Revision No. 4.0 Effective Date June 11, 2020 Distribution ...

Revision No. 4.0

Effective Date June 11, 2020

Policies and Guidelines

Distribution Restriction: Public Document

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Table of Contents Section 1: General ......................................................................................................................................... 3

1.1 General Statement ..................................................................................................................... 3

1.2 Purpose ...................................................................................................................................... 3

1.3 Applicability ................................................................................................................................ 3

Section 2: Program and Organizational Structure ........................................................................................ 3

2.1 Program Structure ..................................................................................................................... 3

2.2 Roles and Responsibilities .......................................................................................................... 3

Financial Policies and Guidelines .................................................................................................................. 4

Section 3: Liquidity ........................................................................................................................................ 4

Section 4: Rate Stabilization Account ........................................................................................................... 4

Section 5: Cash Contingencies ...................................................................................................................... 5

Section 6: Investments .................................................................................................................................. 5

6.1 Objective of Investment Policy .................................................................................................. 5

6.2 Approved Investments ............................................................................................................... 5

6.3 Investment Restrictions ............................................................................................................. 5

Section 7: Debt Management ....................................................................................................................... 6

Section 8: Natural Gas Purchasing Strategy .................................................................................................. 6

8.1 Natural Gas Price Risk Management Objectives ........................................................................ 6

8.2 Physical Supply and Natural Gas Production Sharing Agreements ........................................... 7

8.3 Natural Gas Pipeline and Storage Agreements .......................................................................... 7

8.4 Hedging Transactions ................................................................................................................. 7

8.5 Execution and Monitoring of Hedges ........................................................................................ 9

8.6 Natural Gas Prepay Transactions (and Other Long-Term Commitments Associated with Natural Gas Prepay Transactions) .................................................................................................... 9

Section 9: Contracts .................................................................................................................................... 10

Section 10: Credit ........................................................................................................................................ 11

10.1 Members and Other Customers ............................................................................................ 11

10.2 Long-Term Counterparty Commitment ................................................................................. 11

Section 11: Internal Control Procedures ..................................................................................................... 11

Section 12: Annual Budget and Financial Forecasts ................................................................................... 12

Section 13: Commercial Insurance ............................................................................................................. 12

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Section 14: American Public Gas Association ............................................................................................. 12

Section 15: Board Scholarships ................................................................................................................... 12

Section 16: Business Travel Reimbursement Policy .................................................................................... 13

Administrative Policies and Guidelines ....................................................................................................... 13

Section 17: Conflict of Interest ................................................................................................................... 13

Section 18: Whistleblower .......................................................................................................................... 13

Section 19: Records Retention and Disposition .......................................................................................... 13

Section 20: Anti-Harassment Policy ............................................................................................................ 13

Section 21: Board Member and Board Chairperson Job Descriptions........................................................ 13

Appendix A: Board-Approved Hedging Parameters .................................................................................. 15

Appendix B: Business Travel Reimbursement Policy ................................................................................. 17

Appendix C: Anti-Harassment Policy for Members of the Board of Directors ........................................... 19

Appendix D: Board Member and Board Chairperson Job Descriptions ...................................................... 21

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Section 1: General

1.1 General Statement National Public Gas Agency (NPGA) sets forth written documentation of the Policies and Guidelines it uses to conduct business and administer the organization. The Policies and Guidelines are approved by the NPGA Board of Directors (Board).

1.2 Purpose The Purpose of the Policies and Guidelines is to guide staff in appropriate mechanisms to maintain the fiscal integrity of NPGA and assist in the administration and proper governance of the organization.

1.3 Applicability The Policies and Guidelines applies to all staff working for NPGA and all representatives serving on the Board. Staff would include, but would not be limited to, operations, risk, legal, human resources, finance and accounting; and the Executive Director.

Section 2: Program and Organizational Structure

2.1 Program Structure To ensure effective governance of NPGA’s financial operations and administration, the organizational reporting structure will require timely and meaningful performance as well as compliance and risk reporting.

2.2 Roles and Responsibilities The Board is responsible for approving the Policies and Guidelines. The Executive Director will oversee the administration of and compliance with the Policies and Guidelines. The Executive Director will delegate responsibilities for the administration of Policies and Guidelines, to the Director of Finance and Accounting, the Director of Enterprise Business Support and the General Counsel, as appropriate.

The Director of Finance and Accounting will be responsible for the day to day administration of the Financial Policies and Guidelines. The Director of Finance and Accounting will be responsible for reporting material matters involving the Financial Policies and Guidelines to the Board. The Director of Finance and Accounting is responsible for ensuring the Financial Polices and Guidelines are reviewed and revised, if necessary, at least once per year.

The General Counsel will be responsible for the day to day administration of the Administrative Policies and Guidelines. The General Counsel will be responsible for reporting material matters involving the Administrative Policies and Guidelines to the Board. The General Counsel is responsible for ensuring the Administrative Polices and Guidelines are reviewed and revised, if necessary, at least once per year.

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Financial Policies and Guidelines

Section 3: Liquidity NPGA requires adequate liquidity to fund its normal, recurring business activities, as well as to provide for extraordinary expenses. NPGA’s goal is to maintain operating funds at least equal to 1.5 times (based on working capital lag time of 45 days / 30 days per month) the peak month budgeted costs. The peak month will be determined for administrative and general expenses and separately by Member and customer for commodity costs and transportation costs. Commodity costs will include purchases of gas for injection into storage. Transportation costs will include those pass-through costs where NPGA has contracted to collect and remit payment as an agent. Operating funds = operating cash and cash equivalents + operating investments.

