourn

There being no further business to come before the Board of Directors, meeting was adjourned.

____________________________________ Cristi Clement, Secretary APPROVED:

_______________________________________ Larry Landaker, President

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Sponsors:


Updated: 2/17/2011 11:15 AM by Renee Oelschleger Page 1

Subject: Karen S. Ivy Retirement Resolution

Submitted By: Theresa Owens

Department: Human Resources

Background:

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Pedernales Electric Cooperative, Inc.Regular Meeting

February 21, 2011


Retirement of Karen S. Ivy, after 16 years of service.

The State of TexasCounty of Blanco

Whereas, Karen S. Ivy will retire from her employment with Pedernales Electric Cooperative, Inc. after faithfully and competently serving the members of PEC in various capacities for 16 years; and,

Whereas, Karen S. Ivy has successfully applied her considerable energy, experience, and knowledge to providing the Members of Pedernales Electric Cooperative, Inc. with reliable electric service; and,

Whereas, in the course of her employment, Karen S. Ivy has earned the friendship and respect of the Directors, Employees, and Members of Pedernales Electric Cooperative, Inc. for whom and with whom she has worked; and,

Whereas, Karen S. Ivy’s experience and willingness to serve will be sorely missed by the Members, Employees, and Board of Directors of Pedernales Electric Cooperative, Inc.; and,

Whereas, the Board of Directors of Pedernales Electric Cooperative, Inc. of Johnson City, Texas, thinks it fit and proper that a Resolution be passed and spread upon the minutes recognizing the contributions made by Karen S. Ivy;

Now, Therefore, be it resolved by the Board of Directors of Pedernales Electric Cooperative, Inc. of Johnson City, Texas, that all Members, Employees, Officers, and Directors of Pedernales Electric Cooperative, Inc. hereby express their great appreciation to Karen S. Ivy and their gratitude for the incalculable service rendered by Karen S. Ivy to her fellow employees and friends of Pedernales Electric Cooperative, Inc., and,

Be It Further Resolved that this resolution be delivered to Karen S. Ivy.

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Sponsors: District 4 Director/Vice President Chris Perry


Updated: 2/16/2011 4:21 PM by Luanne Coleman Page 1

Subject: EAC Member Recognitions Feb 2011

Submitted By: Luanne Coleman

Department: Committee - Energy

Background: The Energy Committee would like to recognize Karl R. Rabago for his service on the Energy Advisory Committee.

ATTACHMENTS:

• Karl Rabago Recognition Feb 2011(PDF)

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February 21, 2011


EAC Former Member Recognition

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Introduction of new CEO R.B. Sloan, Jr. By Board President Larry Landaker February 21, 2011 Good morning everyone. Today is President’s Day. It is fitting that we are gathered near the birthplace of an American president as it is a special and exciting day in the history of PEC. The Board of Directors has worked diligently to bring this cooperative back to its rightful place among the member-owners. We have accomplished much—a democratically elected board, the passage of a historic Member Bill of Rights, a new Articles of Incorporation—a fully revised Bylaws, live video streaming of our open meetings, a clean audit, a new fully interactive website, agreement and approval of our top strategic issues and the implementation of tighter financial controls. Today we take the next step, ushering in a new era of leadership with the naming of a new Chief Executive Officer. Last August, the Board contracted with the executive search firm of Mycoff Fry and Prouse up in Conifer, Colorado and embarked on a nationwide search, a search which generated extraordinary interest. The field of candidates included more than 100 qualified applicants. Scott Fry, the principal who worked closely with us, said the final short list could be described as one of the best he has ever assembled for a client. So what exactly was it that the Board was seeking in a new CEO? We were seeking someone who could make PEC the best it could possibly be—to fulfill the promise and expectation of what it means to be an electric cooperative in the delivery of safe, reliable and low cost energy to our members. We were seeking someone with an understanding and appreciation of our unique history and legacy and everything that that implies, including our duty to be open and transparent with the member-owners we serve. We were seeking a CEO who was honest, well liked and respected. We were seeking someone who worked well with people and who had a sensitivity and appreciation for the human condition. We were seeking a communicator—a plain- talking, straight-shooter. No bull. We sought an agent of change, an experienced utility executive with the leadership and managerial skills necessary to make the decisions necessary to forge ahead and lead PEC through a tough financial climate and ever-changing energy

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and political environment. We sought a CEO who understands the cooperative model and the concept of the member-owner. Over the past months, the Board conducted a number of publicly posted meetings and interviews to narrow the field, ultimately choosing one candidate in a unanimous vote at a special called meeting last week. Our CEO selection is with us here this morning and his name is RB Sloan. The first time Mr. Sloan met with our Board he was exceptionally well prepared. He had done his homework, he knew all about us and he wasn’t afraid to challenge the Board. Mr. Sloan knows what it means to work for a living. He understands life in the trenches and to our employees let me say this—Mr. Sloan understands your job and what you do for the cooperative. He brings extensive utility and cooperative experience. His career spans nearly 40 years. He has deep experience in all facets of our business including member services, engineering, safety, IT, finance and power acquisition and distribution. And to our member-owners, let me say this. Mr. Sloan understands your issues as well—whether they be questions concerning billing, legal, governance, or renewable and distributive energy—Mr. Sloan is open-minded and he understands you and your issues too. He is authentic, the real deal. By his own description, he is not slick and he told the Board that there were plenty of slick candidates for us to consider but he wasn’t one of them and if slick was what we wanted then he was not our guy. Mr. Sloan is, indeed, unpretentious—during our interviews we asked him what he like to be called by his employees and he replied simply, “RB”. RB is a native North Carolinian. This 7th generation native of the great Tar Heel State earned a Bachelor of Science degree in electrical engineering from North Carolina State University. He is in fact a registered professional engineer and holds an unlimited electrical contractor’s license in North Carolina. He also holds an MBA from from Queens University. Mr. Sloan started his career as an electrical engineer and safety coordinator. He came up through the ranks at EnergyUnited in Statesville, N.C. where he spent about 34 years and eventually became CEO. In recent years he has worked in the municipal utility industry, serving the cities of Vero Beach, Florida and Danville, Va.

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Mr. Sloan has been married for 36 years to Rita C. Sloan—they have one son, Adam and one daughter, Megan, both of whom have completed studies for advanced degrees. Mr. Sloan said, “When I think of PEC I think of outstanding customer service, industry-leading reliability, extraordinary employees and the legacy of LBJ.” When I welcomed Mr. Sloan last week he said, “I hope you are sensing the pride and excitement I'm feeling to have this opportunity. My intent is to make you and the Board proud of your decision. I can tell you we are already proud of this hire. This is a great day for PEC. On behalf of the member-owners, the employees and the Board of Directors, it is my privilege to present to you the next Chief Executive Officer of Pedernales Electric Cooperative, Mr. R.B Sloan….

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Statement from Pedernales Electric

Chief Executive Officer, R.B. Sloan Jr.

February 21, 2011

Well I was sitting here thinking, well I’m not nervous until you started, so if you built

expectations awfully, awfully high . . . I hope my mother was able to see that because

she would be awfully proud, and I hope my mother-in- law saw it because she would be

awfully surprised.

I’ve got to say everyone I’ve met here; every interaction I’ve had with the exception of

one, it’s been very, very good, and we’ll talk about Vero Beach if you’d like sometime.

When I became aware that PEC was looking for a person, I’ve got to tell you, it really

sparked my interest. I’ve been in the cities; I’ve worked for municipals for about three

and a half years. And let me tell you, working for municipals is nothing like working for

co-ops. I feel a little bit like the prodigal son coming home today.

When I think of PEC, I think of things that the president just laid out. I think about

tremendous, fantastic customer service and I think about great service reliability and I

think about big, big growth, which you’ve seen here, and I also think about our past

president. Then you might ask, well why come here? Well as he said, why not come

here? This is the epitome, the perfection of the cooperative program, so this is indeed a

special, special honor to be associated with PEC.

As I went through the decision process to learn more about PEC, I really believe that

life, and our opportunities that we see come before us are the interaction of our

experiences and opportunities. And, as many of you, I feel like I’m amongst the God-

fearing people. I really think it was fate for me to wind up here.

As contradictory as it many sound, I’m accused of being an engineer, which I confess I

am. I tend to get along with people well and have a bit of a business background, which

I think is really what we need at PEC today. It’s my goal not only for PEC to maintain its

position as the biggest cooperative in the country, but also being known as the best in

the country. How fitting that is for Texas to be the biggest and the best? That’s what we

are going to be.

I plan to get started quickly. My goal is to meet with all of the employees my first week

here. I don’t know if that’s possible; I was looking at the maps this morning and we’re

pretty, wide geographically, but that’s my goal, is to try to get out and meet with all of

the employees, because they are our front line, and if we are successful it will be

because of them. I also intend to meet with our stakeholders, one-on-one if necessary,

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to talk about anything you want to talk about. We will discuss it, we will debate it, and

we’ll enter into all kinds of dialogue, and if I have to do it one-on-one, we will do that.

We will do it in whatever form you want it to be.

While I didn’t grow up in the Hill Country, unfortunately, I do believe I understand what

goes on here. In my early years, I did have the opportunity to work with the founders of

a co-op, and I went to work in 1973 and there was a lot of the people who I founded the

co-op still working. So I was able to learn from them exactly what started the co-op back

many decades ago. Those people left a mark on me that will never escape. True, our

first job was to electrify the country and many people say that’s been accomplished. But

that wasn’t our first job. Our first job was to serve our communities. Our charge and our

purpose is to serve. That service 50 years ago took the form of bringing electricity to

many people who didn’t have it and probably would not have had it for decades. But

we’re still doing that. Our job is to bring reliable, dependable, low-cost electrical service

to all our members. The cooperative business model is uniquely developed to render

that service. The Board has made it clear to me that their intention is for PEC to be the

best. And we’re going to be the best at developing the Cooperative’s partnerships with

its members. So as I am now pleased to accept this position as your chief executive

officer, I’ve got to tell you, I’m honored. Thank you mister president, to the Board, for

placing your trust in me. I look forward to getting to know the members, the employees,

and the community as I start this new today. Thank you.

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Sponsors:

RESOLUTION 2010-147 DOC ID: 1561


Subject: Resolution Announcing the Chief Executive Officer

Submitted By: Renee Oelschleger

Department: General Manager

Background:

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February 21, 2011

RESOLUTION 2010-147

Resolution Announcing the Chief Executive Officer

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Board announce and retain Riley Buren (R.B.) Sloan, Jr. as the new Chief Executive Officer of Pedernales Electric Cooperative, Inc. on the termsaccepted beginning March 6, 2011 with his attendance at the National Rural Electric Cooperative Association Annual Meeting and then beginning in Johnson City Headquarters March 14, 2011; and

BE IT FURTHER RESOLVED that Luis A. Garcia and Aisha Nawaz Hagen resume their duties as General Counsel and In-House Counsel for the Cooperative, respectively, as of March 6, 2011.



