Cobb EMC - Rudy Underwood Others in attendance … Site...award given by ESGR, in recognition of Cobb EMC’s support of Mr. Reisig while he was actively serving in the armed forces,

MINUTES OF REGULAR BOARD OF DIRECTORS MEETING OFCOBB ELECTRIC MEMBERSHIP CORPORATION

1000 EMC PARKWAYMARIETTA, GEORGIA 30060

August 23, 2016

CALL TO ORDER

Chairman Bryan Boyd called the meeting of the Cobb Electric Membership Corporation(hereinafter “Cobb EMC”) Board of Directors to order at approximately 4:00 p.m. The meetingwas held ii the Board Room of the Administrative Building.

INVOCATION AND PLEDGE

Kevan Espy gave the invocation and led the pledge.

I1 ATTENDANCE

The following members of the Board of Directors were present:

Bryan BoydTripper SharpDavid McClellanDavid TennantEd CrowellKelly BodnerMalcolm SwansonEric B. BroadwellRudy Underwood

Others in attendance were:

Chip NelsonDavid JohnsonRobert SteeleTim SosebeeKevan EspyJamey HtilseyKristi KnightJenny CarrollPerla De La RosaAngie JonesBob Schoonover

Minutes of Regular Board of Directors Meeting Page 2 of 10Cobb Electric Membership CorporationAugust 23, 2016

Cliff ReisigKevin Moore, General CounselPatricia-David Brown, Member GuestGuy Andrews, Member Guest

APPROVAL Of AGENDA

Director David McClellan made a motion to approve the agenda. seconded by DirectorEd Crowell. The motion carried unanimously.

SAFETY MESSAGE

Tim Sosebee, Vice President of Business Operations, introduced Cliff Reisig. Cobb EMCIT Projects Specialist and service veteran. Mr. Sosebee and Mr. Reisig recently attended theGeorgia Employer Support of the Guard and Reserve (ESGR) awards ceremony. The ESGR, aDepartment of Defense program, was established in 1972 to promote cooperation andunderstanding between Reserve Component Service members arid their civilian employers. Atthe ceremony, Cobb EMC received The Seven Seals Award; the broadest and most inclusiveaward given by ESGR, in recognition of Cobb EMC’s support of Mr. Reisig while he wasactively serving in the armed forces, In addition, Mr. Reisig nominated his supervisor to receivethe ESGR Service Member Patriot Award for the personal support provided to him and hisfamily while he was on active duty in the military.

Mr. Reisig delivered the Safety Message on teen drivers. Mr. Reisig stressed theimportance of teaching teens to drive with confidence, as the risk of motor vehicle crashes ishigher among 16-19 year-olds than among any other age group. Mr. Reisig offered severalsuggestions to teach teens about safe driving practices, which included; talking with teens oftenabout their driving habits, enrolling teens in defensive driving classes, placing “driver intraining” stickers on the teens car, or purchasing a vehicle monitoring device which rates teendriver performanìce and monitors safe driving behaviors.

APPROVAL OF PREVIOUS MINUTES

Director David Tennant seconded a motion made by Director Eric Broadwell to approvethe minutes from the July 26, 2016 Board of Directors Meeting. The motion carriedunanimously.

RECOGNIZE MEMBERS

Chairman Boyd recognized and welcomed all member guests who were present at themeeting.


REPORT FROM BUDGET AND FINANCE COMMITTEE

Director McClellan. Chairman of the Budget and finance Committee, presented thereport from the Budget and Finance Committee Meeting held on August 22, 2016.

Director McClellan stated the Committee approved the minutes of the July 25, 2016Cotmnittee meeting. Kevin Greiner, President and CEO of Gas South, presented an update onGas South’s financial results as of July 2016. Gas South’s net income for July was a $600,000loss, which is $100,000 favorable to budget. For the fiscal year to date. Gas South’s net incomeis a $500,000 loss, which is $700,000 favorable to the budget.

The Committee received a report on the Financial and Statistical status for the month ofJuly 2016 by Robert Steele. Cf0. The net margin for July is $5.4 million, which is $3.4 millionunfavorable to budget. The net margin year-to-date is $12.1 million, which is $11.3 millionfavorable to budget. The Balance Sheet as of the end of July is $903.0 million.