In view of the ever-changing natural gas markets, NPGA will review its fund balance targets annually to ensure that the funding levels continue to provide the expected level of liquidity protection. In the event these operating funds fall below desired levels, NPGA may replenish these funds through increases in rates and charges in the succeeding two to five years in order to provide for uninterrupted operations.

NPGA may also choose to utilize a pre-billing system, require deposits from Members and/or customers, and/or utilize a line of credit to provide adequate liquidity.

The operating funds balance will be considered in conjunction with other financial targets and ratios when developing the annual rates and charges.

The Board may choose to maintain funds in excess of NPGA’s goal in order to have funds available for working capital lag related to gas supply agreements with new Members or customers, higher than expected expenses, or other opportunities that may arise.

Section 4: Rate Stabilization Account NPGA established a rate stabilization account to provide a mechanism for NPGA to use excess revenue received from a contract termination settlement to stabilize future rates in cases of revenue shortfalls or higher than expected expenses. Each month NPGA may deposit into or transfer from the Rate Stabilization Account the amount budgeted for the then current month as set forth in the current annual budget, or the amount otherwise determined by NPGA to be deposited into or transferred from such fund for the month. Amounts on deposit in the Rate Stabilization Account may also be used to pay operating expenses or for other purposes that enable NPGA to, or facilitate NPGA’s ability to, provide services at stable and economic rates.

NPGA may also choose to maintain funds in reserve rather than funding a rate stabilization account. Based on NPGA’s current rate structure which includes a monthly pooled gas adjustment (PGA) and a member fee, NPGA does not have a goal to accumulate funds within the rate stabilization account.

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Each Member and customer is expected to consider a rate stabilization account and/or adequate reserves to plan for future changes to rates and charges and the monthly PGA as a result of volatility in the natural gas market.

Section 5: Cash Contingencies NPGA maintains relationships with several national banking institutions that have the ability and capacity to facilitate lines of credit in the event that emergency natural gas purchases would be required. Such lines of credit could also be used for other lawful purposes. Currently, NPGA does not maintain an open line of credit.

Section 6: Investments NPGA maintains an investment policy to guide and protect investments in financial assets and to serve as a guide to NPGA’s investment decisions. The investment policy is reviewed on an annual basis in order to utilize any new investment vehicle to maximize return on investments without exposing NPGA to undue risks.

6.1 Objective of Investment Policy 1. Assure safety of principal

2. Retain liquidity to meet projected cash needs

3. Realize the best available yield, while minimizing risk, to make productive use of idle funds

6.2 Approved Investments 1. United States Treasury securities

2. Federal agency securities

3. Certificates of deposit, time deposits and banker’s acceptances limited to no more than $250,000.00 invested in any one Federal Deposit Insurance Corporation (FDIC) covered bank or financial institution to ensure NPGA is covered under FDIC insurance

4. Commercial paper, limited to ratings of A-1, P-1

5. AA- rated or better municipal bonds

6.3 Investment Restrictions 1. Limit of $500,000 with a single issuer, other than the U.S. Government

2. Maximum investment term of two (2) years

3. Should investment opportunities arise that are not listed above, investment consent can be obtained through the approval of at least two of the following: Chairperson of the Board,

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Secretary/Treasurer of the Board, or NPGA Executive Director. This approval must be in writing and reported to the Board at their next meeting.

Section 7: Debt Management To the extent that NPGA is able to maintain competitive rates to its Members and customers and both the operating reserves and rate stabilization funds are adequately funded, NPGA may use excess free cash flow to finance future capital projects and gas supply as deemed appropriate by the Board.

A short-term bank line of credit could be used, if necessary, to provide adequate funding capacity and to provide flexibility as to the timing of the sale of permanent fixed rate or variable rate debt.

Section 8: Natural Gas Purchasing Strategy NPGA may use short-term and long-term physical supply agreements (including commodity trade options), natural gas production sharing agreements, natural gas pipeline and storage agreements, and financial hedging instruments (including swaps and financially-settled options), to manage its forward risk exposures and otherwise to hedge or mitigate commercial risks arising from natural gas operations.

NPGA may also utilize natural gas prepay transactions (and other long-term commitments associated with natural gas prepay transactions) to provide a means by which NPGA may purchase gas at an anticipated discount from the market, subject to Board approval.

8.1 Natural Gas Price Risk Management Objectives The Board risk management objectives are as follows:

As a component of purchased gas expense, the Board’s goal is to utilize financial instruments as well as supply agreements, commodity trade options and other commercial arrangements customary in the natural gas industry, to mitigate risks arising from natural gas operations. It is NPGA’s intent to use financial instruments to provide mitigation strategies against significant upward natural gas price movements, while maintaining the opportunity to participate in the benefits of market price declines and to the extent practical, to stabilize the cost of natural gas delivered to NPGA’s Members.