SECONDER: Ross Fischer, District 5 Director


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Sponsors:



Subject: Change Orders for Construction Projects



Background:

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February 21, 2011

RESOLUTION 2010-148

Change Orders For Construction Projects

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the following change orders for substation construction projects that are subject to the limits described in the Authority and Responsibilities Policy of the Board are approved:

Balcones Substation Project, seven change orders reflecting increases and decreases of $57,328.47, resulting in a net increase of $6,715.53 above the original contract amount of $1,369,605.

Johnson City Substation Project, one change order resulting in an increase of $31,444.58 above the original contract amount of $1,381,007.31.

BE IT FURTHER RESOLVED, that all actions taken prior to the effective date hereof by the authorized agents of the Cooperative, including, but not limited to, the authorization of any change orders with respect to such project are hereby confirmed, ratified and approved; and

BE IT FURTHER RESOLVED that the (Acting) Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.





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Sponsors:



Subject: Purchases of Real Estate for Subst Construction



Background:

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February 21, 2011

RESOLUTION 2010-149

Purchases of Real Estate For Substation Construction Projects

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Cooperative approve the purchases of real property for substation construction projects, as described this day in Executive Session, subject to receipt of satisfactory environmental assessments, with details of any such purchase to be publicly available upon public filing of instruments memorializing the transfers; and

BE IT FURTHER RESOLVED, that the (Acting) Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.





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FEBRUARY 2011 SAFETY REPORT TO

THE PEC BOARD OF DIRECTORS

During the month of January:

• One Personal Injury Accident: • An employee was cutting down an old pole and cut through a canister of fumigant that

had been inserted into pole by Osmose (MITC). Fumigant got into employees eyes.

• Five vehicle accidents reported:• PEC vehicle (1) hit a piece of plywood in the road. The plywood flew up

and hit a PEC vehicle (2) that was behind him. Damage to front of PEC vehicle (2).

• PEC vehicle was parking a trailer up against the yard fence, hit fence knocking out some of the fence panels.

• PEC vehicle was forced off the road by a privately owned vehicle. PEC vehicle swerved to miss the oncoming privately owned vehicle and ran off the road hitting a tree. PEC vehicle is totaled, PEC employee is fine.

• Employee was turning around and hit tree with front fender of PEC vehicle.

• PEC vehicle was parked in parking lot and when employees returned they found a dent in side of vehicle.

SAFETY INFORMATION – JANUARY 2011 2010

Number of Lost-time AccidentsThis Month 0 1

Year to Date 0 0Other OSHA This Month 0 1Reportable Injuries Year to Date 0 1

Number of Personal Injury AccidentsThis Month 1 0

Year to Date 1 0

Number of Vehicle AccidentsThis Month 5 1

Year to Date 5 1

Number of Employees TrainedThis Month 488 481

Year to Date 488 481

Class AttendanceThis Month 1,447 1,474

Year to Date 1,447 1,474

*All Lost Time Accidents are OSHA Reportable

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Sponsors:

RESOLUTION 2010-141 DOC ID: 1548 A

Updated: 2/17/2011 11:17 AM by Renee Oelschleger A Page 1

Subject: Dissolution of the Executive Search Committee



Background:

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February 21, 2011

RESOLUTION 2010-141

Dissolution of the Executive Search Committee

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Executive Search Committee of the Cooperative has fulfilled its purpose and is hereby dissolved and its charter rescinded.


MOVER: Larry Landaker, District 6 Director/President



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Sponsors:


Updated: 2/16/2011 6:17 PM by Aisha N Hagen Page 1

Subject: Installment Plan for Collection of Deposits

Submitted By: Pete Slover

Department: Legal Services

Background:

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February 21, 2011

RESOLUTION 2010-142

Installment Plan for Collection of Deposits

WHEREAS, the Board of Directors referred the subject of a possible installment plan for collection of deposits to the Financial Strategies, Contracts & Budget Committee; and

WHEREAS, deferred payment agreements in other contexts have historically had a significant default rate, and were among issues that deposits were designed, in part, to address; and

WHEREAS, any deferred payment of deposits would invoke significant administrative and accounting costs, attributable in part to the need to segregate deposits owed from other amounts owed; and

WHEREAS, the Financial Strategies, Contracts & Budget Committee has requested that staff study and report back within 90 days regarding alternative means of mitigating the financial impact of deposits on members, including "Lifeline" rates and pre-paid metering; and

WHEREAS, the Financial Strategies, Contracts & Budget Committee has considered and recommends against the institution of an installment plan for collection of deposits;

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Financial Strategies, Contracts & Budget Committee has fulfilled the Board's assignment to consider an installment plan for collection of deposits.



SECONDER: Chris Perry, District 4 Director/Vice President

AYES: Cristi Clement, Kathryn Scanlon, Chris Perry, Ross Fischer

NAYS: Larry Landaker, Dr. Patrick Cox

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Draft for GBL Committee 2-17-11 Proposed Ballot Language for Director Election Methods Ballot Question 1. Method of Electing Cooperative Directors. The Bylaws of the Cooperative require a vote of the Members to recommend to the Board which system should be used for future Director Elections. Please select which of the following options that you prefer for electing PEC Directors. (A) ______ At-Large System. Under the current, at-large system, the seven Directors reside in different geographical districts. Directors are locally nominated by petition of Members within their district but elected by a vote of Members from all districts, across the Cooperative. Under this system, all Cooperative Members are eligible to vote every year. (B) ______ Single-Member System. Under a Single-Member System, each of the seven Directors would reside in a different geographical district. They would be nominated and elected locally, by action of only Members within their district. Each Cooperative Member would normally be eligible to vote every three years, when his or her local Director is up for election. (C) ______ Hybrid, Combination of At-Large and Single-Member System. Under a Hybrid system, most Directors (six or seven) would be elected locally, by members within their Single-Member districts. A smaller number (three or four) would be elected by all Members of the Cooperative. Each Cooperative Member would normally be eligible to vote every year. This method would require Members to approve a change to the Cooperative Articles of Incorporation, as described in Question 2, below. Ballot Question 2 Do you favor amending the PEC Articles of Incorporation to allow the number of Directors on the Board to be as many as 11, if and only if the Cooperative employs a Hybrid System, as described above in Question 1, Option C? ______ Yes ______ No

DRAFT

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Sponsors:

RESOLUTION 2010-143 DOC ID: 1536 C

Updated: 2/17/2011 11:56 AM by Renee Oelschleger C Page 1

Subject: Competitive Matters Policy



Background:

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February 21, 2011

RESOLUTION 2010-143

Competitive Matters Policy

WHEREAS, the Member Bill of Rights, added to the Articles of Incorporation of Pedernales Electric Cooperative, Inc. ("PEC") in June 2010, created a standard for the release of records under the PEC Open Records Policy for documents when they involve matters for which the Board determines in good faith that disclosure presents a compelling risk of likely harm to the Cooperative or its members; and

WHEREAS, the PEC Open Meetings Policy specifies a standard for discussion of commercial information and utility-related matters that the Board, in good faith, determines are related to the Cooperative’s competitive activity that would, if disclosed, give an advantage to competitors or prospective competitors (collectively, "Competitive Matters"); and

WHEREAS, the Board of Directors recognizes that PEC's electric operations have been affected by the deregulation of the wholesale and retail electric markets and are affected by competitive pressures from electric suppliers and other service providers; and

WHEREAS, the Board recognizes the competitive nature of the wholesale power market, and the potential for harm to the Cooperative’s bargaining position in procurement of wholesale power; and

WHEREAS, the Board recognizes its duty to protect the financial position of the Cooperative should PEC elect to implement customer choice; and

WHEREAS, the Board recognizes its duty to evaluate offers to purchase the Cooperative in accordance with its Policy Establishing Procedures For Disposition Of All Or A Substantial Portion Of The Cooperative’s Property, and to protect the Cooperative and its Members from takeover attempts that would threaten to harm the interests of Members; and

WHEREAS, after appropriate deliberations, the Board, as the governing body of PEC, has identified as of the present time, those general areas which it deems to be Competitive Matters, as well as the potential harm to the Cooperative’s competitive position and the nature of the potential advantage to existing or prospective competitors in the event such matters are required to be open to the public, and in the event information relating to such matters is released upon request made pursuant to the PEC

21.B.1

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Member Bill of Rights and Open Records Policy or otherwise discussed in an open meeting;

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the PEC Board, in the exercise of good faith and cognizant of its fiduciary duty in managing and operating PEC, hereby determines that the items listed on Exhibit A attached to this resolution constitute Competitive Matters the disclosure of which would present a compelling risk of likely harm to the Cooperative or its members, because they are related to present or future competitive activity of PEC and are related to the Cooperative’s competitive activity that would, if disclosed or deliberated upon in an open meeting, give an advantage to competitors or prospective competitors; and

BE IT FURTHER RESOLVED that for items listed in Exhibit A, which may relate to a contract being negotiated, the Board determines that deliberation in an Open Meeting would have a detrimental effect on the position of the Cooperative; and

BE IT FURTHER RESOLVED that the PEC Board reserves the right to supplement or amend the list of Competitive Matters set out in this resolution from time to time by addition or deletion as may be appropriate and desirable under the Member Bill of Rights, in order to continue to operate and manage PEC in a manner consistent with the interests of its members; and

BE IT FURTHER RESOLVED that the (Acting) Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.

