EAGLE FORD CONSORTIUM

Presented by Robert D. (Bobby) WaidManager 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 12,0002 Mile Service Area

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.

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

• 1-866-MEC-ELEC (1-866-632-3532)

Thank You!