Staff is directed to hedge anticipated purchase volumes of natural gas to be delivered to NPGA Members and other customers per Board approved parameters described in more detail in Appendix A and in accordance with the following general parameters: no more than 80% of the anticipated natural gas usage and anticipated storage injection quantities of NPGA Members shall be hedged with financial instruments for any individual month during the two-year period including the next prompt month. Financial hedges are limited to no more than 50% of anticipated natural gas usage and anticipated storage injection quantities for periods more than two years beyond the next prompt month. Staff may secure fixed price, or fixed-above-index price, purchase agreements or commodity trade options, including daily call options, for natural gas purchased for anticipated resale to any NPGA Member or customer of NPGA with whom NPGA has in place a physically-delivered gas supply agreement.

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NPGA will only engage in financial hedging transactions that are consistent with prudent risk management practices to hedge or mitigate commercial risk arising from NPGA’s gas sale and purchase commitments and anticipated future purchase and sale requirements.

8.2 Physical Supply and Natural Gas Production Sharing Agreements NPGA utilizes both short-term and long-term physical supply agreements with various counterparties.

In May 2009, NPGA entered into a Natural Gas Production Agreement for Gas Supply Pool No. 3 with Public Gas Partners (the “Agreement”). The Agreement is supported by related agreements with specific Members of NPGA who chose to participate and agreed (with NPGA) to take delivery of natural gas provided under the Agreement. The utilization of related agreements has allowed Members of NPGA to be responsible for individually customizing the gas purchasing strategy for their community.

8.3 Natural Gas Pipeline and Storage Agreements NPGA’s purchasing strategy targets 5%-15% of the maximum pipeline storage as the storage unit inventory at April 1 of each fiscal year. The strategy includes purchase of pro-rata quantities up to the maximum storage during the months of April – October and pro-rata withdrawals during the months of November – March. NPGA monitors anticipated volumes and may make changes to the purchasing strategy as a result of conditions impacting assumptions such as weather, supply, demand and market developments.

Purchase of natural gas that is put into storage utilizes NPGA’s working capital funds that could have been deposited in interest bearing accounts or invested in accordance with NPGA’s Investment policy. NPGA’s rate schedule allows NPGA to add an interest component to the storage gas costs to cover the potential loss in interest or investment revenue. The storage gas interest rate for each fiscal year is equal to NPGA’s average rate received for all interest bearing and investment accounts as of the last day of October prior to the start of NPGA’s fiscal year.

8.4 Hedging Transactions Hedging transactions are defined as any physical or financial agreement, with a counterparty that mitigates commercial risk arising from gas purchase, storage and sales operations of NPGA.

Hedging transactions may include short-term and long-term purchase transactions, commodity trade options, natural gas commodity swap transactions, and financially-settled commodity options entered into to manage the commodity price risk arising from NPGA’s purchase, sale and storage of natural gas. Hedging instruments are used by NPGA to manage the risk associated with normal business operational activities of buying or selling commodities and financial hedging instruments. NPGA may utilize any form of agreement to achieve its hedging objectives, including master agreements with individual transaction confirmations, purchase and sale contracts, option contracts, collars, caps, floors, swaps and/or the various combinations of such products. NPGA may sell its interest in any financial hedging instrument, with the prior approval of the Board.

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Financial transactions are cash-settled, and do not require or provide for the physical receipt or delivery of natural gas. Options are transactions which afford the right (option) to either purchase (call) or sell (put) natural gas at defined prices (or defined prices in relation to an index) for a prescribed period of time. Combinations of individual instruments can create other instruments, such as collars – purchasing a call while selling a put. NPGA is not authorized to establish an account with a futures commission merchant, or to directly or indirectly transact in futures contracts or options on futures contracts, that is, trading instruments that are financially settled via the Chicago Mercantile Exchange (CME Group) and/or the New York Mercantile Exchange (NYMEX).

NPGA will not, and no staff is authorized on behalf of NPGA to, enter into any hedging transactions for the purpose of speculation. Speculation is the purchase or sale of a physical commodity or financial instrument for the purpose of profiting from market price fluctuations. Speculation does not manage, hedge or mitigate the risk associated with NPGA’s normal business operations or activities and will not be permitted at any time. Any officer or employee determined to have entered into a transaction or maintained a position on behalf of NPGA in violation of this policy or for speculative purposes will be subject to discipline, up to and including termination of employment.

Use of hedging instruments requires an understanding of and ongoing compliance with certain laws and regulations, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act amendments to the Commodity Exchange Act (the “Act”), regulations and interpretations of the Commodity Futures Trading Commission (CFTC), as well as the Governmental Accounting Standards Board (GASB) accounting rules, regarding recordkeeping, accounting treatment, reporting, clearing and exchange-trading and speculative position limits, as applicable. Data regarding hedging activity must be provided in a timely manner by other NPGA staff to the appropriate personnel responsible for compliance with such laws, regulations and guidance. In connection with entering into hedging instruments that are swap transactions and financially-settled commodity options (“swaps” under the CFTC interpretations), it is NPGA’s policy not to agree to act as the reporting counterparty for such transactions. Use of these instruments must be completed in such a manner as is consistent with NPGA’s risk policies and in compliance with applicable laws, regulations and accounting rules. NPGA shall designate a Qualified Independent Representative (“QIR”) to advise the Board and NPGA with respect to the suitability of any “swaps” as defined by the Act and/or CFTC regulations. In selecting the QIR, NPGA will confirm that the independent representative meets the criteria set forth in the Act and the CFTC regulations in order to be deemed “qualified”. The Legal department including Risk and Compliance and the Finance and Accounting department will be responsible for monitoring compliance with NPGA’s policies and with applicable laws, regulations and accounting rules.