21.B.1

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EXHIBIT A

Competitive Matters

(A)Purchasing and Contract Information, including, without limitation:

1. Power supply proposals and contracts and associated analysis and supporting documentation; energy and billing information, including dollar amounts and related units

2. Purchasing information, including bidders’ lists, specifications, bids, proposals, responses to purchasing or procurement solicitations, contracts and bid results, bid tabulations and calculations and supporting information, the release of which would serve as a disincentive for vendor participation and a fully competitive procurement process. The Cooperative may, at its discretion, release such information

3. Documents containing third party’s trade secrets or proprietary information, and those portions of documents covered by contractual confidentiality provisions

(B)Distribution system operations, including, without limitation:

4. Distribution control system design and capabilities; engineering and design of distribution system; distribution system and facility construction (other than as reported publicly) and project management plans, and; system maintenance policies and processes

5. Distribution system operating and performance data, including load forecasts and dispatch & outage information, excluding aggregate and anecdotal information of a type included in PEC's monthly public reports; electric distribution system maintenance and outage schedules other than schedules reported to members; operation management planning information and implementation of reliability standards

(C)Financial information, including, without limitation:

6. Audit work papers and consultant work papers in PEC’s possession, until such time as a final audit or consultant’s report is issued, and those portions of audits, and related work papers relating to Competitive Matters

7. Hedging and risk management strategies; rates and pricing strategies and targets; target electric distribution levels

8. Power supply (energy and capacity) pricing or other information that may lead to a determination of any power supplier’s individual pricing or costs of its generation facilities (excluding aggregate information of a type included in PEC's audited financial statements); amount of sales of electricity by city or geographic area subset of the service area, or financial figures from which those amounts can be derived

(D)Business operations, including, without limitation:

9. Individual customer personally identifying, consumption and credit information as identified in the Cooperative Policy on Privacy and Confidentiality, other than such customer information that has been approved for release in the Membership List Policy or as otherwise allowed by law for reporting to credit bureaus or collection agencies

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10. Product design information and proprietary corporate inventions/innovations including, but not limited to, hardware, software, tools and processing methods

11. Compensation of individual employees, except as required by law to be publicly reported, for example on the IRS form 990





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Sponsors:



Subject: Amendment to Delegation of Authority

Submitted By: Aisha N Hagen


Background:ATTACHMENTS:

• 2-21-11Delegation of Authority (PDF)

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February 21, 2011

RESOLUTION 2010-144

Amendment to Delegation of Authority Regarding General Counsel

RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the PEC Board Policy on Authority and Responsibilities (the "Delegation of Authority Policy"), initially adopted on September 15, 2008, and amended on November 17, 2008, November 16, 2009, March 15, 2010 and September 20, 2010 be further amended by making the following changes to items "b)" and "c)" in the section entitled "Authority Reserved to the Board of Directors", as follows (insertions underlined, deletions strike through):

b)Confirm the General Manager's appointment of Appoint and approve the employment terms, and periodically review the performance of the PEC General Counsel.

c)Consult with the General Counsel, independent of the General Manager. in a manner that acknowledges that the General Counsel’s legal client is the Cooperative, as an entity. This reservation is not exclusive, and does not withhold from the General Manager the authority to separately consult with the General Counsel.

to read:

b) Appoint and approve the employment terms, and periodically review the performance of the PEC General Counsel.

c) Consult with the General Counsel in a manner that acknowledges that the General Counsel’s legal client is the Cooperative, as an entity.

and;

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that in the section entitled "Delegation of Authority to the General Manager," the existing item "d)" is stricken and the subsequent item "e)" is relabeled as item "d)," as follows:

d) Appoint the PEC General Counsel, subject to Board Approval.

e) Consult with the General Counsel in a manner that acknowledges that the

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General Counsel’s legal client is the Cooperative, as an entity.

to read:

d) Consult with the General Counsel in a manner that acknowledges that the General Counsel's legal client is the Cooperative, as an entity.

and;






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PEC BOARD POLICY

AUTHORITY AND RESPONSIBILITIES

BOARD ADOPTED: September 15, 2008

AMENDMENTS November 17, 2008, November 16, 2009, March 15, 2010, September 20, 2010, February 21, 2011

OBJECTIVES:

This policy defines the relationship between the Board of Directors and the management of PEC through the description of responsibilities and expectations and through the establishment of guidelines for the delegation of certain powers and duties. To the extent, if any, this policy conflicts with the bylaws, the bylaws control. To the extent this policy conflicts with prior policy, this policy controls.

POLICY:

Responsibilities of the Board of Directors

The Board of Directors (Board) will establish the overall goals and objectives of PEC, review them on an ongoing basis and issue Board policies setting forth desired direction of management actions to attain such goals and objectives.

The Board will consider and establish policies in the best interest of the PEC membership and will retain management personnel with the capabilities to accomplish related policy goals. The Board will faithfully discharge its public trust by conducting its affairs in an ethical and sound business manner consistent with the fiduciary duties of the Directors. The Board and the Directors serving thereon will not direct the policies and actions of PEC from perspectives of private gain or personal advantage.

The Board will exercise reasonable diligence to ensure that the delegations to the General Manager provided for in this policy statement are properly implemented.

The Board will articulate clear and coherent goals and statements of its expectations through its policies and plans. The General Manager is responsible for day-to-day management of the organization with a view to the fulfillment of these goals and expectations.

Authority Reserved to the Board of Directors

The Board reserves to itself all authority and duties specified in and required by state law, PEC Bylaws, and Articles of Incorporation, including authority to:

a) Retain a competent General Manager to whom it delegates authority and responsibility for the operation of PEC within the limits of this and other approved policies, programs, and budget.

b) Appoint and approve the employment terms, and periodically review the performance of the PEC General Counsel.

c) Consult with the General Counsel in a manner that acknowledges that the

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General Counsel's legal client is the Cooperative, as an entity. d) Approve any amendment to the Bylaws. e) Authorize borrowing of money by PEC. f) Approve ethics or conduct policies regarding directors and officers of the Board. g) Approve Election Procedures. h) Approve compensation of directors. i) Approve the Tariff and PEC Service Policy, including provisions for member

access to cooperative records. j) Approve bond indentures. k) Authorize the initiation, settlement or setting of strategic direction of litigation

involving PEC. l) Approve the strategic direction of governmental advocacy by PEC. m) Approve agreements related to joint ownership of generating facilities. n) Set rates and charges for electric power and energy. o) Approve of sale or purchase or initiation of condemnation of any real property,

other than the sale or purchase of easements. p) Approve contracts to buy materials, supplies, equipment & related services to the

extent required by Appendix A. q) Approve contracts for consulting services to the extent required by Appendix A. r) Approve change orders to Board-approved contracts to the extent required by

Appendix A. s) Approve operational budget and capital improvement plan. t) Approve any employment contract entered into by the Cooperative and a

prospective employee or current employee. u) Approve any swap agreement, derivative agreement, hedging agreement, margin

account or any other similar instrument; and v) Approve any derivative contracts in connection with any Cooperative power purchase agreement.

Responsibilities of the General Manager

The General Manager, as the chief executive officer of PEC, is responsible for carrying out the business and activities of PEC according to state law, PEC Bylaws, and Articles of Incorporation, and the direction of the Board. The General Manager will issue appropriate management procedures setting forth desired direction of staff management and other employee actions consistent with the policies, goals, objectives, and directions of the Board. The General Manager will keep the Board adequately informed of operating conditions, financial positions and other key areas of operations, with reports on results of programs, plans, policies and PEC operations, the need for facilities, financing, operating requirements and other areas as requested or required. The General Manager will provide thorough well-organized information to the Board in a timely manner. Communications to the Board will be made forthrightly and with candor in the evaluation of the conduct of business and operations of PEC. As provided in the Bylaws, the General Manager each year will present to the Board

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objectives, goals, and priorities for its consideration. Delegation of Authority to the General Manager

The Board of Directors delegates to the General Manager all general powers including those specified in the State Law, PEC Bylaws, and Articles of Incorporation necessary to accomplish PEC's purpose, plans and objectives as approved by the Board, except for those specifically reserved to members or the Board by provisions of State Law, the Bylaws and Bond Indentures.

The Board delegates to the General Manager authority to perform all acts necessary or incidental to the management of the operations of PEC. This includes, but is not limited to, authority to oversee and make day-to-day decisions regarding finance, engineering, legal, communications, government relations, human resources, existing facilities, electrical construction, distribution and transmission matters in order to effectuate Board policy. Specifically, the General Manager has authority to,

a) Prepare, execute, acknowledge as appropriate, and deliver all agreements, contracts, certificates, consents, indemnities, affidavits, receipts, and other instruments of any nature, necessary or appropriate in the ordinary course of PEC business. This includes authority to approve all routine, major and non-routine purchases to the extent provided in Appendix A.

b) Negotiate or approve amendments to contracts for construction, with such

contracts to be submitted to the Board of Directors for approval to the extent provided in Appendix A.

c) Delegate appropriate authority, except that which is to be retained by the

Members or the Board of Directors by State Law, PEC Bylaws or Articles of Incorporation, to the General Manager's immediate staff and authorize such further delegation to management and staff, to the extent reasonably determined by the General Manager and without prior approval, all activities outlined in their position descriptions.

d) Consult with the General Counsel in a manner that acknowledges that the

General Counsel's legal client is the Cooperative, as an entity.

Appendix A The following contracts must be approved by the Board in advance:*

1. All contracts with a value of $1 million dollars or higher; 2. All CIP contracts with a value of $2 million dollars or higher; 3. All consulting contracts with a value of $150,000.00 or higher; or 4. All contracts of any value with a period of performance of two years or longer.

A reporting and tracking system for the above contract actions shall be implemented to capture at least the following items:

1. Unique contract identification number;

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4

2. Purpose/brief description of qoods/services and business case justification; 3. Estimated value per annum/total value; 4. Competitive Action: If yes, then a discussion of market test. If no, then a

discussion of the justification for sole source; 5. Period of performance; 6. Pricing type: fixed, variable, time & materials, labor hour, cost plus or other type;

and, 7. Name: contract user and contract administrator.

For any time and materials, cost-plus or other contracts for which a total amount is not specified, an estimate of yearly payments under the contract shall be made and that estimated amount shall be used to apply this policy. For any such contract, the General Manager shall notify the board if, at any time during the course of that contract, the total expenditures under that contract reach exceed 75 percent of the thresholds described in this policy.

In the event a weather event or other emergency necessitates expenditures exceeding these amounts prior to Board approval, the General Manager may authorize such expenditures if 1) before such authorization, the General Manager issues a formal determination declaring and describing the emergency and the anticipated special expenditures, and 2) as soon as practicable the General Manager informs the Board of the emergency and the need for special expenditures, and 3) as soon as practicable the General Manager seeks the Board’s ratification for the expenditures. * Payments of debt service and monthly power bills are not subject to these limits.

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Sponsors:

RESOLUTION 2010-145 DOC ID: 1535 B

Updated: 2/16/2011 6:35 PM by Aisha N Hagen B Page 1

Subject: Bylaws Amendment on Easements and Rights of Way



Background:

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February 21, 2011

RESOLUTION 2010-145

Amendment to Bylaws Regarding Grant of Easements, Rights-of-way or Licenses

RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Article I

Section 9 of the Cooperative Bylaws is amended as follows (insertions underlined, deletions

strike through):

Section 9. Grant of Easements, Rights-of-Way or Licenses.

In consideration of the furnishing of Electric Service, upon request of the Cooperative, a Member shall: (1) provide the Cooperative access to or use of real property in which the Member holds an interest sufficient to grant such use ("Member Property"); and (2) pursuant to the law and any terms and conditions specified by the Cooperative, and without compensation from the Cooperative, grant or convey to the Cooperative a written easement, right-of-way or license for use of Member Property as specified by the Cooperative for the purpose of providing Electric Service to the Member or one or more other Members, and (3) when the use of Member Property is necessary for the provision of Electric Service to another Member, negotiate in good faith with the Cooperative for a written easement, right-of-way or license. The Cooperative reserves all rights under state law for acquiring private property for public use.

to read:

“Section 9. Grant of Easements, Rights-of-Way or Licenses.

