-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tIllJhmtcfMXcvUqGawEkrj6gZS4n/Fxom9y2UPSL9mrlStdvAT1642ZgSfYCCxu eAhBmddEPD8d66Gxl0M2ug== 0000018808-94-000011.txt : 19940330 0000018808-94-000011.hdr.sgml : 19940330 ACCESSION NUMBER: 0000018808-94-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL VERMONT PUBLIC SERVICE CORP CENTRAL INDEX KEY: 0000018808 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 030111290 STATE OF INCORPORATION: VT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-08222 FILM NUMBER: 94518564 BUSINESS ADDRESS: STREET 1: 77 GROVE ST CITY: RUTLAND STATE: VT ZIP: 05701 BUSINESS PHONE: 8027732711 10-K 1 FORM 10-K FOR FYE 12/31/93 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________ FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 1-8222 Central Vermont Public Service Corporation (Exact name of registrant as specified in its charter) Vermont 03-0111290 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 77 Grove Street, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (802) 773-2711 ________________________________________________________________________ Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on which Title of each class registered Common Stock $6 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes..X... No...... Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements or any amendment to this Form 10-K. [ ] Cover page State the aggregate market value of the voting stock held by non- affiliates of the registrant: $225,818,327 based upon the closing price as of January 31, 1994 of Common Stock, $6 Par Value, on the New York Stock Exchange as reported in the Eastern Edition of the Wall Street Journal. Indicate the number of shares outstanding of each of the registrant's classes of Common Stock: As of January 31, 1994, there were outstanding 11,580,427 shares of Common Stock, $6 Par Value. DOCUMENTS INCORPORATED BY REFERENCE The following documents, or indicated portions thereof, have been incorporated herein by reference: (1) Portions of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1993 are incorporated by reference as Exhibit EX-13. Cover page continued Form 10-K - 1993 TABLE OF CONTENTS Part I Item 1. Business................................................ Item 2. Properties.............................................. Item 3. Legal Proceedings....................................... Item 4. Submission of Matters to a Vote of Security Holders..... Part II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.................................... Item 6. Selected Financial Data................................. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... Item 8. Financial Statements and Supplementary Data............. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... Part III Item 10. Directors and Executive Officers of the Registrant...... Item 11. Executive Compensation.................................. Item 12. Security Ownership of Certain Beneficial Owners and Management............................................. Item 13. Certain Relationships and Related Transactions.......... Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................................ Signatures........................................................ PART I Item 1. Business. Overview. Central Vermont Public Service Corporation (the "Company"), incorporated under the laws of Vermont on August 20, 1929, is engaged in the purchase, production, transmission, distribution and sale of electricity. The Company has various wholly and partially owned subsidiaries. These subsidiaries are described below. The Company is the largest electric utility in Vermont and serves 133,658 customers in 175 of the 245 towns in Vermont. This represents about 50% of the Vermont population. In addition, the Company supplies electricity at wholesale to one rural cooperative, and one private utility. The Company's sales are derived from a diversified customer mix. The Company's sales to residential, commercial and industrial customers accounted for 59% of total MWH sales for the year 1993. Sales to the five largest retail customers receiving electric service from the Company during the same period constituted about 4.5% of the Company's total electric revenues for the year. The Company's requirements resale sales accounted for approximately 6%, entitlement sales accounted for 27% and other resale sales which include contract sales, opportunity sales and sales to NEPOOL accounted for approximately 8% of total MWH sales for the year 1993. Connecticut Valley Electric Company Inc. ("Connecticut Valley"), a wholly owned subsidiary of the Company, incorporated under the laws of New Hampshire on December 9, 1948, distributes and sells electricity in parts of New Hampshire bordering the Connecticut River. It serves 10,202 customers in 13 communities in New Hampshire. About 2% of the New Hampshire population resides in its service area. Connecticut Valley's sales are also derived from a diversified customer mix. Connecticut Valley's sales to residential, commercial and industrial customers accounted for 99.5% of total MWH sales for the year 1993. Sales to its five largest retail customers during the same period equaled about 17% of Connecticut Valley's total electric revenues for the year. The Company also owns 56.8% of the common stock and 46.6% of the preferred stock of Vermont Electric Power Company, Inc. ("VELCO"). VELCO owns the high voltage transmission system in Vermont. VELCO created a wholly owned subsidiary, Vermont Electric Transmission Company, Inc. ("VETCO"), to finance, construct and operate the Vermont portion of the 450 KV DC transmission line connecting Quebec with Vermont and New England. In addition, the Company owns 31.3% of the common stock of Vermont Yankee Nuclear Power Corporation ("Vermont Yankee"), a nuclear generating company. The Company also owns 2% of the outstanding common stock of Maine Yankee Atomic Power Company, 2% of the outstanding common stock of Connecticut Yankee Atomic Power Company and 3.5% of the outstanding common stock of Yankee Atomic Electric Company. The Company has two wholly owned subsidiaries that were created for the purpose of financing and constructing two hydroelectric facilities in Vermont: Central Vermont Public Service Corporation - Bradford Hydroelectric, Inc. ("Bradford"), which became operational December 20, 1982, and Central Vermont Public Service Corporation - East Barnet Hydroelectric, Inc. ("East Barnet"), which became operational September 1, 1984. These hydro electric facilities have been leased and operated by the Company since their respective in-service dates. The Company also has the following wholly owned non-utility subsidiaries: C.V. Realty Inc., a real estate company, Catamount Energy Corporation whose purpose is to invest in energy-related projects, CV Energy Services, Inc. (a), whose purpose was to provide energy-related services and SmartEnergy Services, Inc., whose purpose is to cost effectively provide reliable energy efficient products and services, including the rental of electric water heaters. Catamount Energy Corporation has established four wholly owned subsidiaries: (See "DIVERSIFICATION"); Catamount Rumford Corp., Equinox Vermont Corporation, Appomattox Vermont Corp. and Catamount Williams Lake L.P. See Exhibit EX-13 for additional information of the Company's diversification activities. REGULATION AND COMPETITION State Commissions. The Company is subject to the regulatory authority of the Vermont Public Service Board ("PSB") with respect to rates, and the Company and VELCO are subject to PSB jurisdiction respecting securities issues, construction of major generation and transmission facilities and various other matters. The Company is subject to the regulatory authority of the New Hampshire Public Utilities Commission as to matters pertaining to construction and transfers of utility property in New Hampshire. Additionally, the Public Utilities Commission of Maine and the Connecticut Department of Public Utility Control exercise limited jurisdiction over the Company based on its ownership as a tenant-in-common of Wyman #4 and Millstone #3, respectively. Connecticut Valley is subject to the regulatory authority of the New Hampshire Public Utilities Commission ("NHPUC") with respect to rates, securities issues and various other matters. Federal Power Act. Certain phases of the businesses of the Company and VELCO, including certain rates, are subject to the jurisdiction of the Federal Energy Regulatory Commission ("FERC"): the Company as a licensee of hydroelectric developments under Part I, and the Company and VELCO as interstate public utilities under Parts II and III, of the Federal Power Act, as amended and supplemented by the National Energy Act. The Company has licenses expiring at various times under Part I of the Federal Power Act for twelve of its hydroelectric plants. The Company has obtained an exemption from licensing for the Bradford and East Barnet projects. Public Utility Holding Company Act of 1935. Although the Company, by reason of its ownership of utility subsidiaries, is a holding company, as defined in the Public Utility Holding Company Act of 1935, it is presently exempt, pursuant to Rule 2, promulgated by the Commission under said Act, from all the provisions of said Act except Section 9(a)(2) thereof relating to the acquisition of securities of public utility affiliates. (a) CV Energy Services, Inc. was dissolved effective March 16, 1993. Environmental Matters. In recent years, public concern for the physical environment has resulted in increased governmental regulation of environmental matters. The Company is subject to these regulations in the licensing and operation of the generation, transmission, and distribution facilities in which it has interest, as well as the licensing and operations of the facilities in which it is a co-licensee. These environmental regulations are administered by local, state and Federal regulatory authorities and concern the impact of the Company's generation, transmission, distribution, transportation and waste handling facilities on air, water, land and aesthetic qualities. The Company cannot presently forecast the costs or other effects which environmental regulation may ultimately have upon its existing and proposed facilities and operations, because the extent of the applicability is not known at this time. The Company believes that any such costs related to its utility operations would be recoverable through the rate-making process. Refer to Exhibit EX-13 incorporated herein by reference for disclosures relating to environmental contingencies, hazardous substance releases and the control measures related thereto. Nuclear Matters. The nuclear generating facilities of Vermont Yankee and the other nuclear facilities in which the Company has an interest are subject to extensive regulations by the Nuclear Regulatory Commission ("NRC"). The NRC is empowered to regulate the siting, construction and operation of nuclear reactors with respect to public health, safety, environmental and antitrust matters. Under its continuing jurisdiction, the NRC may, after appropriate proceedings, require modification of units for which operating licenses have already been issued, or impose new conditions on such licenses, and may require that the operation of a unit cease or that the level of operation of a unit be temporarily or permanently reduced. Refer to Exhibit EX-13 incorporated herein by reference for disclosures relating to the shut down of the Yankee Atomic Nuclear Power plant. Competition. The Company's retail electric businesses in both Vermont and New Hampshire are generally free from competition by other electric utilities, municipalities or other public agencies. Pursuant to Vermont statutes (30 V.S.A. Section 249), the PSB has established as the service area for Central Vermont the area it now serves. Under 30 V.S.A. Section 251(b) no other company is legally entitled to serve any retail customers in the Company's established service area. However, an amendment to 30 V.S.A. Section 212(a) enacted May 28, 1987 authorizes the Vermont Department of Public Service ("Department") to purchase and distribute power at retail to all customers of electricity in Vermont, subject to certain preconditions specified in new sections 212(b) and 212(c). Section 212(b) provides that a review board consisting of the Governor and certain other designated legislative officers review and approve any retail proposal by the Department if they are satisfied that the benefits outweigh any potential risk to the State. However, the Department may proceed to file the retail proposal with the PSB either upon approval by the review board or the failure of the board to act within sixty (60) days of the submission. Section 212(c) provides that the Department shall not enter into any retail sales arrangement before the PSB determines and approves certain findings. Those findings are (1) the need for the sale, (2) the rates are just and reasonable, (3) the sale will result in economic benefit, (4) the sale will not adversely affect system stability and reliability and (5) the sale will be in the best interest of ratepayers. Section 212(d) provides that upon PSB approval of the Department retail sales proposal, Vermont utilities shall make arrangements for distributing such electricity on terms and conditions that are negotiated. Failing such negotiation, the PSB is directed to determine such terms as will compensate the utility for all costs reasonably and necessarily incurred to provide such arrangements. See Rate Developments below for additional details involving retail sales by the Department. In addition, Chapter 79 of Title 30 authorizes municipalities to acquire the electric distribution facilities located within their boundaries. The exercise of such authority is conditioned upon an affirmative three-fifths vote of the legal voters in an election and upon the payment of just compensation including severance damages. Once the price is determined, whether by agreement of the parties or by the PSB, a second affirmative three-fifths vote of the legal voters is required. There has been only one instance where Chapter 79 of Title 30 has been invoked; the Town of Springfield acted to acquire the Company's distribution facilities in that community pursuant to a vote in 1977. This action was subsequently discontinued by agreement between Springfield and the Company in 1985. No other municipality served by the Company, so far as is known to the Company, is taking steps in an attempt to establish a municipal electric distribution system. For a discussion relating to the Company's wholesale electric business see "Wholesale Rates" below. RATE DEVELOPMENTS Vermont Retail Rates. From July 1, 1985 through July 31, 1993, a block of energy obtained by the Department of Public Service (DPS) from the New York Power Authority (NYPA) and from Ontario Hydro was sold by the DPS directly to the Company's retail customers. When the DPS's sources were not sufficient, on a short-term basis, the Company provided back-up energy and capacity to meet the DPS's block requirements. Under this arrangement, which became effective July 1, 1989, the Company was reimbursed for all back-up energy and capacity. During most of 1989 the DPS's block equaled the first 200 KWH sold to certain retail customers, but the block was reduced to 120 KWH beginning with bills rendered on December 1, 1989, to 85 KWH beginning with bills rendered on January 1, 1990, and to 75 KWH beginning with bills rendered on February 3, 1992. Effective February 1, 1993, the DPS block was reduced to a maximum of 25 KWH from 75 KWH due to the termination of the Ontario Hydro power contract with the DPS on October 31, 1992. Since the Company sells to customers all KWH over the DPS's block, the Company's rates were reduced to provide the same net revenues under the 120, 85, 75, and 25 KWH blocks as they would have under the 200 KWH block. Effective February 1, 1992, the PSB allowed the Company to increase its billing and service fees charged to the DPS from 2.3 cents per KWH to 3.6 cents per KWH. The PSB subsequently delayed the effective date to December 1, 1992 but allowed the Company to collect the lost revenues plus interest after November 1, 1992 through a 3.0% surcharge on April and May 1993 bills. On November 18, 1992, the Company filed with the PSB a tariff in response to expected and proposed changes to the provision of power by the DPS. The Company proposed to supply an initial non-seasonally differentiated block of 150 KWH/month to residential customers in the Company's service territory. On December 22, 1992, the DPS filed with the PSB to supply an initial block of 25 KWH/month to the Company's residential customers, reflecting the expiration, on October 31, 1992, of the Ontario Hydro power contract. On December 29, 1992, the PSB approved, on an interim basis pending investigation, a joint DPS-Company block of 150 KWH/month at a non-seasonal uniform rate of 8.4 cents per KWH. Initially, the DPS would sell the first 25 KWH and the Company would sell the remaining 125 KWH. The PSB's interim order resulted in a non-seasonal 25 KWH block at 5.2 cents per KWH for the DPS and a non-seasonal 125 KWH block at 9.0 cents per KWH for the Company. Accordingly, effective February 1, 1993, the DPS block was reduced to a maximum of 25 KWH from 75 KWH. The remaining NYPA power allotment, which was the sole remaining power source of the DPS other than the Company, was reduced substantially effective July 1, 1993. Effective August 1, 1993, the DPS ceased altogether selling to the Company's retail customers. That NYPA power allotment is now sold directly to the Company and the retail sales formerly made by the DPS are now made by the Company. In addition, the Company's rates now provide for an initial non-seasonal 250 KWH block of sales to certain retail customers. In response to a March 1993 PSB inquiry into the appropriateness of a general review of the Company's retail rates, in April 1993 the DPS and the Company entered into a Stipulation that was approved by the PSB in September 1993. In the Stipulation the Company agreed to a decrease in its allowed rate of return on common equity from 12.5% to 12.0% for 1993, to accelerate the recovery of $1.5 million of Conservation and Load Management ("C&LM") costs deferred in 1993, to not seek recovery of further C&LM costs deferred in 1993 equal to amounts in excess of the 12.0% rate of return on common equity for 1993, and to not file a general rate increase that would become effective before August 1, 1994. The PSB in its September 1993 order also announced the opening of an investigation on November 16, 1993, the earliest date the Company could file for a rate increase under the Stipulation, into the Company's cost of service and resulting rates. In response to that investigation, on January 18, 1994 the Company filed a revenue requirement supporting a $16.1 million or 8.0% increase in retail rates for the year beginning November 1, 1993. The Company noted in its filing that current rate levels are justified and that the Company does not want any rate increase to be effective for that period. The Company also noted in its filing that rate relief would be needed in late 1994. Thus on February 15, 1994, the Company filed for a rate increase of $17.9 million or 8.9% to become effective November 1, 1994. The Company anticipates filing for rate increases periodically, primarily to recover increasing purchased power and other operating costs. New Hampshire Retail Rates. Connecticut Valley's retail rate tariffs, approved by the NHPUC, contain a fuel adjustment clause (FAC) and a purchased power cost adjustment clause (PPCA). Under these clauses, Connecticut Valley recovers its estimated annual costs for purchased energy and capacity, respectively, which are reconciled when actual data is available. Although the tariffs provide for annual changes of the FAC and PPCA effective January 1, the Company requested and the NHPUC approved a delay of the effective date to March 1, 1994. The NHPUC also ordered an interim increase in the PPCA effective December 1, 1993. On the basis of estimates of costs for 1994 and reconciliations from 1993, the combined PPCA and FAC will result in a decrease in revenues of approximately $16,000 or 0.1% for 1994. Connecticut Valley filed in 1991 to redesign the revenue recovery from each rate component within each rate class, as well as from each rate class, to more accurately reflect the cost of service for each rate component and rate class. Negotiations with the NHPUC Staff resulted in a settlement rate design which was approved by the NHPUC effective in two steps: January 1, 1992 and March 1, 1992. The redesigned rates feature higher rates during the winter when Connecticut Valley is likely to experience a peak use of electricity. The settlement also provided for subsequent phases of rate redesign. Phase 2 resulted in an increase of the peak to off-peak season price ratio from 1.45 to 1.0 to a ratio of 1.6 to 1.0. This phase of rate redesign caused no change in the overall revenue requirement or the allocation of the revenue requirement among rate classes. The NHPUC approved this phase of rate redesign effective January 1, 1993. The NHPUC approved a delay of the effectiveness of Phase 3 to 1995. Connecticut Valley's retail rate tariffs, approved by the NHPUC, also provide for Conservation and Load Management Percentage Adjustments (C&LMPA) for residential and commercial/industrial customers in order to collect deferred and forecast C&LM costs. The forecast costs are updated effective January 1 of each year and are reconciled when actual data are available. In addition, Connecticut Valley's earnings are made whole through recovery of lost revenues related to fixed costs which Connecticut Valley loses as a result of C&LM activities. However, the Company is not made whole because the fixed costs of the wholesale transaction between the Company and Connecticut Valley are not recovered when C&LM activities occur in Connecticut Valley. The C&LMPA further provides for the future recovery of shareholder incentives related to past C&LM activities. The filing in September 1993 of the annual update of the 1994 C&LMPA rates resulted in a delay of the effective date to March 1, 1994 and a settlement on all issues except for one relating to the basis for determination of lost revenues. The NHPUC approved 1994 C&LMPA rates which result in a revenue decrease of $26,000 or 0.2%. Effective July 1, 1993, the NHPUC allowed a revenue increase of $127,000 or 0.8% related to Connecticut Valley's adoption of the Statement of Financial Accounting Standards No. 106 for Postretirement Benefits Other Than Pensions and the re-enactment of the New Hampshire Franchise Tax. Connecticut Valley also purchases power from several independent power producers who own qualifying facilities under the Public Utility Regulatory Practices Act of 1978. Connecticut Valley filed a complaint with the Federal Energy Regulatory Commission (FERC) informing them of its concern that a solid waste facility owned and operated by Wheelabrator Claremont Company, L.P. has not been such a qualifying facility since the plant began operation. The outcome of this filing is unknown at this time. Potential outcomes of this filing could result in a refund, with interest, of past purchased power costs as well as lower future costs. Any refunds and future lower costs are likely to be reflected in the FAC when known. Connecticut Valley has petitioned the NHPUC for current recovery of costs related to pursuing this filing. Connecticut Valley has also petitioned for a deferral of such costs if a current recovery of these costs is not allowed by the NHPUC. Wholesale Rates. The Company sells firm power to Connecticut Valley under a wholesale rate schedule based on forecast data for each calendar year which is reconciled to actual data annually. The Company filed with the FERC for a revenue increase of $294,300 or 3.2% for 1994 power costs. The rate schedule provides for an automatic update of annual rates, as well as the subsequent reconciliation to actual data. The Company sold firm system capacity to four Vermont village municipal electric departments ("Municipal Departments") under a wholesale tariff based on forecast data for each calendar year which is reconciled to actual data annually. As allowed in the tariff, the Company gave the Municipal Departments notice of extension of termination date of the tariff to October 21, 2008 from October 31, 1993. FERC approved the extension of the termination date. Due to current market conditions, the Municipal Departments did not opt to purchase power under this tariff during the period of the extension. Sales under the tariffs terminated October 31, 1993. One of the Company's requirements wholesale customers, Woodsville Fire District Water and Light Department, with a peak of 3.6 MW began receiving power from the Company under a 15-year contract. The effective date was May 1, 1993 and the effect was to increase revenues from the customer. Another of the Company's requirements wholesale customers, New Hampshire Electric Cooperative, Inc., with an average monthly peak of 2.8 MW has given the Company notice of termination of service under FERC Electric Tariff, First Revised Volume No. 1, effective in March 1995. The Company will continue to provide the transmission service and will enter into negotiations to supply power under another contract. POWER RESOURCES Overview. The Company's and Connecticut Valley's energy production, which includes generated and purchased power, required to serve their retail and firm wholesale customers was 2,414,970 MWH for the year ended December 31, 1993. The maximum one-hour integrated demand during that period was 418.2 MW, which occurred on December 27, 1993. The Company's and Connecticut Valley's total production in 1993, including production related to all resale customers, was 3,651,319 MWH. The following tabulation shows the sources of such energy and capacity available to the Company and Connecticut Valley for the year ended December 31, 1993 and at the time of the Company's own peak. In 1993, the DPS sold 25,714 MWH of NYPA energy to residential customers in the Company's service territory.