All NPGA staff with access to analysis tools and information acquired by NPGA for the purposes of managing natural gas supply, commodity price risk or any other risks arising from natural gas operations, including contract terms or entering into or analyzing hedging instruments, are prohibited from directly or indirectly advising other entities or individuals, other than other NMPP Energy organizations, with respect to such matters or directly or indirectly taking any positions in, or entering into any transactions in the natural gas financial market. Any violation of this policy will be subject to discipline, up to and including termination.

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Hedging instruments may introduce additional risks. These risks include, but are not necessarily limited to, termination risk, counterparty risks including counterparty credit risk, basis risk and tax event risk. Prior to entering into any hedging transaction, these risks must be evaluated to ensure that adequate provisions are in place to minimize the potential downside and to provide maximum potential benefit to the transaction as originally intended.

The counterparty for any agreement entered into for hedging purposes must be evaluated and deemed as creditworthy or must provide financial assurance, collateral or other credit support, as warranted, to NPGA. During the term of such hedging transaction, the Director of Finance and Accounting will assess the counterparty’s creditworthiness on an ongoing basis, and will take action under any related credit support document as necessary to protect NPGA’s interests.

Any deviations from NPGA’s risk policies will require prior approval of the Executive Director.

8.5 Execution and Monitoring of Hedges The Executive Director will designate the individual staff members who have authority to enter into hedging transactions for NPGA. The notional volume of hedging instruments shall not be greater than the contractual volume (or anticipated contractual volume) of “physical” market agreements necessary to hedge the current and anticipated risks being hedged.

NPGA will maintain current reports listing all hedging instruments and fixed price gas supply agreement obligations, and associated credit support arrangements. At least one designated staff member who is not eligible to execute hedging instruments on behalf of NPGA will review and monitor hedging and associated credit risk/support activity. Such review will include a comparison against these policies and Board approved parameters noted in Appendix A.

The Board’s hedging strategy will be reviewed on a routine basis, but at least annually, including any authorization to elect the end-user exception to clearing and exchange-trading any category of swaps for which the CFTC has implemented a clearing mandate.

8.6 Natural Gas Prepay Transactions (and Other Long-Term Commitments Associated with Natural Gas Prepay Transactions) Natural gas prepay transactions and other long-term commitments associated with natural gas prepay transactions provide a means in which NPGA may purchase gas at an expected discount from the market price. These agreements include various risks and terms that must be considered carefully. Gas purchased under a prepay transaction or other long-term commitment associated with a natural gas prepay transaction generally have stipulations as to what type of entity may use the gas, generally a municipality. In addition, the term of the transaction may be longer than the term of NPGA’s otherwise typical gas supply agreements. Such transactions may also have embedded interest rate risks. Consideration must be given as to the volume of gas and related terms for which NPGA is authorized and advised to commit.

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Section 9: Contracts Pursuant to the NPGA Bylaws, NPGA’s Executive Director is authorized to execute any contract or other instrument which has been approved by the Board. In addition, the Executive Director is authorized to execute any contract or other instrument necessary to effectively operate NPGA where, in the judgment of the Executive Director, it is not in the best interests of NPGA to delay action until the next meeting of the Board. Where the amount involved exceeds $10,000, the Executive Director is to report at the next regularly scheduled meeting of the Board, the significant details of such contract or other instrument, excluding routine supply and financial hedging transactions.

NPGA’s Executive Director has made the following delegations of authority which may be changed by the Executive Director from time to time. Changes to these delegations will be incorporated into these Polices and Guidelines and reported to the Board at the next regularly scheduled meeting.

• Contracts for up to one year may be signed by the Director of Gas Operations.

• Contracts and confirmation exhibits for seven (7) months or less with a financial exposure to NPGA of less than $10,000 may be signed by the Director of Gas Operations or the Gas Operations Controller.

• Standard contracts pre-approved by the Board may be signed by the Director of Gas Operations.

• Amendments/addendums to previously approved contracts will go the Board for approval/ratification at the discretion of the Executive Director or the Director of Gas Operations.

• All members of staff entering in to hedging transactions must comply with the provisions of the NPGA Natural Gas Purchasing Strategy as established by the Board, as such Policy and Strategy may be modified from time to time by the Board.

• The Director of Gas Operations is authorized to execute contracts for services of a routine nature prescribed within the NPGA budget.

• During periods in which the Executive Director/CEO is away from the NMPP Energy headquarters due to official travel, authorized leave, or incapacitation, the Director of Enterprise Business Support is authorized to execute contracts and other instruments as necessary to effectively operate NPGA. When both the Executive Director/CEO and the Director of Enterprise Business Support are absent, the Director of Retail Utility Services and Member Relations followed by the Director of Finance and Accounting and the General Counsel in that order, are authorized to execute contracts and other instruments as necessary to effectively operate NPGA.

Members of staff authorized to sign contracts are accountable to minimize risk to members and ensure compliance with appropriate laws, regulations, bylaws and policies.

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Section 10: Credit NPGA’s credit policy is established to address financial risk including prevention of loss of revenue due to the inability of counterparties to meet their payment obligations.

10.1 Members and Other Customers All NPGA Members desiring natural gas supply from NPGA are required to execute the Gas Supply Agreement for Total Requirements Supply (“GSA”) in order to receive such service from NPGA. All other customers of NPGA are required to execute a Gas Purchase Agreement (“GPA”). These documents define the terms and conditions of operations between NPGA and the Member or other customer.