The Committee received a report on the second quarter budget comparisons by Mr.Steele. For the second quarter, Cobb EMC is 3.01% under budget and year to date is 4.80%under budget. The report included a brief discussion of the major variances for each division. Inaddition, the Committee received a detailed report for the second quarter budget comparison.

Mr. Steele offered a report to the Committee on the renewal of the line of credit facility.The renewal will be for the same level as the current line of credit of $60 million. Theadjustment will increase the amount allocated to CoBank. remove the commercial “club group”,and replace with a single commercial bank. In addition to changing the composition of thegroup, the new arrangement will achieve a savings of approximately $60,000 annually. TheCommittee approved the resolution for the renewal and brings to the full Board for approval.Chairman Boyd called for a vote on the motion from the Committee to approve the resolution,there being no second necessary, the motion to approve the resolution authorizing therestructured line of credit facility carried unanimously.

The Committee received the Power Supply Update for the month of July 2016 by DavidJohnson, COO. The report included a recommendation for the Wholesale Power CostAdjustment (WPA) of zero mils on member’s bills rendered in September 2016. The Budget andFinance Committee presented to the Board a recommendation to approve the staff recotnrnendedWPA of zero mils starting September 1, 2016. Director Eric Broadwell noted the WPAadjustment for July of-16 mils represented a total of $6.8 miltion saved by members during themonth of July. Chairman Boyd called for a vote on the motion from the Committee to approvethe staffs recommendation of a WPA of zero mils starting September 1, 2016, withconsideration thereof monthly, there being no second necessary, the motion to approve the staffsrecommendation of a WPA of zero mils starting September 1, 2016, with consideration thereofmonthly, carried unanimously.

Mr. Sosebee presented to the Committee a report on “write-offs” for the month of July2016 for $118,765.

Chairman Boyd stated the fmancial reports have been reviewed and ready for submittal tothe auditors.

REPORTS FROM COMMITTEES


Audit Committee

Director Rudy Underwood, Chairman of the Audit Committee, stated the Committee didnot meet and there was no report at this time. The Committee intends to meet in September.

Public Affairs and Education Committee

Director Kelly Bodner, Chairperson of the Public Affairs and Education Committee,stated the Committee met on August 8, 2016 and discussed the following:

• The Committee created and approved a resolution to name the new communityroom The Pounds Auditorium (after Bo and May Jean pounds). The Committeepresented to the Board a recommendation to adopt the reso]ution as read andpresented by Director Bodner. Chairman Boyd called for a vote on the motionfrom the Committee, there being no second necessary, the motion to adopt theresolution carried unanimously.

• The Committee discussed the foundation and the Bright Ideas Scholarship forpossible fttnding opportunities.

• The Committee discussed the September 17, 2016 Annual Meeting:- The Committee finalized the agenda for the annual meeting. TheCommittee presented to the Board a recommendation to approve the agenda witha minor change to add the community room dedication before Chairman Boydintroduces Chip Nelson, President and CEO. Chainnan Boyd called for a vote onthe motion from the Committee, there being no second necessary, the motion toapprove the annual meeting agenda carried unanimously.- The Committee discussed other details of the Annual Meeting regardingthe meeting layout, parking, the length and time a member can speak and theaddition of a “resolution table” operated by Kevin Moore, Legal Counsel, tofacilitate questions from members.

Governance Committee

Director Ed Crowell, Chairman of the Governance Committee, stated the Committee meton August 9, 2016 and developed a board self-assessment. The board self-assessment iscurrently underway.

Affiliated Transactions Committee

Director Eric Broadwell, Chairman of the Affiliated Transactions Committee, stated therewas no cause for the committee to meet and, therefore, no repoi’t at this time.

Energy Portfolio Committee

Director David Tennant, Chairman of the Energy Portfolio Committee, stated theCommittee met on August 12, 2016. The following is a summary of the actions and reports fromthe meeting:


Hedging

During the Committee meeting, David Johnson, Chief Operating Officer, openedthe discussion by giving a background presentation on hedging defining the term andnoting its use as a tool to stabilize cost and not to reduce costs or create profit. During lastmonth’s committee meeting, the staff presented the Committee with a hedgingrecommendation, proposing 29 to 30 percent of annual gas volume. This plan wouldinclude 340 contracts for 2017 and 201$ each, and 240 contracts for 2019.