Year Ended December 31, 1993 Effective Generated and Capability Purchased at 12 Month Generated Time of the Average and Purchased Company's Peak MW MWH % MW % WHOLLY-OWNED PLANTS: Hydro....................... 42.2 176,154 4.8 24.2 5.8 Diesel and Gas Turbine..... 28.4 228 - - - JOINTLY OWNED PLANTS: Millstone #3................ 19.9 112,823 3.1 19.4 4.6 Wyman #4.................... 11.0 6,736 0.2 5.0 1.2 McNeil...................... 10.5 17,079 0.5 10.3 2.5 EQUITY OWNERSHIP IN PLANTS: (Purchased) Vermont Yankee.............. 156.0 1,028,255 28.2 108.0 25.8 Maine Yankee................ 15.7 102,844 2.8 15.3 3.7 Connecticut Yankee.......... 11.6 74,961 2.0 11.4 2.7 MAJOR LONG-TERM PURCHASES: Hydro-Quebec................ 179.2 853,499 23.4 70.8 16.9 Merrimack #2................ 47.0 300,666 8.2 24.6 5.9 OTHER PURCHASES: Ontario Hydro............... 24.4 35,655 1.0 - - Small Power Qualifying...... 33.1 186,900 5.1 12.3 2.9 Unit Purchases.............. 56.2 265,815 7.3 47.3 11.3 Entitlement Purchases....... 0.9 18,082 0.5 - - System and Other Purchases.. 44.6 212,236 5.8 36.3 8.7 Pumped Storage Hydro........ 1.4 1,365 - - - NEPEX......................... - 258,021 7.1 33.3 8.0 TOTAL.................... 682.1 3,651,319 100.0 418.2 100.0
Wholly Owned Plants. The Company owns and operates 18 hydroelectric generating facilities in Vermont which have an aggregate nameplate capability of 37.5 MW. It also leases and operates hydroelectric facilities at Bradford and East Barnet, Vermont. These two plants have a nameplate capability of 1.5 MW and 2.2 MW, respectively. In addition, the Company owns and operates diesel and gas turbine generating facilities on a peaking or standby basis having a combined nameplate capability of 28.9 MW. Jointly Owned Plants. The Company has a joint-ownership interest in the following generating and transmission plants:
Net Fuel MW Generation Load Net Plant Name Location Type Ownership Entitlement MWH Factor Investment Millstone #3 Waterford, Nuclear 1.73% 20 112,823 64% $61,363,376 Connecticut Wyman #4 Yarmouth, Oil 1.78% 11 6,736 7% $ 1,833,631 Maine Joseph C. McNeil Burlington, Various 20.00% 10 17,079 19% $10,516,552 Vermont Highgate Trans- Highgate Springs, 46.08% N/A N/A N/A $ 9,552,092 mission Facility Vermont
The Company has a 1.73% joint-ownership interest in Millstone #3, an 1149 MW nuclear generating facility located in Waterford, Connecticut, which commenced commercial operation in April 1986. Under the Millstone Sharing Agreement, the Company is entitled to receive its share of the output and capacity of the facility and is responsible for its share of the operating expenses, including decommissioning. The Company also has a 1.78% joint-ownership interest in Wyman #4, a 619 MW oil-fired generating facility located in Yarmouth, Maine and a 20% joint-ownership interest in McNeil, a 53 MW wood, gas and oil-fired generating facility located in Burlington, Vermont. The Company receives its share of the output and capacity from these generating plants and is responsible for its share of the operating expenses of each. Finally the Company has a 46.08% joint-ownership interest in the Highgate Convertor, a 200 MW facility located in Highgate Springs, Vermont. This facility is directly connected to the Hydro-Quebec System to the north of the Convertor and to the VELCO System for delivery of power to Vermont Utilities. This facility can deliver power either direction, but normally delivers power from Hydro-Quebec to Vermont. Equity Ownership in Plants. In 1966 the Company purchased 35% of the Vermont Yankee common stock and was entitled to receive a like percentage of the output of the unit. In late 1969 and early 1970, the Company sold at cost a combined total of 3.7% of its original equity investment and currently resells at cost 4.7% of its entitlement. The Company's current equity ownership and net entitlement percentages are 31.3 and 30.5, respectively. The Atomic Energy Commission, now the NRC, granted a full-term (40-year), full power operating license for the Vermont Yankee plant, which was to expire in December 2007. On December 17, 1990 the NRC issued an amendment of the operating license extending its term to March 2012. Vermont Yankee's net capability is 514 MW of which 156.7 MW (F1) is the Company's net entitlement. Vermont Yankee's plant performance for the past five years is shown below: Availability Capacity Factor Factor (F2) (F3) 1989......................... 84.2 80.1 1990......................... 84.4 80.3 1991......................... 93.6 91.2 1992......................... 87.5 82.7 1993......................... 78.3 74.9 As was described in the overview section above, the Company is a stockholder, together with other New England electric utilities, in the following three nuclear generating companies: Maine Yankee Atomic Power Company, Connecticut Yankee Atomic Power Company and Yankee Atomic Electric Company. Net Company's Company Capability Entitlement Maine Yankee(F4).............. 847 MW 2.0% - 16.9 MW Connecticut Yankee............ 582 MW 2.0% - 11.6 MW Yankee Atomic................. (F5) (F5) The Company is obligated to pay its entitlement percentage of the operating expenses of Vermont Yankee and the other Yankee companies, including depreciation and a return on invested capital, whether or not the plant is operating. The Company is obligated to contribute its entitlement percentage of the capital requirements of Vermont Yankee and Maine Yankee and has a similar, but more limited obligation to Connecticut Yankee. The Company's ownership percentages are identical to the entitlement percentages. For additional information regarding Equity Ownership in Plants, refer to Exhibit EX-13 incorporated herein by reference. _______________ (FN) (F1) Currently, the Company resells at cost, through VELCO, 23.2 MW of its original entitlement to other Vermont utilities. (F2) "Availability Factor" means the hours that the plant is capable of producing electricity divided by the total hours in the period. (F3) "Capacity Factor" means the total net electrical generation divided by the product of the maximum dependable electrical capacity multiplied by the total hours in the period. (F4) Currently, the Company resells at cost 1.8 MW of its entitlement to certain municipal utilities in Massachusetts. (F5) Yankee Atomic permanently ceased power operations of the Yankee Nuclear Power Station. See Decommissioning Expense discussion below. Decommissioning Expense. Each of the Yankee Companies has developed its own estimate of the cost of decommissioning its nuclear generating unit. These estimates vary depending upon the method of decommissioning, economic assumptions, site and unit specific variables, and other factors. Each of the Yankee Companies includes charges for decommissioning costs in the cost of capacity, as approved by the FERC. The Company's entitlement percentage of decommissioning costs for Vermont Yankee, Connecticut Yankee, Maine Yankee and Yankee Atomic is as follows (dollars in millions):
CVPS's Total Share of Date of Estimated CVPS's Funded Study Obligation Obligation Obligation Nuclear generating companies: Vermont Yankee 1988 $190 $66.5 $34.6 Maine Yankee 1987 $167 $3.3 $1.9 Connecticut Yankee 1992 $294.2 $5.9 $2.5 Yankee Atomic 1992 $200 $7.0 $3.1
On February 26, 1992, the Board of Directors of Yankee Atomic decided to permanently discontinue operation of their plant, and, in time, decommission the facility. The decision to prematurely retire the plant was based on continuing regulatory uncertainty and economics. The Company relied on Yankee Atomic for less than 1.5% of its system capacity. Presently, purchased power costs billed to the Company by Yankee Atomic, which include a provision for ultimate decommissioning of the unit, are being collected from the Company's customers via existing retail and wholesale rate tariffs. On March 18, 1993, the FERC approved the settlement agreement regarding the decommissioning plan, recovery of plant investment and all issues with respect to prudency of the decision to discontinue operation. Yankee Atomic has estimated that as of December 31, 1993, its costs of discontinuing operations are approximately $345 million, which includes $200 million of decommissioning costs in 1992 dollars. The Company's total current share of its cost with respect to Yankee Atomic's decision to discontinue operation is approximately $12 million. This amount is subject to ongoing review and revision and is reflected in the accompanying balance sheet both as a regulatory asset and deferred power contract obligation (current and non-current). The Company believes that its proportionate share of Yankee Atomic costs will be recovered through the regulatory process and, therefore, the ultimate resolution of the premature retirement of the plant will not have a material adverse effect on the Company's earnings or financial condition. Although the estimated costs of decommissioning are subject to change due to changing technologies and regulations, the Company expects that the nuclear generating companies' liability for decommissioning, including any future changes in the liability, will be recovered in their rates over their operating lives. In 1982 the State of Maine enacted legislation that requires the development of a decommissioning trust fund for the Maine Yankee nuclear plant. This statute also provides that, if the trust has insufficient funds to decommission the plant, the licensee, Maine Yankee, is responsible for the deficiency and, if the licensee is unable to provide the entire amount, the owners of the licensee are jointly and severally responsible for the remainder. The definition of owner under the statute includes the Company. It is expected that any payments required by the Company under these provisions would be recovered through rates. Nuclear Fuel. Vermont Yankee has approximately $165 million of "requirements based" purchase contracts for nuclear fuel needs to meet substantially all of its power production requirements through 2002. Under these contracts, any disruption of operating activity would allow Vermont Yankee to cancel or postpone deliveries until actually needed. Vermont Yankee has contracted for uranium enrichment services through 2002. Vermont Yankee also has an enrichment contract with the DOE which expires in 2001. However, Vermont Yankee has exercised its right to partially terminate the DOE contract for the period 1990 to 1996. Vermont Yankee has a contract with the United States Department of Energy ("DOE") for the permanent disposal of spent nuclear fuel. Under the terms of this contract, in exchange for the one-time fee discussed below and a quarterly fee of $.001 per KWH of electricity generated and sold, the DOE agrees to provide disposal services when a facility for spent nuclear fuel and other high-level radioactive waste is available, which is required by current statute to be prior to January 31, 1998. The DOE contract obligates Vermont Yankee to pay a one-time fee of $39.3 million for disposal costs for all spent fuel discharged through April 7, 1983. Although such amount has been collected in rates from the Sponsors, Vermont Yankee has elected to defer payment of the fee to the DOE as permitted by the DOE contract. The fee must be paid no later than the first delivery of spent nuclear fuel to the DOE. Interest accrues on the unpaid obligation based on the thirteen-week Treasury Bill rate and is compounded quarterly. Through 1993 Vermont Yankee deposited approximately $37.5 million, including $8.2 million in 1993, in an irrevocable trust to be used exclusively for defeasing this obligation at some future date provided the DOE complies with the terms of the aforementioned contract. In 1991 and 1992, Vermont Yankee deposited an additional amount of approximately $8.2 and $5.2 million, respectively, into this trust. On December 31, 1991 the DOE issued a final rule amending the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste. The amended final rule conforms with a March 17, 1989 ruling of the U.S. Court of Appeals for the District of Columbia that the $.001 per KWH fee in the Standard Contract should be based on net electricity generated and sold. The impact of the amendment on Vermont Yankee was to reduce the basis for the fee by 6% on an ongoing basis and to establish a receivable from the DOE at December 31, 1991 of $2.2 million for previous overbillings and accrued interest. Vermont Yankee has recognized in its rates the full impact of the amended final rule to the Standard Contract. The DOE is refunding the overpayments (including interest) to utilities over the next four year period ending in 1995 via credits against quarterly payments. Interest is based on the 90-day Treasury Bill Auction Bond Equivalent and will continue to accrue on amounts remaining to be credited. At December 31, 1993 and 1992 approximately $.9 and $1.6 million in principal and interest is reflected in other accounts receivable in the Vermont Yankee's Balance Sheet. The average cost to the Company of energy generated at the Vermont Yankee plant was 4.04, 4.60, 3.69, 4.71 and 5.34 mills per KWH for the years 1989 through 1993, respectively. The Company has been advised by the companies operating other nuclear generating stations in which the Company has an interest that they have contracted for certain segments of the nuclear fuel production cycle through various dates. Contracts for the remainder of the fuel cycle will be required but their availability, prices and terms cannot be predicted. Nuclear Liability and Insurance. For a complete disclosure regarding nuclear liability and insurance see Exhibit EX-13 incorporated herein by reference. Major long-term purchases. Canadian Purchases - Under various contracts, the Company purchases from Hydro-Quebec capacity and associated energy. Under the terms of these contracts, the Company is required to pay certain fixed capacity costs whether or not energy purchases above a minimum level described in the contracts are made. Such minimum energy purchases must be made whether or not other less expensive energy sources might be available. The state of Vermont contract, between the Company and the Vermont Department of Public Service, terminates on September 22, 1995. The Company receives 69 MW of firm capacity and associated energy delivered at the Highgate interconnection. The Company's portion of the 1987 Hydro-Quebec contract consists of: Schedule A, 25 MW of firm capacity and associated energy to be delivered at the Highgate interconnection through September 22, 1995. All of this power is being sold back to Hydro-Quebec for the duration of the contract. This sell-back of 25 MW continues as Schedule C-1 power at the termination of the Schedule A contract. This sell-back contract is not cancelable. Schedule C-1, 31 MW and Schedule C-2, 21 MW of firm capacity and associated energy are to be delivered at the NEPOOL/Hydro-Quebec (Phase I and Phase II) interconnection through October 2012. Under a cancelable contract, the Company is selling back to Hydro-Quebec 30 MW and 20 MW of its C-1 and C-2 entitlements, respectively, for the period ending October 31, 1996. Under the terms of this agreement, the Company can exercise an option, on an annual basis, to cancel all or any portion of this sell-back and resume deliveries of this power under the appropriate C-1 and C-2 schedules. Further agreements allow for the interruption of the sell-back, and the provision of 50 MW of capacity and delivery of associated energy for the period March through October of a given year. The Company must return this energy by the month of March of the following year or pay Hydro-Quebec 150% of the Schedule C-1 and Schedule C-2 energy price. Hydro-Quebec has the option under this sell-back agreement to buy back 50 MW for the period November 1, 1996 through October 31, 2000. This option must be exercised no later than October 31, 1994. These sell-back agreements provide the Company with the necessary flexibility to minimize near-term costs while retaining the long-term benefits of the purchase contracts. Schedule B, 92 MW of firm capacity and associated energy is expected to be delivered at the Highgate interconnection for 20-years beginning September 23, 1995. The Company will sell back 25 MW of Schedule B entitlement for the period September 23 through October 31, 1995. Schedule C-4a, 24 MW of firm capacity and associated energy is expected to be delivered over the NEPOOL/Hydro-Quebec (Phase I and Phase II) interconnection beginning November 1, 1996 through October 31, 2012. Details of these purchases and sell-back contracts are described in the table that follows (dollars in thousands):
State of VT Contract Schedule A Schedule C-1 Schedule C-2 Schedule B Schedule C-4a Capacity in MW 69 25 31 21 92 24 Contract period 1985-1995 1991-1995 1991-2012 1992-2012 1995-2015 1996-2012 Minimum energy capacity factor 50.0% 50.0% 75.0% 75.0% 75.0% 75.0% Minimum annual energy in MWH 302,746 109,500 201,863 138,141 606,069 155,801 Actual 1993 energy charges $7,760 $3,040 $4,300 $3,130 N/A N/A Est. 1st year future energy charges $7,370 $3,250 $4,880 $3,340 $15,840 $4,230 Est. avg. % change from 1st yr. future (24.5)% (19.8)% 4.0% 4.0% 4.0% 4.0% (1994-1995) (1994-1995) (1994-2012) (1994-2012) (1995-2015) (1996-2012) Actual 1993 annual capacity charge $4,650 $2,510 $7,170 $5,040 N/A N/A Est. 1st year future capacity charge $4,700 $2,590 $7,270 $5,050 $23,570 $6,300 Est. avg. % change from 1st yr. future (24.5)% (24.5)% - - - - (1994-1995) (1994-1995) (1993-2012) (1994-2012) (1994-2015) (1996-2012) Actual 1993 avg. cost in cents/KWH 2.8 5.3 6.2 6.1 N/A N/A Est. 1st yr. future avg. cost in cents/KWH 2.8 5.3 6.0 6.1 6.5 6.8 Est. avg. % change from 1st yr future 3.5% 7.1% 1.6% 1.6% 1.6% 1.6% (1994-1995) (1994-1995) (1994-2012) (1994-2012) (1995-2015) (1996-2012) 1993 Sell-back in MW 25 30 20 Actual 1993 sell-back revenues $5,550 $8,790 $6,200 Expected sell-back #1 revenues 25 MW 25 MW 25 MW 100% of costs 100% of costs 100% of costs Est. 1st year future annual $5,840 $1,650 $1,110 (1994) (1995) (1995) Est. out-yrs. average annual $4,560 $9,890 Est. average annual % change (21.9)% 1.6% (1995) (1996-2012) Expected sell-back #2 revenues up to 30 MH 20 MW Approx. 78% of costs for period Estimated average annual $8,530 $6,530 (1994-1995) (1994-1996) Estimated average annual $1,600 (1996)
Merrimack #2 - Merrimack #2 is a 320 MW capacity coal-fired steam unit located in Bow, New Hampshire, and is owned and operated by Public Service Company of New Hampshire ("PSNH"). In 1968 VELCO contracted with PSNH to purchase a block of 100 MW of the plant's output for 30 years and to pay a proportionate share of the plant's actual capacity and operating costs. Under an agreement dated February 10, 1968, between the Company and VELCO, the Company buys from VELCO at VELCO's cost 47.0 MW of that block for a 30-year period commencing May 1, 1968. Northeast Utilities (N.U.) has acquired all of PSNH's assets including the Merrimack #2 plant, pursuant to a merger agreement in 1991. The Merrimack 2 unit is subject to limits on sulfur dioxide ("SO2") and Nitrogen Oxides ("NOx") starting in 1995, mandated by the Clean Air Act Amendments ("CAAA"). The CAAA establishes SO2 allowances to reduce SO2 emissions. PSNH expects to have sufficient SO2 allowances to meet CAAA SO2 requirements. If any gains are realized from the sale of excess allowances, the Company will receive its proportionate share from VELCO. Likewise, the Company will pay its share of any allowances purchased. The CAAA NOx limits will be specified in Administrative Rules to be established by the state of New Hampshire. The New Hampshire Air Resources Division ("NHARD") has a proposed rule which includes Merrimack 2 NOx limits, that replaces a previous proposed rule submitted to the U.S. Environmental Protection Agency ("EPA") in 1993. The current proposed rule must be approved by the NHARD and the EPA, and implement the NOx reductions by May 31, 1995. PSNH expects to comply with the current proposed Merrimack 2 NOx limits by installing Selective Noncatalytic Reduction equipment ("SNCR") and reducing load at Merrimack 2. Installation of the SNCR will increase capital and operating costs. PSNH will implement load reductions based on actual unit operating characteristics and dispatch, to comply with the NOx rule at the lowest cost. PSNH expects that an average load reduction of 22 per cent will be required for compliance. The Company will share on a pro-rata basis the SNCR and load reduction costs, based on its share of the VELCO contract. Other Purchases. Cogeneration/Small Power Qualifying - The Company continues to work with customers exploring the opportunities for either cogeneration by customers or the purchase by the Company of the output of small power qualifying. Cogeneration is the production of electricity and usable thermal energy from the same fuel. A number of small producers using hydroelectric, biomass, and refuse-burning generation are currently producing energy that the Company is purchasing. For the year ended December 31, 1993, the Company received 186,899 MWH from these sources for which it paid $18,213,351. New York Power Authority - Prior to July 1, 1985, under agreements between the State and NYPA, the Department purchased St. Lawrence and Niagara Project power. The Company in turn contracted with the Department to purchase the St. Lawrence and Niagara Project power at cost, and credited the lower cost thereof to certain of the Company's retail customers. From July 1, 1985 through July 31, 1993, the St. Lawrence and/or Niagara Project power was purchased by the DPS and sold directly to residential customers in the Company's service territory. This power is expected to be reduced to a minimum level in July 1994 and continue at that level through October 2003. For additional information regarding the DPS's sales to the Company's residential customers see "Vermont Retail Rates". The St. Lawrence Project power continues to be available to the Department but will be reduced each July 1 over a ten-year period until 1994, at which time the State will receive one MW of this power through 2002. New England Power Pool - The Company, through VELCO, is a participant in the New England Power Pool ("NEPOOL"), which is open to all investor-owned, municipal and cooperative utilities in New England under an agreement in effect since 1971. The NEPOOL Agreement provides for joint planning and operation of generating and transmission facilities and also incorporates generating capacity reserve obligations and provisions regarding the use of major transmission lines and payment for such use. Because of its participation in NEPOOL, the Company's operating revenues and costs are affected to some extent by the operations of other participants in that agreement. The primary purposes of NEPOOL are to provide energy reliability for the region, centralized economic dispatch and coordination of generation planning and construction by the individual participants. The Company's peak demand for 1993 occurred on December 27, 1993 and equaled 418.2 MW. At the time of this peak, the Company had a reserve margin of 21%. NEPOOL's peak for the year occurred on July 8, 1993 and totaled 19,570 MW. NEPOOL had a 26% reserve margin at the time of its 1993 peak. Power Resources - Future. The Company purchases about 90% of the power it needs, including the power it receives as part owner of the various Yankee nuclear plants. In 1993, about 35% of the Company's purchased power came from renewable sources, primarily water and wood. The Company's core business has no plans at this time to build any new generating facilities to supply power, instead it intends to satisfy customers' energy needs through a combination of power purchases and energy-efficiency services. Therefore, the Company uses a process called "integrated resource planning," or IRP, to help determine the resources necessary to meet future power needs. IRP is an evolving, on-going process. An interdisciplinary team representing various functional planning area works together continuously to coordinate and integrate planning. A Corporate Review Committee provides policy guidance and reviews resource investment recommendations from the IRP team. The primary objective of IRP is to provide reliable, least-cost energy resources consistent with the Company's policy to protect the environment. The choice of least-cost resources explicitly seeks a balance between traditional supply resources and energy efficiency investments with the Company's customers. Flexibility and diversity are investment guidelines designed to provide least-cost resources over a broad range of possible futures. The Company does not currently plan to build generation resources. The resource plan calls for investments in energy efficiency through the 1990's with additional investments in energy-efficiency programs or power purchases beginning in the late 1990's. The energy efficiency and power purchase commitments made in the late 1980's served the Company and its shareholders well during the recent recessionary downturn. The resources from developers of cogeneration projects were deferred due to decreased need. Power purchases from Hydro-Quebec were deferred until the mid-1990's with the ability to recall on one-year notice. Energy efficiency investments associated with new customers and new end-uses naturally declined during the period of reduced load growth. Thus the resource investment strategy with inherent flexibility and diversity provided near-term benefits with unpredictable changing economic conditions. Based upon current load forecasts, the Company expects to be able to satisfy its load requirements into the mid-1990's through its ownership in various generating facilities and purchases from various other New England, New York, Canadian utilities, Independent Power Qualifying, and Conservation and Load Management. Current load and capacity forecasts for NEPOOL indicate adequate reserves and availability of power for the region as a whole into the late-1990's. TRANSMISSION Vermont Electric Power Company, Inc. Since 1958 VELCO has been engaged in the operation of a high-voltage transmission system which interconnects the electric utilities in the State including the areas served by the Company. VELCO is also engaged in the business of purchasing bulk power for resale, at cost, to the Company and the other electric utilities (cooperative, municipal and investor-owned) in Vermont (the "Vermont utilities") and transmitting such power for the Vermont utilities. Refer to the notes to financial statements for a discussion of the 1985 Four Party Agreement between the Company, VELCO and two other major distribution companies in Vermont. VELCO provides transmission services for the State of Vermont, acting by and through the Department, and for all of the electric distribution utilities in the State of Vermont. VELCO is reimbursed for its costs (as defined in the agreements relating thereto) for the transmission of power for such entities. The Company, as the largest electric distribution utility in Vermont, is the major user of VELCO's transmission system. The Company owns 34,083 shares (56.8%) of the Class B common stock of VELCO, the balance being owned by other Vermont utilities. Each share of Class B common stock has one vote. The Company also owns 46,624 shares (46.6%) of the Class C preferred stock of VELCO, the balance being owned by other Vermont utilities. Shares of Class C preferred stock have no voting rights except the limited right to vote VELCO's shares of common stock in Vermont Electric Transmission Company, Inc. if certain dividend requirements are not met. NEPOOL Arrangements. VELCO participates for itself and as agent for the Company and twenty-one other Vermont utilities in NEPOOL (see "Business-New England Power Pool" for additional details). Capitalization. VELCO has authorized 92,000 shares of Class B common stock, $100 par value, of which 60,000 shares were outstanding on December 31, 1993 and 125,000 shares of Class C preferred stock, of which 100,000 shares were outstanding at December 31, 1993. On that date there were authorized and outstanding three issues of First Mortgage Bonds, aggregating $41,263,000, issued under an Indenture of Mortgage dated as of September 1, 1957, as amended, between VELCO and Bankers Trust Company, as Trustee (the "VELCO Indenture"). The issuance of bonds under the VELCO Indenture is unlimited in amount but is subject to certain restrictions. New transmission and associated facilities will be required by VELCO in 1994 to transmit power to Vermont utilities. The costs of such facilities are presently estimated at $1,833,000 including allowance for funds used during construction calculated at a rate of approximately 4.5%. For a description of VELCO's properties, see "VELCO" under Item 2. Management. In 1957 VELCO entered into an agreement (the "Three-Party Agreement") whereby the Company and Green Mountain agreed that, if VELCO transmits firm power owned by it (which it does not now do), they would have the right to purchase all such firm power not sold to others with their consent and the obligation to pay (in agreed proportions) amounts sufficient, together with VELCO's revenues from other sources, to pay all VELCO's operating expenses, debt service and taxes. In connection with the transfer to VELCO of entitlements of the output of the Vermont Yankee plant, the Company and Green Mountain entered into a Three-Party Transmission Agreement, dated November 21, 1969, as amended, whereby they have agreed to pay transmission charges thereon in an aggregate amount sufficient, with VELCO's other revenues, to pay all of VELCO's expenses including capital costs. VELCO's Bonds are secured by a first mortgage on the major part of VELCO's transmission properties and by the assignment to the Trustee of the Three-Party Agreement, the Three-Party Transmission Agreement and certain other contracts as specified in the VELCO Indenture. Refer to Note 2 to Consolidated Financial Statements incorporated herein by reference for information relating to the 1985 Four-Party Agreement. Vermont Electric Transmission Company, Inc. In connection with the importation of Canadian power, VELCO has created a wholly owned subsidiary, Vermont Electric Transmission Company, Inc. ("VETCO"), to construct, finance and operate the Vermont portion of the transmission line which connects the Hydro-Quebec lines at the Canadian border to the lines of New England Electric Transmission Corporation, a subsidiary of New England Electric System, at the New Hampshire border on the Connecticut River. VETCO has entered into a Capital Funds Agreement with VELCO pursuant to which VETCO may request up to $12,500,000 (of which $10,000,000 was contributed as of December 31, 1993) of capital contributions from VELCO and has entered into Transmission Line Support Agreements with 20 New England utilities, including VELCO as representative for 15 Vermont utilities, pursuant to which those utilities have agreed to pay the transmission line costs, whether or not the line is operational. VELCO, as such representative, has entered into a similar agreement with New England Electric Transmission Corporation with respect to the New Hampshire portion of the DC transmission line and the DC/AC converter station. VELCO has entered into a Vermont Participation Agreement and a Capital Funds Support Agreement with 15 Vermont distribution utilities, including the Company, pursuant to which those utilities assume their pro rata share (based upon 1980 sales) of the benefits and obligations