All NPGA GSA Participants agree, through the GSA, to adopt and enforce rates and charges for the services of their municipal natural gas utility systems and collect sufficient revenue to pay for the natural gas, transportation and related services purchased from NPGA.

Periodically, the Finance and Accounting Department will review and consider the Member’s financial position, rating agency reports, and other available information.

10.2 Long-Term Counterparty Commitment Before entering into a long-term commitment for the purchase of natural gas, NPGA will investigate the Counterparty’s financial solvency.

NPGA will review financial information such as current financial statements and audited financial statements, with accompanying footnotes, for the two immediately preceding fiscal years for financial solvency and contingencies that could impact the Counterparty’s financial strength and will consider the counterparty’s financial position, references, rating agency reports, and other available information.

Section 11: Internal Control Procedures In order to maintain the integrity and accuracy of NPGA’s financial records, internal control processes and procedures have been developed and implemented in all areas of financial accountability, which include the following:

1. Purchases, accounts payable, cash disbursements and electronic payments,

2. Invoicing, accounts receivable, cash receipts and bank reconciliations, and

3. Payroll processing, and

4. Derivatives and hedging.

The internal control processes are reviewed annually by an independent auditor as part of the annual financial statement audit. The auditors consider internal control processes relevant to the preparation and fair presentation of the financial statements but not for the purpose of expressing an opinion on the effectiveness of NPGA’s internal control processes. Such review includes analysis of adequate

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segregation of duties between department personnel and evaluating the appropriateness of accounting policies.

Section 12: Annual Budget and Financial Forecasts Annually, NPGA will prepare a detailed budget to establish rates and charges for the immediately succeeding fiscal year based on known information and other quantifiable information.

NPGA may also prepare a financial forecast based on projected costs and natural gas usage requirements. This forecast is used to analyze the liquidity and rate stabilization account targets.

Section 13: Commercial Insurance To minimize the risk of loss due to an event beyond NPGA’s control, NPGA reviews its insurance package on an annual basis to ensure that insurance coverage is in effect for any area of exposure of loss of a catastrophic nature. Coverage limits are increased, added or deleted as the situation warrants.

Commercial coverage includes: Property and contents, business interruption, general liability, automotive, inland marine, workers’ compensation, cyber risk, crime, commercial umbrella, directors and officers, fiduciary and dishonesty.

Additionally, NPGA may also request Certificates of Insurance from NPGA’s long-term counterparties for natural gas supply.

Section 14: American Public Gas Association NPGA recognizes the benefit received by joining together to advocate for municipally owned natural gas distribution systems; and, education and communication that can be received regarding safety, awareness, performance and competitiveness as part of membership in American Public Gas Association (APGA). APGA also offers discounts when members of a joint action agency participate in APGA. NPGA annually remits dues to APGA on behalf of NPGA’s Members and customers who elect to participate. NPGA Members and customers in turn reimburse NPGA for the applicable cost of APGA membership. APGA Research Foundation recommends a voluntary contribution in support of the Gas Technology Institute (GTI) of $0.01/MMBtu. Annually, Members will confirm with NPGA their interest in contributing to the GTI. A GTI charge will be included on the monthly bill from NPGA for Members who elect to contribute. The total amount collected will be remitted by NPGA directly to APGA.

Section 15: Board Scholarships NPGA offers scholarships to assist Member communities with training and participation in industry conferences. Scholarships are limited to the funds available in the fiscal year budget. Reimbursement is provided for the NPGA representative on the APGA Board of Directors of up to $1,000 per meeting for up to four meetings per year.

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Section 16: Business Travel Reimbursement Policy The Board has approved a Business Travel Reimbursement Policy (“Travel Policy”) that provides guidelines for reimbursement to NPGA Directors for reasonable business travel expenses incurred while on NPGA company business approved by the Board, Executive Director or Director of Gas Operations, not including travel to or from NPGA Board meetings. The Travel Policy may be modified by the Board from time to time. The Travel Policy is included as Appendix B.

Administrative Policies and Guidelines

Section 17: Conflict of Interest The Board has determined that effective oversight and governance has components of legal, fiduciary and policy responsibilities, and that the Board has a fiduciary duty of reasonable care, loyalty, and good faith. Neither the NPGA Interlocal Agreement nor the NPGA Bylaws mention “Conflicts of Interest” but the job description referenced in Section 21 states that a Director will follow policies regarding conflict of interest, confidentiality, and harassment. The Joint Operating Agreement, signed by NPGA, contains Section XIV regarding “Conflict of Interest”, whereby the parties waive any actual or potential conflict of interest, in matters mutual in nature that may arise as a result of the shared status of Directors, Officers, trustees, employees or agents. All parties have access to independent legal counsel.

Section 18: Whistleblower The NMPP Energy Employee Policy Manual includes a whistleblower policy which defines a whistleblower as an employee of NMPP who reports an activity that he/she considers to be illegal or dishonest, to an appropriate person as outlined in the policy. The Policy provides examples and guidelines regarding reporting.

Section 19: Records Retention and Disposition Guidelines are available to staff to define a record and a non-record. Records are retained and disposed of in accordance with Records Retention Schedules that have been approved by the Nebraska Records Management Division.

