March 2016 Powerlines

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Powerlines March 2016 | Volume 29 • Number 3 | www.powersouth.com/powerlines | info@powersouth.com PowerSouth and its member systems broke tradition last year with new power contracts they expect will strengthen their financial futures. Instead of the periodic extension of the long-term contracts, the PowerSouth Board added a so-called "evergreen" provision that automatically renews the contracts every five years unless a member specifically decides not to renew. The new agreement extends the current Wholesale Power Contract through the year 2055. Under the evergreen provision, that 2055 date would be extended until 2060 unless a member takes action to not extend the time. That new arrangement adds greater certainty to the future of the relationship between PowerSouth and its members, and that could lower costs. PowerSouth requires outside financing for its power supply projects, and lenders like to know that their investments are secure. The credit rating agencies that evaluate businesses like PowerSouth for lenders, give high marks for the kind of stability offered by long-term contracts with evergreen provisions. Those high marks can even mean more favorable interest rates. "The financial credit rating agencies consider many variables when determining PowerSouth's rating," said PowerSouth's Corporate Planning and Power Supply Committee Chairman Gary Harrison. "This amendment should help PowerSouth maintain a high rating in future credit reviews, which ultimately translates into long-term financial benefits for PowerSouth and its member systems." President and CEO Gary Smith praised PowerSouth members for working together to maintain and improve their generation and transmission co-op. "The initiative our members took to make these changes shows their commitment to one another and their confidence in PowerSouth," Smith said. "The contract creates a sense of unity among PowerSouth and its 20 members, and we are pleased to continue serving them for many years to come." Approval of the evergreen provision originated as a recommendation from last June's strategic planning session of PowerSouth member systems. The resolution was adopted at the August board meeting. The final member system wholesale power contract was approved in December. g Prefer to read an electronic version of Powerlines? Visit www.powersouth.com/powerlines to access our e-newsletter. Wholesale Power Contract extension a sign of strong member unity, support for financial strength "The contract creates a sense of unity among PowerSouth and its 20 members." Gary Smith President and CEO

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