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

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

MEC’s 12,000 2 Mile Service Area

MEC Application Process Overview Call MEC-ELEC ( ) 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.

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

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)

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

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

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

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

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

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

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 MEC-ELEC ( )

Thank You!