Section 20: Anti-Harassment Policy The Board is committed to providing an environment that is free from all forms of discrimination and conduct that can be considered harassing, coercive, or disruptive, including sexual harassment. As part of that commitment, the Board has adopted an Anti-Harassment Policy which is included as Appendix C.

Section 21: Board Member and Board Chairperson Job Descriptions The Board adopted job descriptions for Board Members and the position of Board Chairperson as helpful tools to outline what is expected of the Board Member and member community. These job descriptions do not replace the guidelines provided in the NPGA Bylaws. The job descriptions are included as Appendix D.

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Revision History

Version Effective Date Description of Revision

1.0 6.21.18 Adoption of full policy and guidelines document

2.0 2.13.2019 Clarification to rate used for storage gas interest to include all interest bearing accounts

3.0

September 12, 2019 Errata changes. Clarify participation by Members and customers in Section 14: APGA. Clarification of NPGA-approved business in Section 16: Business Travel Reimbursement Policy. Add Board Chairperson Job Description in Section 21 consistent with other NMPP Energy company policies.

4.0 June 11, 2020 Revised Section 8: Natural Gas Purchasing Strategy for clarity

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Board-Approved Hedging Parameters


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Appendix A: Board-Approved Hedging Parameters APPROVED: Version 7.0 - Approved June 11, 2020 by NPGA Board of Directors: Motion: Russ Pfeil, Alma, NE, moved to hedge approximately 33% of LPP volume for the 2020

winter season to reach a total hedge of approximately 50% volume for that time period, and begin hedging approximately 50% of LPP volumes for forward months 13-24. Russ Piroutek, Belleville, KS, seconded the motion, which carried unanimously on roll call vote.

SUPERSEDED: Version 6.0 - Approved February 13, 2020 by NPGA Board of Directors: Motion: Larry Brittenham, Superior, NE, moved to suspend Hedging Policy until the Board

reinstates. Bob Lockmon, Stuart, NE, seconded the motion, which carried unanimously on roll call vote.

Version 5.0 - Approved June 21, 2018 by NPGA Board of Directors: Motion: Larry Brittenham moved to re-initiate hedging at 25 percent of volumes of level

purchase plan participants, for the 13th to 24th forward months, with NPGA staff’s flexibility on timing. Russ Pfeil seconded the motion, which carried unanimously on roll call vote.

Version 4.0 - Approved December 14, 2017 by NPGA Board of Directors: Motion: Larry Brittenham moved to suspend all hedging for the next 6 months and then to revisit

the topic at the next meeting thereafter. Neal Lewis seconded the motion, which carried unanimously on a roll call vote.

Version 3.0 - Approved April 24, 2014 by NPGA Board of Directors: Motion Russ Pfeil moved to adopt the NPGA Proposed Gas Purchasing Strategy as presented.

Larry Brittenham seconded the motion which carried unanimously on roll call vote.

NPGA Proposed Gas Purchasing Strategy

NPGA will acquire approximately 50% of the projected rolling twelve (12) month volumes of gas utilizing swap contracts for Level Purchase Plan (LPP) participants.

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Each swap contract consists of 10,000 mmbtu. These swap contracts shall be calculated as 50% of the anticipated usage for the forward month and shall begin 13 months in advance of that consumption.

1. Approximately 50% of the estimated monthly gas needs under the LPP rate schedule will be

purchased on a dollar-cost averaging basis. Purchases of these swap contracts shall be made beginning up to 12 months in advance of the month of gas use.

2. Of the above 50% of gas needs, the following purchase schedule will be used, subject to the

10,000 mmbtu contract limit:

a. The first 1/6 shall be purchased 10 to 12 months in advance of the month of use, and

b. The second 1/6 shall be purchased 8 to 10 months in advance of the month of use, and

c. The third 1/6 shall be purchased 6 to 8 months in advance of the month of use, and

d. The fourth 1/6 shall be purchased 4 to 6 months in advance of the month of use, and

e. The fifth 1/6 shall be purchased 2 to 4 months in advance of the month of use, and

f. The sixth 1/6 shall be purchased 0 to 2 months in advance of the month of use.

Version 2.0 - Approved June 27, 2013 by NPGA Board of Directors: Motion Larry Brittenham moved that the NPGA Board of Directors authorizes staff to hedge

natural gas up to 50% of member requirements from June 2013 through June 2016. Thereafter, with each succeeding month, hedge 1/12th of NPGA’s natural gas needs starting in July of 2016. Staff is not required to hedge natural gas, but may use their best professional judgment. Neal Lewis seconded the motion which carried unanimously on roll call vote.

Version 1.0 - Approved June 21, 2012 by NPGA Board of Directors: Motion Larry Brittenham moved to give John Harms, Director of Wholesale Gas Operations, the

authority to hedge up to 35% of natural gas purchases from November 2013 to the end of the Gas Supply Contract which is 2015. Randy Woldt seconded the motion which carried unanimously on roll call vote.