of VELCO under the Support Agreements and the VETCO Capital Funds Agreement. VETCO has authorized 10 shares of common stock, $100 par value, all of which were outstanding on December 31, 1993 and owned by VELCO, with each share having one vote. During 1986 VETCO paid off its construction financing by issuing $37,000,000 of secured notes, maturing in 2006, and receiving a $9,999,000 equity contribution from VELCO. The notes are secured by a First Mortgage on the major part of VETCO's transmission properties and by the assignment of its rights under the Support Agreements. Phase I and Phase II. The Company participated with other electric utilities in the construction of the Phase I Hydro-Quebec transmission facilities in northeastern Vermont, which were completed at a total cost of approximately $140 million. Under a support agreement relating to the Company's participation in the facilities, the Company is obligated to pay its 4.42% share of Phase I Hydro-Quebec capital costs over a twenty-year recovery period through and including 2006. Phase II transmission line began operation in November 1990. This service increased the maximum capacity of the Hydro-Quebec 450 KV DC line from 690 MW to 2000 MW and extended Phase I line from Comerford, New Hampshire to Sandy Pond, Massachusetts. The Company uses this transmission path to deliver a portion of the Company's long-term Hydro-Quebec firm power contract. The project cost approximately $487 million. Under a similar support agreement, the Company is obligated to pay its 5.132% share of Phase II Hydro-Quebec capital costs over a 25-year recovery period through and including 2015. Under the support agreement, the Company is eligible for savings associated with certain energy transactions by NEPOOL, which will offset the Company's support cost obligations. CONSERVATION AND LOAD MANAGEMENT The primary purpose of Conservation and Load programs is to offset the need for long-term power supply and delivery resources that are more expensive to purchase or develop than customer-efficiency programs. Expenditures in 1992 and 1993 were $4.3 million and $9.5 million, respectively, and are planned to be approximately $5.4 million in 1994. The amount of expenditures will be adjusted annually, based on the cost-effectiveness of programs compared to other options. The PSB has approved all of the Company's C&LM programs delivered in Vermont, which include direct utility investments in customer premises to increase customer participation. In addition, the PSB has approved a Monitoring and Evaluation Plan utilized to evaluate the continued cost-effectiveness of the C&LM programs. In late 1993, the Company filed a Petition to amend and slow the pace of its C&LM programs in light of the excess capacity in the region which made some of the C&LM programs less effective in the near-term. The revised programs focus on improving efficiencies based on lessons learned in the past several years. In addition, the programs focus on incorporating efficiencies for new construction and remodeling programs that have long useful lives. In the Petition, the Company stated it planned to implement the program amendments with or without PSB approval starting in 1994. By letter dated January 20, 1994, the PSB indicated it would not be opening proceedings concerning the Petition at this time. However, many of the issues raised in the Petition are before the PSB, along with deferred C&LM expenditures and related lost revenues from 1991 to the present, in the PSB's investigation of our rates. In addition, in Vermont, the Company is involved in several cases related to C&LM activities including the role of fuel switching as a C&LM measure, the level of externalities for electricity and the role of fuel choice in new construction. In an order dated December 29, 1992, the NHPUC approved C&LM programs of the Company's wholly owned New Hampshire subsidiary, Connecticut Valley Electric Company Inc. Currently, the NHPUC staff and the Company have reached agreement on all of the issues but one concerning the 1994 C&LM expenditures and related lost revenues. These expenditures and lost revenues are recovered along with shareholder incentives for 1993 program activity through a C&LM percentage adjustment clause applied March 1, 1994 through the end of 1994. The only issue awaiting clarification by the NHPUC is the method for calculating lost revenues. The agreement reached by the Company and the NHPUC staff includes a pilot program through which costs of C&LM services will be billed directly to customers. To support delivery and evaluation of the programs, a complex infrastructure of information systems, technical audit software packages to estimate savings for efficiency measures and a comprehensive program tracking system to track all efficiency activity by individual customers was also put into place in 1992. Additionally, extensive training was conducted with employees and information programs were directed at customers throughout 1992. Competition in the energy services market exists between electricity and fossil fuels. In the residential and small commercial sectors this competition is primarily for electric space and water heating from propane and oil dealers. Competitive issues are price, service, convenience, cleanliness and safety. In the large commercial and industrial sectors, cogeneration and self-generation are the major competitive threats to electric sales. Competition here is primarily for seasonal, one-shift operations that can tolerate periodic power outages, and for industrial customers with steady heat loads where the generator's waste heat can be used in their manufacturing process. Competitive issues here that favor electricity, are the cost of back up power sources, space requirements, noise problems, and maintenance requirements. The Company provides information to customers to help them use electricity more efficiently, first by ensuring that the customers are on the correct rate and have incorporated efficiency and conservation measures; secondly, by continually evaluating new energy management systems and other technologies to identify and develop programs to address new market opportunities and the competitive strengths of electricity. DIVERSIFICATION Catamount Energy Corporation (Catamount) was formed for the purpose of investing in non-regulated energy-related projects. Currently, Catamount has four wholly owned subsidiaries with interests in four operating independent power projects located in Rumford, Maine; East Ryegate, Vermont; Hopewell, Virginia; and Williams Lake, British Columbia, Canada. Effective January 1, 1993, the Company formed a new non-utility subsidiary, SmartEnergy Services, Inc. The purpose of this subsidiary is to cost effectively provide reliable, energy efficient products and services, including the rental of electric water heaters. For additional information regarding the Company's diversification activities, see Exhibit EX-13 incorporated herein by reference. The Company is continually assessing additional diversification opportunities. Any new investments will be financed primarily through a combination of debt and equity. EMPLOYEE INFORMATION A Local Union No. 300 affiliated with the International Brotherhood of Electrical Workers represents operating and maintenance employees of the Company and its wholly owned subsidiaries. At December 31, 1993 the Company and its wholly owned subsidiaries employed 775 persons, of which 264 are represented by the union. On December 18, 1989, the Company and its employees represented by the union agreed to a three-year contract, which provided for annual wage increases of 3%, 3.25% and 4.5% in 1990, 1991 and 1992, respectively. This contract expired on December 31, 1992. The current contract, which was approved on December 31, 1992 and effective January 1, 1993, provides for an annual wage increase of 3.95% for a three year period ending December 31, 1995. In the first quarter of 1994, the Company offered a Voluntary Retirement Program (VRP) to eligible employees. Approximately 40 employees accepted the offer. The estimated benefit obligation for 1994 is about $4.4 million. This amount consists of pension benefits and postretirement medical benefits of $2.2 million and $2.2 million, respectively. For rate-making purposes, the Company received an accounting order from the PSB dated March 11, 1994, requiring the Company to defer these costs and amortize them over a five-year period beginning June 1, 1994 and ending May 31, 1999. Additionally, the Company also offered a Voluntary Severance Program (VSP) to certain employees. For additional information in regard to the VRP and VSP programs, see Exhibit EX-13 incorporated herein by reference. SEASONAL NATURE OF BUSINESS The Company experiences its heaviest loads in the colder months of the year. Winter recreational activities, longer hours of darkness and heating loads from cold weather usually cause the Company's peak of electric MWH sales to occur in January or late December. For additional information regarding the seasonal nature of business see Exhibit EX-13 incorporated herein by reference. Item 2. Properties. The Company. The Company's properties are operated as a single system which is interconnected by transmission lines of VELCO, New England Power Company and PSNH. The Company owns and operates 21 small generating stations with a total current nameplate capability of 66,370 KW, has a 1.78% joint-ownership interest in an oil generating plant in Maine, has a 20% joint-ownership interest in a wood, gas and oil-fired generating plant in Vermont, has a 1.73% joint-ownership interest in a nuclear generating plant in Connecticut, has a 46.08% joint-ownership interest in a transmission interconnection with Hydro-Quebec in Vermont and leases and operates two hydro generating stations from wholly owned subsidiaries, Bradford and East Barnet, 1,500 KW and 2,200 KW, respectively. The electric transmission and distribution systems of the Company include about 613 miles of overhead transmission lines, about 7,136 miles of overhead distribution lines and about 192 miles of underground distribution lines which are located in Vermont except for about 23 miles of transmission lines which are located in New Hampshire and about two miles of transmission lines which are located in New York. Connecticut Valley. Connecticut Valley's electric properties consist of two principal systems in New Hampshire which are not interconnected with each other but each of which is connected directly with facilities of the Company. The electric systems of Connecticut Valley include about two miles of transmission lines and about 422 miles of overhead distribution lines and about nine miles of underground distribution lines. All the principal plants and important units of the Company and its subsidiaries are held in fee. Transmission and distribution facilities which are not located in or over public highways are, with minor exceptions, located either on land owned in fee or pursuant to easements substantially all of which are perpetual. Transmission and distribution lines located in or over public highways are so located pursuant to authority conferred on public utilities by statute, subject to regulation of state or municipal authorities. VELCO. VELCO's properties consist of about 483 miles of high voltage overhead transmission lines and associated substations. The lines connect on the west at the Vermont-New York state line with the lines of Niagara Mohawk Power Corporation near Whitehall, New York, and Bennington, Vermont and with the submarine cable of NYPA near Plattsburg, New York; on the south and east with lines of New England Power Company and PSNH; and on the south with the facilities of Vermont Yankee. VETCO. VETCO has approximately 52 miles of high voltage DC transmission line connecting at the Quebec-Vermont border in the Town of Norton, Vermont with the transmission line of Hydro-Quebec and connecting at the Vermont-New Hampshire border near New England Power Company's Moore hydro-electric generating station with the transmission line of New England Electric Transmission Corporation, a subsidiary of New England Electric System. Item 3. Legal Proceedings. On December 5, 1991, Bonneville Pacific Corporation (Bonneville) filed for protection under Chapter 11 of the Bankruptcy Laws. On August 30, 1993, Bonneville's trustee in bankruptcy filed suit in the United States Bankruptcy Court in Utah, claiming damages in excess of two million dollars in connection with two contracts between Bonneville and the Company concerning the development of a 52 MW co-generation plant in Vermont and the sale of power from the plant to the Company. The Company and Bonneville have settled the case and Bonneville's claim has been dismissed with prejudice. On March 20, 1992, Sunnyside Cogeneration Associates filed suit in the United States District Court for the District of Vermont against the Company, CV Energy Resources, Inc. (CVER) and a subsidiary of CVER alleging damages in excess of five million dollars resulting from the parties inability to come to agreement on the terms of CVER's proposed investment in the plaintiff's waste coal cogeneration facility under construction in Sunnyside, Utah. The Company has filed an answer denying the allegations and does not expect the resolution of the case to have a material affect on the business or financial condition of the Company. There are no other material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of their property is subject. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to security holders during the fourth quarter of 1993. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. (a) The Company's common stock is traded on the New York Stock Exchange ("NYSE") under the trading symbol CV. The table below shows the high and low sales price of the Company's common stock, as reported on the NYSE composite tape by The Wall Street Journal, for each quarterly period during the last two years as follows: Market Price High Low 1993 First quarter.............. $ 25 5/8 $ 24 1/8 Second quarter............. 25 1/8 22 Third quarter.............. 24 3/4 23 1/4 Fourth quarter............. 23 3/4 20 1/8 1992(F1) First quarter.............. $ 22 7/8 $ 19 5/8 Second quarter............. 21 1/4 19 1/2 Third quarter.............. 22 1/2 20 7/8 Fourth quarter............. 25 21 1/8 (FN) (F1)Retroactively adjusted to reflect the three-for-two stock split on February 11, 1993. (b) As of December 31, 1993, there were 16,620 holders of the Company's common stock, $6 par value. (c) Common stock dividends have been declared quarterly. Cash dividends of $.355 per share were paid for all quarters of 1993 and post-split cash dividends of $.3475 per share were paid for all quarters of 1992. So long as any Senior Preferred Stock or Second Preferred Stock is outstanding, except as otherwise authorized by vote of two-thirds of each such class, if the Common Stock Equity (as defined) is, or by the declaration of any dividend will be, less than 20% of Total Capitalization (as defined), dividends on Common Stock (including all distributions thereon and acquisitions thereof), other than dividends payable in Common Stock, during the year ending on the date of such dividend declaration, shall be limited to 50% of the Net Income Available for Dividends on Common Stock (as defined) for that year; and if the Common Stock Equity is, or by the declaration of any dividend will be, from 20% to 25% of Total Capitalization, such dividends on Common Stock during the year ending on the date of such dividend declaration shall be limited to 75% of the Net Income Available for Dividends on Common Stock for that year. The defined terms identified above are used herein in the sense as defined in subdivision 8A of the Company's Articles of Association; such definitions are based upon the unconsolidated financial statements of the Company. As of December 31, 1993, the Common Stock Equity of the Company was 52.7% of total capitalization. For additional information regarding dividend restrictions see Exhibit EX-13 incorporated herein by reference. Item 6. Selected Financial Data. Information required to be furnished in response to this Item is submitted as Exhibit EX-13 incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Information required to be furnished in response to this Item is submitted as Exhibit EX-13 incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. Information required to be furnished in response to this Item is submitted as Exhibit EX-13 incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. The Company's Articles of Incorporation and By-Laws provide for the division of the Board of Directors into three classes having staggered terms of office. In accordance with the Company's By-Laws, the Board of Directors has fixed at ten (10) the number of Directors for the ensuing year. The Directors whose terms will expire at the 1994 Annual Meeting of Stockholders are Frederic H. Bertrand, Mary Alice McKenzie and Robert D. Stout. Each of these Directors will stand for re-election to a three-year term expiring in 1997. Proxies will be voted (unless otherwise instructed) in favor of the election of the three nominees as indicated in the table below. The following table sets forth certain information regarding the three nominees for Director, as well as all Directors presently serving on the Board whose terms will expire after the 1994 Annual Meeting. Each of the individuals listed in the table has been employed by the firm or has had the occupation set forth under his or her name for the past five years. In general, the business experience of each of these persons during this time was typical of a person engaged in the principal occupation listed for each. Names and Principal Occupation Served as of Nominees and Directors Age Director Since Nominees whose terms will expire in 1997: FREDERIC H. BERTRAND 57 1984 Chairman of the Board and Chief Executive Officer, National Life Insurance Co. Montpelier, Vermont MARY ALICE MCKENZIE 36 1992 President, John McKenzie Packing Co., Inc. Burlington, Vermont (Manufacturer of Meat Products) ROBERT D. STOUT 67 1985 Retired President and Chief Executive Officer, Putnam Memorial Health Corporation Bennington, Vermont Directors whose terms will expire in 1996: ROBERT P. BLISS, JR. 70 1973 President, Bob Bliss, Ltd. St. Albans, Vermont (Insurance Industry Consultants) ELIZABETH COLEMAN 56 1990 President, Bennington College Bennington, Vermont PRESTON LEETE SMITH 63 1977 President and Chief Executive Officer, S-K-I Ltd. c/o Killington Ltd. Killington, Vermont (Ski Business) THOMAS C. WEBB 59 1986 President and Chief Executive Officer, Central Vermont Public Service Corporation Rutland, Vermont Directors whose terms will expire in 1995: LUTHER F. HACKETT 60 1979 President, Hackett, Valine & MacDonald, Inc. Burlington, Vermont (Insurance Agents) F. RAY KEYSER, JR. 66 1980 Chairman of the Board, Central Vermont Public Service Corporation, Of Counsel, Keyser, Crowley, Meub, Layden, Kulig & Sullivan, P.C. Rutland, Vermont (Lawyers) GORDON P. MILLS 57 1980 Chairman, EHV-Weidmann Industries, Inc. St. Johnsbury, Vermont (Manufacturer of Electric Transformer Insulation) The following table sets forth the names and ages of all executive officers of the Company, all positions and offices held within the Company, as well as work experience and positions held during the past five years. None of the executive officers of the Company has any family relationship with any other executive officer of the Company. Executive Officers of the Registrant: Name and Age Office Officer Since Thomas C. Webb, 59 President and Chief Executive Officer 1985 Robert H. Young, 46 Executive Vice President and Chief Operating Officer 1987 Steven J. Allenby, 39(F1) Senior Vice President- Marketing and Customer Services 1985 Robert de R. Stein, 44 Senior Vice President- Engineering and Energy Resources 1988 Jacquel-Anne Chouinard, 54 Vice President-Human Resources 1986 Thomas J. Hurcomb, 56 Vice President-Marketing and Public Affairs 1975 Robert G. Kirn, 42 Vice President-Division Operations 1991 Donald L. Rushford, 63 Vice President and General Counsel 1972 Patricia A. Wakefield, 51(F1) Vice President-Marketing and Customer Services 1988 William J. Deehan, 41 Assistant Vice President-Rates and Economic Analysis 1991 Jonathan W. Booraem, 55 Treasurer 1984 James M. Pennington, 38 Controller 1993 Joseph M. Kraus, 39 Secretary and General Counsel 1987 Mr. Webb joined the Company in 1985 as Executive Vice President - Finance and Administration and in 1986 was also designated Chief Operating Officer. He was elected Director, President and Chief Executive Officer on July 1, 1986. From 1977 to 1985, Mr. Webb was employed by Central Maine Power Company as Senior Vice President - Finance and Administration and in other executive positions. Mr. Young joined the Company in 1987 as Vice President - Finance and Administration. Mr. Young was named Senior Vice President - Finance and Administration in 1988, and in 1993 was elected Executive Vice President and Chief Operating Officer. During 1985-1986, he served as Senior Management Consultant for A. D. Little Co. Mr. Stein joined the Company on June 1, 1988 as Assistant Vice President - Energy Planning. Mr. Stein was elected Vice President - Energy Supply Planning and Engineering effective January 1, 1990, and Senior Vice President - Engineering and Energy Resources in 1993. During the period 1984-1988, he served United Illuminating Company as Manager of Revenue Requirements and Manager of Generation Planning and Power Contracts. Ms. Chouinard joined the Company in 1985 as Director - Human Resources. She was elected Assistant Vice President - Human Resources in 1986 and assumed her present position in 1988. Mr. Hurcomb joined the Company in 1967 in the Marketing and customer Service area. He was elected Vice President - External Affairs in 1975, and Vice President - Marketing and Public Affairs in 1993. Mr. Kirn joined the Company in 1991 as Vice President - Division Operations. From 1979 to 1991, he was employed by New York State Electric & Gas Corporation. He served as Operations Manager of the Lancaster Division Electric from 1988 until 1991 and as Operating Superintendent of the Berkshire District from 1985 to 1988. Mr. Rushford joined the Company in 1972 and has served as Vice President and General Counsel since that time. Mr. Rushford retired effective January 1, 1994. Mr. Deehan joined the Company in 1985. Prior to being elected to his present position, he served as Director of Rate Administration and Forecasting since 1987 and as Energy Forecaster from 1985-1987. Mr. Booraem has been with the Company since 1969. Prior to being elected Treasurer in 1984, he was Director of Finance & Planning. Mr. Kraus joined the Company in 1981 as Assistant Corporate Counsel. He was named Associate Corporate Counsel in 1983 and Senior Corporate Counsel in 1987. He was also elected Corporate Secretary and Senior Corporate Counsel in 1987 and Corporate Secretary and General Counsel effective January 1, 1994. Mr. Pennington joined the Company in 1989 as Director of Taxes. He was named Director of Taxes and Plant Accounting in 1990. Mr. Pennington was designated Acting Controller effective July 19, 1992, and was elected Controller and named Principal Accounting Officer in 1993. From 1984 to 1989, he served as Senior Tax Accountant for Northern Indiana Public Service Company. (FN) (F1) Steven J. Allenby and Patricia A. Wakefield resigned from the Company effective October 31, 1993. The term of each officer is for one year or until a successor is elected. Item 11. Executive Compensation. The following table sets forth all cash compensation paid or to be paid by the Company and its subsidiaries, as well as the number of stock option awards earned during the last three fiscal years by the Company's Chief Executive Officer and the Company's four other most highly compensated policy making executive officers ("officer(s)") whose direct cash compensation for services rendered to the Company and its subsidiaries in all capacities exceeded $100,000. I. SUMMARY COMPENSATION TABLE
Long-Term Compensation Annual Compensation Awards (a) (b) (c) (d) (g) (i) Name and Options/ All Other Principal Salary Bonus SARs Compensation Position Year ($)(F1) ($)(F2) (#)(F3) ($)(F4) A. Thomas C. Webb 1993 248,755 67,183 8,000/0 12,453 President and CEO 1992 244,694 73,000 6,000/0 17,850 1991 236,966 81,409 6,000/0 17,513 B. Robert H. Young, Jr. 1993 141,769 35,995 6,000/0 4,533 Executive Vice President 1992 130,667 34,073 4,500/0 4,363 and Chief Operating 1991 121,574 35,868 4,500/0 3,942 Officer C. Robert de R. Stein 1993 114,677 16,804 4,500/0 3,988 Senior Vice President - 1992 105,473 18,728 3,000/0 3,472 Engineering and Energy 1991 97,881 24,126 3,000/0 3,138 Resources D. Donald L. Rushford 1993 103,794 16,463 3,000/0 6,493 Vice President and 1992 104,001 18,700 3,000/0 4,620 General Counsel 1991 96,318 23,100 3,000/0 4,240 (Retired Effective 1/1/94) E. Thomas J. Hurcomb 1993 98,382 15,606 3,000/0 4,996 Vice President - 1992 98,649 17,766 3,000/0 4,355 Marketing and 1991 92,863 22,894 3,000/0 3,304 Public Affairs (FN) (F1) - 1993 includes compensation deferred at the election of all executive officers named and directors' retainers and fees earned from VELCO by Mr. Webb. - 1992 calendar year includes 53 pay periods. - Includes compensation for services performed by Mr. Webb for Vermont Yankee and by Mr. Stein for VELCO for which the Company was reimbursed. - 1991 includes salary increases earned in 1991 but deferred until 1992 as follows: For A: $6,966; for B: $3,574; for C: $2,881; for D: $2,753; and for E: $2,733. (F2) Includes incentive bonuses awarded by Catamount Energy Corporation in 1992 and 1993 and by CV Energy Resources, Inc. in 1991, both wholly owned subsid iaries, as follows: For A: 1993 - $10,000, 1992 - $5,000, 1991 - $12,409; for B: 1993 -$10,000, 1992 - $5,000, 1991 - $6,368; for C: 1991 - $5,126; for D: 1991 - $4,910; and for E: 1991 - $4,864. (F3) In 1991, the Board of Directors rescinded provisions of the 1988 Stock Option Plan for Key Employees permitting grants of SAR's. (F4) The total amounts shown in this column for the last fiscal year are comprised as follows: (i) Company matching contributions to the Employee Savings and Investment Plan includes for A: $8,185; for B: $4,253; for C: $3,785; for D: $2,784; and for E: $3,250. (ii) Premium on executive split-dollar insurance (an insurance plan that gives both employer and employee an interest in a life insurance policy on the employee's life) for A: $1,801; for B: $280; for C: $203; for D: $791; and for E: $494. (iii) Includes accrued above-market interest on deferred compensation for A: $2,467; for D: $2,918; and for E: $1,252.
STOCK OPTIONS The following table sets forth options granted to the Company's chief executive officer and the Company's four other most highly compensated executive officers during 1993 under the Company's 1988 Stock Option Plan. Under SEC regulations, companies are required to project an estimate of appreciation of the underlying shares of stock during the option term. The Company has chosen the Black-Scholes model formula approved by the SEC. However, the ultimate value will depend on the market value of the Company's stock at a future date, which may or may not correspond to the projections below. II. OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year Grant Date Individual Grants Value (a) (b) (c) (d) (e) (f) % of Number of Total Securities Options/ Underlying SARs Options/ Granted to Exercise Grant SARs Employees or Base Expira- Date Granted in Fiscal Price tion Present Name (#)(F1) Year ($/Sh)(F2) Date Value($)(F3) Thomas C. Webb 8,000/0 18.1% $24.375 5/4/03 $19,600 Robert H. Young, Jr. 6,000/0 13.5 24.375 5/4/03 14,700 Robert deR. Stein 4,500/0 10.2 24.375 5/4/03 11,025 Donald L. Rushford 3,000/0 6.8 24.375 5/4/03 7,350 Thomas J. Hurcomb 3,000/0 6.8 24.375 5/4/03 7,350 (FN) (F1) A total of 44,300 shares were awarded to all plan participants in 1993. Stock options are exercisable in whole or in part from the date of the grant for a period of ten years and one day. (F2) The exercise price reflects the post-split price and unexercised shares have been adjusted for the 3 for 2 common stock split effective 2/11/93. The exercise price represents the fair market value of the Company's Common Stock on the date of the grant. (F3) Per Black-Scholes model as certified by independent consultant. The assumptions used for the Model are as follows: Volatility-.18 based on quarterly prices for the period of 3/31/87 to 12/31/93; Risk free rate of return-6%; Dividend Yield-6.5% over period of 3/31/87 to 12/31/93; and Term of Exercise-10 years.
The following table sets forth stock options exercised by the Company's Chief Executive Officer and the Company's four other most highly compensated executive officers during 1993, and the number and value of all unexercised options at year-end. The value of "in-the-money" options refers to options having an exercise price which is less than the market price of the Company's stock on December 31, 1993. III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Value (a) (b) (c) (d) (e) Value of Number of Unexercised Unexercised In-the-Money Options/SARs Options/SARs at FY-End (#) FY-End ($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized($)(F1)Unexercisable Unexercisable(F1) Thomas C. Webb 6,000 $41,125 14,000/0 $ 3,500/0 Robert H. Young, Jr. - - 14,625/0 14,656/0 Robert de R. Stein - - 15,000/0 28,060/0 Donald L. Rushford 5,000 31,875 3,000/0 0/0 Thomas J. Hurcomb - - 15,000/0 35,120/0 (FN) (F1) The dollar values are calculated by determining the difference between the fair market value of the securities underlying the options and the exercise or base price of the options.
DEFERRED COMPENSATION PLAN Employees of the Company who are officers are eligible to defer receipt of a portion of their compensation pursuant to the Company's Deferred Compensation Plan for Officers. Also, certain of the Directors of the Company have elected to defer receipt of all or a portion of their fees under a similar plan for Directors. Under the Plan approved effective January 1, 1990 Directors and Officers of the Company may elect to defer over a 5-year period receipt of a specified amount of compensation or fees otherwise currently payable to them until retirement at age 65 (age 70 for Directors), or until their death, disability, or resignation. Officers may receive a reduced benefit beginning at age 60 with 10 years of service. Amounts deferred are not currently taxable for state and Federal income taxes. The benefit is equal to the compensation deferred plus interest credited by the Company. This plan is a defined contribution program under which the Company recovers any costs, including the cost of capital, through the proceeds of the supporting life insurance policies. In addition, if death of a Director occurs before age 70, an additional survivor benefit equal to the annual amount deferred will be paid to the beneficiary each year for fifteen years. This benefit is also financed by life insurance proceeds. PENSION PLAN The Pension Plan of Central Vermont Public Service Corporation and Its Subsidiaries (the "Plan") covers employees, among others, who are officers. The Company pays the full cost of the Plan. The table below shows the annual amounts payable under the present provisions of the Plan as amended through December 31, 1993, based on Final Average Earnings for various years of service, assuming the employee would retire at age 65 in 1994.
