Blue Ridge Electric’s Reliability Improvement Plan

74,000 Members 7,800 Miles Distribution 280 Miles Transmission

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SAIDI History

2025 Vision Distribution 60 min Transmission 15 min

183

135 145

95 83 77 82 77

97

76 69 61

8

8

58

13 54

10 15

13

1

13

4 5

-

50

100

150

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Distribution Transmission

What Members Want

High Reliability

Good Customer Service Low Rates

ACSI - 90 TSE - 9.4 First Call Resolution - 90% SAIDI - 75 CAIDI - 75 Member Engagement - 75

Member Accidents - 0 Accidents Electric - 0 Accidents Energies - 0 Top RESAP Scores - 3.0 or Higher

Rate Design WorkSmart

Subsidiary Benefits - 50% of Margins Rotation of Capital - 3%

Business Model Decision

Asset Management Distributed Generation

Micro Grid Opportunities

Blue Ridge Electric - 2025 Vision

Superior Member Experience “Nothing Less Than Our Very Best”

Top Member Service

Utility Of The Future

Fair Member

Rates

Top Safety

Performance

Guiding Purpose:

To Make Life Better

Vision:

Nothing Less Than Our Very Best

MEMBER PROSPERITY

Energy Options Community Opportunities

INNOVATION & TECHNOLOGY PREFERRED EMPLOYER

Top Talent/Succession Management Processes

Focus on Diversity

Competitive Pay/Benefits

Honesty and Integrity

Respect & Appreciation for Employees Excellent Reputation

Commitment to Safety & Environmental Stewardship

Commitment to Community & Cooperative Principles

Exceptional Member Service

Fina

ncia

l M

embe

r In

tern

al

Proc

esse

s Ta

lent

&

Tech

nolo

gy

Core

Va

lues

Enabling Employees

and Technology

to Execute Strategies

that Control Expenses

and Provide Great

Member Service

Strategy Map 2015 - 2017

Top TSE Scores Top ACSI Scores

Member Engagement Excellence in SAIDI/CAIDI

CREATE MEMBER VALUE THROUGH LOW BILLS, RELIABILITY AND GREAT SERVICE!

OPERATIONAL EXCELLENCE

Member Equity

Improved Efficiencies - WorkSmart Top Safety Performance

SUBSIDIARY BENEFITS WHOLESALE POWER METER GROWTH

Achieve 40% Equity Economic

Development Expense Transfer

Net Income Manage Duke FRA/Rates

OPERATIONAL EXCELLENCE

Improve Member Experience

Utility of the Future

BLUE RIDGE ELECTRIC MEMBERSHIP CORPORATION

2015 Key Strategic Initiatives

On Target Action Needed Major Issues

Member Perspective Progress Excellence in SAIDI – Small Animal guards Excellence in SAIDI – Enhance Vegetation Management Excellence in SAIDI – Reduce Momentary outages Reduce Payment Transaction Costs Member Engagement – Targeted Member Communication Financial Perspective Progress WorkSmart Initiative Improve Budgeting Process Economic Development – Enhance ED in Region Manage Duke FRA – DR Test program – Wifi Thermostat Internal Processes Progress Quest for Zero Energy Options – Revise NM rate Energy Options – Revise NB rate Community Opportunities – Enhance Youth Leadership Community Opportunities – Enhance Foundation Effectiveness Talent and Technology Progress Continuous Review of Employee Costs Ethics and Compliance Establish and Train Critical Communications Board Microwave Update Mobile Data Utility of the Future Other Progress Caldwell Facilities Update

4.8 8.2

16.3

20.8 25.2

30.7

40.1

47.3 50.2

54.0

62.6 65.5

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

System Average Interruption Duration Index - SAIDI 2014 SAIDI

Kiazen Continuous Process Improvement

• Good processes = Good results

• Understand the current situation

• Speak with data - Manage by facts

• Find the root cause

• Plan – Do – Check - Act

Problem Statement

Decision Analysis

Solution

People

Standby

Line Training Apprtnti~ Program Formoliztd

Sub Training Sub Training Manual Completed

Txm Training Annual Txm Molntenon~ Closs

Hours Worked Crew Availability

Trouble Shooting Loss of Experience Intern Program Established

Relays Relay Test program established

Txm Gro unding Re-Grounding Txm

Complete Grounding

Sectionalizing Need more remote Recio.er control points Dist Structures

Dist. line BIL

Lack of High Tech Relaying

DTF relaying

Fault Locators Add Remote locators

Equipment

Copper Pion ($500k per yeor)