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Effective Date September 12, 2019

Business Travel Reimbursement Policy


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Appendix B: Business Travel Reimbursement Policy

Subject to the provisions set forth below, National Public Gas Agency (NPGA) will reimburse directors for reasonable business travel expenses incurred while on NPGA company business approved by the Board, Executive Director or Director of Gas Operations, not including travel to or from NPGA Board of Directors (Board) meetings. If there are specific limitations to travel reimbursement for specific programs approved by the Board, those limits supersede the Business Travel Reimbursement Policy. The actual costs of meeting registration, travel, meals, lodging and other expenses directly related to accomplishing business travel objectives will be reimbursed by NPGA. Directors are expected to limit expenses to reasonable amounts. Meal costs will not be reimbursed when a meal option has been provided by NPGA or another NMPP Energy organization. Directors are asked to consider projected time and distance of travel and the resulting actual costs in determining whether to fly or drive and whether to rent or use a personal or employer-owned vehicle. Directors will be reimbursed for use of a personal or employer-owned vehicle for NPGA business at the then-current Internal Revenue Service auto mileage reimbursement rate. Should a Director choose to drive when flying is more economical, the reimbursement will be limited to the price of the airline ticket. Directors are asked to consider hotel amenities, location, convenience and comparable costs in selecting reasonable lodging arrangements. Directors shall make use of available corporate and discount rates for lodging. The Administrative Assistant for NPGA, who serves as the NPGA travel coordinator, is available to assist Directors in selecting lodging arrangements and making lodging reservations. Other expense categories excluded from reimbursement include, but are not limited to: housing allowance or residence for personal use, payments for business use of personal residence, health or social club dues or initiation fees, personal services (e.g. maid, chauffer, chef), tax indemnification and gross up payments, discretionary spending accounts, in-room movies, parking tickets or fines, entertainment expenses unless associated with a business activity, travel insurance, valet parking service (unless personal parking is not available), and purchase of personal items (clothing, toiletry items, spa use). Travel arrangements for NPGA business including attendance at events such as conventions, workshops and related events should be made through the Administrative Assistant for NPGA (when possible) who serves as NPGA’s travel coordinator. First class and/or charter travel will not be reimbursed unless required for the completion of NPGA business and the receipt of prior Board approval. Directors who are involved in an accident while traveling on business must promptly report the incident to Nebraska Municipal Power Pool’s General Counsel. Vehicles owned, leased, or rented by NPGA may not be used for personal use without prior approval by the Executive Director. Directors on business travel may be accompanied by a family member or friend, when the presence of a companion will not interfere with successful completion of business objectives. Additional or incremental expenses arising from a family member or friend are the responsibility of the Director.

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When travel is completed, Directors should submit completed, itemized business travel reimbursement request reports within 30 days to the Director of Gas Operations. A sample Business Travel Reimbursement Request form is available upon request. Business travel reimbursement request reports must be accompanied by an itemized receipt for each business expense item explaining the business purpose of the expense. Specifically, in order to provide proof during a sales tax audit, NPGA must be able to show documentation that sales tax is paid on each purchase. Mileage requests should note the location and mileage traveled and be supported by an internet printout verifying the related mileage from the Director’s community to the site of the business meeting or event. This support is not expected to agree exactly to the mileage requested as additional business travel within the individual cities, etc. is expected. The printout serves to support the reasonableness of the request. Request for reimbursement of an expense without an itemized receipt will be refused. Payment will be made by NPGA as directed on the travel expense report through NPGA’s normal payment process. Submission of an expense report requesting reimbursement payment to the Director shall constitute certification the Director has not and will not be reimbursed by the Director’s community or any other party for the same expenses and the Director’s community prefers direct payment to the Director rather than to the Director’s community. Abuse of this business travel reimbursement policy, including falsifying expense reports to reflect costs not incurred by the Director, can be grounds for denial of reimbursement, termination of directorship and filing of criminal charges.

Revision History


1.0 June 26, 2014 Board approval of policy

2.0 September 11, 2014 Updated to reflect changes in titles, practices, etc.

3.0 6.21.18 Updated to reflect changes in titles

4.0 September 12, 2019 Errata changes, clarified Board approved company business and other

specific programs approved by the Board and meal cost reimbursement when a meal has been provided.

Revision No. 1.0

Effective Date 6.21.18

Anti-Harassment Policy for Members of the Board of Directors


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Appendix C: Anti-Harassment Policy for Members of the Board of Directors NMPP Energy (Nebraska Municipal Power Pool, Municipal Energy Agency of Nebraska, National Public Gas Agency, and the Public Alliance for Community Energy, referred to as “the organization”) is committed to providing an environment that is free from all forms of discrimination and conduct that can be considered harassing, coercive, or disruptive, including sexual harassment. Actions, words, jokes, or comments based on an individual’s sex, race, color, sexual orientation, gender identity, national origin, age, religion, disability, genetic information, pregnancy, or any other legally protected characteristic are not appropriate and may rise to the level of unlawful harassment if they are unwelcome, severe or pervasive, and/or create a hostile environment. There are numerous Federal, State, and local laws which govern discriminatory and harassing conduct.* Sexual harassment is defined as unwanted sexual advances, or visual, verbal, or physical conduct of a sexual nature. This definition includes many forms of offensive behavior and includes gender based harassment of a person of the same sex as the harasser. The following is a partial list of examples of inappropriate behaviors that are to be avoided because they might be unlawful if they meet the definition of harassment:

• Unwanted sexual advances. • Offering employment benefits in exchange for sexual favors. • Making or threatening reprisals for a negative response to sexual advances. • Visual conduct that includes leering, making sexual gestures, or displaying of sexually

suggestive objects or pictures, cartoons or posters. • Verbal conduct that includes making or using derogatory comments, epithets, slurs, or jokes. • Verbal sexual advances or propositions. • Verbal abuse of a sexual nature, graphic verbal commentaries about an individual's body,

sexually degrading words used to describe an individual, or suggestive or obscene letters, notes, or invitations.