In consideration of the furnishing of Electric Service, upon request of the Cooperative, a Member shall: (1) provide the Cooperative access to or use of real property in which the Member holds an interest sufficient to grant such use ("Member Property"), and (2) pursuant to the law and any terms and conditions specified by the Cooperative, and without compensation from the Cooperative, grant or convey to the Cooperative a written easement, right-of-way or license for use of the Member Property as specified by the Cooperative for the purpose of providing Electric Service to the Member, and (3) when the use of Member Property is necessary for the provision of Electric Service to another Member, negotiate in good faith with the Cooperative for a written easement, right-of-way or license. The Cooperative reserves all rights under state law for acquiring private property for public

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use.”

;and

BE IT FURTHER RESOLVED, that the Board Recording Secretary or her designee is

authorized to correct article and section designations, punctuation, and cross-references

and to make such other technical and conforming changes as may be necessary to these

Bylaws to reconcile any amendments made this day and to reflect the expressed intent of

the Board; and

BE IT FURTHER RESOLVED, that the (Acting) Chief Executive Officer or his designee is

authorized to take such actions as needed to implement this resolution.

RESULT: TABLED [4 TO 2]



AYES: Cristi Clement, Chris Perry, Larry Landaker, Dr. Patrick Cox

NAYS: Kathryn Scanlon, Ross Fischer

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Sponsors:


Updated: 2/16/2011 6:38 PM by Aisha N Hagen A Page 1

Subject: Method of Considering Director Qualifications



Background:

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February 21, 2011

RESOLUTION 2010-146

Method of Considering Director Qualifications Bylaws Amendment

RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the proposed Bylaw Amendment Regarding Director Qualifications be posted to the Cooperative website through March 11, 2011, to allow Members to comment on the proposal; and

BE IT FURTHER RESOLVED that those comments should be transmitted to Directors in time for their consideration at the March 2011 Regular Board Meeting, at which time Directors shall consider adoption of the proposed Bylaw Amendment Regarding Director Qualifications; and


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Sponsors:



Subject: Amendment to Bylaws re Director Qualifications



Background:

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February 21, 2011

RESOLUTION 2010-150

Amendment to Bylaws Regarding Director Qualifications and Director Disqualifications

RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Article III Section 2 (e) of the Cooperative Bylaws is amended as follows (insertions underlined, deletions struck through):

(e) While a Director and during the three (3) years immediately prior to becoming a Director, not be, have been, or have a child, spouse or parent who is or has been an employee of the Cooperative or - wholesale power supplier (i) an employee, (ii) a director, or (iii) an owner of ten (10) percent or more of the voting stock or shares, or an owner of ten (10) percent or more of the fair market value of an entity, or the subsidiary or parent of an entity, that is regulated by the Public Utility Commission of Texas ("PUC") or registered with PUC or the Electric Reliability Council of Texas for the generation, sale, transmission, or delivery of ancillary services or electricity for resale (“Wholesale Power Supplier”).

to read:

(e) While a Director and during the three (3) years immediately prior to becoming a Director, not be, have been, or have a child, spouse or parent who is or has been an employee of the Cooperative or (i) an employee, (ii) a director, or (iii) an owner of ten (10) percent or more of the voting stock or shares, or an owner of ten (10) percent or more of the fair market value of an entity, or the subsidiary or parent of an entity, that is regulated by the Public Utility Commission of Texas ("PUC") or registered with PUC or the Electric Reliability Council of Texas for the generation, sale, transmission, or delivery of ancillary services or electricity for resale (“Wholesale Power Supplier”).

;and

BE IT FURTHER RESOLVED, that the first sentence of Article III Section 5 of the Cooperative Bylaws is amended as follows (insertions underlined, deletions struck through)

Director Disqualification. If a Director does not comply with any Director Qualification in effect at the time of his or her latest qualification to be placed on the ballot for election or reelection, then, except as otherwise provided by the

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Board of Directors for good cause, the Board of Directors may vote to disqualify the Director and the individual shall no longer be a Director and his or her seat shall be declared vacant ("Disqualification").

to read:

“Director Disqualification. If a Director does not comply with any Director Qualification in effect at the time of his or her latest qualification to be placed on the ballot for election or reelection, then, except as otherwise provided by the Board of Directors for good cause, the Board of Directors may vote to disqualify the Director and the individual shall no longer be a Director and his or her seat shall be declared vacant ("Disqualification").”

;and

BE IT FURTHER RESOLVED, that the Board Recording Secretary or her designee is authorized to correct article and section designations, punctuation, and cross-references and to make such other technical and conforming changes as may be necessary to these Bylaws to reconcile any amendments made this day and to reflect the expressed intent of the Board; and

BE IT FURTHER RESOLVED, that the Acting Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.





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CONFLICT OF INTEREST POLICY PEDERNALES ELECTRIC COOPERATIVE, INC.

BOARD ADOPTED: December 16,2008

Conflict of Interest Certification and Disclosure Form

As defined in the Pedernales Electric Cooperative, Inc. Conflict of Interest Policy (Policy), the undersigned Official:

1. Affirms that Official has received or has access to, has read, and understands the most current version of the Policy;

2. Agrees to comply with the Policy; 3. Based upon Official's good faith belief, to the best of Official's knowledge, and

except as disclosed below, certifies that Official currently complies with the Policy;

4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance with the Policy:

----------..- ..-~--..-~..- ...---- ..--~..-----, 5. Upon discovering any information or fact regarding any actual or potential

income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agr~ disclose this information or fact to Cooperative's President or Manager~d /

6. Upon not complying with the Policy, agrees to any s~?n, disqualif,6ation,/ removal, or other action taken under the Poli y.

LAJ1S A. 6Af<o.A Printed Name of Official

t[:{ 1t\J<S C60 Position of Official Date

/// / , ,//'-" <

Page 7 of 7

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- ...-----~- --..-~~-...---....--....~....-~--------

5. Upon discovering any information or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and

6. Upon not complying with the Policy, agrees to any sanction, disqualification, removal, or other action taken under the Policy.

_PAvL l'J.w~~~\j~S Printed Name of Official

\Je "h G~ DaM ,2.'-; ,;;I_v_I_I____ positn of Official

Page 7 of 7

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--~"---"



oSition of Official

{

Date'

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..~--.-.. -----~.

-- ---,---_._. .--------5. Upon discovering any information or fact regarding any actual or potential

income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and

6. Upon not complying with the Policy, agrees to any sanction, disqualification, removal, or other action taken under the POliC~ ?

JAfrt(:J Dla~ hJ ;~--dlr---_ Printed Name of Official re of Official

._._._._---_.. _-- .--..

Position of Official ~.-

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4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance with thvPolicy:

rio h,£/



Printed Name of Official

AC(1~~~ Cf2· 03· 1-011 Position of Official Date

Page 7 of 7

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As defined in the Pedernales Electric Cooperative, Inc, Conflict of Interest Policy (Policy), the undersigned Official:

1, Affirms that Official has received or has access to, has read, and understands the most current version of the Policy;

2, Agrees to comply with the Policy; 3. Based upon Official's good faith belief, to the best of Official's knowledge, and


4, Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance with the Policy:

..--~.~-..---------------5. Upon discovering any information or fact regarding any actual or potential


6, Upon not complying with the Policy, agrees to any sanction, disqualification, removal, or other action taken under the Policy,

/ / /" ~~.~./:~~~---

Printed Name of Official Signature of olfiCiai C-,,4 L ).ii

,/

Position of Official Date

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BOARD ADOPTED: December 16, 2008







5. Upon discovering any or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and


11~ I ~ Vcl/r~1c:7~__ J~~ I <.c~""'<r~,l(ta·•

i ' (. ~"

Printed Name of Official Signature 0 OffiCial


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5. Upon discovering any information or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official'S compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and


'Ll".J <'- 1:D/ 1\ /0--1--rinted Name of Official Signature o~::

'b,z\,J-iO-VL-- U; j J,-y,~~ 0' /-251_1'_____ Position of Official Date

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-------"--,-"--"









.. -_. ~------:--~-



~baa= :1)&NZO ~-JG<!:> Printed Name of Official Signature of Offi~ ~

~\5\~cr \'f\.c,...tJ~~r /- ~g -2011-Position of Official Date

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6. Upon not complying with the Policy, agrees to any sanction, disqualification, removal, or other action taken under the Policy .

_,~.1~ ~4\-=..o_('(;--:s-=:t'L::e,:---____ _ .G~t0M Printed Name of Official Signatu~ f Official

l {25(~9~l!____ Position of Official Date

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--









5. Upon discovering any information or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official'S compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and


It:.. A ~l lUi :;''&'

p'rinted Name of Official

Position of Official

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. )1 / /

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Printed Name eff Official Signature ofOffi¢ll ;/ ~

-;} <_L i, 10"U/ -' T7-1 <..-1 1/ 1''

Position of OfficiaV .........---- Date

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idW/t;' /7Je,{Eff ~mk. Printed Name of Official ignat re of Official

~.mZCCT /7//lA/#t9ErC Position of Official Date

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4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Officjal's compliance with the Policy:t0dc)



Signature of Official

Oat

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2, Agrees to comply with the Policy; 3. Based upon Official's good faith belief, to the best of Official's knowledge, and


4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact

compliance with the Policy:

5, Upon discovering any information or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and


--r- r I ''Y

/ .~ e ~' Or-0i2-lK:

Printed ame of Official

Date

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/2,;B6?i-L d. t~1&;LSO~ ~~~ SrgnatUreOfOfficial ..==----Printed Name of Official

Date I

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------.----- ----....---...---------



----F-!!-16~~~i~~_...Printed Name of Official Signature of Official

~\MUl'l~\Ch }Ad~ec 2.7. II Position of Official Date

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Conflict of I nterest Certification and Disclosure Form








Signat

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4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance with the Policy: I serve- 0'11. ~ DCtV~ 4f n Rt'&Ar ~1h.t L-er ~:hbw\t(1i?tVE- iV\ a non-COM~M5\~ j

() ~. -to M .., . -' I~O~1 I

.' . e.. -C - no.,~ . V' • , , LlV"'~ICL~.

ny actu I or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and


ci . ~.I$

5. Upon discovering any information or fact regarding

Printed Name of Official

COM tAl) tv \1J' UL.;A'n o~.s M/>rlJ l>rb~ 1Position of Official Date

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4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact O~ili~I'S compliance with the Policy:

.,o()Z



--7f;Q r~e00 It,! [vu;/ 11S

Printed Name of Official Signa'ture of Official

Position of Official

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ZeJen ni Aiacb<-!.'n-"-'e"""""J:..."""'--__ Printed Name of Official

XVtformu lion k it oL LI 01 j"zq /WII-----....-Po-s-lit'=io-n"-'-o=f"--'O'--'ff-""ic'-'-ia-'-I---J~c. .n ~ / Date

Uaf}~e'(

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Signature of Official

t11f", 1>.,..... S~'VI(:"S J41e.n#ll fJ'fr


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1. Affirms that Official has received or has access to, has read, and understands the most current version of the Policy; /

2. Agrees to comply with the Policy; v 3. Based upon Official's good faith belief, to the best of Official's knowledge, and

except as disclosed below, certifies that Official currently complies with the Policy; ~

4. Discloses the following information or facts regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance with the Policy: v _._.._.!V"'L_.._._._._.~_..~_._._._.~_.._.__.._.____

5. Upon discovering any information or fact regarding any actual or potential income, employment, compensation, Conflicting Interest Transaction, Business Opportunity, or pecuniary benefit, or other information or fact, that could impact Official's compliance, or another Official's compliance, with the Policy, agrees to disclose this information or fact to Cooperative's President or Manager; and .....