Assumed 5-Year Final Years of Service Average Earnings 15 20 25 30 35 $ 80,000 $19,085 $25,447 $31,809 $ 38,171 $ 40,171 100,000 24,335 32,447 40,559 48,671 51,171 120,000 29,585 39,447 49,309 59,171 62,171 140,000 34,835 46,447 58,059 69,671 73,671 160,000 40,085 53,447 66,809 80,171 84,171 180,000 45,335 60,447 75,559 90,671 95,671 220,000 55,632 74,176 92,720 111,263 116,744 260,000 55,632 74,176 92,720 111,263 116,744 300,000 55,632 74,176 92,720 111,263 116,744 340,000 55,632 74,176 92,720 111,263 116,744
Final Average Earnings is the highest five-year average of consecutive years' Base Salary (item (c) from the Summary Compensation Table) over an employee's career with the Corporation. The amounts above are payable for the life of the retiree only, and would be reduced on an actuarial basis if survivor options were chosen. In addition, no Social Security offset applies to amounts above. The credited years of service at December 31, 1993 under the Plan for those individuals named in the Summary Compensation Table were as follows: Mr. Webb, 9 years; Mr. Young, 6 years, 6 months; Mr. Stein, 5 years, 7 months; Mr. Rushford, 21 years, 6 months; and Mr. Hurcomb, 26 years. OFFICERS' INSURANCE AND SUPPLEMENTAL RETIREMENT PLAN The Officers' Insurance and Supplemental Retirement Plan (the "Plan") is designed to supplement the retirement benefits available to the Company's officers. The Plan is a part of the Company's overall strategy for attracting and maintaining top managerial talent in the utility industry. The Company pays the entire cost of the Plan. Under the Plan, each officer is entitled to receive, upon his or her retirement at age 65, fifteen annual payments in amounts equal to a specified percentage of his or her final year's Base Salary (item (c) from the Summary Compensation Table). A reduced benefit is available at age 60 with ten years of service. The applicable percentages for the individuals named in Summary Compensation Table are as follows: Mr. Webb, 44.5%; Mr. Young, 33%; Mr. Stein, 33%; Mr. Rushford, 33%; and Mr. Hurcomb, 33%. Shown below is the estimated Company provided benefit payable at age 65 for those individuals named in the Summary Compensation Table who receive a benefit under the Officers' Insurance and Supplemental Retirement Plan: Assumed Final Annual Base Pay $ 33% 44.5% 80,000 26,400 35,600 100,000 33,000 44,500 120,000 39,600 53,400 140,000 46,200 62,300 160,000 52,800 71,200 180,000 59,400 80,100 220,000 72,600 97,900 260,000 85,800 115,700 300,000 99,000 133,500 340,000 112,200 151,300 PREDECESSOR DEFERRED COMPENSATION PLAN Between 1986 and 1990, the Company allowed officers to defer receipt of compensation in return for fifteen annual payments of a defined benefit amount upon retirement. The Company will pay the difference, if any, between the defined benefit cost and the accumulated value of deferred compensation. Shown below is the estimated Company-provided benefit, payable at age 65, for those individuals named in the Summary Compensation Table who elected to participate. Since these benefits do not apply to all of the named individuals, they have not been reflected in the foregoing pension table. Annual Company- Provided Benefit Name Payable at Age 65 Mr. Webb $29,800 Mr. Rushford 19,700 Mr. Hurcomb 13,900 Item 12. Security Ownership of Certain Beneficial Owners and Management. Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's Officers and Directors to file reports of ownership and changes in ownership of Company securities with the Securities and Exchange Commission and to furnish the Company with copies of all such reports. In 1993, Director Mary Alice McKenzie inadvertently failed to file with the Securities and Exchange Commission on a timely basis one required report involving one transaction in Common Stock of the Company which she beneficially owns. Except for the foregoing, the Company believes that during 1993 all filing requirements applicable to its Officers and Directors have been met. In making this statement, the Company has relied on copies of reports that have been filed with the Commission. Section 16(a) of the Securities Exchange Act of 1934 also requires executive officers and directors and persons who beneficially own more than ten percent (10%) of the Company's stock to file initial reports of ownership and subsequent reports of changes in ownership with the SEC and the NYSE. Based solely on a review of the copies of such forms prepared and filed during 1993 on behalf of our executive officers and directors, and on written representations that no other reports were required the Company believes its directors and executive officers have complied with all Section 16(a) filing requirements. The Company does not have a ten percent holder. The following is a tabulation of equity securities of the Company beneficially owned by all present Directors and Executive Officers of the Company as a group (19 persons) as of January 31, 1994. No Director, nominee for Director or Executive Officer owns any shares of the various classes of the Company's outstanding non-voting preferred stock. Title of Class Amount Beneficially Owned Percent of Class Common Stock, $6 Par Value 187,908 shares (F1) 1.6% (FN) (F1) Includes 124,625 shares that the directors and executive officers have a right to acquire pursuant to options granted under Stock Option plans. The Company knows of no person, entity or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) which owns beneficially more than 5% of any class of the Company's outstanding equity securities. Item 13. Certain Relationships and Related Transactions. None. Filed Herewith at Page PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following documents are filed as part of this report: 1. Management's Discussion: 1.1 Central Vermont Public Service Corporation and its wholly owned subsidiaries: (See Item 7) Management's Discussion and Analysis of Financial Condition and Results of Operations 2. Financial Statements: 2.1 Central Vermont Public Service Corporation and its wholly owned subsidiaries: (See Item 8) Consolidated Statement of Income, years ended December 31, 1993, 1992, and 1991. Consolidated Statement of Cash Flows, years ended December 31, 1993, 1992 and 1991. Consolidated Balance Sheet, December 31, 1993 and 1992. Consolidated Statement of Capitalization, December 31, 1993 and 1992. Consolidated Statement of Changes in Common Stock Equity, years ended December 31, 1993, 1992 and 1991. Notes to Consolidated Financial Statements. 3. Financial Statement Schedules: 3.1 Central Vermont Public Service Corporation and its wholly owned subsidiaries: Schedule V - Utility Plant, years ended December 31, 1993, 1992 and 1991. Schedule VI - Accumulated Depreciation of Utility Plant, years ended December 31, 1993, 1992 and 1991. Filed Herewith at Page PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Continued. Schedule VIII - Reserves, years ended December 31, 1993, 1992 and 1991. Schedule IX - Short-term borrowings, years ended December 31, 1993, 1992 and 1991. 3.2 Financial Statements and Schedules for Vermont Yankee Nuclear Power Corporation - per index attached. Schedules not included have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Separate financial statements of the Registrant (which is primarily an operating company) have been omitted since they are consolidated only with those of totally held subsidiaries. Separate financial statements of subsidiary companies not consolidated have been omitted since, if considered in the aggregate, they would not constitute a significant subsidiary. Other than Vermont Yankee Nuclear Power Corporation, separate financial statements of 50% or less owned persons for which the investment is accounted for by the equity method by the Registrant have been omitted since, if considered in the aggregate, they would not constitute a significant investment. (b) Reports on Form 8-K: There were no reports on Form 8-K for the quarter ended December 31, 1993. (c) See exhibits index. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Central Vermont Public Service Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Central Vermont Public Service Corporation's annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 7, 1994. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the index above are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state, in all material respects, the consolidated financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. ARTHUR ANDERSEN & CO. Boston, Massachusetts, February 7, 1994 Schedule V CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Utility Plant and Nuclear Fuel Years ended December 31, 1993, 1992 and 1991
Description 1993 1992 1991 Electric plant: Intangible $ 9,530,882 $ 9,530,962 $ 864,165 Production 127,113,202 127,151,910 125,136,959 Transmission 60,588,771 61,175,146 62,032,252 Distribution 162,583,392 158,350,306 153,931,597 General 33,514,895 31,974,205 30,587,869 Electric plant purchased - - 463,432 Completed construction not classified 32,905,951 19,678,446 12,867,786 Completed retirements not classified (4,308,252) (1,165,859) (790,101) Construction work in progress 8,388,392 10,534,478 13,945,677 430,317,233 417,229,594 399,039,636 Nuclear fuel: Fuel in refinement (921) 339,386 15,582 Fuel in stock 123,885 192,150 190,552 Fuel in reactor 2,169,513 2,581,613 2,581,613 Fuel spent 3,996,750 2,768,689 2,768,689 6,289,227 5,881,838 5,556,436 $436,606,460 $423,111,432 $404,596,072 ____________ ____________ ____________ (FN) (a)Neither total additions of $18,442,288, $19,916,850 or $18,077,565 nor total retirements of $4,947,180, $1,401,490 or $2,671,746 for the years ended December 31, 1993, 1992 and 1991, respectively, exceeded 10% of the utility plant balance at the end of the year.
Schedule VI CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Accumulated Depreciation Of Electric Plant And Amortization Of Nuclear Fuel Years ended December 31, 1993, 1992 and 1991
1993 1992 1991 Balance at beginning of year $102,328,927 $ 88,780,026 $79,381,919 Additions: Charges to expense 15,246,243 14,265,003 12,264,213 Salvage value of plant retired 660,011 556,873 762,217 Other(F1) - 1,188,239 - Total additions 15,906,254 16,010,115 13,026,430 Deductions: Retirements, renewals and replacements 4,944,980 1,401,490 2,684,708 Removal cost of plant retired during the year 991,631 1,059,724 943,615 Total deductions 5,936,611 2,461,214 3,628,323 Total accumulated depreciation 112,298,570 102,328,927 88,780,026 Accumulated amortization of nuclear fuel 4,899,751 4,385,120 3,837,982 Balance at end of year $117,198,321 $106,714,047 $92,618,008 ____________ ____________ ___________ (FN) (F1) Prior years depreciation expense related to electric plant purchased in 1991.
Schedule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Reserves Year ended December 31, 1993
Additions Balance at Charged to Charged Balance at beginning costs and to other end of of year expenses accounts Deductions year Reserves deducted from assets to which they apply: $ 64,809(F1) Reserve for uncollectible 324,081(F2) accounts receivable $1,079,806 $960,000 $388,890 $1,492,616(F3) $ 936,080 __________ ________ ________ __________ __________ Accumulated depreciation of miscellaneous properties: Rental water heater program $3,334,201 $352,547 - $ 257,804(F4) $3,428,944 Non-utility property 41,052 27,101 - - 68,153 $3,375,253 $379,648 $ 257,804 $3,497,097 __________ ________ __________ __________ Reserve shown separately: Injuries and damages reserve $ 242,901 - - $ 17,321(F5) $ 225,580 __________ __________ __________ (FN) (F1) Amount due from collection agency. (F2) Collections of accounts previously written off. (F3) Uncollectible accounts written off. (F4) Retirements of rental water heaters. (F5) Payments for construction accidents.
Schedule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Reserves Year ended December 31, 1992
Additions Balance at Charged to Charged Balance at beginning costs and to other end of of year expenses accounts Deductions year Reserves deducted from assets to which they apply: Reserve for uncollectible accounts receivable $ 992,433 $1,018,700 $355,472(F1) $1,286,799(F2) $1,079,806 __________ __________ ________ __________ __________ Accumulated depreciation of miscellaneous properties: Rental water heater program $3,283,660 $ 350,642 - $ 300,101(F3) $3,334,201 Non-utility property 293,777 27,958 - 280,683(F4) 41,052 $3,577,437 $ 378,600 $ 580,784 $3,375,253 __________ __________ __________ __________ Reserve shown separately: Injuries and damages reserve $ 268,077 - - $ 25,176(F5) $ 242,901 __________ __________ __________ (FN) (F1) Collection of accounts previously written off. (F2) Uncollectible accounts written off. (F3) Retirements of rental water heaters. (F4) Retirement of non-utility property. (F5) Payments for construction accidents.
Schedule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Reserves Year ended December 31, 1991
Additions Balance at Charged to Charged Balance at beginning costs and to other end of of year expenses accounts Deductions year Reserves deducted from assets to which they apply: Reserve for uncollectible accounts receivable $ 726,992 $1,353,084 $147,337(F1) $1,234,980(F2) $ 992,433 __________ __________ ________ __________ __________ Accumulated depreciation of miscellaneous properties: Rental water heater program $3,197,620 $ 327,586 $ - $ 241,546(F3) $3,283,660 Non-utility property - 51,068 242,709(F4) - 293,777 $3,197,620 $ 378,654 $242,709 $ 241,546 $3,577,437 __________ __________ ________ __________ __________ Reserve shown separately: Injuries and damages reserve $ 262,584 $ - $ 16,289(F5) $ 10,796(F6) $ 268,077 __________ __________ ________ __________ __________ (FN) (F1) Collections of accounts previously written off. (F2) Uncollectible accounts written off. (F3) Retirements of rental water heaters. (F4) Transfer from utility property to non-utility property. (F5) Charged to construction and retirement work in progress. (F6) Payments for construction accidents.
Schedule IX CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES Short-Term Borrowings Years Ended December 31, 1993, 1992, 1991
Interest Rate Maximum Average Weighted Average Category of Aggregate Balance at at End of Amount Outstanding Amount Outstanding Interest Rate Short-Term Borrowings End of Period Period at any Month-end During the Period (F2) During the Period( Notes Payable to Banks (F1) Period Ending - 1993..... $ 1,356,000 5.20% $43,945,000 $ 8,488,000 3.67% Period Ending - 1992..... $ 2,100,000 4.22% $ 2,100,000 $ 186,000 4.30% Period Ending - 1991..... - - $18,700,000 $ 5,769,000 6.16% (FN) (F1) The Company had committed lines of credit amounting to $19,500,000 and uncommitted loan facilities amounting to $25,000,000 at December 31, 1993. The Company had fee arrangements on some of these short-term borrowing arrangements. (F2) Average amount outstanding computed by using daily debt balances. (F3) The weighted average interest rate is computed by using daily debt balances and daily interest expense.
Independent Auditor's Report The Stockholders and Board of Directors Vermont Yankee Nuclear Power Corporation: We have audited the accompanying balance sheet of Vermont Yankee Nuclear Power Corporation as of December 31, 1993, and the related statements of income and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Vermont Yankee Nuclear Power Corporation as of December 31, 1992 and 1991, were audited by other auditors whose report, dated February 5, 1993, expressed an unqualified opinion on those statements and included an additional paragraph discussing the Company's 1992 change in accounting for postretirement benefits other than pensions. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vermont Yankee Nuclear Power Corporation as of December 31, 1993, and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. As discussed in note 10 of the accompanying financial statements, effective January 1, 1993 the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Our audit was made for the purpose of forming an opinion on the basic financial statements taken as whole. The supplementary schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Arthur Andersen & Co. Boston, Massachusetts January 27, 1994 VERMONT YANKEE NUCLEAR POWER CORPORATION Index to Financial Statements and Financial Statement Schedules Financial Statements: Balance Sheets, December 31, 1993 and 1992 Statements of Income and Retained Earnings, years ended December 31, 1993, 1992 and 1991 Statements of Cash Flows, years ended December 31 ,1993, 1992 and 1991 Notes to Financial Statements Financial Statement Schedules: Schedule I - Marketable Securities and Other Investments at December 31, 1993 Schedule V - Property, Plant and Equipment, years ended December 31, 1993, 1992 and 1991 Schedule VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment, years ended December 31, 1993, 1992 and 1991 All other schedules are omitted as the required information is inapplicable or the required information is included in the financial statements or related notes. Balance Sheets Assets December 31, 1993 1992 (Dollars in thousands) Utility plant: Electric plant, at cost (note 6) $ 374,736 $ 362,278 Less accumulated depreciation 198,389 185,263 176,347 177,015 Construction work in progress 597 6,408 Net electric plant 176,944 183,423 Nuclear fuel, at cost (note 6): Assemblies in reactor 69,063 74,025 Fuel in process - 5,236 Spent fuel 287,700 259,199 356,763 338,460 Less accumulated amortization of burned nuclear fuel 317,039 302,362 39,724 36,098 Less accumulated amortization of final core nuclear fuel 7,220 6,487 Net nuclear fuel 32,504 29,611 Net utility plant 209,448 213,034 Current assets: Cash and temporary investments 2,349 1,922 Accounts receivable from sponsors 12,235 15,407 Other accounts receivable 4,522 2,715 Materials and supplies 17,081 16,862 Prepaid expenses 3,949 4,381 Total current assets 40,136 41,287 Deferred charges: Deferred decommissioning costs (note 2) 34,379 34,389 Accumulated deferred income taxes (note 10) 18,231 10,378 Deferred DOE enrichment site decontamination and decommissioning fee (note 4) 18,627 18,143 Net unamortized loss on reacquired debt 2,942 - Other deferred charges (note 4) 3,643 4,994 Total deferred charges 77,822 67,904 Long-term funds at amortized cost: Decommissioning fund (notes 2, 5, and 7) 98,880 82,091 Disposal fee defeasance fund (notes 5, 7, and 8) 43,484 33,892 Total long-term funds 142,364 115,983 $469,770 $438,208 See accompanying notes to financial statements. Balance Sheets Capitalization and Liabilities December 31, 1993 1992 (Dollars in thousands) Capitalization: Common stock equity: Common stock, $100 par value; authorized 400,100 shares; issued 400,014 shares of which 7,533 are held in Treasury $ 40,001 $ 40,001 Additional paid-in capital 14,227 14,227 Treasury stock (7,533 shares at cost) (1,131) (1,131) Retained earnings 1,067 1,178 Total common stock equity 54,164 54,275 Long-term obligations, net (notes 6 and 7) 79,636 74,193 Total capitalization 133,800 128,468 Commitments and contingencies (notes 2, 14 and 15) Disposal fee and accrued interest for spent nuclear fuel (notes 7 and 8) 80,688 78,239 Current liabilities: Accrued liabilities 28,063 22,743 Accounts payable 2,117 2,591 Accrued interest 635 974 Accrued taxes 1,206 1,472 Total current liabilities 32,021 27,780 Deferred credits: Accrued decommissioning costs (note 2) 134,614 117,601 Accumulated deferred income taxes 56,478 58,963 Net regulatory tax liability (note 10) 8,351 - Accumulated deferred investment tax credits 7,013 7,590 Net unamortized gain on reacquired debt - 1,732 Accrued DOE enrichment site decontamination and decommissioning fee (note 4) 15,966 17,220 Other deferred credits 839 615 Total deferred credits 223,261 203,721 $469,770 $438,208 See accompanying notes to financial statements. Statements of Income and Retained Earnings Years ended December 31, 1993 1992 1991 (Dollars in thousands except per share amounts) Operating revenues $180,145 $175,919 $151,722 Operating expenses: Nuclear fuel expense 19,526 21,240 24,864 Other operating expense 74,013 72,967 59,666 Maintenance 31,405 27,878 13,664 Depreciation 13,707 13,253 11,800 Decommissioning expense (note 2) 11,315 10,649 8,065 Taxes on income (note 10) 3,777 3,401 3,485 Property and other taxes 9,961 10,227 10,294 Total operating expenses 163,704 159,615 131,838 Operating income 16,441 16,304 19,884 Other income and (deductions): Net earnings on decommissioning fund (notes 2 and 5) 5,653 5,395 4,423 Decommissioning expense (note 2) (5,653) (5,395) (4,423) Allowance for equity funds used during construction 92 89 124 Interest 1,550 2,046 1,377 Taxes on other income (note 10) (623) (756) (447) Other, net (232) (199) (917) 787 1,180 137 Income before interest expense 17,228 17,484 20,021 Interest expense: Interest on long-term debt 7,281 7,101 7,684 Interest on disposal costs of spent nuclear fuel (note 8) 2,450 2,801 4,312 Allowance for borrowed funds used during construction (297) (339) (465) Total interest expense 9,434 9,563 11,531 Net income 7,794 7,921 8,490 Retained earnings at beginning of year 1,178 1,166 1,982 8,972 9,087 10,472 Dividends declared 7,905 7,909 9,306 Retained earnings at end of year $ 1,067 $ 1,178 $ 1,166 Average number of shares outstanding in thousands 392 392 394 Net income per average share of common stock outstanding $ 19.86 $ 20.18 $ 21.56 Dividends per average share of common stock outstanding $ 20.14 $ 20.15 $ 23.71 See accompanying notes to financial statements. Statements of Cash Flows Years ended December 31, 1993 1992 1991 (Dollars in thousands) Cash flows from operating activities: Net income $7,794 $ 7,921 $ 8,490 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of nuclear fuel 15,410 18,143 21,002 Depreciation 13,707 13,253 11,800 Decommissioning expense 11,315 10,649 8,065 Deferred tax expense (979) (2,169) (801) Amortization of deferred investment tax credits (577) (641) (740) Nuclear fuel disposal fee interest accrual 2,450 2,802 4,312 Interest and dividends on disposal fee defeasance fund (1,402) (1,385) (1,495) (Increase) decrease in accounts receivable 1,365 688 (129) (Increase) decrease in prepaid expenses 432 (1,159) 163 (Increase) in materials and supplies inventory (219) (454) (1,531) Increase (decrease) in accounts payable and accrued liabilities 4,846 (7,453) 5,495 Increase (decrease) in interest and taxes payable (605) 306 (760) Other (1,228) (1,410) (1,665) Total adjustments 44,515 31,170 43,716 Net cash provided by operating activities 52,309 39,091 52,206 Cash flows from investing activities: Electric plant additions (7,229) (10,750) (6,596) Nuclear fuel additions (18,303) (4,707) (18,444) Payments to decommissioning fund (11,250) (10,612) (8,323) Payments to disposal fee defeasance fund (8,190) (5,190) (8,216) Net cash used in investing activities (44,972) (31,259) (41,579) Cash flows from financing activities: Dividend payments (7,905) (7,909) (9,306) Purchase of treasury stock - - (1,131) Issuance of Series H first mortgage bonds, net - - 10,374 Issuance of Series I first mortgage bonds, net 75,125 - - Retirement of first mortgage bonds including redemption costs (74,629) (6,521) (13,178) Payments of long-term obligations (137,911) (107,763) (53,419) Borrowings under long-term agreements 138,410 111,215 53,798 Net cash used in financing activities (6,910) (10,978) (12,862) Net increase (decrease) in cash and temporary investments 427 (3,146) (2,235) Cash and temporary investments at beginning of year 1,922 5,068 7,303 Cash and temporary investments at end of year $ 2,349 $ 1,922 $ 5,068 See accompanying notes to financial statements. Notes to Financial Statements NOTE 1. Summary of Significant Accounting Policies (a) Regulations and Operations Vermont Yankee Nuclear Power Corporation ("the Company") is subject to regulations prescribed by the Federal Energy Regulatory Commission ("FERC"), and the Public Service Board of the State of Vermont with respect to accounting and other matters. The Company is also subject to regulation by the Nuclear Regulatory Commission ("NRC") for nuclear plant licensing and safety, and by federal and state agencies for environmental matters such as air quality, water quality and land use. Prior to November, 1993, the Company was subject to regulation by the Securities and Exchange Commission. As a result of the debt refinancing discussed in note 6, the Company is no longer subject to such regulation. The Company recognizes revenue pursuant to the terms of the Power Contracts and Additional Power Contracts. The Sponsors, a group of nine New England utilities, are severally obligated to pay the Company each month their entitlement percentage of amounts equal to the Company's total fuel costs and operating expenses of its Plant, plus an allowed return on equity (since December 1, 1989, 12.25%). Such contracts also obligate the Sponsors to make decommissioning payments through the end of the Plant's service life and the completion of the decommissioning of the Plant. All Sponsors are committed to such payments regardless of the Plant's operating level or whether the Plant is out of service during the period. Under the terms of the Capital Funds Agreements, the Sponsors are committed, subject to obtaining necessary regulatory authorizations, to make funds available to obtain or maintain licenses necessary to keep the Plant in operation. (b) Depreciation and Maintenance Electric plant is being depreciated on the straight-line method at rates designed to fully depreciate all depreciable properties over the lesser of estimated useful lives or the Plant's remaining NRC license life, which extends to March, 2012. Depreciation expense was equivalent to overall effective rates of 3.74%, 3.56% and 3.23% for the years 1993, 1992 and 1991, respectively. Renewals and betterments constituting retirement units are charged to electric plant. Minor renewals and betterments are charged to maintenance expense. When properties are retired, the original cost, plus cost of removal, less salvage, is charged to the accumulated provision for depreciation. (c) Amortization of Nuclear Fuel The cost of nuclear fuel is amortized to expense based on the rate of burn-up of the individual assemblies comprising the total core. The Company also provides for the costs of disposing of spent nuclear fuel at rates specified by the United States Department of Energy ("DOE") under a contract for disposal between the Company and the DOE. The Company amortizes to expense on a straight-line basis the estimated costs of the final unspent nuclear fuel core, which is expected to be in place at the expiration of the Plant's NRC operating license in conformity with rates authorized by the FERC. (d) Amortization of Materials and Supplies The Company amortizes to expense a formula amount designed to fully amortize the cost of the material and supplies inventory that is expected to be on hand at the expiration of the Plant's NRC operating license. (e) Long-term Funds The Company accounts for its investments in long-term funds at amortized cost since it has both the intent and ability to hold these investments for the foreseeable future. Amortized cost represents the cost to purchase the investment, net of any unamortized premiums or discounts. Notes to Financial Statements NOTE 1. Summary of Significant Accounting Policies (Continued) (f) Amortization of Gain and Loss on Reacquired Debt The difference between the amount paid upon reacquisition of any debt security and the face value thereof, plus any unamortized premium, less any related unamortized debt expense and reacquisition costs, or less any unamortized discount, related unamortized debt expense and reacquisition costs applicable to the debt redeemed, retired and canceled, is deferred by the Company and amortized to expense on a straight-line basis over the remaining life of the applicable security issues. (g) Allowance for Funds Used During Construction Allowance for funds used during construction ("AFUDC") is the estimated cost of funds used to finance the Company's construction work in progress and nuclear fuel in process which is not recovered from the Sponsors through current revenues. The allowance is not realized in cash currently, but under the