• Physical conduct that includes touching, assaulting, or impeding or blocking movements.

In the course of carrying out their duties for NMPP Energy, no board member has been given any authority by the organization to require any employee, vendor, member or supplier to enter into any type of sexual relationship, to demean any individual because of gender/sex or any other protected characteristic, or to require any such person to listen to or participate in sexual discussions (including sexual jokes) which are unwelcome or offensive to such individual. Likewise, no board member has been given any authority to require any employee, vendor, member or supplier to adopt any particular religious views, to demean any individual because of their religious views, or to require any such person to listen to or participate in religious discussions which are unwelcome or offensive to that individual. Furthermore, no board member has been given any

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authority to demean any employee, member, vendor, or supplier because of their race or ethnic background or the existence of any disability, or to require any such individual to listen to offensive or unwelcome jokes or remarks based upon race, ethnicity or disability. Under the law, this type of rude behavior is also likely to be considered unlawful “harassment” if the initiator knew that the conduct would be unwelcome or offensive (or the conduct was of the type which most reasonable people would have realized would be offensive under the circumstances). If an employee is offended, the offender should be informed that his or her conduct is upsetting, and be given a chance to correct the problem. However, common sense should prevail, and cases of serious misbehavior should be brought immediately to the attention of management (as should situations where offensive behavior continues, even after objection has been registered) so that an investigation can be conducted. Any board member who is determined, after an investigation, to have engaged in sexual or other unlawful harassment shall be subject to disciplinary action, including removal from the Board of Directors where warranted. The Board of Directors recognizes that the NMPP Energy Policy Manual shall include a Workplace Harassment Policy for staff. *A sample of these laws include, but are not limited to,: Title VII of the Civil Rights Act, Age Discrimination in Employment Act (ADEA), Equal Pay Act, Pregnancy Discrimination Act, Immigration Reform and Control Act, Americans with Disability Act (ADA), Nebraska Fair Employment Practice Act.

Revision History


1.0 6.21.18 Adoption of policy

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Board Member Job Description


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Appendix D: Board Member and Board Chairperson Job Descriptions Responsibilities • Regularly attend Board meetings. • Make a serious commitment to participate actively in Board and committee activity, including

planning work and development of organizational strategy and goals. • Review agenda and supporting meeting materials prior to Board and committee meetings. • Be informed about the organization’s mission, services, policies and programs. • Keep up to date on developments in the organization’s field. • Get to know other Board members and build a collegial working relationship that contributes to

consensus. • Follow conflict of interest, and anti-harassment policies and abide by confidentiality agreements and

provisions. • Assist the Board in carrying out its fiduciary responsibilities such as regularly reviewing the

organization’s financial performance, approving the annual budget, setting rates, accepting the annual audit, and establishing investment policies and monitoring investment performance.

• Maintain professional working relationship with staff, utilize appropriate chain of command for questions or concerns, recognize and appropriately manage authority and role as a Board member.

• Promote mission and visibility of NPGA in the community.

Personal Characteristics to Consider • Ability to listen, analyze, think clearly and creatively, work well with people individually and in a

group. • Willing to prepare for and attend Board and committee meetings, ask questions, actively provide

input, interact respectfully with staff and Board members, and contribute positively to group dynamics.

• Maintain or develop skills necessary to read and understand financial statements, learn more about the energy and energy services business, understand role and responsibility as a Board member.

• Possess honesty, sensitivity to and tolerance of differing views, a friendly, responsive, and patient approach, community-building skills, personal integrity, and concern for the organization’s welfare.

Board Chairperson Job Description Responsibilities • Preside over meetings of the Board. See that it functions effectively, interacts with management

and staff optimally, and fulfills all of its duties. • Assist with the development of agendas. • Encourage regular attendance and active participation in meetings by all Board members. • Ask for nominations and appoint representatives to committees as needed. • Represent the Board on the Joint Operating Committee. Report to the Board the actions of the Joint

Operating Committee.

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• Reflect any concerns management has in regard to the role of the Board or individual Board members. Reflect to the Executive Director the concerns of the Board and other constituencies.

• Oversee development of any policies and procedures to ensure Board is complying with its fiduciary responsibilities, and legal and regulatory requirements.

• Oversee role planning and strategy development. • Establish a relationship to outside counsel as needed if situation arises. • Welcome new Board members and ensure they are oriented to their new role and responsibilities. • Annually review the performance of the Board and take steps to improve its performance.

Personal Characteristics to Consider (in addition to those of a Board Member) • Skills as a group facilitator, including ability to lead by example, encourage active participation, listen

attentively, pose questions to achieve clarification and shared meaning, respond with respect and courtesy, and intervene privately when necessary. Maintain confidentiality in dealing with sensitive matters.

• Understanding of financial statements and sound business management practices. • Ability to establish a positive working relationship with key staff and engage in discussions regarding

Board and staff roles, responsibilities, and performance. • Ability to provide candid and constructive feedback.

Revision History


1.0 June 26, 2014 Adoption of Job Description

2.0 September 12, 2019 Errata changes and addition of Board Chairperson description consistent with other NMPP Energy organizations.

Revision No. 4.0 Effective Date June 11, 2020 Distribution ...

Documents

Transcript of Revision No. 4.0 Effective Date June 11, 2020 Distribution ...