6. Upon not complying with the Policy, agrees to any sanction, disqualification, removal, or other action taken under the Policy. v

-"--..-"-..~"--------_._"--Printed Name of Official Signature of Official


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MARCH 2011 SAFETY REPORT TO

THE PEC BOARD OF DIRECTORS

During the month of February:

o Medical Treatment:

§ Employee stepped on rock and sprained ankle

§ Employee hit the corner of truck door bruising knee

§ Employee was pulling cable and injured elbow

o One Personal Injury Accident:

§ Employee was descending pole, slipped, and received splinters in forearm

o Two vehicle accidents reported:§ A privately owned truck threw-up rocks and hit a windshield of a PEC vehicle

leaving a hole in the windshield§ Employee was on a narrow road, got too close to a rock overhang and bent

rotate piston bracket on bucket

SAFETY INFORMATION - FEBRUARY 2011 2010

Number of Lost-time AccidentsThis Month 0 0

Year to Date 0 1Other OSHA This Month 3 2Reportable Injuries Year to Date 3 3

Number of Personal Injury AccidentsThis Month 1 5

Year to Date 2 5

Number of Vehicle AccidentsThis Month 2 2

Year to Date 7 3

Number of Employees TrainedThis Month 449 466

Year to Date 508 500

Class AttendanceThis Month 1,304 1,455

Year to Date 2,818 2,929

*All Lost Time Accidents are OSHA Reportable

10.A.1

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Month Jan Feb Mar Apr May June July Aug Sep Oct Nov DecSAIDI (min) 1.5 7.6SAIFI .05 0.13CAIDI (min) 29.1 73.1

BarksdaleCopperas CoveBertramDevil's HillSpicewood6 Sub Circuit Sw.Manchaca-BudaBlanco

0.1$6,824

No Changes this month

January

14232116751

111

Operations Summary ReportFebruary 2011

December2

0.4$19,324

No Changes this month

495 773

1607

December5117

OLD LINE EXTENSIONS

NEW LINE EXTENSIONS

January1

Avery RanchButtercup

SUBSTATION CONSTRUCTION PROJECTS

Balcones

In ConstructionIn Design Completed Projects

Rocksprings

Rutherford

Johnson CityMarshall Ford Terminal

2011 DISTRIBUTION IMPROVEMENT PROJECTS

In ConstructionYTD CompletionsTotal Projects

9

RELIABILITY (Forced)

In DesignReady to Build

10813

Design Pending

Estimated Cost

Number

6Marshall Ford - ButtercupWirtz/Mountain Top Terminals

1133

February

February0

Completed

0Approximate Miles$0

Completed

Total Year to Date 953Idle or disconnected 1

Pending 179

11.A.1

Packet P

g. 84

Attachment: Operations Summary Report (February) (1551 : Monthly Operations Report)

Dec Jan Feb Dec Jan Feb182, 93% 190, 97% 191, 98% Completed 99, 51% 100, 51% 100, 51%8 feeders 2 1 In progress 15 feeders 17 feeders 18 feeders

5 3 3 67 82 84

Unique EventsMobile Unit # 1 was removed from the temporary AEP 69KV ROW site on Feb. 17th.The new Rocksprings station was energized and load was transferred Feb. 17th. Replaced (3) 138KV bushings on T1 at Rocksprings.Assisted Transmission Maintenance personnel with load transfer at Wimberley in order to take a clearance on the Hwy. 32 to Wimberley 69KV T-320 line section to complete repairs and maintenance work.

For the month of February, 2011 the outages affected in all 246,304 members. The total outage time was 934 hours, with a member outage time of 98,121 hours.

Operations Summary ReportFebruary 2011

552.1%Percentage of Poles Rejected

288

Outages

2,004226,11413,741Equipment

Feeder Maintenance - Construction

219

Work Orders Ready

Number of OutagesTop Three Causes Member's affected

Remaining

192

2589PrearrangedTransmission

Total Poles RejectedTotal Poles Inspected 2011

Feeder Maintenance - Inspections

CompletedIn progress

Pole Inspection Program

11.A.1

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g. 85

Attachment: Operations Summary Report (February) (1551 : Monthly Operations Report)

CONFIDENTIAL/CLOSED ITEM

(Pages 86-94)


(Pages 95-96)

SAIDI Indicator (Current period 2010 - 2011)

The following table and graph indicates the Statistical Interruption Time per Meter.This is also referred to as the System Average Interruption Duration Index or SAIDI.The number values represent Interruption Time in Hours.The time period is November 1 through October 31.Interruptions Exclude Planned, Transmission, and Major Weather and Events.The diagonal line indicates a target of One Hour per Meter per Year

Interruption SAIDI Excluding Planned, Transmission, and Major Weather and Events

Year Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

08-09 0.05 0.14 0.20 0.24 0.31 0.41 0.48 0.64 0.71 0.78 0.84 0.90

09-10 0.06 0.10 0.24 0.26 0.31 0.36 0.42 0.56 0.59 0.63 0.70 0.7310-11 0.04 0.12 0.14 0.27

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

SA

IDI (H

ours

)

08-09 SAIDI 09-10 SAIDI 10-11 SAIDI Target 1 hr / meter / year

11.A.4

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D_LIESMANN Pedernales Electric Cooperative, Inc.

Electric Outage Report (Cause)

Planned Outages Excluded Major Events Excluded

Beginning Date:02/01/2011 Ending Date:02/28/2011

District:All Districts Substation:All Substations

CauseNumber of

Consumers

Consumer

Outage Time

Actual

Outage Time

Number of

Outages

OutageType:Multiple Outage Types Device: Multiple Devices Cause:Multiple Causes

1 Animals 43 43:53 651 747:06

2 Weather 73 192:26 3074 11407:33

3 Equipment 192 329:08 13741 18027:03

7 Human Error 12 22:21 109 102:14

Totals 320 587:48 17575 30283:56

Consumer Hours:

Consumer Hours:

Consumer Hours:

Total Consumer Outage Time / Active Consumers

30283.933000 / 237741

0.12738

Page 3 of 3 03/04/2011 1:13 pmPECOUTR006 (v1.13)

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Planned Outages Excluded Major Events Excluded



CauseNumber of

Consumers

Consumer

Outage Time

Actual

Outage Time

Number of

Outages

OutageType:Multiple Outage Types Device: Multiple Devices Cause:Multiple Causes

1 Animals 110 109:31 3519 1790:59

2 Weather 90 234:34 3299 11746:25

3 Equipment 289 503:08 15734 21168:52

7 Human Error 38 50:43 7580 1666:12

Totals 527 897:56 30132 36372:28

Consumer Hours:

Consumer Hours:

Consumer Hours:


36372.467000 / 237741

0.15299

Page 3 of 3 03/04/2011 11:00 amPECOUTR006 (v1.13)

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Planned Outages Included Major Events Included



CauseNumber of

Consumers

Consumer

Outage Time

Actual

Outage Time

Number of

Outages

OutageType:Multiple Outage Types Device: All Devices Cause:All Causes

1 Animals 43 43:53 651 747:06

2 Weather 73 192:26 3074 11407:33

3 Equipment 192 329:08 13741 18027:03

4 Substation 1 2:43 611 1659:53

5 Transmission 219 80:49 226114 64836:07

6 Scheduled 288 263:05 2004 1341:34

7 Human Error 12 22:21 109 102:14

Totals 828 934:25 246304 98121:30

Consumer Hours:

Consumer Hours:

Consumer Hours:


98121.500000 / 237741

0.41272

Page 3 of 3 03/04/2011 10:52 amPECOUTR006 (v1.13)

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Planned Outages Included Major Events Included



CauseNumber of

Consumers

Consumer

Outage Time

Actual

Outage Time

Number of

Outages

OutageType:Multiple Outage Types Device: All Devices Cause:All Causes

1 Animals 110 109:31 3519 1790:59

2 Weather 90 234:34 3299 11746:25

3 Equipment 289 503:08 15734 21168:52

4 Substation 1 2:43 611 1659:53

5 Transmission 219 80:49 226114 64836:07

6 Scheduled 592 590:39 4331 3289:57

7 Human Error 38 50:43 7580 1666:12

Totals 1339 1572:07 261188 106158:25

Consumer Hours:

Consumer Hours:

Consumer Hours:


106158.417000 / 237741

0.44652

Page 4 of 4 03/04/2011 1:14 pmPECOUTR006 (v1.13)

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40

50

60

70

80

90

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50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

500,000,000

550,000,000

600,000,000

650,000,000

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Mo

nth

ly A

vg

. T

em

p. D

eg

rees F

.

PE

C S

yste

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ota

l kW

hEnergy Usage and Average Temperature

Rolling 2 Year Comparison (Monthly)

Monthly KWH - 3/09 thru 2/10 Monthly KWH - 3/10 thru 2/11

Average Temperature - 3/09 thru 2/10 Average Temperature - 3/10 thru 2/11

11.A.7

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10

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90

100

110

40,000,000

60,000,000

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1/2

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Week Beginning With...

Weekly PEC System kWh vs Weekly Avg Air Temp

Air Temp.

PEC System kWh

PEC System kWh

Air Temp.

PEC System kWh

Air Temp.

PEC System kWh

11.A.8

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GROWTH STATISTICS

YEAR/ ACTIVE NETMONTH ACCOUNTS* INCREASE APPLICATIONS

2009January 228,139 249 2,891February 228,575 436 3,289March 228,976 401 3,583April 229,420 444 3,586May 229,926 506 3,598June 230,457 531 4,287July 230,975 518 2,552August 231,536 561 2,543September 231,727 191 1,929October 231,945 218 1,871November 232,390 445 1,836December 232,753 363 1,660

2010January 233,065 312 1,543February 233,329 264 1,607March 233,903 574 3,772April 234,429 526 1,863May 234,865 436 2,034June 235,339 474 2,220July 235,690 351 2,224August 236,115 425 2,451September 236,279 164 1,792October 236 441 162 1 771

*"Active Accounts" was formerly identifed as "Number of Consumers." Active Accounts are meters and lights only.

October 236,441 162 1,771November 236,822 381 1,323December 236,997 175 1,502

2011January 237,470 473 1,532February 237,741 271 1,557

*"Active Accounts" was formerly identifed as "Number of Consumers." Active Accounts are meters and lights only.