Power Contracts, the allowance will be recovered in cash over the Plant's service life through higher revenues associated with higher depreciation and amortization expense. AFUDC was capitalized at overall effective rates of 5.92%, 6.82% and 6.98% for 1993, 1992 and 1991, respectively, using the gross rate method. (h) Decommissioning The Company is accruing the estimated costs of decommissioning its Plant over the Plant's remaining NRC license life. Any amendments to these estimated costs are accounted for prospectively. (i) Taxes on Income Effective January 1, 1993, the Company began accounting for taxes on income under the liability method required by Statement of Financial Accounting Standard 109. See Note 10 for a further discussion of this change in accounting. Investment tax credits have been deferred and are being amortized to income over the lives of the related assets. (j) Cash Equivalents For purposes of the Statements of Cash Flows, the Company considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents. (k) Reclassifications Certain information in the 1992 and 1991 financial statements has been reclassified to conform with the 1993 presentation. (l) Earnings per Common Share Earnings per common share have been computed by dividing earnings available to common stock by the weighted average number of shares outstanding during the year. Notes to Financial Statements NOTE 2. Decommissioning The Company accrues estimated decommissioning costs for its nuclear plant over its remaining NRC licensed life based on studies by an independent engineering firm that assumes that decommissioning will be accomplished by the prompt removal and dismantling method. This method requires that radioactive materials be removed from the plant site and that all buildings and facilities be dismantled immediately after shutdown. Studies estimate that approximately six years would be required to dismantle the Plant at shutdown, remove wastes and restore the site. The Company has implemented rates based on a settlement agreement with the FERC which allowed $190 million, in 1988 dollars, as the estimated decommissioning cost. This allowed amount is used to compute the Company's liability and billings to the Sponsors. Based on an assumed inflation rate of 6% per annum and an expiration of the Plant's NRC operating license in 2012, the estimated current cost of decommissioning is $253 million and, at the end of 2012, is approximately $769 million. The present value of the pro rata portion of decommissioning costs recorded to date is $134.6 million. On December 31, 1993, the balance in the Decommissioning Trust was $98.9 million. Billings to Sponsors for estimated decommissioning costs commenced during 1983, at which time the Company recorded a deferred charge for the present value of decommissioning costs applicable to operations of the Plant for prior periods. Current period decommissioning costs not funded through billings to Sponsors or earnings on decommissioning fund assets are also deferred. These deferred costs will be amortized to expense as they are funded over the remaining life of the NRC operating license. In 1994, the Company must file a revised estimate of decommissioning costs and a revised schedule of future annual decommissioning fund collections reflecting the historical differences between assumed and actual rates of inflation and the historical differences between assumed and actual rates of earnings on decommissioning fund assets. Filings are required to be made within four years of the most recent FERC approval of decommissioning cost estimates and rates. Cash received from Sponsors for plant decommissioning costs is deposited into the Vermont Yankee Decommissioning Trust in either the Qualified Fund (i.e., amounts currently deductible pursuant to the IRS regulations) or the Nonqualified Fund (i.e., excess collections pursuant to FERC authorization which are not currently deductible). Funds held by the Trust are invested in high-grade U.S. government securities and municipal obligations. Interest earned by the Decommissioning Trust assets is recorded in other income and deductions, with an equal and offsetting amount representing the current period decommissioning cost funded by such earnings reflected as decommissioning expense. Decommissioning expense for 1991 included an adjustment of approximately $2.1 million resulting from the Company's rate reduction filing approved by the FERC on February 28, 1991 as discussed in Note 3. NOTE 3. FERC Rate Case Matters On April 27, 1989, Vermont Yankee filed an application with the NRC to extend the term of the operating license from 2007 to 2012 so that the Plant may operate for 40 years after it entered commercial service in 1972. On December 17, 1990, the NRC issued an amendment to the operating license extending its term to March 21, 2012. The Company submitted a rate reduction filing with the FERC to reflect in rates the adjustments to decommissioning, depreciation and amortization resulting from the license extension. The Company proposed to make this reduction effective as of March 1, 1991 and, since the extension was issued in 1990, to reflect the necessary adjustment for the period January 1, 1990 through February 28, 1991. On February 28, 1991, the FERC approved the Company's rate reduction filing. The effects of this ruling were accounted for prospectively in fiscal 1991, producing a net revenue reduction of approximately $7.4 million in 1991, which reflected the retroactive treatment to January 1, 1990. This ruling resulted in reduced revenue requirements of approximately $3.5 million for both 1992 and 1993, and similar reductions are expected in future years. Notes to Financial Statements NOTE 3. FERC Rate Case Matters (Continued) On March 26, 1993, the FERC initiated a review of the return on common equity component of the formula rates included in the Company's Power Contracts. On October 22, 1993, the FERC approved a settlement whereby the Company retained its 12.25% authorized rate of return on common equity and agreed to credit monthly power billings by approximately $139,000 beginning in June, 1993. In 1994, the Company will submit a rate filing to the FERC which will include, among other things, a revised estimate of decommissioning costs and a revised schedule of future annual decommissioning fund collections. NOTE 4. Other Deferred Charges and Credits In October, 1992, Congress passed the Energy Policy Act of 1992 which requires, among other things, that certain utilities help pay for the cleanup of the DOE's enrichment facilities over a 15-year period. The Company's annual fee is estimated based on the historical share of enrichment service provided by the DOE and is indexed to inflation. These fees will not be adjusted for future business as the DOE's future cost of sales will include a decontamination and decommissioning component. The Act stipulates that the annual fee shall be fully recoverable in rates in the same manner as other fuel costs. In 1993, the DOE billed and the Company paid the first of the 15 annual fees. As of December 31, 1993, the Company has recognized a current accrued liability of $2.6 million for the two fee payments expected to be made in 1994, a deferred credit of $16.0 million for the 12 annual fee payments that are due subsequent to 1994 and a corresponding regulatory asset of $18.6 million which represents the total amount includable in future billings to the purchasers under the Power Contracts. While these amounts are reflected in these financial statements, the Company is reviewing the DOE's calculation of the annual fee and believes that the annual fee will ultimately be reduced. Approximately $2.1 and $3.3 million of the $3.6 and $5.0 million in other deferred charges at December 31, 1993 and 1992, respectively, relate to payments made to the Vermont Low Level Radioactive Waste Authority ("VLLRWA"), an agency of the State of Vermont for the siting and construction of a low-level waste disposal facility. NOTE 5. Long-term Funds The book value and estimated market value of long-term fund investment securities at December 31, is as follows: 1993 1992 Book Market Book Market value value value value (Dollars in thousands) Decommissioning fund: U.S. Treasury obligations $17,262 18,666 $22,000 $23,067 Municipal obligations 79,755 84,576 57,141 59,009 Accrued interest and money market funds 1,863 1,863 2,950 2,950 98,880 105,105 82,091 85,026 Disposal fee defeasance fund: Short-term investments 39,870 39,870 26,457 26,457 Corporate bonds and notes 3,195 3,083 6,110 5,940 Accrued interest and money market funds 419 419 1,325 1,325 43,484 43,372 33,892 33,722 Total long-term fund investments $142,364 $148,477 $115,983 $118,748 Notes to Financial Statements NOTE 5. Long-term Funds (Continued) At December 31, 1993 and 1992, gross unrealized gains and losses pertaining to the long-term investment securities were as follows: 1993 1992 (Dollars in thousands) Unrealized gains on U.S. Treasury obligations $ 1,431 $ 1,071 Unrealized losses on U.S. Treasury obligations $ (27) $ (4) Unrealized gains on Municipal obligations $ 4,843 $ 1,895 Unrealized losses on Municipal obligations $ (22) $ (27) Unrealized losses on corporate bonds and notes $ (112) $ (170) Maturities of short-term obligations, bonds and notes (face amount) at December 31, 1993 are as follows (dollars in thousands): Within one year $42,200 Two to five years 16,977 Five to seven years 19,670 Over seven years 57,860 $136,707 NOTE 6. Long-term Obligations A summary of long-term obligations at December 31, 1993 and 1992 is as follows: 1993 1992 (Dollars in thousands) First mortgage bonds: Series B - 8.50% due 1998 $ - $1,307 Series C - 7.70% due 1998 - 1,612 Series D - 10.125% due 2007 - 23,147 Series E - 9.875% due 2007 - 5,703 Series F - 9.375% due 2007 - 5,704 Series G - 8.94% due 1995 - 25,000 Series H - 8.25% due 1996 - 8,388 Series I - 6.48% due 2009 75,845 - Total first mortgage bonds 75,845 70,861 Eurodollar Agreement Commercial Paper 3,791 3,292 Unamortized premium on debt - 40 Total long-term obligations $ 79,636 $ 74,193 The first mortgage bonds are issued under, have the terms and provisions set forth in, and are secured by an Indenture of Mortgage dated as of October 1, 1970 between the Company and the Trustee, as modified and supplemented by 13 supplemental indentures. All bonds are secured by a first lien on utility plant, exclusive of nuclear fuel, and a pledge of the Power Contracts and the Additional Power Contracts (except for fuel payments) and the Capital Funds Agreements with Sponsors. On July 1, 1993, the Company retired the outstanding Series B and Series C first mortgage bonds. In November, 1993, the Company issued $75.8 million of Series I, first mortgage bonds stated to mature on November 1, 2009. The Company applied the proceeds of the bond issuance principally to retire the remaining Series D, Series E, Series F, Series G and Series H first mortgage bonds including call premiums totalling $3.7 million based on the early redemption of the bonds. Cash sinking fund requirements for the Series I first mortgage bonds are $5.4 million annually beginning in November, 1999. The Company has a $75.0 million Eurodollar Credit Agreement that expires on December 31, 1995 subject to three optional one-year extensions. The Company issued commercial paper under this agreement with weighted average interest rates of 3.22% for 1993 and 3.95% for 1992. Payment of the commercial paper is supported by the Eurodollar Credit Agreement, which is secured by a second mortgage on the Company's generating facility. Notes to Financial Statements NOTE 7. Disclosures About the Fair Value of Financial Instruments The carrying amounts for cash and temporary investments, trade receivables, accounts receivable from sponsors, accounts payable and accrued liabilities approximate their fair values because of the short maturity of these instruments. The fair values of long-term funds are estimated based on quoted market prices for these or similar investments. The fair values of each of the Company's long-term debt instruments are estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The estimated fair value of the Company's financial instruments as of December 31 are summarized as follows (dollars in thousands): 1993 1992 Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Decommissioning fund $98,880 $105,105 $82,091 $85,026 Disposal fee defeasance fund 43,484 43,372 33,892 33,722 Long-term debt 79,636 77,361 74,193 78,235 Disposal fee and accrued interest 80,688 80,688 78,239 78,239 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. NOTE 8. Disposal Fee for Spent Nuclear Fuel The Company has a contract with the United States Department of Energy ("DOE") for the permanent disposal of spent nuclear fuel. Under the terms of this contract, in exchange for the one-time fee discussed below and a quarterly fee of 1 mil per kwh of electricity generated and sold, the DOE agrees to provide disposal services when a facility for spent nuclear fuel and other high-level radioactive waste is available, which is required by current statute to be prior to January 31, 1998. The DOE contract obligates the Company to pay a one-time fee of approximately $39.3 million for disposal costs for all spent fuel discharged through April 7, 1983. Although such amount has been collected in rates from the Sponsors, the Company has elected to defer payment of the fee to the DOE as permitted by the DOE contract. The fee must be paid no later than the first delivery of spent nuclear fuel to the DOE. Interest accrues on the unpaid obligation based on the thirteen-week Treasury Bill rate and is compounded quarterly. Through 1993, the Company deposited approximately $37.5 in an irrevocable trust to be used exclusively for defeasing this obligation at some future date, provided the DOE complies with the terms of the aforementioned contract. On December 31, 1991, the DOE issued an amended final rule modifying the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-level Radioactive Waste. The amended final rule conforms with a March 17, 1989 ruling of the U.S. Court of Appeals for the District of Columbia that the 1 mil per kilowatt hour fee in the Standard Contract should be based on net electricity generated and sold. The impact of the amendment on the Company was to reduce the basis for the fee by 6% on an ongoing basis and to establish a receivable from the DOE for previous overbillings and accrued interest. The Company has recognized in its rates the full impact of the amended final rule to the Standard Contract. The DOE is refunding the overpayments, including interest, to utilities over a four-year period ending in 1995 via credits against quarterly payments. Interest is based on the 90-day Treasury Bill Auction Bond Equivalent and will continue to accrue on amounts remaining to be credited. At December 31, 1993 and 1992, respectively, approximately $0.9 and $1.6 million in principal and interest is reflected in other accounts receivable. Notes to Financial Statements NOTE 9. Short-term Borrowings The Company had lines of credit from various banks totalling $6.3 million at December 31, 1993 and 1992. The maximum amount of short-term borrowings outstanding at any month-end during 1993, 1992 and 1991 was approximately $0.2 million, $0.6 million and $0.4 million, respectively. The average daily amount of short-term borrowings outstanding was approximately $0.3 million for 1993, and $0.1 million for 1992 and 1991 with weighted average interest rates of 5.75% in 1993, 6.12 % in 1992 and 8.19% in 1991. There were no amounts outstanding under these lines of credit as of December 31, 1993 and 1992. NOTE 10. Taxes on Income In February, 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which required the Company to change from the deferred method to the liability method of accounting for income taxes on January 1, 1993. The liability method accounts for deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to differences between the book basis and the tax basis of assets and liabilities ("temporary differences"). This new statement requires recognition of deferred tax liabilities for (a) income tax benefits associated with timing differences previously passed on to customers and (b) the equity component of allowance for funds used during construction, and of a deferred tax asset for the tax effect of the accumulated deferred investment tax credits. It also requires the adjustment of deferred tax liabilities or assets for an enacted change in tax laws or rates, among other things. Although adoption of this new statement has not and is not expected to have a material impact on the Company's cash flow, results of operations or financial position because of the effect of rate regulation, the Company was required to recognize an adjustment to accumulated deferred income taxes and a corresponding regulatory asset or liability to customers (in amounts equal to the required deferred income tax adjustment) to reflect the future revenues or reduction in revenues that will be required when the temporary differences turn around and are recovered or settled in rates. In addition, this new statement required a reclassification of certain deferred income tax liabilities to liabilities to customers in order to reflect the Company's obligation to flow back deferred income taxes provided at rates higher than the current 35% federal tax rate. The Company has applied the provisions of this new statement without restating prior year financial statements. The components of income tax expense for the years ended December 31, 1993, 1992 and 1991 are as follows: 1993 1992 1991 (Dollars in thousands) Taxes on operating income: Current federal income tax $ 4,236 $ 4,926 $ 4,003 Deferred federal income tax (1,059) (1,840) (1,285) Current state income tax 1,097 1,285 1,024 Deferred state income tax 80 (329) 483 Investment tax credit adjustment (577) (641) (740) 3,777 3,401 3,485 Taxes on other income: Current federal income tax 496 598 353 Current state income tax 127 158 94 623 756 447 Total income taxes $ 4,400 $ 4,157 $ 3,932 Notes to Financial Statements NOTE 10. Taxes on Income (Continued) A reconciliation of the Company's effective income tax rates with the federal statutory rate is as follows: 1993 1992 1991 Federal statutory rate 35.0% 34.0% 34.0% State income taxes, net of federal income tax benefit 6.9 6.1 6.1 Investment credit (4.7) (5.3) (6.0) Book depreciation in excess of tax basis 2.0 1.9 1.7 AFUDC equity 0.6 0.9 0.9 Flowback of excess deferred taxes (3.6) (3.1) (6.7) Other (0.1) (0.1) 1.7 36.1% 34.4% 31.7% The items comprising deferred income tax expense are as follows: 1993 1992 1991 (Dollars in thousands) Decommissioning expense not currently deductible $ (351) $ (104) $ 14 Tax depreciation over (under) financial statement depreciation (978) (679) 955 Tax fuel amortization over (under) financial statement amortization (255) (637) (1,389) Tax loss on reacquisition of debt over (under) financial statement expense 1,887 187 178 Pension expense not currently deductible (167) (192) (562) Postemployment benefits deduction over (under) financial statement expense 67 (141) - Amortization of materials and supplies not currently deductible (335) (343) (239) Low-level waste deduction over (under) financial statement expense (596) 139 825 Flowback of excess deferred taxes (442) (376) (828) Other 191 (23) 245 $ (979) $ (2,169) $ (801) Notes to Financial Statements NOTE 10. Taxes on Income (Continued) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1993 and January 1, 1993 are presented below: December 31, January 1, 1993 1993 (Dollars in thousands) Deferred tax assets: Accumulated amortization of final nuclear core $ 2,914 $ 2,559 Nuclear decommissioning liability 2,810 2,291 Regulatory liabilities 5,856 6,793 Accumulated deferred investment credit 2,830 2,984 Accumulated amortization of materials and supplies 2,281 1,851 Other 2,771 4,591 Total gross deferred tax assets 19,462 21,069 Less valuation allowance 1,231 1,142 Net deferred tax assets 18,231 19,927 Deferred tax liabilities: Plant and equipment (51,258) (51,399) Other (5,220) (5,574) Total gross deferred tax liabilities (56,478) (56,973) Net deferred tax liability (38,247) (37,046) The valuation allowance is the result of a provision in Vermont tax law which limits refunds resulting from carrybacks of net operating losses. NOTE 11. Supplemental Cash Flow Information The following information supplements the cash flow information provided in the Statements of Cash Flows: 1993 1992 1991 (Dollars in thousands) Cash paid during the year for: Interest (net of amount capitalized) $ 7,632 $ 7,062 $ 7,990 Income taxes $ 7,070 $ 6,192 $ 4,793 NOTE 12. Pension Plans The Company has two noncontributory pension plans covering substantially all of its regular employees. The Company's funding policy is to fund the net periodic pension expense accrued each year. Benefits are based on age, years of service and the level of compensation during the final years of employment. The aggregate funded status of the Company's pension plans as of December 31, 1993 and 1992 is as follows: December 31, 1993 1992 (Dollars in thousands) Vested benefits $ 8,882 $ 6,548 Nonvested benefits 1,338 918 Accumulated benefit obligation 10,220 7,466 Additional benefits related to future compensation levels 8,540 7,728 Projected benefit obligation 18,760 15,194 Fair value of plan assets, invested primarily in equities and bonds 16,343 13,791 Projected benefit obligation in excess of plan assets $ 2,417 $ 1,403 Notes to Financial Statements NOTE 12. Pension Plans (Continued) The increase in the projected benefit obligation from $15.2 million in 1992 to $18.8 million in 1993 is the result of additional service accruals, interest costs and changed plan assumptions. Certain changes in the items shown above are not recognized as they occur, but are amortized systematically over subsequent periods. Unrecognized amounts still to be amortized and the amount that is included in the balance sheet appear below. December 31, 1993 1992 (Dollars in thousands) Unrecognized net transition obligation $ 996 $1,057 Unrecognized net gain (4,086) (4,939) Pension liability included in balance sheet 4,866 4,610 Unrecognized prior service costs 641 675 Projected benefit obligation in excess of plan assets $ 2,417 $ 1,403 The following are pension plan assumptions as of December 31, 1993 and 1992: December 31, 1993 1992 Discount rate 7.0% 8.0% Compensation scale 5.5% 6.5% Expected return on assets 8.5% 8.5% Net pension expense for the three years ending December 31, 1993 included the following components: 1993 1992 1991 (Dollars in thousands) Service cost - benefits earned $ 1,141 $ 1,275 $ 1,147 Interest cost on projected benefit obligation 1,288 1,305 1,104 Actual (return) loss on plan assets (1,792) (867) (2,124) Net amortization and deferral 631 78 1,452 Net pension expense $ 1,268 $ 1,791 $ 1,579 NOTE 13. Postretirement Benefits Other Than Pensions The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS 106), on January 1, 1992. This statement requires companies to use accrual accounting for postretirement benefits other than pensions. Prior to 1992, the Company accrued and collected a portion of postretirement benefits costs through decommissioning billings while the remaining cost was expensed when benefits were paid. The incremental cost, above the amount collected through decommissioning billings, approximately $2.4 million, is now accrued and since January, 1992, has been included in the Company's monthly power billings to Sponsors. The Company is funding this liability by placing monies in separate trusts. In order to maximize the deductible contributions permitted under IRS regulations, the Company has amended its pension plans and established separate VEBA trusts for management and union employees. Notes to Financial Statements NOTE 13. Postretirement Benefits Other Than Pensions (Continued) In December, 1992, the FERC issued its policy statement setting forth how utilities can recover in rates the increased costs associated with the implementation of SFAS 106. The policy statement specifies three conditions that must be met before FERC will consider companies' election of the accrual method: (a) the Company must agree to make cash deposits to an irrevocable external trust fund, at least quarterly, in amounts that are proportional and, on an annual basis, equal to the annual test period allowance for postretirement benefits other than pensions; (b) the Company must agree to maximize the use of income tax deductions for contributions to funds of this nature; and (c) in order to recover the transition obligation, the Company must file a general rate change within three years of adoption of SFAS 106. The following table presents the plan's funded status reconciled with amounts recognized in the Company's balance sheets as of December 31, 1993 and December 31, 1992 (dollars in thousands): Accumulated postretirement benefit obligation: 1993 1992 Retirees $ 1,078 $ 1,277 Fully eligible active plan participants 921 1,332 Other active participants 8,071 9,935 Total accumulated postretirement benefit obligation 10,070 12,544 Fair value of plan assets, invested primarily in short-term investments 2,457 1,595 Accumulated postretirement benefit obligation in excess of plan assets $ 7,613 $10,949 Unrecognized net transition obligation $ 7,933 $10,314 Unrecognized net gain (1,980) (126) Accrued postretirement benefit cost collected through decommissioning billings and included in accrued liabilities 1,660 761 Accumulated postretirement benefit obligation in excess of plan assets $ 7,613 $ 10,949 The net periodic postretirement benefit cost for 1993 and 1992 includes the following components (dollars in thousands): 1993 1992 Service cost $ 735 $ 958 Interest cost 652 941 Net amortization and deferral 350 543 Net periodic postretirement benefit cost $ 1,737 $2,442 For measurement purposes, a 15% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) was assumed for 1993; the rate was assumed to decrease gradually to 6% by the year 2001 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1993 by $2.2 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1993 by $0.3 million. