EAGLE FORD CONSORTIUM

1. EAGLE FORD CONSORTIUM Presented by Robert D. (Bobby) Waid Manager of Special Projects April 22, 2014

2. About Medina Electric Co-op • Established 1938 • Non-profit, owned by those we serve • Distribution only, no transmission or substations • 127 employees • 30,700 meters in 17 TX counties • 9,168 miles of line (Tallahassee, FL to Anchorage, AK and back) • Offices in Hondo, Uvalde, Dilley, Bruni and Rio Grande City

3. MEC’s 12,0002 Mile Service Area

4. MEC Application Process Overview • Call 1-866-MEC-ELEC (1-866-632-3532) • Pay $100 CIAC for engineering • Complete & return load data form • MEC evaluates project scope (load & location) • If significant in load and/or location, require additional CIAC before field design • Project designed, final estimated CIAC calculated, easements drafted, etc.

5. Process Overview Con’t. • Applicant executes MPPA, secures easements, pays final estimated CIAC, provides deposit or acceptable payment history from other electric utility • Oil & gas contract & letter of credit required if over 500 kVA • Project built & close out cost determined • If actual more than estimate, payment required • If actual is less than estimate, refund made

6. Process Overview Con’t. • If estimated CIAC exceeds $250,000, eligible for pro-rata refund if other oil/gas loads tie on (3-year window)

7. Challenges • Lack of adequate infrastructure to serve significant additional load • Multiple projects requiring miles of line construction & long lead-time on materials • Lack of reasonably firm multi-year load projections from oil companies • New substations take 1-2 years to build • 4 to 5 years if transmission lines are required • Oil fields situated in service areas of multiple utilities

8. Challenges Con’t. • Attracting/retaining quality employees, oil companies average pay is higher • Feb. 23, 2013 Express-News article: 19 year old Kenedy HS grad makes $8k to $10k per month • Significantly higher than MEC journeyman linemen • Difficult defending pay to Member-Owners outside of Eagle Ford area

9. Challenges Con’t. • Time required to train new line workers • 4 years or more to become journeyman lineman • Employee Safety • Deteriorating road conditions and increased traffic make driving and working on lines in highway ROW more dangerous • MEC employees drove almost 1.1 million miles in 2013, many of these in Eagle Ford area

10. Challenges Con’t. • Reasonable housing costs for employees and contractors • Competition for utility contractors • Among utilities and with oil companies • Changes in mindset of MEC’s Member-Owners • Those in Eagle Ford expect $$$ for granting easements, or object to anything else being built on property • Establishing rates and tariffs that are fair to all

11. MEC Economic Development • MEC’s economic development efforts center around the communities it serves, not the Eagle Ford industries • Thirty $1,000 scholarships awarded annually • Government in Action Youth Tour – 3 students to Washington DC for a week • Support local chambers of commerce • Operation Round Up – $55,000 to date

12. MEC Economic Development, Con’t. • Co-op Connections Card • Discounts to participating local businesses and national retailers • Discounts on prescriptions and certain health care providers • Area food drives • Employee volunteers in community events • Donate drinking water for community events and fundraisers

13. In Closing… • MEC is striving to meet the needs of the oil & gas related loads in the Eagle Ford region • MEC recently created a Business Development department with 4 personnel • BD personnel act as a liaison between MEC and the larger oil & gas loads, freeing up engineering to design lines • 1-866-MEC-ELEC (1-866-632-3532)

14. Thank You!