12.A.1

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PAYMENTS (OR PENDING PAYMENTS) ON ORDERS

Rolling 12 Months: March 1, 2010 - February 28, 2011

No. of Orders Amt Paid

$3,367,672.98 619March 2010

$3,026,510.50 545April 2010

$2,957,756.43 645May 2010

$2,604,759.52 507June 2010

$2,718,082.37 528July 2010

$4,249,706.38 538August 2010

$4,984,849.70 572September 2010

$4,868,387.31 528October 2010

$2,373,718.76 347November 2010

$4,298,083.45 365December 2010

$3,069,363.38 455January 2011

$2,801,377.20 407February 2011

Orders Totals: 5,757 $41,320,267.98

Page 1 of 1

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(Pages 106-175)


(Page 176)

Placeholder for Monthly Financials

Page 1

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Placeholder for Budget to Actual

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Object Object Description Payee Amount

PEDERNALES ELECTRIC COOPERATIVE, INC.OVER $10,000 VOUCHED TO THE MONTH OF FEBRUARY 2011

Summarized and Grouped by GL Account & Payee

Page 1 of 5

126 DP-OH Conductors & Devices

K B S Electrical Distributors 15,500.00

15,500.00Sub-Total by Object131 DP-Line Transformers


TEC Utility Supply & Service 281,688.00

Techline Ltd 10,086.00

321,627.00Sub-Total by Object156 GP-Comp Equip & Software

Deltaware Incorporated 13,191.00

Emerson Network Power 41,066.00

Hewlett-Packard Company 12,400.00

Power Line Systems 17,360.00

84,017.00Sub-Total by Object158 GP-Transp Equip (w/o Hvy Eq)

Grande Truck Center 124,761.00

124,761.00Sub-Total by Object167 GP-Display, Advertising

Pro ModelBuilders Inc. 18,750.00

18,750.00Sub-Total by Object187 WIP-Dist Overhead

Schneider Engineering Inc 24,820.73

24,820.73Sub-Total by Object188 WIP-Dist Contractor Services

Can-fer Utility Services LLC 222,285.12

Eckhardt Electric Construction 64,930.66

J M Utility Construction 30,000.00

Pike Electric LLC 233,562.12

T & D Solutions, Ltd 88,531.12

U C Synergetic 470,000.00

1,109,309.02Sub-Total by Object199 WIP-LT Contractor Serv

EFACEC ACS Inc. 79,571.00

Lambda Construction I Ltd 651,689.24

Lower Colorado River Authority 40,040.74

Mesa Technical Associates 39,420.00

13.A.1.b

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Page 2 of 5

North Houston Pole Line, LP 1,402,634.90


Schneider Engineering Inc 25,510.68

Thomas & Betts Corporation 287,726.00

Tidal Power Services LLC 14,067.78

2,930,206.36Sub-Total by Object454 Materials Inventory-Stocked


TEC Utility Supply & Service 10,980.44

Texas Electric Cooperatives In 102,582.60

Thomasson Lumber Company 11,109.30

139,432.34Sub-Total by Object482 Prepaid Ins-Worker's Comp

Texas Mutual Insurance Company 39,939.00

39,939.00Sub-Total by Object483 Prepaid Dues & Memberships


127,809.28Sub-Total by Object484 Prepaid Maint Agreement

Adjacent Technologies Inc 28,560.00

CDW Direct LLC 78,782.23

107,342.23Sub-Total by Object485 Prepaid Premium-Employee Insur

Blue Cross & Blue Shield of Te 831,884.66

Guardian Life Insurance Compan 58,702.18

Life Insurance Company of Nort 49,765.40

940,352.24Sub-Total by Object487 Prepaid Other

Doble Engineering Company 23,450.00

23,450.00Sub-Total by Object488 Prepaid HQ Paper

Ginny's Printing 32,804.04

32,804.04Sub-Total by Object496 Transportation-Clearing

Stroeher & Son Inc 16,847.77

Wright Express 10,468.00

27,315.77Sub-Total by Object579 Accr Tax-Sales & Use

Texas Comptroller of Public Ac 1,911,500.00

13.A.1.b

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Page 3 of 5

1,911,500.00Sub-Total by Object581 Accr Tax-City Franchise

Austin, City of 212,776.27

Bulverde, City of 13,293.71

Cottonwood Shores, City of 19,800.09

Jonestown, City of 10,125.12

Kempner, City of 12,084.86

Leander, City of 87,984.76

Mustang Ridge, City of 14,618.21

370,683.02Sub-Total by Object600 Accr Int-08 CFC Bridge Loan

National Rural Utilities Coop 1,798,650.70

1,798,650.70Sub-Total by Object694 COP-Purchased For Resale

AEP Energy Partners Inc 4,735,177.53

Lower Colorado River Authority 24,183,898.56

28,919,076.09Sub-Total by Object721 TME-Substation Equipment


16,426.39Sub-Total by Object760 DME-Poles, Towers & Fixtures

Eckhardt Electric Construction 16,232.67

16,232.67Sub-Total by Object766 DME-Tree Trimming

Davey Tree Surgery Company, Th 62,414.28

62,414.28Sub-Total by Object777 Meter Reading Exp

Aclara 116,938.00

116,938.00Sub-Total by Object778 Consumer Assist & Records

Information Management Solutio 24,811.38

USPS-CAPS # 21253 65,000.00

USPS-POC #1829830 17,000.00

106,811.38Sub-Total by Object787 Cons Assist-Instruct

Hampton Rogers Associates 36,481.00

36,481.00Sub-Total by Object793 Instruct Adver


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Page 4 of 5

61,123.20Sub-Total by Object820 A&G-Office Supplies

Jani-King of Austin 53,737.00

53,737.00Sub-Total by Object821 A&G-Contract Services

BKD 24,675.00

Bridgepoint Consulting 29,968.28

54,643.28Sub-Total by Object826 A&G-Emp Pension & Benefits

Pension Benefit Guaranty Corp 26,600.00

Rudd and Wisdom Inc 14,318.86

40,918.86Sub-Total by Object837 A&G-Data Processing

Ciber 10,560.00

Comsys 12,992.00

Deloitte Consulting, LLP 27,920.12

Susan S. Marshall 10,012.50

61,484.62Sub-Total by Object839 A&G-Rent & Lease Expense

Lane LTD, Robb 11,400.33

11,400.33Sub-Total by Object842 A&G-Credit Card Clearing

Commercial Card Solutions 89,171.41

89,171.41Sub-Total by Object844 A&G-Telephone Voucher Clearing

A T & T Mobility 11,180.21

Lower Colorado River Authority 12,820.50

Time Warner Cable 123,398.10

Verizon Wireless 18,574.26

165,973.07Sub-Total by Object846 Legal Expenses

Cox Smith Matthews Inc 46,684.75

46,684.75Sub-Total by Object951 Misc Non-Oper Income-Expense

Opus Real Estate VIII LP 15,350.00

Texas Comptroller of Public Ac -33,451.25

-18,101.25Sub-Total by Object954 Oth Deducts-Donations

P E C United Charities Inc 13,590.07

13.A.1.b

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13,590.07Sub-Total by Object 40,003,274.88

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(Page 188)


(Pages 189-191)

This Month 0.41272 0.02010Year To Date 0.44652 0.18009

Interruption Hours excluding planned, This Month 0.12738 0.01209 transmission, and major weather outages Year To Date 0.15299 0.15216

2011 2010

This Month 2 0Year To Date 2 0

This Month $90,300 $0Year to Date $90,300 $0

This Month 48 111Year To Date 90 206

This Month $74,200 $69,400Year To Date $183,950 $121,550

This Month $0 $0Year To Date $0 $0

2011 2010This Month 14 45

Year to Date 67 111

2011

Total Interruption Hours

FEBRUARYCONSUMER POWER INTERRUPTION HOURS

COMMUNITY RELATIONS - FEBRUARY

Number of Grants Funded

2010

Total Amount of Grants Funded

Energy Audits Completed

CONSERVATION:

PROGRAMS - FEBRUARY

COMMUNITY DEVELOPMENT:

Number of Programs Presented

Commercial Lighting Rebates $ Paid

HVAC Rebates $ Paid

P:\Board Reports\BOARD REPORTS FOR 2011-03-21

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30,4

27

31,3

44

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Number of Accounts Paid Online

Online PaymentsJanuary

February

March

April

May

June

July

August

September

October

November

December

$4,4

48,7

48

$5,7

05,5

77

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Amount Collected Online

Online RevenueJanuary

February

March

April

May

June

July

August

September

October

November

December

* Data provided by Google Analytics

22,2

37

25,0

98

0

5,000

10,000

15,000

20,000

25,000

30,000

Number of Reports Generated

MyUse Activity*January

February

March

April

May

June

July

August

September

October

November

December

30,4

27

31,3

44

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Number of Accounts Paid Online

Online PaymentsJanuary

February

March

April

May

June

July

August

September

October

November

December

$4,4

48,7

48

$5,7

05,5

77

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Amount Collected Online

Online RevenueJanuary

February

March

April

May

June

July

August

September

October

November

December

98,8

92

100,

652

0

20,000

40,000

60,000

80,000

100,000

120,000

Total Registered Members

Online RegistrationsJanuary

February

March

April

May

June

July

August

September

October

November

December

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Sponsors:

RESOLUTION (ID # 1558) DOC ID: 1558 A


Subject: Extension of Draw Period of CFC Bridge Loan

Submitted By: Aline Milam

Department: Comm - Financial Strategies, Contracts & Budget

Background:

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Extension of Draw Period of CFC Bridge Loan; Authorization for Supplement to Sixth Supplemental Indenture

WHEREAS, Pedernales Electric Cooperative, Inc. (the “Cooperative”) and National Rural Utilities Cooperative Finance Corporation (“CFC”) have previously entered into that certain Series 2008 Loan Agreement ("CFC Note Facility") dated as of March 27, 2008 for a three-year period through March 27, 2011 which authorized the Cooperative to borrow from CFC up to an aggregate of $300 million to pay the cost of capital improvements to the Cooperative’s electric transmission and distribution system, and to repay certain Advances under the Cooperative’s existing line of credit with CFC that were used to pay for such capital improvements;

WHEREAS, the Cooperative has previously drawn $230 million on the CFC Note Facility;

WHEREAS, the Cooperative wishes to extend the Draw Period as such term is defined in the CFC Note Facility for an additional three-year period through March 27, 2014;

WHEREAS, the Cooperative and The Bank of New York, New York (as successor in interest to The Frost National Bank of San Antonio), as trustee (the "Trustee") entered into a Sixth Supplemental Indenture of Trust dated as of March 25, 2008 ("Sixth Supplemental Indenture") in connection with the issuance of the CFC Note Facility as Additional Obligations under the Master Indenture of Trust dated as of January 1, 1993 by and between the Cooperative and the Trustee; and