After the review of the presentation and a discussion on issues related to hedging,Mr. Johnson introduced Lori Holt, Vice President of Fuels and Energy, and Bryan O;i,Natural Gas Strategy and Special Pioject Manager from Oglethorpe Power, whopresented on the historical natural gas prices and OPC’s hedging program.

Chairman Tennant asked for input from each Director regarding hedging. After adiscussion, the members of the Committee voted to bring to the ftifl Board therecommendation to hedge up to 340 contracts for 2017, 340 for 201$, and up to 240 for2019. Action on the Committee’s recommendation would be taken during the “OldBusiness” portion of the Agenda.

Human Resource Committee

Director Malcolm Swanson, Chaimian of the Human Resource Committee, stated theCommittee did not meet and there was no report at this time. The Committee intends to meet inSeptember

APPROVE APPLICATIONS AND CANCELLATIONS OF MEMBERSHIPS

Chip Nelson, President and CEO, presented the Applications and Cancellations ofMemberships report, stating there were 2,569 activations and 2,058 cancellations, resulting in anet positive of 5 11 new members in the month of July. Net additions for the year total 1,525 andthe member count as July 1,2016 was 181,398.

Director Broadwell made a motion to approve the applications for new memberships andapprove cancellations of memberships, as presented, seconded by Director Bodner. The motioncarried unanimously.

REVIEW SAFETY REPORT

Jamey Hulsey. Senior Vice President of Electric Operations presented the July 2016Board Safety Report as follows:

July 2016 Results

• July Safety Meetings - attendance remains at 100% for all departments.• Preventable Vehicle Accidents - reviewed and compared annual totals for 2012 through

2016 with zero preventable vehicle accidents occurring in July 2016 arid nine year-to-date.


• Safety Violation Incidents - reviewed and compared annual totals for 2012 through 2016with zero safety violations occurring in July 2016 and twenty-three year-to-date.

• Recordable Injury Comparison - reviewed and compared annual totals for 2012 through2016 with one non-violation injury occurring in July 2016 and seven year-to-date.

• Incident / DART Rate (includes preventable and non-preventable injuries) - reviewed andcompared annual totals for 2012 through 2015. Cobb EMC’s year-to-date cumulativeincident rate was 1.37, which decreased significantly from the 2015 rate of 3.74 and theyear-to-date dart rate was 0.78, which also decreased significantly from the 2015 rate of2.55.

• 2016 Safety Goal = 100 percent — due to one violation injury in 2016, a daily success rateof 99.5 percent has been achieved; 212 out of 213 days has passed without a violationinjury, with 128 days since the last violation injury.

Percentage of Safety Participation

Mr. Hulsey presented on safety participation since 2014. Yearly totals for 2014 were30.9 percent, 42.1 percent in 2015 and 73.80 percent year-to-date in 2016. Mr. Hulsey notedCobb EMC’s ongoing commitment to safety is evident in these increasing numbers.

OuarteHy Reliability Report

Mr. Hulsey presented on the monthly SAIDI (System Average Interruption DurationIndex) totals for 2014 through 2016. The cumulative SAIDI for 2015 was 29.973, the lowestCobb EMC has seen in its history. The cumulative SAIDI for this quarter is 19.5.

Mr. Hulsey reviewed the April through June 2016 average minutes lost by cause codereport noting right-of-way as the main contributor at 6.52. Total minutes lost by cause code forthe quarter total 19.5 total minutes.

Linemen in Costa Rica

Mr. Hulsey reported on two Cobb EMC linemen who recently returned from a trip toCosta Rica. In July, Ian Hansman, and Wesley Thames, both first class linemen — step two,traveled with the NRECA International foundation to Central America to provide the residentswith access to reliable and affordable electricity. Over the course of ten days, Hansman andThames worked with a group of local linemen to build lines to power the homes of almost half adozen families who did not have electricity. The linemen had fewer resources to use whenbuilding the lines as the Costa Rican crews were not equipped with the machinery and toolsHansrnan and Thames typically use on a job of this size. The pair faced many obstacles, yetdespite their challenges, Thames, Kansrnan and the Costa Rican crews successfully completedthe job. They believe their work in Costa Rica was life changing for the locals, who have accessto electricity for the first time ever, and for themselves.

Mr. Hulsey played a Yoti Tube video featuring highlights from the lineman’s Costa Ricatrip which is available at https://www.youtube.com/watch?v=IJFdQ2 I K4ZE.