Lack of Txm Vehicles

Purd1osed 2-Tl<m buckets & !-Derrick

Processes

ROW Cycle Line Design

Stondordized

Planned Otgs

6-yr Right of woy schedule

Pole Treating 9-yeor Pole Treating

Inspections

Def ined Procedure Annual 3Ph inspections 8-yeor URD inspections

Maintenance Programs

Operating Procedures Defined Pro~dures Switching Procedures

Defined Procedure

Call out Procedures Defined Pro~dure

Lightning

Txm Light ing Arrestors

Add Txm Arrestors Ice

Animals

Snow

Reduce SAIDI

Vehicle Accidents

Stnall Anitnal Mitigation Plan

Environment

Terrain (Wind, Mountains)

Add Txm Motor Operated S\vit ches

Environmental Sensitivity

Ishikawa Diagram 2014 Update

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Trees Other Weather Customer Substation Planned Animals Transmission Equipment Transformer

Consumer Minutes by Outage Cause

Distribution Standards: “Grow-ins” 1 per 100 miles/yr. “Fall-ins” 8 per 100 miles/yr.

2005: 12+ years 2014: 6 years 3-yr mid-cycle 6-yr Herbicide

Right of Way Cycle

Vegetation Management

Distribution Grow-ins 46

Fall-ins 366 (284 live, 82 dead)

Transmission Grow-ins 0

Fall-ins 0

Goal: < 50 Goal: < 400

Goal: 0 Goal: 0

Distribution Standards: “Grow-ins” 1 per 100 miles/yr. “Fall-ins” 8 per 100 miles/yr. 2014 Data

Circuit Outages SAIDI Impact = 14 minutes

51

40

45

27

31 33

47

33

37

22

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.0021

240

151

318

329

340

642

253

121

411

111

429

429

120

131

140

416

218

218

526

118

450

145

311

215

154

242

412

248

127

151

451

111

340

240

517

213

553

247

311

517

312

351

230

310

327

352

226

452

452

131

230

242

128

221

353

315

229

210

211

631

412

120

440

346

245

252

345

428

117

148

247

145

146

313

213

315

313

121

126

343

247

428

330

120

231

313

427

242

316

143

126

247

250

246

148

3

Circuit SAIDI

Sub Ckt Members Outages SAIDI Baldwin 483 1,167 16 299 Obids 461 1,360 58 278 Ellis 502 1,145 52 253 Creston 472 340 22 252 Hound Ears 262 406 20 224

2014 Data

0.000

0.500

1.000

1.500

2.000

2.500

3.00047

216

152

331

343

142

313

413

113

246

127

250

231

443

212

148

321

145

120

429

215

252

111

617

142

140

311

513

326

230

147

431

246

320

228

145

447

110

212

330

211

347

328

252

226

453

210

321

326

327

317

230

345

317

311

246

254

213

515

340

251

418

451

116

245

248

231

148

127

150

140

553

315

118

242

440

412

218

529

151

240

652

453

151

342

211

129

326

111

429

418

320

128

321

440

121

2

Circuits by Outage Frequency

Reducing Circuit Outages

Expand rights of way to first protective device

Sectionalizing - Additional protection

- Split circuits

- Equalize circuit size

Small Animal guards

Call out procedures (2nd crew on circuit outages)

Education (DOT, other utility contractors, etc.)

Reducing Circuit Outages Fused Cutouts

• 5,000 Fused Cutouts installed

• CSP Transformers

• Main Line Taps

Reducing Circuit Outages Down-line Remote Control Reclosers

• 35 Triple-Single Reclosers installed

• Connected to SCADA

0

100

200

300

400

500

600

700

800

900

1000Ja

n-05

Mar

-05

May

-05

Jul-0

5S

ep-0

5N

ov-0

5Ja

n-06

Mar

-06

May

-06

Jul-0

6S

ep-0

6N

ov-0

6Ja

n-07

Mar

-07

May

-07

Jul-0

7S

ep-0

7N

ov-0

7Ja

n-08

Mar

-08

May

-08

Jul-0

8S

ep-0

8N

ov-0

8Ja

n-09

Mar

-09

May

-09

Jul-0

9S

ep-0

9N

ov-0

9Ja

n-10

Mar

-10

May

-10

Jul-1

0S

ep-1

0N

ov-1

0Ja

n-11

Mar

-11

May

-11

Jul-1

1S

ep-1

1N

ov-1

1Ja

n-12

Mar

-12

May

-12

Jul-1

2S

ep-1

2N

ov-1

2Ja

n-13

Mar

-13

May

-13

Jul-1

3S

ep-1

3N

ov-1

3Ja

n-14

Mar

-14

May

-14

Jul-1

4S

ep-1

4N

ov-1

4

Total Number of Outages

Total Number of Outages

Year Outages

2009 4,060

2010 3,150

2011 3,546

2012 3,023

2013 3,234

2014 2,476

Goal: < 2,400

Small Animal Outages (Circuits with Squirrel guards installed)