WHEREAS, pursuant to Section 3.2 of the Sixth Supplemental Indenture the terms of the CFC Note Facility are incorporated into the Sixth Supplemental Indenture; and

WHEREAS, any changes to the terms of the CFC Note Facility therefore affect the Sixth Supplemental Indenture and a supplement or amendment to the Sixth Supplemental Indenture must be approved by CFC, the Trustee and the Board of Directors pursuant to Section 6.1 of the Sixth Supplemental Indenture; and

WHEREAS, a supplemental indenture by and between the Cooperative and the Trustee shall be executed and delivered in connection with the extension of the Draw Period of the CFC Note Facility;

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE

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COOPERATIVE, that the Board requests that CFC extend the Draw Period of the CFC Note Facility through March 27, 2014;

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, the execution and delivery by the Cooperative of the First Supplement to Sixth Supplemental Indenture of Trust dated as of March 21, 2011 ("First Supplement") and the performance by the Cooperative of the transactions contemplated thereby are hereby ratified, approved and confirmed in all respects; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the form, terms, and provisions of the First Supplement between the Cooperative and the Trustee, a substantially final form of which has been presented to the Board of Directors, hereby is approved in all respects; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Chief Executive Officer or any person designated by him in writing for such purpose, be, and each hereby is, authorized as a duly authorized officer or agent of the Cooperative, for and in the name and on behalf of the Cooperative, to execute and deliver the First Supplement, any other agreements, certificates, consents, affidavits, opinions, and other instruments of any nature necessary or appropriate to give effect to such First Supplement and extension by CFC, in each case in such form and containing such terms and conditions as such officer or agent may in his sole discretion deem necessary, appropriate, or desirable; and to file the First Supplement with the Secretary of State of the State of Texas and as otherwise may be required by Texas law and the Master Indenture; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Chief Executive Officer of the Cooperative, or any person designated in writing by him for such purpose, be and each of them hereby is, authorized as a duly authorized officer or agent of the Cooperative, for and in the name and on behalf of the Cooperative, to do any and all acts deemed by such officer in such officer's judgment to be necessary or appropriate in the best interests of the Cooperative to give effect to the foregoing resolutions, including, without limitation, filing the First Supplement with the Secretary of State of the State of Texas; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that all actions taken prior to the effective date hereof by the officers and duly authorized agents of the Cooperative in connection with the subject of the foregoing resolutions be and are hereby ratified, confirmed, and approved.

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Sponsors:



Subject: Amendments to Internal/External Auditor Contracts

Submitted By: Tia Owens

Department: Committee - Audit Committee


• 2-25-11amendment to BKD (PDF)

• 2-25 amendment spj (PDF)

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Amendments to Internal and External Auditor Contracts

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Cooperative amend the contracts of Smith Patterson & Johnson PLLC as internal auditor and BKD LLP as external auditor as further described in the attached amendments;

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Chair of the Audit Committee is authorized, as a duly authorized agent of the Cooperative, for and in the name and on behalf of the Cooperative, to execute the amendment to the engagement letter of the external auditor;

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the President of the Board of Directors is authorized, as a duly authorized agent of the Cooperative, for and in the name and on behalf of the Cooperative, to execute the amendment to the engagement letter of the internal auditor; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the board resolution from February 2011 requiring the issuance of an RFP for internal audit services is superseded; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.

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DRAFT 3/11/11

AMENDMENT TO ENGAGEMENT LETTER - BKD

This Amendment to Engagement Letter ("Amendment") is entered into by and between BKD LLP ("BKD") and Pedernales Electric Cooperative, Inc. ("PEC") and dated as of March __, 2011.

RECITALS

WHEREAS, PEC issued a Request for Proposal ("RFP") in 2009 for auditing and tax services; and WHEREAS, the RFP included the statement that the contract was to cover a minimum of three years with an option to renew annually; and WHEREAS, BKD submitted a response to PEC's 2009 RFP; and WHEREAS, the Board of PEC approved an award to BKD in February 2009; and WHEREAS, BKD and PEC executed a contract for services in May 2009 for the audit of the consolidated balance sheet of PEC as of December 31, 2008, and in November 2009 BKD and PEC executed a contract for services for the audit of the consolidated balance sheet of PEC as of December 31, 2009, and in September 2010 BKD and PEC executed a contract for services for the audit of the consolidated balance sheet of PEC as of December 31, 2010; and WHEREAS, due to inadvertent scrivener error, none of the contracts from May 2009, November 2009 or September 2010 includes any reference to the master term of three-years with an annual renewal option; and WHEREAS, the intent of the parties is for the contract to consist of a three-year term with an annual option renewal; and WHEREAS, the current engagement letter dated September 8, 2010 requires an agreement in writing by the parties for any modifications or extensions to its terms; and WHEREAS, the parties wish to specify that there is one additional year remaining in the term of BKD's contract; and WHEREAS, PEC will go-live with its LINK project in two phases with a final completion date on or about March 31, 2012 and PEC wishes to reduce its audit expense by retaining an auditor through completion of the LINKS project; and WHEREAS, PEC wishes to now exercise its option to extend the services of BKD through completion of the FY 2012 audit performed in 2013; and

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NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

1. The recitals to this Amendment are incorporated herein for all purposes.

2. Two new sentences shall be inserted to the beginning of the section entitled "Engagement Objectives" of the Engagement Letter shall be amended and restated as follows: The FY 2010 Audit Engagement is year two of a three-year contract between the parties that at conclusion of the three-year term in 2012 for the FY 2011 Audit includes an annual renewal option to be exercised at the option of PEC. As noted below, at any time the parties may terminate these services.

3. PEC also hereby gives notice of the exercise of its option for BKD to perform the FY

2012 Audit subject to execution of mutually agreeable scope of services.

4. All other terms and conditions of the Engagement Letter not hereby modified shall continue in full force and effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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PEDERNALES ELECTRIC COOPERATIVE, INC. By: __________________________ Name: Title: Audit Committee Chair of Board of Directors

BKD LLP By: ______________________ Name: Title:

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AMENDMENT TO ENGAGEMENT LETTER- SPJ

This Amendment to Engagement Letter ("Amendment") is entered into by and between Smith, Patterson & Johnson PLLC ("SPJ") and Pedernales Electric Cooperative, Inc. ("PEC") and dated as of March __, 2011.

RECITALS

WHEREAS, PEC issued a Request for Proposal ("RFP") in 2009 for internal auditing services; and WHEREAS, the RFP included a provision as to "Contract Term" to consist of a three-year period with an option of performing internal audit services for two additional years; and WHEREAS, Bridgepoint Consulting LLC ("Bridgepoint") submitted a response to PEC's 2009 RFP and in the first paragraph of its response made no exceptions to the requirements of PEC in such RFP; and WHEREAS, the Board of PEC approved an award to Bridgepoint in May 2009; and WHEREAS, Bridgepoint and PEC executed a contract for services in May 2009 and then SPJ, an affiliate of Bridgepoint, executed a contract with PEC for services in April 2010; and WHEREAS, due to inadvertent scrivener error, neither contract from 2009 or 2010 includes any reference to the master term of three-years with an additional two-year option; and WHEREAS, the intent of the parties is for the "Contract Term" of the contract as specified in the RFP to consist of a three-year term with an additional two-year option; and WHEREAS, the current contract expiring March 31, 2011 between PEC and SPJ permits amendments to the contract if by mutual agreement of the parties; and WHEREAS, the Board at its February 2011 meeting adopted a resolution to require a request for proposal to be issued for internal audit services; and WHEREAS, there are potential negative effects at this time if PEC is required to open for bid the internal audit functions prior to completion of the LINKS project and the Cooperative would suffer a loss of continuity in services; and WHEREAS, there is current work in process and the 2010 Audit Plan has not been completed and; WHEREAS, the parties wish to extend the March 31, 2011 timeframe to May 31, 2011 to complete items in the 2010 Audit Plan; and

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WHEREAS, the parties wish to specify that there is one additional year remaining in the term of SPJ's contract; and WHEREAS, this Amendment supersedes the Board's February 2011 resolution requiring a RFP issuance for internal audit services; and NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

1. The recitals to this Amendment are incorporated herein for all purposes.

2. The section entitled "Term of Engagement" of the Engagement Letter shall be amended and restated as follows: The term of this engagement is intended to be sufficient to complete the FY 2010 Internal Audit Plan. The FY 2010 Internal Audit Plan will begin on April 1, 2010 and end on May 31, 2011, unless amended by authorized additions or changes. The FY 2010 Internal Audit Plan is year two of a three-year contract between the parties that at conclusion of the three-year term in March 2012 includes an additional two-year option for services by SPJ to be exercised at the option of PEC. In accordance with the Standard Terms and Conditions, this engagement may be terminated with two weeks notice by either party.

3. All other terms and conditions of the Engagement Letter not hereby modified shall

continue in full force and effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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PEDERNALES ELECTRIC COOPERATIVE, INC. By: __________________________ Name: Title: President of the Board of Directors

SMITH PATTERSON & JOHNSON PLLC By: ______________________ Name: Title:

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Sponsors:


Updated: 3/15/2011 2:10 PM by Aisha N Hagen Page 1

Subject: Engagement of External Auditor for LINKS

Submitted By: Tia Owens

Department: Committee - Audit Committee

Background:

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Engagement of External Auditor for LINKS Internal Controls Function

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Cooperative engage BKD LLP to perform the scope of work pertaining to the LINKS internal control functions as described in its engagement letter; and

BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Chair of the Audit Committee is authorized, as a duly authorized agent of the Cooperative, for and in the name and on behalf of the Cooperative, to execute the engagement letter with BKD LLP.

14.B.2

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Governance, Bylaws & Legal Committee


Committee Meeting www.pec.coop

~ Minutes ~ Call PEC Toll Free

1-888- 554-4732

Tuesday, February 15, 2011 9:00 AM PEC Headquarters Auditorium201 South Avenue F


Governance, Bylaws & Legal Committee Page 1 Revised 3/14/2011

I. Call to Order

9:00 AM Meeting was called to order at 9:02 AM on February 15, 2011 at PEC Headquarters Auditorium, 201 South Avenue F, Johnson City, TX.

Attendee Name Title Status ArrivedDr. Patrick Cox Committee Chairperson PresentRoss Fischer Committee Member PresentLarry Landaker Committee Member PresentJeanell Davis Assistant General Manager PresentPete Slover Special Counsel PresentLana Freudenberg Administrative Assistant Present

Committee Members Dr. Patrick Cox, Ross Fischer, and Larry Landaker were all in attendance telephonically

II. Review and Approve Minutes

1. Monday, January 10, 2011

III. Member Comments

No member comments.

IV. Open Session

A. Unfinished Business

1. Competitive Matters Policy

Special Counsel Pete Slover presented a draft policy as requested by the committee at the January meeting. Committee discussed the proposed policy. Larry Landaker moved, Ross Fischer seconded the motion that the policy be presented at the February Board Meeting. Motion unanimously approved.