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7% at December 31, 1993. The change in the accumulated postretirement benefit obligation from $12.5 million in 1992 to $10.0 million in 1993 is the result of adjustments made to reflect a lower actual medical cost increase during 1993 than projected. The reduction in the unrecognized net transition obligation from $10.3 million in 1992 to $7.9 million in 1993 is primarily the result of elimination of Medicare Part B coverage. Notes to Financial Statements NOTE 14. Lease Commitments The Company leases equipment and systems under noncancelable operating leases. Charges against income for rentals under these leases were approximately $3.7 million, $2.6 million and $3.7 million in 1993, 1992 and 1991, respectively. Minimum future rentals as of December 31, 1993 are as follows: Annual Fiscal years ended rentals (Dollars in thousands) 1994 $ 3,283 1995 3,060 1996 2,878 1997 2,798 1998 and after 5,053 The Company has entered into an agreement with General Electric Capital Corporation to lease certain equipment being constructed by General Electric Corporation valued at approximately $29 million including installation costs. Under the lease agreement, the Company will make 120 monthly payments of $342,358 per month commencing on the later of (1) April 15, 1995 or (2) the commissioning date of the equipment. The lease will also include the sale and leaseback of a $2 million turbine rotor forging previously owned by the Company. The lease will be classified as an operating lease for accounting purposes. The construction contract requires progress payments to be paid by Vermont Yankee prior to installation of the equipment. Just prior to delivery of the equipment, the lessor will reimburse Vermont Yankee for these payments and will continue to make the remaining payments until the commencement date of the lease. During the time period subsequent to equipment delivery before the equipment is commissioned, the Company will pay interim rent to the lessor based on the amount of outstanding progress payments. The final documentation of the lease is currently being negotiated, and if a final agreement cannot be reached, the Company would be responsible for substantial termination payments. Low-level Waste In February, 1993, the Vermont Public Service Board issued an order which requires the Company to pay its share of expenses incurred by the Vermont Low Level Radioactive Waste Authority for the period April, 1993 through June, 1994, currently capped at $4.5 million. In addition, in accordance with Vermont Act 296, the order established a fund for the long-term care of any eventual Vermont low-level waste disposal facility. Based on this order, the Company must make annual payments of approximately $0.8 million into the long-term care fund. Payments made to the VLLRWA, not pertaining directly to the siting and construction of a low-level waste disposal facility, are being expensed currently. In parallel with siting a low-level radioactive waste facility in Vermont, there has been a three-state effort between Vermont, Maine, and Texas to form a compact to site such a facility in Texas. The Texas Legislature has approved, and Governor Ann Richards of Texas has signed into law, a bill that would form such a compact. On November 2, 1993, Maine voters ratified the compact. Early during its 1994 session, the Vermont Legislature is scheduled to vote to approve entry into the compact. Following approval by the Vermont Legislature, the compact will require approval of the U.S. Congress. Notes to Financial Statements NOTE 15. Commitments and Contingencies (Continued) If the compact is successful and proceeds on schedule, Vermont Yankee would begin sending its waste to a Texas facility during 1997. Under the proposed compact, Vermont would pay the State of Texas $25 million ($12.5 million when the U.S. Congress ratifies the compact and $12.5 million when the facility opens). In addition, Vermont must pay $2.5 million ($1.25 million when Congress ratifies the compact and $1.25 million when the facility is licensed) for community assistance projects in Hudspeth County, Texas, where the facility is to be located. Vermont would also pay one-third of the Texas Low-Level Radioactive Waste Disposal Compact Commission's expenses until the facility opens. The Disposal fees for generators in Vermont and Maine would then be set at a level that is the same for generators in Texas. The Company anticipates recovering the costs of the compact from sponsors. Nuclear Fuel The Company has approximately $165 million of "requirements based" purchase contracts for nuclear fuel needs to meet substantially all of its power production requirements through 2002. Under these contracts, any disruption of operating activity would allow the Company to cancel or postpone deliveries until actually needed. Insurance The Price-Anderson Act, as amended, currently limits public liability from a single incident at a nuclear power plant to $9.4 billion. Any damages beyond $9.4 billion are indemnified under an agreement with the NRC, but subject to Congressional approval. The first $200 million of liability coverage is the maximum provided by private insurance. The Secondary Financial Protection program is a retrospective insurance plan providing additional coverage up to $9.2 billion per incident by assessing retrospective premiums of $79.3 million against each of the 116 reactor units that are currently subject to the Program in the United States, limited to a maximum assessment of $10 million per incident per nuclear unit in any one year. The maximum assessment is to be adjusted at least every five years to reflect inflationary changes. The above insurance covers all workers employed at nuclear facilities prior to January 1, 1988, for bodily injury claims. The Company has purchased a Master Worker insurance policy with limits of $200 million with one automatic reinstatement of policy limits to cover workers employed on or after January 1, 1988. Vermont Yankee's estimated contingent liability for a retrospective premium on the Master Workers policy as of December, 1993 is $3.1 million. The Secondary Financial Protection program referenced above provides coverage in excess of the Master Worker policy. Insurance has been purchased from Nuclear Electric Insurance Limited (NEIL II) to cover the costs of property damage, decontamination or premature decommissioning resulting from a nuclear incident. All companies insured with NEIL II are subject to retroactive assessments if losses exceed the accumulated funds available to NEIL II. The maximum potential assessment against the Company with respect to losses arising during the current policy year is $5.8 million at the time of a first loss and $12.3 million at the time of a subsequent loss. The Company's liability for the retrospective premium adjustment for any policy year ceases six years after the end of that policy year unless prior demand has been made. Notes to Financial Statements VERMONT YANKEE NUCLEAR POWER CORPORATION Schedule I Marketable Securities - Other Investments (Dollars in Thousands) __________________________________________________________________________ Name of Issuer and Number Cost of Market Amount Title of Each Issue of Shares Each Value of at Which or Units Issue Each Each Principal * Issue Portfolio Amounts of at of Equity Bonds and 12/31/93 Security Notes Issues and Each Other Security Issue Is Carried on the Balance Sheet __________________________________________________________________________ Decommissioning fund: U.S. Treasury obligations $ 16,252 $ 17,262 $ 18,666 $ 17,262 Municipal obligations 78,055 79,755 84,576 79,755 Money market funds and Accrued Interest 1,863 1,863 1,863 1,863 $ 96,170 $ 98,880 $105,105 $ 98,880 Disposal fee defeasance fund: Short-term investments $ 40,200 $ 39,870 $ 39,870 $ 39,870 Corporate bonds and notes 3,200 3,195 3,083 3,195 Money market funds and Accrued Interest 419 419 419 419 $ 43,819 $ 43,484 $ 43,372 $ 43,484 * Cost includes accrued interest and amortization of premiums and discounts. VERMONT YANKEE NUCLEAR POWER CORPORATION Schedule V - Property, Plant and Equipment Years Ended December 31, 1993, 1992, and 1991 ($000) 1993 1992 1991 Electric Plant: Land and land rights $ 1,397 $ 1,127 $ 984 Structures and improvements 61,887 61,868 61,515 Reactor, turbogenerator and accessory equipment 304,388 292,561 285,808 Transmission equipment 5,948 5,606 6,141 Other 1,116 1,116 1,116 Construction work in progress 597 6,408 4,188 375,333 368,686 359,752 Nuclear Fuel: Assemblies in reactor 69,063 74,025 83,213 Fuel in process - 5,236 637 Fuel in stock - - 22,863 Spent fuel 287,700 259,199 227,040 356,763 338,460 333,753 Total $732,096 $707,146 $693,505 Neither total additions of $25,361,000, $15,167,000 or $25,002,000 nor total retirements of $411,000, $1,526,000, or $0 for the years ended December 31, 1993, 1992 and 1991, respectively, exceeded 10% of the utility plant balance at the end of the year. VERMONT YANKEE NUCLEAR POWER CORPORATION Schedule VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment Years Ended December 31, 1993, 1992 and 1991 (Dollars in Thousands) Additions Other Balance Charged to Charges Balance Beginning Costs and and At End of Year Expenses Retirements (Deduct) of Year Accumulated depreciation of electric plant: (F1) 1993 185,263 13,707 (411) (170) (B) 198,389 1992 173,827 13,253 (1,526) (291) (B) 185,263 1991 162,065 11,800 - ( 38) (B) 173,827 Accumulated amortization of nuclear fuel: 1993 308,848 19,526 - (4,115) (C) 324,259 1992 291,013 21,240 - (3,405) (C) 308,848 1991 270,011 24,864 - (3,862) (C) 291,013 Total accumulated depreciation and amortization 1993 494,111 33,234 (411) (4,286) 522,648 1992 464,840 34,493 (1,526) (3,696) 494,111 1991 432,076 36,664 - (3,900) 464,840 (FN) (F1) Electric plant is being depreciated on the straight-line method at rates designed to fully depreciate all depreciable properties by 2012. (See Note 1 to the financial statements). (B) Represents net salvage and removal costs. (C) Represents disposal costs of spent nuclear fuel. CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 7, 1994 included or incorporated by reference in this Form 10-K, into Central Vermont Public Service Corporation's previously filed Registration Statements on Form S-8, File No. 33-22741, Form S-8, File No. 33-22742, Form S-8, File No. 33-58102, Form S-8, File No. 33-6200 and Form S-3, File No. 33-37095. ARTHUR ANDERSEN & CO. Boston, Massachusetts March 25, 1994 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Central Vermont Public Service Corporation: We consent to the incorporation by reference in the Registration Statement on Form S-8, File No. 33-22741, Form S-8, File No. 33-22742, Form S-8, File No. 33-58102, Form S-8, File No. 33-6200, and Form S-3, File No. 33-37095, of our report dated February 5, 1993 relating to the balance sheet of Vermont Yankee Nuclear Power Corporation as of December 31, 1992 and the related statements of income and retained earnings and cash flows for each of the years in the two-year period ended December 31, 1992, which report is included in the December 31, 1993 Annual Report on Form 10-K of Central Vermont Public Service Corporation. KPMG PEAT MARWICK Boston, Massachusetts March 24, 1994 EXHIBIT INDEX Each document described below is incorporated by reference to the files of the Securities and Exchange Commission, unless the reference to the document is marked as follows: * - Document has heretofore been filed with the Commission as is incorporated by reference and made a part hereof. Exhibit Number Description 3. Articles of Incorporation and By-Laws 3-1 By-Laws, as amended December 3, 1990. (Exhibit No. 3-1, 1990 10-K) 3-2 Articles of Association, as amended August 11, 1992. (Exhibit No. 3-2, 1992 10-K) 4. Instruments defining the rights of security holders including Indentures Incorporated herein by reference: B-1 Mortgage dated October 1, 1929, between the Company and Old Colony Trust Company, Trustee, securing the Company's First Mortgage Bonds. (Exhibit B-3, File No. 2-2364) B-2 Supplemental Indenture dated as of August 1, 1936, supplemental to B-1. (Exhibit B-4 File No. 2364) B-3 Copy of Supplemental Indenture dated as of November 15, 1943, supplemental to B-1. (Exhibit B-3, File No. 2-5250 B-4 Copy of Supplemental Indenture dated as of December 1, 1943, supplemental to B-1. (Exhibit No. B-4, File No. 2-5250) B-5 Copy of directors' resolutions adopted December 14, 1943, establishing the Series C Bonds and dealing with other related matters, supplemental to B-1. (Exhibit B-5, File No. 2-5250) B-6 Copy of Supplemental Indenture dated as of April 1, 1944 supplemental to B-1. (Exhibit No. B-6, File No. 2-5466) B-7 Copy of Supplemental Indenture dated as of February 1, 1945, supplemental to B-1. (Exhibit 7.6, File No. 2-5615 (22-385) B-8 Directors' resolutions adopted April 9, 1945, establishing the Series D Bonds and dealing with other matters, supplemental to B-1. (Exhibit 7.8, File No. 2-5615 (22-385) B-9 Copy of Supplemental Indenture dated as of September 2, 1947, supplemental to B-1. (Exhibit 7.9, File No. 2-7489) B-10 Copy of Supplemental Indenture dated as of July 15, 1948, and directors' resolutions establishing the Series E Bonds and dealing with other matters, supplemental to B-1. (Exhibit 7.10, File No. 2-8388) B-11 Copy of Supplemental Indenture dated as of May 1, 1950, and directors' resolutions establishing the Series F Bonds and dealing with other matters, supplemental to B-1. (Exhibit 7.11, File No. 2-8388) B-12 Copy of Supplemental Indenture dated August 1, 1951, and and directors'resolutions, establishing the Series G Bonds and dealing with other matters, supplemental to B-1. (Exhibit 7.12, File No. 2-9073) B-13 Copy of Supplemental Indenture dated May 1, 1952, and directors' resolutions, establishing the Series H Bonds and dealing with other matters, supplemental to B-1. (Exhibit 4.3.13, File No. 2-9613) B-14 Copy of Supplemental Indenture dated as of July 10, 1953, supplemental to B-1. (July, 1953 Form 8-K) B-15 Copy of Supplemental Indenture dated as of June 1, 1954, and directors' resolutions establishing the Series K Bonds and dealing with other matters, supplemental to B-1. (Exhibit 4.2.16, File No. 2-10959) B-16 Copy of Supplemental Indenture dated as of February 1, 1957 and directors' resolutions establishing the Series L Bonds and dealing with other matters, supplemental to B-1. (Exhibit 4.2.16, File No. 2-13321) B-17 Copy of Supplemental Indenture dated as of March 15, 1960, supplemental to B-1. (March, 1960 Form 8-K) B-18 Copy of Supplemental Indenture dated as of March 1, 1962, supplemental to B-1. (March, 1962 Form 8-K) B-19 Copy of Supplemental Indenture dated as of March 2, 1964, supplemental to B-1. (March, 1964 Form 8-K) B-20 Copy of Supplemental Indenture dated as of March 1, 1965, and directors' resolutions establishing the Series M Bonds and dealing with other matters, supplemental to B-1. (April, 1965 Form 8-K) B-21 Copy of Supplemental Indenture dated as of December 1, 1966, and directors' resolutions establishing the Series N Bonds and dealing with other matters, supplemental to B-1. (January, 1967 Form 8-K) B-22 Copy of Supplemental Indenture dated as of December 1, 1967, and directors' resolutions establishing the Series O Bonds and dealing with other matters, supplemental to B-1. (December, 1967 Form 8-K) B-23 Copy of Supplemental Indenture dated as of July 1, 1969, and directors' resolutions establishing the Series P Bonds and dealing with other matters, supplemental to B-1. (July, 1969 Form 8-K) B-24 Copy of Supplemental Indenture dated as of December 1, 1969, and directors' resolutions establishing the Series Q Bonds January, and dealing with other matters, supplemental to B-1. (January, 1970 Form 8-K) B-25 Copy of Supplemental Indenture dated as of May 15, 1971, and directors' resolutions establishing the Series R Bonds and dealing with other matters, supplemental to B-1. (May, 1971 Form 8-K) B-26 Copy of Supplemental Indenture dated as of April 15, 1973, and directors' resolutions establishing the Series S Bonds and dealing with other matters, supplemental to B-1. (May, 1973 Form 8-K) B-27 Copy of Supplemental Indenture dated as of April 1, 1975, and directors' resolutions establishing the Series T Bonds and dealing with other matters, supplemental to B-1. (April, 1975 Form 8-K) B-28 Copy of Supplemental Indenture dated as of April 1, 1977, modifying B-1. (Exhibit 2.42, File No. 2-58621) B-29 Copy of Supplemental Indenture dated as of July 29, 1977, and directors' resolutions establishing the Series U, V, W, and X Bonds and dealing with other matters, supplemental to B-1. (Exhibit 2.43, File No. 2-58621) B-30 Copy of Thirtieth Supplemental Indenture dated as of September 15, 1978, and directors' resolutions establishing the Series Y Bonds and dealing with other matters, supplemental to B-1. (Exhibit B-30, 1980 Form 10-K) B-31 Copy of Thirty-first Supplemental Indenture dated as of September 1, 1979, and directors' resolutions establishing the Series Z Bonds and dealing with other matters, supplemental to B-1. (Exhibit B-31, 1980 Form 10-K) B-32 Copy of Thirty-second Supplemental Indenture dated as of June 1, 1981, and directors' resolutions establishing the Series AA Bonds and dealing with other matters, supplemental to B-1. (Exhibit B-32, 1981 Form 10-K) B-33 Copy of Trust Indenture dated as of May 1, 1962, between the Company and Mellon National Bank and Trust Company, Trustee, relating to the Company's 4 7/8% Debentures due May 1, 1987. (Exhibit 4.2.24, File No. 2-26485) B-34 Copy of Trust Indenture dated as of May 1, 1968, between the Company and The First National Bank of Boston, Trustee, relating to the Company's 7% Debentures due May 1, 1993. (May, 1986 Form 8-K) B-35 Copy of Trust Indenture dated as of April 1, 1970, between the Company and The First National Bank of Boston, Trustee, relating to the Company's 10 5/8% Debentures due April 1, 1995. (April, 1970 Form 8-K) B-36 Copy of Indenture of Mortgage, dated as of September 1, 1957, between Vermont Electric Power Company, Inc. ("Velco") and Bankers Trust Company, securing Velco's First Mortgage Bonds. (Exhibit (b)(1), 1957 Form 10-K) B-37 Copy of Supplemental Indenture dated as of December 1, 1958, modifying B-36. (Exhibit (b)(1), 1958 Form 10-K) B-38 Copy of Supplemental Indenture dated as of December 1, 1969, modifying B-36. (Exhibit 2.35, File 2-57458) B-39 Copy of Supplemental Indenture dated as of November 1, 1970, modifying B-36. (Exhibit 2.36, File No. 2-57458) B-40 Copy of Supplemental Indenture dated as of December 1, 1971, modifying B-36. (Exhibit 2.37, File No. 2-57458) B-41 Copy of Supplemental Indenture dated as of December 1, 1972, modifying B-36. (Exhibit 2.38, File No. 2-57458) B-42 Copy of Supplemental Indenture dated as of July 1, l974, modifying B-36. (Exhibit 2.39, File No. 2-57458) B-43 Copy of Supplemental Indenture dated as of January 1, 1975, modifying B-36. (Exhibit 2.40, File No. 2-57458) B-44 Copy of Supplemental Indenture dated as of January 1, 1979, modifying B-36. (Exhibit B-44, 1981 Form 10-K) B-45 Copy of Thirty-third Supplemental Indenture dated as of August 15, 1983, and directors' resolutions establishing the Series BB Bonds and dealing with other matters, supplemental to B-1. (Exhibit B-45, 1983 Form 10-K) B-46 Copy of Bond Purchase Agreement between Merrill, Lynch, Pierce, Fenner & Smith, Inc., Underwriters and The Industrial Development Authority of the State of New Hampshire, issuer and Central Vermont Public Service Corporation. (Exhibit B-46, 1984 Form 10-K) B-47 Copy of Thirty-Fourth Supplemental Indenture dated as of January 15, 1985, and directors' resolutions establishing the Series CC Bonds and Series DD Bonds and matters connected therewith, supplemental to B-1. (B-47, 1985 Form 10-K) B-48 Copy of Bond Purchase Agreement among Connecticut Development Authority and Central Vermont Public Service Corporation with E. F. Hutton & Company Inc. dated December 11, 1985. (Exhibit B-48, 1985 Form 10-K) B-49 Stock-Purchase Agreement between Vermont Electric Power Company, Inc. and the Company dated August 11, 1986 relative to purchase of Class C Preferred Stock. (Exhibit B-49, 1986 Form 10-K) 4-50 Copy of Thirty-Fifth Supplemental Indenture dated as of December 15, 1989 and directors' resolutions establishing the Series EE, Series FF and Series GG Bonds and matters connected therewith, supplemental to B-1. (Exhibit 4-50, 1989 Form 10-K) 4-51 Copy of Thirty-Sixth Supplemental Indenture dated as of December 10, 1990 and directors' resolutions establishing the Series HH Bonds and matters connected therewith, supplemental to B-1. (Exhibit 4-51, 1990 Form 10-K) 4-52 Copy of Thirty-Seventh Supplemental Indenture dated December 10, 1991 and directors' resolutions establishing the Series JJ Bonds and matters connected therewith, supplemental to B-1. (Exhibit 4-52, 1991 Form 10-K) * 4-53 Copy of Thirty-Eight Supplemental Indenture dated December 10, 1993 establishing Series KK, LL, MM, NN, OO supplemental to B-1 (Exhibit 4-53, 1993 Form 10-K) 10. Material Contracts (*Denotes filed herewith) Incorporated herein by reference: 10.l Copy of firm power Contract dated August 29, 1958, and supplements thereto dated September 19, 1958, October 7, 1958, and October 1, 1960, between the Company and the State of Vermont (the "State"). (Exhibit C-1, File No. 2-17184) 10.1.1 Agreement setting out Supplemental NEPOOL Understandings dated as of April 2, 1973. (Exhibit C-22, File No. 5-50198) 10.2 Copy of Transmission Contract dated June 13, 1957, between Velco and the State, relating to transmission of power. (Exhibit C-2, 1957 Form 10-K) 10.2.1 Copy of letter agreement dated August 4, 1961, between Velco and the State. (Exhibit C-3, File No. 2-26485) 10.2.2 Amendment dated September 23, 1969. (Exhibit C-4, File No. 2-38161) 10.2.3 Amendment dated March 12, 1980. (Exhibit C-92, 1982 Form 10-K) 10.2.4 Amendment dated September 24, 1980. (Exhibit C-93, 1982 Form 10-K) 10.3 Copy of subtransmission contract dated August 29, 1958, between Velco and the Company (there are seven similar contracts between Velco and other utilities). (Exhibit C-5, 1957 Form 10-K) 10.3.1 Copies of Amendments dated September 7, 196l, November 2, 1967, March 22, 1968, and October 29, 1968. (Exhibit C-6, File No. 2-32917) 10.3.2 Amendment dated December 1, 1972. (Exhibit C-91, 1982 Form 10-K) 10.4 Copy of Three-Party Agreement dated September 25, 1957, between the Company, Green Mountain and Velco. (Exhibit C-7, File No. 2-17184) 10.4.1 Superseding Three Party Power Agreement dated January 1, 1990. (Exhibit 10-201, 1990 Form 10-K) 10.4.2 Agreement Amending Superseding Three Party Power Agreement dated May 1, 1991. (Exhibit 10.4.2, 1991 Form 10-K) 10.5 Copy of firm power Contract dated December 29, 1961, between the Company and the State, relating to purchase of Niagara Project power. (Exhibit C-8, File No. 2-26485) 10.5.1 Amendment effective as of January 1, 1980. (Exhibit C-51, 1980 Form 10-K) 10.6 Copy of agreement dated July 16, 1966, and letter supplement dated July 16, 1966, between Velco and Public Service Company of New Hampshire relating to purchase of single unit power from Merrimack II. (Exhibit C-9, File No. 2-26485) 10.6.1 Copy of Letter Agreement dated July 10, 1968, modifying Exhibit A. Exhibit C-10, File No. 2-32917) 10.7 Copy of Capital Funds Agreement between the Company and Vermont Yankee dated as of February 1, 1968. (Exhibit C-11, File No. 70-4611) 10.7.1 Copy of Amendment dated March 12, 1968. (Exhibit C-12, File No. 70-4611) 10.8 Copy of Power Contract between the Company and Vermont Yankee dated as of February 1, 1968. (Exhibit C-13, File No. 70-4591) 10.8.1 Amendment dated April 15, 1983. (C-106, 1983 Form 10-K) 10.8.2 Copy of Additional Power Contract dated February 1, 1984. (Exhibit C-123, 1984 Form 10-K ) 10.8.3 Amendment No. 3 to Vermont Yankee Power Contract, dated April 24, 1985. (Exhibit 10-144, 1986 Form 10-K) 10.8.4 Amendment No. 4 to Vermont Yankee Power Contract, dated June 1, 1985. (Exhibit 10-145, 1986 Form 10-K) 10.8.5 Amendment No. 5 dated May 6, 1988. (Exhibit 10-179, 1988 Form 10-K) 10.8.6 Amendment No. 6 dated May 6, 1988. (Exhibit 10-180, 1988 Form 10-K) 10.8.7 Amendment No. 7 dated June 15, 1989. (Exhibit 10-195, 1989 Form 10-K) 10.9 Copy of Capital Funds Agreement between the Company and Maine Yankee dated as of May 20, 1968. (Exhibit C-14, File No. 70-4658) 10.9.1 Amendment No. 1 dated August 1, 1985. (Exhibit C-125, 1984 Form 10-K ) 10.10 Copy of Power Contract between the Company and Maine Yankee dated as of May 20, 1968. (Exhibit C-15, File No. 70-4658) 10.10.1 Amendment No. 1 dated March 1, 1984. (Exhibit C-112, 1984 Form 10-K) 10.10.2 Amendment No. 2 effective January 1, 1984. (Exhibit C-113, 1984 Form 10-K) 10.10.3 Amendment No. 3 dated October 1, 1984. (Exhibit C-114, 1984 Form 10-K) 10.10.4 Additional Power Contract dated February 1, 1984. (Exhibit C-126, 1985 Form 10-K) 10.11 Copy of Agreement dated January 17, 1968, between Velco and Public Service Company of New Hampshire relating to purchase of additional unit power from Merrimack II. (Exhibit C-16, File No. 2-32917) 10.12 Copy of Agreement dated February 10, 1968 between the Company and Velco relating to purchase by Company of Merrimack II unit power. (There are 25 similar agreements between Velco and other utilities.) (Exhibit C-17, File No. 2-32917) 10.13 Copy of Three-Party Power Agreement dated as of November 21, 1969, among the Company, Velco, and Green Mountain relating to purchase and sale of power from Vermont Yankee Nuclear Power Corporation. (Exhibit C-18, File No. 2-38161) 10.13.1 Amendment dated June 1, 1981. (Exhibit C-59, 1981 Form 10-K) 10.14 Copy of Three-Party Transmission Agreement dated as of November 21, 1969, among the Company, Velco, and Green Mountain providing for transmission of power from Vermont Yankee Nuclear Power Corporation. (Exhibit C-19, File No. 2-38161) 10.14.1 Amendment dated June 1, 1981. (Exhibit C-60, 1981 Form 10-K) 10.15 Copy of Stockholders Agreement dated March 29, 1957, between the Company, Velco, Green Mountain and Citizens Utilities Company. (Exhibit No. C-20, File No. 70-3558) 10.16 New England Power Pool Agreement dated as of September 1, 1971, as amended to November 1, 1975. (Exhibit C-21, File No. 2-55385) 10.16.1 Amendment dated December 31, 1976. (Exhibit C-52, 1980 Form 10-K) 10.16.2 Amendment dated January 23, 1977. (Exhibit C-53 1980 Form 10-K) 10.16.3 Amendment dated July 1, 1977. (Exhibit C-54, 1980 Form 10-K) 10.16.4 Amendment dated August 1, 1977. (Exhibit C-55, 1980 Form 10-K) 10.16.5 Amendment dated August 15, 1978. (Exhibit C-56, 1980 Form 10-K) 10.16.6 Amendment dated January 31, 1979. (Exhibit C-57 1980 Form 10-K) 10.16.7 Amendment dated Feburary 1, 1980. (Exhibit C-58, 1980 Form 10-K) 10.16.8 Amendment dated December 31, 1976. (Exhibit C-72, 1981 Form 10-K) 10.16.9 Amendment dated January 31, 1977. (Exhibit C-73, 1981 Form 10-K) 10.16.10 Amendment dated July 1, 1977. (Exhibit C-74, 1981 Form 10-K) 10.16.11 Amendment dated August 1, 1977. (Exhibit C-75, 1981 Form 10-K) 10.16.12 Amendment dated August 15, 1978. (Exhibit C-76, 1981 Form 10-K) 10.16.13 Amendment dated January 31, 1980. (Exhibit C-77, 1981 Form 10-K) 10.16.14 Amendment dated February 1, 1980. (Exhibit C-78, 1981 Form 10-K) 10.16.15 Amendment dated September 1, 1981. (Exhibit C-79 1981 Form 10-K) 10.16.16 Amendment dated December 1, 1981. (Exhibit C-80 1981 Form 10-K) 10.16.17 Amendment dated June 15, 1983. (Exhibit C-105, 1983 Form 10-K) 10.16.18 Amendment dated September 1, 1985. (Exhibit 10-160, 1986 Form 10-K) 10.16.19 Amendment dated April 30, 1987. (Exhibit 10-172, 1987 Form 10-K) 10.16.20 Amendment dated March 1, 1988. (Exhibit 10-178, 1988 Form 10-K) 10.16.21 Amendment dated March 15, 1989. (Exhibit 10-194, 1989 Form 10-K) 10.16.22 Amendment dated October 1, 1990. (Exhibit 10-203, 1990 Form 10-K) 10.16.23 Amendment dated September 15, 1992. (Exhibit 10.16.23, 1992 Form 10-K) 10.16.24 Amendment dated May 1, 1993 10.16.25 Amendment dated June 1, 1993 10.17 Agreement dated October 13, 1972, for Joint Ownership, Construction and Operation of Pilgrim Unit No. 2 among Boston Edison Company and other utilities, including the Company. (Exhibit C-23, File No. 2-45990) 10.17.1 Amendments dated September 20, 1973, and September 15, 1974. (Exhibit C-24, File No. 2-51999) 10.17.2 Amendment dated December 1, 1974. (Exhibit C-25, File No. 2-54449) 10.17.3 Amendent dated February 15, 1975., (Exhibit C-26, File No. 2-53819) 10.17.4 Amendment dated April 30, 1975. (Exhibit C-27, File No. 2-53819) 10.17.5 Amendment dated as of June 30, 1975. (Exhibit C-28, File No. 2-54449) 10.17.6 Instrument of Transfer dated as of October 1, 1974, assigning partial interest from the Company to Green Mountain Power Corporation. (Exhibit C-29, File No. 2-52177) 10.17.7 Instrument of Transfer dated as of January 17, 1975, assigning a partial interest from the Company to the Burlington Electric Department. (Exhibit C-30, File No. 2-55458) 10.17.8 Addendum dated as of October 1, 1974 by which Green Mountain Power Corporation became a party thereto. (Exhibit C-31, File No. 2-52177) 10.17.9 Addendum dated as of January 17, 1975 by which the Burlington Electric Department became a party thereto. (Ehibit C-32, File No. 2-55450) 10.17.10 Amendment 23 dated as of 1975. (Exhibit C-50, 1975 Form 10-K) 10.18 Agreement for Sharing Costs Associated with Pilgrim Unit No.2 Transmission dated October 13, 1972, among Boston Edison Company and other utilities including the Company. (Exhibit C-33, File No. 2-45990) 10.18.1 Addendum dated as of October 1, 1974, by which Green Mountain Power Corporation became a party thereto. (Exhibit C-34, File No. 2-52177) 10.18.2 Addendum dated as of January 17, 1975, by which Burlington Electric Department became a party thereto. (Exhibit C-35, File No. 2-55458) 10.19 Agreement dated as of May 1, 1973, for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units among Public Service Company of New Hampshire and other utilities, including Velco. (Exhibit C-36, File No. 2-48966) 10.19.1 Amendments dated May 24, 1974, June 21, 1974, September 25, 1974, October 25, l974, and January 31, 1975. (Exhibit C-37, File No. 2-53674) 10.19.2 Instrument of Transfer dated September 27, 1974, assigning partial interest from Velco to the Company. (Exhibit C-38, File No. 2-52177) 10.19.3 Amendments dated May 24, 1974, June 21, 1974, and September 25, 1974. (Exhibit C-81, File No. 2-51999) 10.19.4 Amendments dated October 25, 1974 and January 31, 1975. (Exhibit C-82, File No. 2-54646) 10.19.5 Sixth Amendment dated as of April 18, 1979. (Exhibit C-83, File No. 2-64294) 10.19.6 Seventh Amendment dated as of April 18, 1979. (Exhibit C-84, File No. 2-64294) 10.19.7 Eighth Amendment dated as of April 25, 1979. (Exhibit C-85, File No. 2-64815) 10.19.8 Ninth Amendment dated as of June 8, 1979. (Exhibit C-86, File No. 2-64815) 10.19.9 Tenth Amendment dated as of October 10, 1979. (Exhibit C-87, File No. 2-66334 ) 10.19.10 Eleventh Amendment dated as of December 15, 1979. (Exhibit C-88, File No.2-66492) 10.19.11 Twelfth Amendment dated as of June 16, 1980. (C-89, File No. 2-68168) 10.19.12 Thirteenth Amendment dated as of December 31, 1980. (Exhibit C-90, File No. 2-70579) 10.19.13 Fourteenth Amendment dated as of June 1, 1982.