Second Quarter Review - Two-Year Construction Work Plan

Mr. Hulsey offered a detailed report on the two-year construction work plan, whichincluded the 299-Fiber Project, the 399-Replacing Copper Conductors, the 400-New Substations,the 500-Substation Upgrades, the 61 1-Non-SCADA Devices, and the 706-LED Retrofit. Otherprojects discussed were member service extensions, system improvements and projectapplications.

Expenditures associated with the 2016-20 17 Construction Work Plan are as follows:

• For the first and second quarter of 2016 = $17,862,924• Current available work plan amount = $54,541,032• Remaining balance available = $36,678,108

REPORT FROM PRES[DENT AND CEO

• Chip Nelson, President and CEO, distributed the August 2016 edition of the Cobb EMCpublication “Plugged In” to the Board.

• Mr. Nelson discussed an ongoing issue that multiple utility companies including CobbEMC are having with AT&T cutting cables when installing their new fiber. On July 21,2016, Cobb EMC and other utility companies met with a Cobb County official to presenttheir findings resulting from AT&T’s damages. The Georgia Public ServiceCommission. Commissioner Stan Wise has called on all interested parties, includingcommunications companies, utilities, excavators, contractors, facilities locators andCommission staff, to present comments at the September 1, 2016 meeting of theCommission’s facilities Protection Committee regarding damages to undergroundfacilities, and in particular by Google fiber, U-Verse, and AT&T. Cobb EMC will havea heavy presence at this meeting.

• Recently, Dansby Swanson, Marietta native and son of Board Member, MalcolmSwanson, was promoted from the minor leagues to play shortstop for the Atlanta Braves.Mr. Nelson congratulated Director Swanson and presented him with a picture collage ofhis family at Dansby’s debut with the Braves on Wednesday, August 17, 2016.

• Mr. Nelson presented on the recently published Public Service Commission (PSC)Rankings, noting Cobb EMC ranked exceptionally well. Cobb EMC’s PSC rankingsnoted in cents/kWh are as follows:

• Of all 94 electric utilities at I000kWh — Cobb EMC ranked first and Georgia Powerranked 58 at 50.1096. Rankings among the 41 EMC’s in Georgia are as follows;- EMC’s at 500 kWh—Cobb EMC ranked second at $00917- EMC’s at 1000 kVv’b —Cobb EMC ranked first at 50.0917- EMC’s at 1500 kWh — Cobb EMC ranked first at 50.0966- EMC’s at 2000 KWh — Cobb EMC ranked fifih at 50.0991

MARKETING AND CORPORATE COMMUNICATIONS REPORT

Kevan Espy, Vice President of Marketing and Corporate Communications, presented theJuly 2016 Marketing and Corporate Communications report.

Minutes of Regular Board oDfrectors Meeting Page 8 of 10Cobb Electric Membership CorporationAugust 23, 2016

Mr. Espy reported on Cobb EMC’s Cooperative Solar initiative launched November 1,2015. The 2016 goal for solar blocks sold is 1,000 and as of July 2016, 161 members havepurchased 400 blocks on the program. Mr. Espy reported on Smart Choice accounts for July2016, which totaled 3,621 active accounts and an opt-in number totaling 100. Year-to-dateaccounts total 18.7 19. The marketing campaign officially launched in June to promote the SmartChoice Rate.

Mr. Espy offered additional results from J.D. Power and Associates U.S. Retail ElectricProvider Residential Customer Satisfaction Study noting members are pleased with the servicewe are providing. for the fourth time in a row, our J.D. Power Score has reached above 700.Our 2016 wave four score of 734 contributes to our overall average score of 735. J. D. Powerand Associates “grades” electric providers in the Electric Residential Percentile Sti.idy in sixcategories; overall customer satisfaction index, power quality and reliability, price, billing andpayment, corporate citizenship, communications, and customer service. Our score for this studyin 2015 hovered in the second and low first quartile categories, for 2016, Cobb EMC rankedwell into the first quartile in all categories. Cobb EMC’s Overall Customer Satisfaction Indeximproved 11 1 points over the last five years, making our co-op the second highest powercompany in terms of improvement. The overall industry improvement average is +55.