2. Communications Policy

Committee discussed and instructed staff to prepare a draft policy to include the changes as recommended today to present at the next Committee meeting.

3. Ballot Language for Election Methodology

Committee discussed the proposed language, Jeanell Davis recommended that Election Services "ESC" review the proposed language. Committee would like proposed language presented to Directors for their information at the February Board Meeting.

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4. Updating Bylaws, Policies and Procedures

Committee. discussed and unanimously recommended that "Method for Considering Director Qualification Bylaws Amendment", be placed on the February Board agenda.

5. Bylaws Provision on Easements and Rights of Way

Committee discussed proposed language for amendment. Larry Landaker moved, Ross Fischer seconded the motion for the proposed amendment to be presented to the Board at the February Board Meeting. Motion unanimously approved.

6. Delegation of Authority re: General Counsel

Pete Slover presented recommended changes, Committee discussed and unanimously recommended presenting these proposed changes at the February Board Meeting .

7. Legislative Update

Pete Slover reported that Acting General Counsel, Acting CEO and Deputy General Manager are attending the TEC Legislative Rally, visiting various Representatives and Senators who serve the PEC service area. Dr Cox requested that staff make sure all directors are receiving the legislative updates from General Counsel.

V. Executive Session (if needed) Executive Session begun at 10:03 AM

A. Legal

1. Gunter Litigation

2. Update on Sentencing of Former GM

Executive Session ended at 10:04 AM

VI. Open Session (if needed) Open Session not needed at this time.

VII. Adjournment Meeting was adjourned at 10:05 AM

1. Committee Signature

There being no further business to come before the Governance, Bylaws & Legal Committee, meeting was adjourned.

Governance, Bylaws & Legal Committee Page 2 Revised 311412011

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Sponsors:

RESOLUTION (ID # 1568) DOC ID: 1568 B

Updated: 3/16/2011 10:08 AM by Renee Oelschleger B Page 1

Subject: Designation of Competitive Matters

Submitted By: Aisha N Hagen


Background:

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Designation of Competitive Matter(s)

WHEREAS, the Member Bill of Rights, added to the Articles of Incorporation of Pedernales Electric Cooperative, Inc. ("PEC") in June 2010, created a standard for the release of records under the PEC Open Records Policy for documents when they involve matters for which the Board determines in good faith that disclosure presents a compelling risk of likely harm to the Cooperative or its members; and

WHEREAS, the PEC Open Meetings Policy specifies a standard for discussion of commercial information and utility-related matters that the Board, in good faith, determines are related to the Cooperative’s competitive activity that would, if disclosed, give an advantage to competitors or prospective competitors (collectively, "Competitive Matters"); and

WHEREAS, after appropriate deliberations, the Board, as the governing body of PEC, has identified as of the present time, those general areas which it deems to be Competitive Matters, as well as the potential harm to the Cooperative’s competitive position and the nature of the potential advantage to existing or prospective competitors in the event such matters are required to be open to the public, and in the event information relating to such matters is released upon request made pursuant to the PEC Member Bill of Rights and Open Records Policy or otherwise discussed in an open meeting;

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the PEC Board, in the exercise of good faith and cognizant of its fiduciary duty in managing and operating PEC, hereby determines that the item or items listed on Exhibit A attached to this resolution constitute Competitive Matters the disclosure of which would present a compelling risk of likely harm to the Cooperative or its members, because they are related to present or future competitive activity of PEC and are related to the Cooperative’s competitive activity that would, if disclosed or deliberated upon in an open meeting, give an advantage to competitors or prospective competitors; and

BE IT FURTHER RESOLVED that for items listed in Exhibit A, which may relate to a contract being negotiated, the Board determines that deliberation in an Open Meeting would have a detrimental effect on the position of the Cooperative; and

BE IT FURTHER RESOLVED that the PEC Board reserves the right to supplement or

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amend the list of Competitive Matters set out in this resolution from time to time by addition or deletion as may be appropriate and desirable under the Member Bill of Rights, in order to continue to operate and manage PEC in a manner consistent with the interests of its members; and

BE IT FURTHER RESOLVED that the Chief Executive Officer or his designee is authorized to take such actions as needed to implement this resolution.

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EXHIBIT A

Competitive Matters

1. Portions of contracts for purchased power or proprietary software, the disclosure of which is limited by confidentiality provisions in such contracts.

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Sponsors:


Updated: 3/15/2011 3:04 PM by Pete Slover A Page 1

Subject: Communications Policy




• board communications policy_rev _3_ (PDF)

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Communications Policy

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Cooperative adopts the External and Internal Communications Policy as attached; and

BE IT FURTHER RESOLVED, that any policy concerning the Communications Policy approved previous to this day is hereby superseded, including the Internal and External Communications Policy passed by Board resolution on January 26, 2009; and

BE IT FURTHER RESOLVED, that the Chief Executive Officer or his designee is authorized to

take such actions as needed to implement this resolution.

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Communication Policy Version 3.0 for GBL 3-14-2011

1

EXTERNAL AND INTERNAL COMMUNICATIONS POLICY Adopted: January 26, 2009

Amended:

Section 1. External Communications.

a) General. If a member of the PEC Board of Directors (“Director”) elects to publicly speak or write about cooperative matters (an “External Communication”), the Director must clearly state whether he or she is speaking as an individual board member or on behalf of the entire PEC Board. An External Communication under this policy does not include any communication regarding legislative matters covered separately under the PEC Legislative Policy.

b) Staff Resources and Review.

In the event that an External Communication is in a Director’s individual capacity, no Cooperative staffing resources shall be used or costs incurred in making the External Communication without the prior approval of the Chief Executive Officer. Upon request of a Director wishing to make an External Communication, the General Counsel shall review in advance the content of such External Communication to determine accuracy and potential liability.

c) Director Candidates.

This policy does not apply to Directors in their capacity as candidates for election to the Board.

Section 2. Internal Communications.

a) General. Directors shall contact the Chief Executive Officer or his designee (“CEO”) with any requests for information or assistance from staff. This policy does not cover communications between a Director and the General Counsel.

b) Requests for Staff Assistance.

The CEO will direct the request to the appropriate staff person(s) for response. The CEO shall inform the full Board of any such request and its disposition. If the CEO declines to assign staff to fulfill the request, the CEO will notify the Director of such a decision. The request may then be submitted by the Director to the Board for consideration at a regularly

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scheduled meeting, at which time the Board shall consider whether to direct the CEO to fulfill the request.

c) Additional Communications Avenues.

Directors may communicate about matters pending before a committee of the Board directly with staff assigned to assist such committee, and any such communication should simultaneously be shared with the CEO. Additional avenues of communication between Directors and staff may be opened with consent from the CEO. All official communications, policies, and directives of the Board that are of interest and concern to the staff shall be communicated through the CEO, who shall also keep staff informed of the Board’s concerns and actions.

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Sponsors:

RESOLUTION (ID # 1570) DOC ID: 1570 B

Updated: 3/15/2011 3:32 PM by Aisha N Hagen B Page 1

Subject: Ballot Language for 2011 Elections




• Ballot Language pdf (PDF)

18.B.3

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Ballot Language for 2011 Elections

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the attached language appear on the 2011 Annual Meeting election ballot; and


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Ballot Question: Method of Electing Cooperative Directors. The Bylaws of the Cooperative require a vote of the Members to recommend to the Board which system should be used for future Director Elections. Please select which of the following options that you prefer for electing PEC Directors. (A) ______ At-Large System. Under the current, at-large system, the seven Directors

reside in different geographical districts. Directors are locally nominated by petition of Members within their district but elected by a vote of Members from all districts, across the Cooperative. Under this system, all Cooperative Members are eligible to vote every year.

(B) ______ Single-Member System. Under a Single-Member System, each of the seven Directors would reside in a different geographical district. They would be nominated and elected locally, by action of only Members within their district. Each Cooperative Member would normally be eligible to vote every three years, when his or her local Director is up for election. (C) ______ Hybrid, Combination of At-Large and Single-Member System. Under a Hybrid system, most Directors would be elected locally, by members within their Single-Member districts. A smaller number would be elected by all Members of the Cooperative. Each Cooperative Member would normally be eligible to vote every year. This method would require Members to approve a change to the Cooperative Articles of Incorporation.

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Sponsors:


Updated: 3/16/2011 3:19 PM by Renee Oelschleger A Page 1

Subject: Amend Bylaws Provision Director Qualificaions



Background:

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Bylaw Amendments to Director Qualifications

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that Article III Section 2 (e) of the Cooperative Bylaws is amended as follows (insertions underlined, deletions struck through):

(e) While a Director and during the three (3) years immediately prior to becoming a Director, a Director shall not

(1) Be, have been, or have a child, spouse or parent who is or has been an employee of the Cooperative, or an employee or a Director of a wholesale power supplier

(2) Be or have been an officer, director or owner of ten (10) percent or more of the voting stock or shares of an entity which has entered into a contract withthe Cooperative and received consideration of more than $25,000 from theCooperative during any twelve consecutive months, or

(3) Be or have been an employee, officer, director, or an owner of ten (10) percent or more of the voting stock or shares of an entity, that has sold more than 50,000MWhs of electricity to the Cooperative during any twelve consecutive months.

to read:

(e) While a Director and during the three (3) years immediately prior tobecoming a Director, a Director shall not

(1) Be, have been, or have a child, spouse orparent who is or has been an employee of the Cooperative, or

(2) Be or have been an officer, director or owner of ten (10) percent or more of thevoting stock or shares of an entity which has entered into a contract withthe Cooperative and received consideration of more than $25,000 from theCooperative during any twelve consecutive months, or

(3) Be or have been an employee, officer, director, or an owner of ten (10) percent or more of the voting stock or shares of an entity, that has sold more than 50,000MWhs of electricity to the Cooperative during any twelve consecutive months.

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BE IT FURTHER RESOLVED, that the Board Recording Secretary or her designee is authorized to correct article and section designations, punctuation, and cross-references and to make such other technical and conforming changes as may be necessary to these Bylaws to reconcile any amendments made this day and to reflect the expressed intent of the Board; and


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Sponsors: District 3 Director Kathryn Scanlon



Subject: Rescind Feb 2011 Resolution re Issuance of RFP



Background:

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Motion to Rescind February 2011 Resolution Regarding Issuance of RFP for Internal Audit Services

NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the resolution from the Board's February 21, 2011 meeting regarding issuance of a RFP for internal audit services be rescinded; and


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CONFLICT OF INTEREST POLICY PEDERNALES ELECTRIC COOPERATIVE. INC.








-------- ------- -------~----- ---------------------,5. Upon discovering any information or fact regarding any actual or potential



R.B. S-LDM JR. Printed Name of Official J

CEO,,--_ Position of Official Date! !

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