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January 2017 Powerlines

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Q&A with PowerSouth CEO Gary Smith Q: How does safety contribute to PowerSouth's overall success? How does PowerSouth encourage and reward employees for working safely? Safety is PowerSouth's first corporate value. It should be the second and third, too. We have failed if we can't produce our product (electric generation and transmission) without injuring the public or our people. Serious injuries are not worth the value of providing electric service. Electric service, like most other products and services, is based on the provision of the comforts of modern life. We use those goods and services to make our life easier and more enjoyable. If we destroy property or health in creating those products and services, and by doing so make life worse for some people, we have not accomplished the goal of making life better. Our employees are the most exposed to dangers inherent in our business — the high temperatures and pressures of electric generation and the high voltage exposure of electric transmission. Safety requires a high degree of understanding the work environment and processes of electric service. We provide safety training for all our employees so that they will understand their jobs and the dangers associated with them. We attempt to prepare them for what they will experience in the field so there will be no surprises. We provide tools that will make the work environment as safe as possible and stress the importance of safety first. However, the success of our safety program is the result of our people accepting responsibility for their own safety, the safety of their fellow employees and the safety of the public. Any success we have in our safety programs is because our people have embraced the concept of safety and live it every hour of every day. They are responsible for our success. They are rewarded first with their health to enjoy their lives outside of PowerSouth, and we also provide recognition and rewards for safety accomplishment. Q: Natural gas and coal prices have remained relatively stable in recent years. What has PowerSouth done to minimize the impact of rising fuel prices in the future? Fuel prices have been relatively stable for the past seven or eight years. Coal prices have increased with the increase in environmental regulation on mining and coal-fired electric generation. However, both natural gas and coal prices are currently in a favorable range. We have entered into long-term 5-, 7- and 10-year physical natural gas supply contracts with a number of large natural gas producers to supply natural gas at fixed prices into the future. In the near term, we have secured fixed priced natural gas equal to about 50 percent of our natural gas needs. We also continue to use financial hedges for about 24 months into the future to secure natural gas costs. We are exploring coal contracts and our needs as the coal-fired generation environmental landscape changes. All our arrangements will help maintain future fuel costs near the current range. Prefer to read an electronic version of Powerlines? Visit www.powersouth.com/powerlines to access our e-newsletter. Powerlines January 2017 | Volume 30 • Number 1 | www.powersouth.com/powerlines | info@powersouth.com

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