SAIDI Impact = 2.6 minutes 241

281

164

225

134 135

71

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014

Planned Outages Year Outages

2006 1,491

2007 1,122

2008 663

2009 599

2010 678

2011 668

2012 647

2013 515

2014 446

Change in Operational Procedure

SAIDI Impact = 4.3 minutes

Outages > 3 Hours Year > 3 Hours 2007 155 2008 133 2009 93 2010 99 2011 84 2012 107 2013 89 2014 101

Goal: < 100

New Procedure: Districts must explain any outage exceeding 3 hours.

Monthly Outage Report

Exception Report (Outages over 3 hours)

Maintenance Programs

Program Cycle

Relay testing 1-3-10 yrs.

Breakers 3-10 yrs.

Regulators 10 yrs.

Reclosers 5 yrs.

Pole Inspection 8 yrs.

Right of Way 6 yrs.

Pole Treating Year Reject Rate

2006 7.3%

2007 5.8%

2008 3.1%

2009 2.7%

2010 2.3%

2011 2.5%

2012 1.5%

2013 1.1%

2014 1.2% Goal: < 1.5%

Photo Credit: Osmose Utilities

Major Events

Year Qty “Storm CAIDI” 2008 4 252 2009 7 654 (Ice Storm)

2010 8 205 2011 1 167 2012 4 122 2013 6 163 2014 2 99 Storm CAIDI

Goal: < 300

58

13

54

10

15 13

1

13

4 5

-

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Transmission SAIDI

Goal: <15 minutes

Transmission Training

Annual Training • Classroom - Outage Scenarios

• Field Training

• Substation Training

230 kV TL Single Contingency Protocol

• Weather Forecast

• W inds <25 mph

• No major weather (T-storms, etc)

• Loading

• Load < 150 MW

• Line Condit ion

• Recent Pat rol < 2 weeks

• System Condit ions (in service)

• No 230 kV lines out of service

• No Horse Gap or W. Jefferson 100 kV lines out of service

Momentary Transmission Outages

Year Events 2009 11 2010 5 2011 14 2012 15 2013 3 2014 6

Goal: < 9

Standard: 3 momentary outages per 100 miles/yr.

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Electric Services Group

2014

Key Strategic Initiatives

••••••••••••••••••• Save Strategy Execution Worksheet

Strategic Objective

Strategic Initiative

Vision Impact SAIDI < 75 Minutes

StratEx $440,000 (Capex) ($400,000 arresters & $40,000 reground1ng)

Benefit Reduce transmission operations to less than 9 per year

Accountability Direct:

Job Family Impact Direct:

Init iative Action Items

Action Step

Research 8ppropriale arrester installation ,v • ~ ,r. arrangement t

7 > v • .,

Order 1 OOkV arresters for Deep Gap Line

Order 44kV arresters tor Elk Cteelc Line

'?;.v11u.; •l ·<.

Install 100kV arresters on Deep Gap Line

Install 44kV arresters oo Bk Creek Line

Accountability

Mike High

Mike High

Mike High

Hoss Prestwood I Steve Woodring

Hoss Prestwood I Jeff Benfield

Indirect:

Indirect:

•• Completed Date

711113 12/31/13

111114 3131/14

111114 3131114

7/1114 12131114

7/1114 12131/14 6ri) 11.lt--

2014-2016

Priority Scan?:

Comments

(Quantity per structure)

Financial Considerations

“What do you mean you don’t know when my power will be back on?”

Estimated Time of Restoral (ETRs)

Outages > 3 Hours

Year > 3 Hours 2006 165 2007 65 2008 133 2009 93 2010 99 2011 84 2012 107 2013 89

Goal: < 100

New Procedure: Districts must explain any outage exceeding 3 hours.

5-Year Outage History

2001-2005 181 Minutes

2010-2014 83 Minutes

2013 NRECA Distribution Reliability Study

0

50

100

150

200

250

300

350

400

450SAIDI

We are Here

14.6 Minimum 71.4 1st Quartile 105.2 2nd Quartile 138.1 3rd Quartile 412.0 Maximum

Individual SAIDI Scores 86 Respondents

Min

utes

per

Yea

r

Lee Layton, PE Chief Operating Officer Blue Ridge EMC 1216 Blowing Rock Blvd Lenoir, NC 28645

LLayton@BlueRidgeEMC.com 828.759.8939