(Exhibit C-104, 1982 Form 10-K) 10.19.14 Fifteenth Amendment dated April 27, 1984. (Exhibit 10-134, 1986 Form 10-K) 10.19.15 Sixteenth Amendment dated June 15, 1984. (Exhibit 10-135, 1986 Form 10-K) 10.19.16 Seventeenth Amendment dated March 8, 1985. (Exhibit 10-136, 1986 Form 10-K) 10.19.17 Eighteenth Amendment dated March 14, 1986. (Exhibit 10-137, 1986 Form 10-K) 10.19.18 Nineteenth Amendment dated May 1, 1986. (Exhibit 10-138, 1986 Form 10-K) 10.19.19 Twentieth Amendment dated September 19, 1986. (Exhibit 10-139, 1986 Form 10-K) 10.19.20 Amendment No. 22 dated January 13, 1989. (Exhibit 10-193, 1989 Form 10-K) 10.20 Transmission Support Agreement dated as of May 1, 1973, among Public Service Company of New Hampshire and other utilities, including Velco, with respect to New Hampshire Nuclear Units. (Exhibit C-39, File No. 248966) 10.21 Sharing Agreement - 1979 Connecticut Nuclear Unit dated September 1, 1973, to which the Company is a party. (Exhibit C-40, File No. 2-50142) 10.21.1 Amendment dated as of August 1, 1974. (Exhibit C-41, File No. 2-51999) 10.21.2 Instrument of Transfer dated as of February 28, 1974, transferring partial interest from the Company to Green Mountain. (Exhibit C-42, File No. 2-52177) 10.21.3 Instrument of Transfer dated January 17, 1975, transferring a partial interest from the Company to Burlington Electric Department. (Exhibit C-43, File No. 2-55458) 10.21.4 Amendment dated May 11, 1984. (Exhibit C-110, 1984 Form 10-K) 10.22 Preliminary Agreement dated as of July 5, 1974, with respect to 1981 Montague Nuclear Generating Units. (Exhibit C-44, File No. 2-51733) 10.22.1 Amendment dated June 30, 1975. (Exhibit C-45, File No. 2-54449) 10.23 Agreement for Joint Ownership, Construction and Operation of William F. Wyman Unit No. 4 dated November 1, 1974, among Central Maine Power Company and other utilities including the Company. (Exhibit C-46, File No. 2-52900) 10.23.1 Amendment dated as of June 30, 1975. (Exhibit C-47, File No. 2-55458) 10.23.2 Instrument of Transfer dated July 30, 1975, assigning a partial interest from Velco to the Company. (Exhibit C-48, File No. 2-55458) 10.24 Transmission Agreement dated November 1, 1974, among Central Maine Power Company and other utilities including the Company with respect to William F. Wyman Unit No. 4. (Exhibit C-49, File No. 2-54449) 10.25 Copy of Power Contract between the Company and Yankee Atomic dated as of June 30, 1959. (Exhibit C-61, 1981 Form 10-K) 10.25.1 Revision dated April 1, 1975. (Exhibit C-61, 1981 Form 10-K) 10.25.2 Amendment dated May 6, 1988. (Exhibit 10-181, 1988 Form 10-K) 10.25.3 Amendment dated June 26, 1989. (Exhibit 10-196, 1989 Form 10-K) 10.25.4 Amendment dated July 1, 1989. (Exhibit 10-197, 1989 Form 10-K) 10.25.5 Amendment dated February 1, 1992 (Exhibit 10.25.5, 1992 Form 10-K) 10.26 Copy of Transmission Contract between the Company and Yankee Atomic dated as of June 30, 1959. (Exhibit C-63, 1981 Form 10-K) 10.27 Copy of Power Contract between the Company and Connecticut Yankee dated as of June 1, 1964. (Exhibit C-64, 1981 Form 10-K) 10.27.1 Supplementary Power Contract dated March 1, 1978. (Exhibit C-94, 1982 Form 10-K) 10.27.2 Amendment dated August 22, 1980. (Exhibit C-95 1982 Form 10-K) 10.27.3 Amendment dated October 15, 1982. (Exhibit C-96, 1982 Form 10-K) 10.27.4 Second Supplementary Power Contract dated April 30, 1984. (Exhibit C-115, 1984 Form 10-K) 10.27.5 Additional Power Contract dated April 30, 1984. (Exhibit C-116, 1984 Form 10-K) 10.28 Copy of Transmission Contract between the Company and Connecticut Yankee dated as of July 1, 1964. (Exhibit C-65 1981 Form 10-K) 10.29 Copy of Capital Funds Agreement between the Company and Connecticut Yankee dated as of July 1, 1964. (Exhibit C-66, 1981 Form 10-K) 10.29.1 Copy of Capital Funds Agreement between the Company and Connecticut Yankee dated as of September 1, 1964. (Exhibit C-67, 1981 Form 10-K) 10.30 Copy of Five-Year Capital Contribution Agreement between the Company and Connecticut Yankee dated as of November 1, 1980. (Exhibit C-68, 1981 Form 10-K) 10.31 Form of Guarantee Agreement dated as of November 7, 1981, among certain banks, Connecticut Yankee and the Company, relating to revolving credit notes of Connecticut Yankee. (Exhibit C-69, 1981 Form 10-K) 10.32 Form of Guarantee Agreement dated as of November 13, 1981, between The Connecticut Bank and Trust Company, as Trustee, and the Company, relating to debentures of Connecticut Yankee. (Exhibit C-70, 1981 Form 10-K) 10.33 Form of Guarantee Agreement dated as of November 5, 1981, between Bankers Trust Company, as Trustee of the Vernon Energy Trust, and the Company, relating to Vermont Yankee Nuclear Fuel Sale Agreement. (Exhibit C-71, 1981 Form 10-K) 10.34 Preliminary Vermont Support Agreement re Quebec Interconnection between Velco and among seventeen Vermont Utilities dated May 1, 1981. (Exhibit C-97, 1982 Form 10-K) 10.34.1 Amendment dated June 1, 1982. (Exhibit C-98, 1982 Form 10-K) 10.35 Vermont Participation Agreement for Quebec Interconnection between Velco and among seventeen Vermont Utilities dated July 15, 1982. (Exhibit C-99, 1982 Form 10-K) 10.35.1 Amendment No. 1 dated January 1, 1986. (Exhibit C-132, 1986 Form 10-K) 10.36 Vermont Electric Transmission Company Capital Funds Support Agreement between Velco and among sixteen Vermont Utilities dated July 15, 1982. (Exhibit C-100, 1982 Form 10-K) 10.37 Vermont Transmission Line Support Agreement, Vermont Electric Transmission Company and twenty New England Utilities dated December 1, 1981, as amended by Amendment No. 1 dated June 1, 1982, and by Amendment No. 2 dated November 1, 1982. (Exhibit C-101, 1982 Form 10-K) 10.37.1 Amendment No. 3 dated January 1, 1986. (Exhibit 10-149, 1986 Form 10-K) 10.38 Phase 1 Terminal Facility Support Agreement between New England Electric Transmission Corporation and twenty New England Utilities dated December 1, 1981, as amended by Amendment No. 1 dated as of June 1, 1982 and by Amendment No. 2 dated as of November 1, 1982. (Exhibit C-102, 1982 Form 10-K) 10.39 Power Purchase Agreement between Velco and CVPS dated June 1, 1981. (Exhibit C-103, 1982 Form 10-K) 10.40 Agreement for Joint Ownership, Construction and Operation of the Joseph C. McNeil Generating Station by and between City of Burlington Electric Department, Central Vermont Realty, Inc. and Vermont Public Power Supply Authority dated May 14, 1982. (Exhibit C-107, 1983 Form 10-K 10.40.1 Amendment No. 1 dated October 5, 1982. (Exhibit C-108, 1983 Form 10-K) 10.40.2 Amendment No. 2 dated December 30, 1983. (Exhibit C-109, 1983 Form 10-K) 10.40.3 Amendment No. 3 dated January 10, 1984. (Exhibit 10-143, 1986 Form 10-K) 10.41 Transmission Service Contract between Central Vermont Public Service Corporation and The Vermont Electric Generation & Transmission Cooperative, Inc. dated May 14, 1984. (Exhibit C-111, 1984 Form 10-K) 10.42 Copy of Highgate Transmission Interconnection Preliminary Support Agreement dated April 9, 1984. (Exhibit C-117, 1984 Form 10-K) 10.43 Copy of Allocation Contract for Hydro-Quebec Firm Power dated July 25, 1984. (Exhibit C-118, 1984 Form 10-K) 10.43.1 Tertiary Energy for Testing of the Highgate HVDC Station Agreement, dated September 20, 1985. (Exhibit C-129, 1985 Form 10-K) 10.44 Copy of Highgate Operating and Management Agreement dated August 1, 1984. (Exhibit C-119, 1986 Form 10-K) 10.44.1 Amendment No. 1 dated April 1, 1985. (Exhibit 10-152, 1986 Form 10-K) 10.44.2 Amendment No. 2 dated November 13, 1986. (Exhibit 10-167, 1987 Form 10-K) 10.44.3 Amendment No. 3 dated January 1, 1987. (Exhibit 10-168, 1987 Form 10-K) 10.45 Copy of Highgate Construction Agreement dated August 1, 1984. (Exhibit C-120, 1984 Form 10-K) 10.45.1 Amendment No. 1 dated April 1, 1985. (Exhibit 10-151, 1986 Form 10-K) 10.46 Copy of Agreement for Joint Ownership, Construction and Operation of the Highgate Transmission Interconnection. (Exhibit C-121, 1984 Form 10-K) 10.46.1 Amendment No. 1 dated April 1, 1985. (Exhibit 10-153, 1986 Form 10-K) 10.46.2 Amendment No. 2 dated April 18, 1985. (Exhibit 10-154, 1986 Form 10-K) 10.46.3 Amendment No. 3 dated February 12, 1986. (Exhibit 10-155, 1986 Form 10-K) 10.46.4 Amendment No. 4 dated November 13, 1986. (Exhibit 10-169, 1987 Form 10-K) 10.46.5 Amendment No. 5 and Restatement of Agreement dated January 1, 1987. (Exhibit 10-170, 1987 Form 10-K) 10.47 Copy of the Highgate Transmission Agreement dated August 1, 1984. (Exhibit C-122, 1984 Form 10-K) 10.48 Copy of Preliminary Vermont Support Agreement Re: Quebec Interconnection - Phase II dated September 1, 1984. (Exhibit C-124, 1984 Form 10-K) 10.48.1 First Amendment dated March 1, 1985. (Exhibit C-127, 1985 Form 10-K) 10.49 Vermont Transmission and Interconnection Agreement between New England Power Company and Central Vermont Public Service Corporation and Green Mountain Power Corporation with the consent of Vermont Electric Power Company, Inc., dated May 1, 1985. (Exhibit C-128, 1985 Form 10-K) 10.50 Service Contract Agreement between the Company and the State of Vermont for distribution and sale of energy from St. Lawrence power projects ("NYPA Power") dated as of June 25, 1985. (Exhibit C-130, 1985 Form 10-K) 10.50.1 Lease and Operating Agreement between the Company and the State of Vermont dated as of June 25, 1985. (Exhibit C-131, 1985 Form 10-K) 10.51 System Sales & Exchange Agreement Between Niagara Mohawk Power Corporation and Central Vermont Public Service Corporation dated October 1, 1986. (Exhibit C-133, 1986 Form 10-K) 10.52 Agreement of Purchase & Sale of 1.59096% Seabrook Ownership between Central Vermont Public Service Corporation and Eastern Utilities Associates dated February 19, 1986. (Exhibit 10-140, 1986 Form 10-K) 10.52.1 Addendum dated June 27, 1986. (Exhibit 10-141, 1986 Form 10-K) 10.53 Agreement between Bangor Hydro-Electric Company, Central Maine Power Company, Central Vermont Public Service Corporation, Fitchburg Gas and Electric Light Company, Maine Public Service Company and EUA Power Corporation dated October 20, 1986 conveying interests in transmission project facilities related to Seabrook. (Exhibit 10-142, 1986 Form 10-K) 10.54 Transmission Agreement between Vermont Electric Power Company, Inc. and Central Vermont Public Service Corporation dated January 1, 1986. (Exhibit 10-146, 1986 Form 10-K) 10.55 1985 Four Party Agreement between Vermont Electric Power Company, Central Vermont Public Service Corporation, Green Mountain Power Corporation and Citizens Utilities dated July 1, 1985. (Exhibit 10-146, 1986 Form 10-K) 10.55.1 Amendment dated February 1, 1987. (Exhibit 10-171, 1987 Form 10-K) 10.56 1985 Option Agreement between Vermont Electric Power Company, Central Vermont Public Service Corporation, Green Mountain Power Corporation and Citizens Utilities dated December 27, 1985. (Exhibit 10-148, 1986 Form 10-K) 10.56.1 Amendment No. 1 dated September 28, 1988. (Exhibit 10-182, 1988 Form 10-K) 10.56.2 Amendment No. 2 dated October 1, 1991. (Exhibit 10.56.2, 1991 Form 10-K) 10.57 Highgate Transmission Agreement dated August 1, 1984 by and between the owners of the project and the Vermont electric distribution companies. (Exhibit 10-156, 1986 Form 10-K) 10.57.1 Amendment No. 1 dated September 22, 1985. (Exhibit 10-157, 1986 Form 10-K) 10.58 Vermont Support Agency Agreement re: Quebec Interconnection - Phase II between Vermont Electric Power Company, Inc. and participating Vermont electric utilities dated June 1, 1985. (Exhibit 10-158, 1986 Form 10K) 10.58.1 Amendment No. 1 dated June 20, 1986. (Exhibit 10-159, 1986 Form 10-K) 10.59 Indemnity Agreement B-39 dated May 9, 1969 with amendments 1-16 dated April 17, 1970 thru April 16, 1985 between licensees of Millstone Unit No. 3 and the Nuclear Regulatory Commission. (Exhibit 10-161, 1986 Form 10-K) 10.59.1 Amendment No. 17 dated November 25, 1985. (Exhibit 10-162, 1986 Form 10-K) 10.60 Memorandum of Understanding by and between The Champlain Pipeline Company and Northern New England Gas Corporation, Noverco Corporation and Central Vermont Equity Corporation dated February 2, 1987. (Exhibit 10-163, 1987 Form 10-K) 10.60.1 Amendment No. 1 dated April 10, 1987. (Exhibit 10-164, 1987 Form 10-K) 10.60.2 Assignment Agreement by and between CV Energy Resources, Inc. and CV Champlain Investments, Inc. dated December 31, 1987. (Exhibit 10-165, 1987) 10.61 General Partnership Agreement re: Champlain Pipeline Partnership dated January 1, 1988 by and between Noverco, Northern New England Gas Corporation, CV Energy Resources, Inc. and Providence Energy Corporation. (Exhibit 10-166, 1987 Form 10-K) 10.62 Contract for the Sale of 50MW of firm power between Hydro-Quebec and Vermont Joint Owners of Highgate Facilities dated February 23, 1987. (Exhibit 10-173, 1987 Form 10-K) 10.63 Interconnection Agreement between Hydro-Quebec and Vermont Joint Owners of Highgate facilities dated February 23, 1987. (Exhibit 10-174, 1987 Form 10-K) * 10.63.1 Amendment dated September 1, 1993 (Exhibit 10.63.1, 1993 Form 10-K) 10.64 Firm Power and Energy Contract by and between Hydro-Quebec and Vermont Joint Owners of Highgate for 500MW dated December 4, 1987. (Exhibit 10-175, 1987 Form 10-K) 10.64.1 Amendment No. 1 dated August 31, 1988. (Exhibit 10-191, 1988 Form 10-K) 10.64.2 Amendment No. 2 dated September 19, 1990. (Exhibit 10-202, 1990 Form 10-K) 10.64.3 Firm Power & Energy Contract dated January 21, 1993 by and between Hydro-Quebec and Central Vermont Public Service Corporation for the sale back of 25 MW of power. (Exhibit 10.64.3, 1992 Form 10-K) 10.64.4 Firm Power & Energy Contract dated January 21, 1993 by and between Hydro-Quebec and Central Vermont Public Service Corporation for the sale back of 50 MW of power. (Exhibit 10.64.4, 1992 Form 10-K) 10.65 Settlement Agreement between EUA Power Corporation, Bangor Hydro-Electric Company, Central Maine Power Company, Central Vermont Public Service Corporation and Maine Public Service Company dated January 31, 1988 re: Seabrook real estate. (Exhibit 10-176, 1988 Form 10-K) 10.66 Hydro-Quebec Participation Agreement dated April 1, 1988 for 600 MW between Hydro-Quebec and Vermont Joint Owners of Highgate. (Exhibit 10-177, 1988 Form 10-K) 10.67 Sale of firm power and energy (54MW) between Hydro-Quebec and Vermont Utilities dated December 29, 1988. (Exhibit 10-183, 1988 Form 10-K) EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 10.68 Stock Option Plan for Non-Employee Directors dated July 18, 1988. (Exhibit 10-184, 1988 Form 10-K) 10.69 Stock Option Plan for Key Employees dated July 18, 1988. (Exhibit 10-185, 1988 Form 10-K) 10.70 Officers Supplemental Insurance Plan authorized July 9, 1984. (Exhibit 10-186, 1988 Form 10-K) 10.71 Officers Supplemental Deferred Compensation Plan dated November 4, 1985. (Exhibit 10-187, 1988 Form 10-K) 10.72 Directors' Supplemental Deferred Compensation Plan dated November 4, 1985. (Exhibit 10-188, 1988 Form 10-K) 10.73 Management Incentive Compensation Plan as adopted September 9, 1985. (Exhibit 10-189, 1988 Form 10-K) 10.73.1 Revised Management Incentive Plan as adopted February 5, 1990. (Exhibit 10-200. 1989 Form 10-K) 10.74 Officers' Change of Control Agreements as approved October 3, 1988. (Exhibit 10-190, 1988 Form 10-K) * 10.78 Stock Option Plan for Non-Employee Directors dated April 30, 1993 (Exhibit 10.78, 1993 Form 10-K) * 10.79 Officers Insurance Plan dated November 15, 1993 (Exhibit 10.79, 1993 Form 10-K) * 10.80 Directors'Supplemental Deferred Compensation Plan dated (Exhibit 10.80, 1993 Form 10-K) * 10.81 Officers' Supplemental Deferred Compensation Plan dated (Exhibit 10.81, 1993 Form 10-K) -------------------------------------------- 10.75 Receivables Purchase Agreement between Central Vermont Public Service Corporation, Central Vermont Public Service Corporation as Service Agent and The First National Bank of Boston dated November 29, 1988. (Exhibit 10-192, 1988 Form 10-K) * 10.75.1 Agreement Amendment No. 1 dated December 21, 1988 (Exhibit 10.75.1, 1993 Form 10-K) * 10.75.2 Letter Agreement dated December 4, 1989 (Exhibit 10.75.2, 1993 Form 10-K) * 10.75.3 Agreement Amendment No. 2 dated November 29, 1990 (Exhibit 10.75.3, 1993 Form 10-K) * 10.75.4 Agreement Amendment No. 3 dated November 29, 1991 (Exhibit 10.75.4, 1993 Form 10-K) * 10.75.5 Agreement Amendment No. 4 dated November 29, 1992 (Exhibit 10.75.5, 1993 Form 10-K) 10.76 Power Purchase Agreement with Bonneville Pacific Corporation, Unit I, dated November 15, 1989. (Exhibit 10-198, 1989 Form 10-K) 10.77 Power Purchase Agreement with Bonneville Pacific Corporation, Unit II, dated November 15, 1989. (Exhibit 10-199, 1989 Form 10-K) * 10.82 Transmission Service Agreement between this Company and Green Mountain Power Corporation dated September 1, 1993 (Exhibit 10.82, 1993 Form 10-K) 11. Not applicable. 12. Not applicable. 13. 1992 Annual Report to Stockholders * 13.1 Portions of the Annual Report to Stockholders of Central Vermont Public Service Corporation that have been incorporated by reference under Items 6, 7 and 8 16. Change in certifying accountant (July 1, 1985 Form 8-K) 18. Letter re change in accounting principles (1980 3rd Quarter Form 10-Q) 21. Subsidiaries of the Registrant * 21.1 List of subsidiaries of registrant SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By /s/ Thomas C. Webb Thomas C. Webb, President and Chief Executive Officer By /s/ Robert H. Young Robert H. Young, Executive Vice President - Chief Operating Officer and Principal Financial Officer By /s/ James M. Pennington James M. Pennington, Controller and Principal Accounting Officer March 14, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 14, 1994 /s/ Frederic H. Bertrand Frederic H. Bertrand Director March 14, 1994 /s/ Robert P. Bliss, Jr. Robert P. Bliss, Jr. Director March 14, 1994 /s/ Elizabeth Coleman Elizabeth Coleman Director March 14, 1994 /s/ Luther F. Hackett Luther F. Hackett Director March 14, 1994 /s/ F. Ray Keyser, Jr. F. Ray Keyser, Jr. Director March 14, 1994 /s/ Mary Alice McKenzie Mary Alice McKenzie Director March 14, 1994 /s/ Gordon P. Mills Gordon P. Mills Director March 14, 1994 /s/ Preston Leete Smith Preston Leete Smith Director March 14, 1994 /s/ Robert D. Stout Robert D. Stout Director March 14, 1994 /s/ Thomas C. Webb Thomas C. Webb Director SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission File No. 1-8222 December 31, 1993 CENTRAL VERMONT PUBLIC SERVICE CORPORATION EXHIBITS TO 1993 FORM 10-K INDEX List of Exhibits 1993 Form 10-K 4-53 Copy of Thirty-Eight Supplemental Indenture dated December 10, 1993 establishing Series KK, LL, MM, NN, OO supplemental to B-1 10.16.24 Amendment dated May 1, 1993. 10.16.25 Amendment dated June 1, 1993 10.63.1 Amendment dated September 1, 1993 10.75.1 Agreement Amendment No. 1 dated December 21, 1988 10.75.2 Letter Agreement dated December 4, 1989 10.75.3 Agreement Amendment No. 2 dated November 29, 1990 10.75.4 Agreement Amendment No. 3 dated November 29, 1991 10.75.5 Agreement Amendment No. 4 dated November 29, 1992 10.78 Stock Option Plan for Non-Employee Directors dated April 30, 1993 10.79 Officers Insurance Plan dated November 15, 1993 10.80 Directors'Supplemental Deferred Compensation Plan dated January 1, 1990 10.81 Officers' Supplemental Deferred Compensation Plan dated January 1, 1990 10.82 Transmission Service Agreement between this Company and Green Mountain Power Corporation dated September 1, 1993 13 Annual Report to Security holders 13.1 Portions of the Annual Report to Stockholders of Central Vermont Public Service Corporation that have been incorporated by reference under Items 6, 7 and 8 18. Letter re change in accounting principles (1980 3rd Quarter Form 10-Q) 21. Subsidiaries of the Registrant * 21.1 List of subsidiaries of registrant EX-4 2 EXHIBIT 4 OF FORM 10K 4-53 THIS SUPPLEMENTAL INDENTURE, dated as of December 10, 1993, by and between CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a corporation duly organized and existing under the laws of the State of Vermont (hereinafter generally referred to as the Company), and THE FIRST NATlONAL BANK OF BOSTON, a national banking association (hereinafter generally referred to as the Trustee), as it is the successor Trustee under the Indenture of Mortgage next hereinafter referred to, WITNESSETH that: WHEREAS the Company heretofore duly executed and delivered to Old Colony Trust Company, as Trustee, an Indenture of Mortgage (hereinafter generally referred to as the Original Indenture), dated as of October 1, 1929, but actually executed on October 24, 1929 (the Original Indenture, with all indentures supplemental thereto as therein provided, being hereinafter generally referred to as the Mortgage), and recorded, among other places, in Washington County (New York), Liber 150 of Mortgages, Page 51, Grafton County (New Hampshire) Registry of Deeds, Liber 616, Folio 484, Sullivan County (New Hampshire) Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the Office of the City Clerk of Rutland, Vermont, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the Office of the Secretary of State of the State of Vermont, to which Original Indenture this instrument is supplemental, and thirty-seven duly recorded indentures supplemental thereto and in modification and confirmation thereof, whereby all the properties of the Company, whether owned at the time of the execution thereof or thereafter acquired, with certain exceptions and reservations therein fully set forth, were granted, assigned, transferred, mortgaged and pledged to the Trustee, in trust upon the terms and conditions set forth therein, to secure bonds of the Company issued and to be issued in accordance with the terms of the Mortgage and for other purposes more particularly set forth therein; and WHEREAS on January 4, 1971, Old Colony Trust Company was merged into The First National Bank of Boston which thereupon succeeded to the trusts under the Mortgage; and WHEREAS in order to comply with the obligations of the Company in Section 12 of Article III and elsewhere in the Original Indenture, and the provisions of said section and of Section 1 of Article XVI of the Original Indenture, it is desirable and the Company is required and has duly and lawfully determined, at the request of the Trustee, to execute and deliver this instrument for the purpose of complying with said obligations and provisions; and WHEREAS the Company has caused to be paid or redeemed all bonds issued under the Mortgage other than those now outstanding as described below and has caused to be paid or redeemed or has otherwise discharged the underlying bonds of its predecessor corporations described in the Original Indenture and the mortgages securing the same; and the Company has also issued and there are outstanding on the date of delivery hereof $67,580,000 in principal amount of First Mortgage Bonds, Series M, N, Y, EE, FF, GG, HH and JJ and the Company proposes to issue under the Mortgage $10,000,000 in aggregate principal amount of additional First Mortgage 5.30% Bonds, Series KK, due December 15, 1998 (herein referred to as the bonds of Series KK); $5,000,000 in aggregate principal amount of additional First Mortgage 5.54% Bonds, Series LL, due December 15, 2000 (herein referred to as the bonds of Series LL); $7,500,000 in aggregate principal amount of additional First Mortgage 6.01% Bonds, Series MM, due December 15, 2003 (herein referred to as the bonds of Series MM); $3,000,000 in aggregate principal amount of additional First Mortgage 6.27% Bonds, Series NN, due December 15, 2008 (herein referred to as the bonds of Series NN); and $17,500,000 in aggregate principal amount of additional First Mortgage 6.90% Bonds, Series OO, due December 15, 2023 (herein referred to as the bonds of Series OO), which series (subject to the restrictions and provisions contained in the Mortgage) are limited to such aggregate principal amount, respectively; and WHEREAS this Supplemental Indenture has been duly and legally authorized by the Board of Directors of the Company, and the use of terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture as heretofore and hereby supplemented, modified and confirmed; and WHEREAS the bonds of Series KK, LL, MM, NN and OO and the Trustee's certificate thereon are to be substantially in the respective forms set forth in resolutions (a certified copy of which is on file with the Trustee) of the Board of Directors of the Company designating and authorizing the bonds of Series KK, LL, MM, NN and OO, and the bonds of Series KK, LL, MM, NN and OO are to be redeemable as set forth in said forms of the bonds of Series KK, LL, MM, NN and OO; NOW THEREFORE, in confirmation of and supplementing the Mortgage and pursuant to, in compliance with, and in execution of, the powers, authorities and obligations conferred, imposed and reserved therein and every other power, authority and obligation appertaining thereto, in consideration of the premises, and of the acceptance and purchase of the bonds by the holders thereof, and of the sum of one dollar to it duly paid by said The First National Bank of Boston and of other good and valuable consideration, the receipt whereof is hereby acknowledged, said Central Vermont Public Service Corporation has given, granted, bargained, sold, transferred, assigned, pledged, mortgaged, warranted, conveyed and confirmed, and by these presents does give, grant, bargain, sell, transfer, assign, pledge, mortgage, warrant, convey and confirm, unto said The First National Bank of Boston, as Trustee as aforesaid, and its successor or successors in the trusts under the Mortgage and hereunder, and its and their assigns, (a) all and singular the plants, rights, permits, franchises, privileges, easements and property, real, personal and mixed, described in the Original Indenture and each of the preceding Supplemental Indentures, and thereby or otherwise thereunder conveyed, pledged, assigned, transferred and mortgaged, or intended so to be (said descriptions in the Original Indenture and each of the preceding Supplemental Indentures being hereby made a part hereof to the same extent as if set forth herein at length), whether then or now owned or thereafter or hereafter acquired, except such of said properties or interests therein as may have been released by the Trustee or sold or disposed of in whole or in part as permitted by the provisions of the Original Indenture as heretofore supplemented and amended, and (b) also, but without in any way limiting the generality of the foregoing, all of the right, title and interest of the Company in and to the franchises, rights, titles, interests, easements and properties described in Schedule A hereto attached and hereby made a part hereof as fully as if set forth herein at length. Subject, however, as to all of the foregoing, to the specific rights, privileges, liens, encumbrances, restrictions, conditions, limitations, covenants, interests, reservations, exceptions and otherwise as provided in the Original Indenture and preceding Supplemental Indentures, and in the descriptions in the schedules thereto and hereto and in the deeds or grants in said schedules referred to. BUT SPECIFICALLY RESERVING AND EXCEPTING (as the same were reserved and excepted from the lien of the Original Indenture and all preceding Supplemental Indentures) from this instrument and the grant, conveyance, mortgage, transfer