Mr. Espy presented on the restilts from the employee survey for Cobb EMC’s Julyemployee event. Ninety-three employees took the survey, 87 percent of employees gave a fourand five satisfaction score, 40.48 percent of employees would like to have the event earlier in theyear around April or May, and 34.48 percent would like to have the event in the fall. Aftermatching finds raised by employees at the dunking booth during the July employee event, CobbEMC donated $1,078 to the Fallen Linemen Organization.

Mr. Espy reported total Community Foundation distributions for August totaled $63,300.

REPORT FROM GENERAL COUNSEL

General Counsel, Kevin Moore, stated he had nothing to report at this time.

REPORT FROM DIRECTORS

1. Director Broadwell congratulated Chip Nelson on his recent commencement speech atKSU for the College of Architecture and Construction Management, College ofComputing and Software Engineering, Southern Polytechnic ColLege of Engineering andEngineering Technology, and University College.

2. Director Underwood attended the Georgia EMC Director’s Conference August 14, 2016.The Georgia EMC Director’s Association Nominating Committee selected DirectorUnderwood as their incoming Secretary/Treasurer for the organization for the next term.Director Underwood accepted the nomination at the August meeting.

3. Director Crowell attended the Georgia EMC Director’s Conference August 14, 2016 andcongratulated Director Underwood on his new appointment as Secretary/Treasurer for theorganization.

4. Director Swanson attended the Solar 101 Seminar on August II, 2016 and complimentedDavid Johnson, COO. on his outstanding presentation on solar. Director Swansoncommented the event was very organized and a large number of members attended.


5. Director Bodner attended the Solar 101 Seminar and reiterated Director Swanson’scommentary. Director Bodner also attended the Women’s Task Force meeting on Atigust16, 2016.

6. Director Sharp attended the Solar 101 Seminar and congratulated Kevan Espy and DavidJohnson on a successful and welt-attended meeting. Director Sharp also attended theWomen’s Task Force meeting.

7. Director McClellan attended the Solar 101 Seminar and stated that members seem toenjoy the meeting, and were very engaged. Director McClellan congratulated DavidJohnson on a successful event.

OLD BUSINESS

Hedin

During the July Board Meeting, the Energy Portfolio Committee presented to the Board arecommendation to approve the staff endorsed recommendation for hedging up to 340 contractsfor 2017 (29 percent) and 2018 (30 percent). and 240 contracts for 2019 (29 percent). DirectorRudy Underwood made a substitute motion to table the hedging recommendation until the nextregularly scheduled Board meeting to allow the Board additional time for review; seconded byDirector Eric Broadwell. The substitute motion to table the recommendation carriedunanimously. After disctission, Director Tennant brought forward the recommendation from theEnergy Portfolio Committee that the Board approve the staff recommendation for hedging. Afterdiscussion, Chairman Boyd called for a vote on the motion from the Committee, there being nosecond necessary, the motion failed by a vote of 3 to 4, (Directors Broadwell, Underwood,Swanson, and Bodner opposed), Director Crowell abstained. Director Crowell made a motion toreturn the item to the Energy Portfolio Committee for further study and review. The motionfailed for a lack of a second. following additional discussion among the Directors, DirectorSharp made a motion to approve staff’s recommendation for hedging as presented withadditional review by staff and the Board in order to determine if more value to the EMC can beobtained through hedging, or non-hedging; seconded by Director Crowell. The motion carriedby a vote of 5 to 3 (Directors Broadwell, Underwood and Swanson opposed).

NEW BUSINESS

Chairman Boyd stated there was no new business to discuss at this time.

EXECUTIVE SESSION

Director Ed Crowell made a motion to enter Executive Session to discuss a Gas Southcontract, however no vote or action would be taken; seconded by Director Eric Broadwell. Themotion carried unanimously.

The Directors went into Executive Session.

Minutes of Regular Board of Directors MeetingCobb Electric Membership CorporationAugust 23, 2016

Page 10 of 10

Motion by Director McClellan to exit Executive Session, seconded by Director Tennant,the motion carried unanimously.

ADJOURNMENT

There being no further business, Director Sharp made a motion to adjourn the meeting;seconded by Director Tennant. The motion carried unanimousV

Malcolm SwansonSecretary/Treasurer

BryanChaimi an

Documents

Cobb EMC - Rudy Underwood Others in attendance … Site...award given by ESGR, in recognition of Cobb EMC’s support of Mr. Reisig while he was actively serving in the armed forces,