and assignment herein contained (1) all right, title and interest of the Company, now owned or hereafter acquired, in and to the properties and rights specified in subclauses (a) to (c), both inclusive, of the granting clauses on page 11 of the Original Indenture, and (2) (as the same, pursuant to the provisions of Section 18(b) of Article 2 of the Fifth Supplemental Indenture, dated as of February 1, 1945, were reserved from the lien of the Original Indenture and the preceding Supplemental Indentures) all telephone properties, whether heretofore or now owned or hereafter acquired by the Company. TO HAVE AND TO HOLD all said property hereby conveyed, assigned, pledged or mortgaged, or intended so to be, together with the rents, issues and profits thereof, as well as all such after-acquired property, unto the Trustee, its successor or successors in the trusts under the Mortgage and hereunder and its and their assigns forever; BUT IN TRUST, NEVERTHELESS, under and subject to the provisions and conditions, with all the powers and authority and for the trusts and purposes, herein and in the Mortgage set forth, (1) for the equal and proportionate benefit and security (except as provided in Section 3 of Article III and elsewhere in the Original Indenture as heretofore and hereby supplemented, modified and confirmed) of the holders of all bonds and interest coupons heretofore, now and hereafter issued under the Mortgage and from time to time outstanding, pursuant to the provisions thereof, and for the enforcement of the payment of said bonds and coupons when payable, and the performance of and compliance with the covenants and conditions of the Mortgage, without (except as aforesaid) any preference, distinction or priority as to lien or otherwise of any bond or coupon over any other bond or coupon by reason of the difference in the series or time of the actual issue, sale or negotiation thereof, or for any other reason whatsoever, so that each and every bond heretofore, now or hereafter issued under the Mortgage shall have the same lien, and so that the interest and principal of every such bond shall, subject to the terms of the Original Indenture, be equally and proportionately secured thereby and hereby, as if it had been made, executed, delivered, sold and negotiated simultaneously with the execution and delivery of the Original Indenture; and (2) subject to the covenants, agreements, rights, privileges, immunities, trusts and duties set forth in the Original Indenture, as heretofore supplemented, modified and confirmed, and in this Supplemental Indenture. AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, upon the trusts and for the purposes aforesaid, as set forth in the following covenants, agreements, conditions and provisions: ARTICLE 1. CERTAIN LIMITATIONS AND COVENANTS. SECTION 1. The Company covenants and agrees as follows: That, so long as any of the bonds of Series KK, LL, MM, NN or OO remain outstanding, it will not (a) declare or pay any dividend or make any distribution on any shares of capital stock of the Company of any class (other than a dividend payable solely in capital stock of the Company), or (b) apply any of its property or assets to the purchase, redemption or other retirement of, or set apart any sums for dividends on or for the purchase, redemption or other retirement of, or make any distribution by reduction of capital or otherwise in respect of (except from the proceeds of any stock financing subsequent to the date hereof), any shares of capital stock of the Company of any class other than shares retired through the operation of the mandatory sinking fund provisions of any class of the Company's preferred stocks now or hereafter issued, if in either case the aggregate amount so paid, distributed and applied after December 31, 1988, would exceed the sum of (i) the aggregate of the net income of the Company accumulated for the period from said date up to and including the end of the month next preceding the month in which a dividend is to be paid or such distribution, purchase, redemption or other retirement is to be made plus (ii) $35,000,000. Any payment, distribution, purchase, redemption or other retirement permitted by the prior sentence may be made only if immediately prior to such action and after giving effect to such action there will not have occurred or be con- tinuing a default or event of default under the Mortgage. Net income of the Company for the purpose of this section shall mean the gross operating revenues and other income of the Company less all deductions for operating expenses, taxes (including income, excess profits and other taxes based on or measured by income), interest expense, reserves, any extraordinary items of expense and other appropriate items, all as determined in accordance with such system of accounts as may be prescribed by the Vermont Public Service Board or any successor regulatory commission or agency of the State of Vermont having the same or similar jurisdiction over accounts or, in the absence thereof, in accordance with sound accounting practice, and less, for any period, the amount, if any, by which the Renewal Requirement as defined in Article VII of the Mortgage for such period exceeds the aggregate amount included in operating expenses with respect to depreciation of electric plant during such period; provided, however, that in determining the net income of the Company for the purposes of this section no deduction or adjustment shall be made for or in respect of: (a) expenses in connection with the redemption or retirement of any securities issued by the Company, including any amount paid in excess of the principal amount of securities redeemed or retired and, in the event that such redemption or retirement is effected with the proceeds of sale of other securities of the Company, interest on the securities redeemed or retired from the date on which the funds required for such redemption or retirement are deposited in trust for such purpose to the date of redemption or retirement; (b) profits and losses from sales of public utility property or other capital assets, or taxes on or in respect of any such profits; (c) any earned surplus adjustment (including tax adjustments) applicable to any period prior to January 1, 1993; or (d) amortization of utility plant adjustment accounts or intangibles. SECTION 2.(a) The Company covenants and agrees that, except as provided in subsections 2(b), (c), (d), (e) and (f), it will not, and will not request the Trustee to, redeem, pay or purchase or otherwise retire any bonds of Series KK, LL, MM, NN or OO, in connection with the Renewal Fund established under Article VII of the Mortgage or for any other purposes of the Mortgage other than in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money. In connection with a redemption or purchase pursuant to said Article IX, bonds of Series KK, LL, MM, NN or OO may be called for redemption or purchased, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series KK, LL, MM, NN or OO to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsections 2(b), (c), (d), (e) and (f) below) with respect to the principal amount being redeemed or purchased. (b) Notwithstanding any provision of the Mortgage, the bonds of Series KK may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time after December 15, 1994 and prior to December 15, 1998, at a redemption price of 100% of the principal amount of the bonds of Series KK to be redeemed plus accrued interest thereon to the date of redemption, together with a premium equal to the Make-Whole Premium Amount with respect to the principal amount being redeemed. As used herein the following terms shall have the meanings set forth below: "Make-Whole Premium Amount" shall mean at any time with respect to the bonds of Series KK being redeemed pursuant to this subsection 2(b), the excess, if any, (and in no case less than zero) of (i) the present value as of the date of, but immediately prior to, such redemption of the principal payment at final maturity allocable to such redemption and the remaining scheduled interest payments (including any accrued interest) on the bonds of Series KK allocable to such redemption (determined by discounting such amounts on a semiannual compounded basis at the "Reinvestment Yield" from the respective dates on which but for the redemption under this subsection 2(b), such principal payments and interest payments would have been payable) over (ii) 100% of the principal amount of the bonds of Series KK being redeemed plus accrued interest thereon from the next preceding interest payment date to the date of such redemption. "Reinvestment Yield" shall mean the lesser of (A) 5.30% or (B) the sum of 0.50% plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest securities (adjusted to constant maturities) equal to the remaining Life to Maturity (as of the date of the proposed redemption of the bonds of Series KK) as published by the Federal Reserve Board in its Statistical Release H.15(519) for the two calendar weeks ending on the Saturday next preceding the Premium Notice Date, as defined below, or, if such average is not published for such period, of such reasonably comparable index as may be approved by the holder or holders of at least 66 2/3% of the unpaid principal amount of the bonds of Series KK to be redeemed. If no maturity exactly corresponds to such Life to Maturity, the yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month; provided, that if there is no such greater published maturity, the yield to maturity shall be such lesser published maturity. "Life to Maturity" shall mean as at the date of the proposed redemption thereof the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Life to Maturity of the bonds of Series KK and the date of payment at final maturity. The Company may not make any redemption under this subsection 2(b) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series KK to be redeemed. In the case of a redemption under this subsection 2(b), at least thirty (30) days prior to the date fixed for redemption (the "Premium Notice Date") the Company will furnish written notice to the Trustee and each holder of bonds of Series KK, by telecopy or other same day written communication, of the premium, if any, applicable to such redemption and the calculations, in reasonable detail, used to determine the amount of any such premium. (c) Notwithstanding any provision of the Mortgage, the bonds of Series LL may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time after December 15, 1994 and prior to December 15, 2000, at a redemption price of 100% of the principal amount of the bonds of Series LL to be redeemed plus accrued interest thereon to the date of redemption, together with a premium equal to the Make-Whole Premium Amount with respect to the principal amount being redeemed. As used herein the following terms shall have the meanings set forth below: "Make-Whole Premium Amount" shall mean at any time with respect to the bonds of Series LL being redeemed pursuant to this subsection 2(c), the excess, if any, (and in no case less than zero) of (i) the present value as of the date of, but immediately prior to, such redemption of the principal payment at final maturity allocable to such redemption and the remaining scheduled interest payments (including any accrued interest) on the bonds of Series LL allocable to such redemption (determined by discounting such amounts on a semiannual compounded basis at the "Reinvestment Yield" from the respective dates on which but for the redemption under this subsection 2(c), such principal payments and interest payments would have been payable) over (ii) 100% of the principal amount of the bonds of Series LL being redeemed plus accrued interest thereon from the next preceding interest payment date to the date of such redemption. "Reinvestment Yield" shall mean the lesser of (A) 5.54% or (B) the sum of 0.50% plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest securities (adjusted to constant maturities) equal to the remaining Life to Maturity (as of the date of the proposed redemption of the bonds of Series LL) as published by the Federal Reserve Board in its Statistical Release H.15(519) for the two calendar weeks ending on the Saturday next preceding the Premium Notice Date, as defined below, or, if such average is not published for such period, of such reasonably comparable index as may be approved by the holder or holders of at least 66 2/3% of the unpaid principal amount of the bonds of Series LL to be redeemed. If no maturity exactly corresponds to such Life to Maturity, the yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month; provided, that if there is no such greater published maturity, the yield to maturity shall be such lesser published maturity. "Life to Maturity" shall mean as at the date of the proposed redemption thereof the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Life to Maturity of the bonds of Series LL and the date of payment at final maturity. The Company may not make any redemption under this subsection 2(c) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series LL to be redeemed. In the case of a redemption under this subsection 2(c), at least thirty (30) days prior to the date fixed for redemption (the "Premium Notice Date") the Company will furnish written notice to the Trustee and each holder of bonds of Series LL, by telecopy or other same day written communication, of the premium, if any, applicable to such redemption and the calculations, in reasonable detail, used to determine the amount of any such premium. (d) Notwithstanding any provision of the Mortgage, the bonds of Series MM may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time after December 15, 1994 and prior to December 15, 2003, at a redemption price of 100% of the principal amount of the bonds of Series MM to be redeemed plus accrued interest thereon to the date of redemption, together with a premium equal to the Make-Whole Premium Amount with respect to the principal amount being redeemed. As used herein the following terms shall have the meanings set forth below: "Make-Whole Premium Amount" shall mean at any time with respect to the bonds of Series MM being redeemed pursuant to this subsection 2(d), the excess, if any, (and in no case less than zero) of (i) the present value as of the date of, but immediately prior to, such redemption of the principal payment at final maturity allocable to such redemption and the remaining scheduled interest payments (including any accrued interest) on the bonds of Series MM allocable to such redemption (determined by discounting such amounts on a semiannual compounded basis at the "Reinvestment Yield" from the respective dates on which but for the redemption under this subsection 2(d), such principal payments and interest payments would have been payable) over (ii) 100% of the principal amount of the bonds of Series MM being redeemed plus accrued interest thereon from the next preceding interest payment date to the date of such redemption. "Reinvestment Yield" shall mean the lesser of (A) 6.01% or (B) the sum of 0.50% plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest securities (adjusted to constant maturities) equal to the remaining Life to Maturity (as of the date of the proposed redemption of the bonds of Series MM) as published by the Federal Reserve Board in its Statistical Release H.15(519) for the two calendar weeks ending on the Saturday next preceding the Premium Notice Date, as defined below, or, if such average is not published for such period, of such reasonably comparable index as may be approved by the holder or holders of at least 66 2/3% of the unpaid principal amount of the bonds of Series MM to be redeemed. If no maturity exactly corresponds to such Life to Maturity, the yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month; provided, that if there is no such greater published maturity, the yield to maturity shall be such lesser published maturity. "Life to Maturity" shall mean as at the date of the proposed redemption thereof the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Life to Maturity of the bonds of Series MM and the date of payment at final maturity. The Company may not make any redemption under this subsection 2(d) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series MM to be redeemed. In the case of a redemption under this subsection 2(d), at least thirty (30) days prior to the date fixed for redemption (the "Premium Notice Date") the Company will furnish written notice to the Trustee and each holder of bonds of Series MM, by telecopy or other same day written communication, of the premium, if any, applicable to such redemption and the calculations, in reasonable detail, used to determine the amount of any such premium. (e) Notwithstanding any provision of the Mortgage, the bonds of Series NN may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time after December 15, 1994 and prior to December 15, 2008, at a redemption price of 100% of the principal amount of the bonds of Series NN to be redeemed plus accrued interest thereon to the date of redemption, together with a premium equal to the Make-Whole Premium Amount with respect to the principal amount being redeemed. As used herein the following terms shall have the meanings set forth below: "Make-Whole Premium Amount" shall mean at any time with respect to the bonds of Series NN being redeemed pursuant to this subsection 2(e), the excess, if any, (and in no case less than zero) of (i) the present value as of the date of, but immediately prior to, such redemption of the principal payment at final maturity allocable to such redemption and the remaining scheduled interest payments (including any accrued interest) on the bonds of Series NN allocable to such redemption (determined by discounting such amounts on a semiannual compounded basis at the "Reinvestment Yield" from the respective dates on which but for the redemption under this subsection 2(e), such principal payments and interest payments would have been payable) over (ii) 100% of the principal amount of the bonds of Series NN being redeemed plus accrued interest thereon from the next preceding interest payment date to the date of such redemption. "Reinvestment Yield" shall mean the lesser of (A) 6.27% or (B) the sum of 0.50% plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest securities (adjusted to constant maturities) equal to the remaining Life to Maturity (as of the date of the proposed redemption of the bonds of Series NN) as published by the Federal Reserve Board in its Statistical Release H.15(519) for the two calendar weeks ending on the Saturday next preceding the Premium Notice Date, as defined below, or, if such average is not published for such period, of such reasonably comparable index as may be approved by the holder or holders of at least 66 2/3% of the unpaid principal amount of the bonds of Series NN to be redeemed. If no maturity exactly corresponds to such Life to Maturity, the yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month; provided, that if there is no such greater published maturity, the yield to maturity shall be such lesser published maturity. "Life to Maturity" shall mean as at the date of the proposed redemption thereof the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Life to Maturity of the bonds of Series NN and the date of payment at final maturity. The Company may not make any redemption under this subsection 2(e) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series NN to be redeemed. In the case of a redemption under this subsection 2(e), at least thirty (30) days prior to the date fixed for redemption (the "Premium Notice Date") the Company will furnish written notice to the Trustee and each holder of bonds of Series NN, by telecopy or other same day written communication, of the premium, if any, applicable to such redemption and the calculations, in reasonable detail, used to determine the amount of any such premium. (f)(i) Notwithstanding any provision of the Mortgage, the bonds of Series OO may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time after December 15, 1994 and prior to December 15, 2018, at a redemption price of 100% of the principal amount of the bonds of Series OO to be redeemed plus accrued interest thereon to the date of redemption, together with a premium equal to the Make-Whole Premium Amount with respect to the principal amount being redeemed. As used herein the following terms shall have the meanings set forth below: "Make-Whole Premium Amount" shall mean at any time with respect to the bonds of Series OO being redeemed pursuant to this subsection 2(f), the excess, if any, (and in no case less than zero) of (i) the present value as of the date of, but immediately prior to, such redemption of the principal payment at final maturity allocable to such redemption and the remaining scheduled interest payments (including any accrued interest) on the bonds of Series OO allocable to such redemption (determined by discounting such amounts on a semiannual compounded basis at the "Reinvestment Yield" from the respective dates on which but for the redemption under this subsection 2(f), such principal payments and interest payments would have been payable) over (ii) 100% of the principal amount of the bonds of Series OO being redeemed plus accrued interest thereon from the next preceding interest payment date to the date of such redemption. "Reinvestment Yield" shall mean the lesser of (A) 6.90% or (B) the sum of 0.50% plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest securities (adjusted to constant maturities) equal to the remaining Life to Maturity (as of the date of the proposed redemption of the bonds of Series OO) as published by the Federal Reserve Board in its Statistical Release H.15(519) for the two calendar weeks ending on the Saturday next preceding the Premium Notice Date, as defined below, or, if such average is not published for such period, of such reasonably comparable index as may be approved by the holder or holders of at least 66 2/3% of the unpaid principal amount of the bonds of Series OO to be redeemed. If no maturity exactly corresponds to such Life to Maturity, the yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month; provided, that if there is no such greater published maturity, the yield to maturity shall be such lesser published maturity. "Life to Maturity" shall mean as at the date of the proposed redemption thereof the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Life to Maturity of the bonds of Series OO and the date of payment at final maturity. The Company may not make any redemption under this subsection 2(f)(i) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series OO to be redeemed. In the case of a redemption under this subsection 2(f)(i), at least thirty (30) days prior to the date fixed for redemption (the "Premium Notice Date") the Company will furnish written notice to the Trustee and each holder of bonds of Series OO, by telecopy or other same day written communication, of the premium, if any, applicable to such redemption and the calculations, in reasonable detail, used to determine the amount of any such premium. (ii) Notwithstanding any provision of the Mortgage, the bonds of Series OO may be redeemed at the option of the Company, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time on or after December 15, 2018 and prior to December 15, 2023, at a redemption price of 100% of the principal amount of the bonds of Series OO to be redeemed plus accrued and unpaid interest thereon to the date of redemption but without premium. The Company may not make any redemption under this subsection 2(f)(ii) unless it shall have delivered to the Trustee, at least sixty (60) days before the redemption date, written notice thereof specifying the principal amount of bonds of Series OO to be redeemed. SECTION 3. The Company covenants and agrees that, so long as any bonds of Series KK, LL, MM, NN or OO remain outstanding, it will apply to the Trustee for no release, under Section 2 of Article VIII of the Original Indenture as heretofore supplemented and amended, of any part of the mortgaged property for any consideration consisting in whole or in part of purchase money obligations secured by mortgage on the property released if the aggregate principal amount of such purchase money obligations in connection with any release would exceed sixty percent (60%) of the value (as defined in Section 3 of Article II of the Original Indenture as heretofore supplemented and amended) of the property to be released. SECTION 4. Notwithstanding any provisions of the Mortgage, whenever any bonds of Series KK, LL, MM, NN or OO are to be called for redemption as provided in Article 1 hereof, the Trustee shall select such bonds in accordance with the following provisions: the principal amount of bonds of Series KK, LL, MM, NN or OO then to be redeemed from each holder thereof shall bear the same ratio (to the nearest $1,000) to the total principal amount of bonds of Series KK, LL, MM, NN or OO then to be redeemed as the total principal amount of bonds of such series then held by each such holder bears to the total principal amount of bonds of such series then outstanding. Purchases of bonds of Series KK, LL, MM, NN or OO by the Company or the Trustee (as Trustee) shall be made only (a) with the written consent of all the then holders of the bonds of such series being purchased to the purchase being made, or (b) after the Company or the Trustee shall first have offered to purchase at the same price and contemporaneously from each then holder of the bonds of such series being purchased such holder's pro rata share of the total principal amount of the bonds of such series then being purchased. SECTION 5. Notwithstanding any provisions of the Mortgage, in connection with any redemption of bonds of Series KK, LL, MM, NN or OO any notice of redemption shall be sufficiently given if mailed first class, postage prepaid, to each registered holder of bonds at the last address of each holder appearing on the bond register. SECTION 6. Notwithstanding any provisions of the Mortgage or the bonds of Series KK, LL, MM, NN or OO, so long as the original registered holders or any subsequent registered holder of bonds of Series KK, LL, MM, NN or OO which is a bank, an insurance company, a savings institution, a trust company, a pension fund, or other institutional investor shall hold any of the bonds of Series KK, LL, MM, NN or OO all payments of interest on the bonds of such series and all payments on account of principal or premium, if any, shall be made directly to each such registered holder or its nominee at such address as may from time to time be furnished by such holder in writing without surrender or presentation of such bonds of such series to the Trustee (except in the case of payment or redemption of any bond of Series KK, LL, MM, NN or OO in whole) and with respect to each such original holder or subsequent holder such payments shall be made in accordance with the provisions of any written agreement between such original holder or subsequent holder and the Company which shall have been communicated and consented to by the Trustee. The Trustee hereby consents to the method of payment described in Section 6 of the Bond Purchase Agreements dated as of December 3, 1993 between the Company and the respective purchasers as defined therein. ARTICLE 2. MISCELLANEOUS PROVISIONS. SECTION 1. The Trustee hereby confirms its approval, previously given, of the designations: "First Mortgage 5.30% Bonds, Series KK" for the bonds of said Series KK; "First Mortgage 5.54% Bonds, Series LL" for the bonds of said Series LL; "First Mortgage 6.01% Bonds, Series MM" for the bonds of said Series MM; "First Mortgage 6.27% Bonds, Series NN" for the bonds of said Series NN; and "First Mortgage 6.90% Bonds, Series OO" for the bonds of said Series OO. SECTION 2. The Trustee shall be entitled to, may exercise and shall be protected by, where and to the full extent that the same are applicable, all the rights, powers, privileges, immunities and exemptions provided in the Mortgage as if the provisions concerning the same were incorporated herein at length. The Trustee under the Mortgage shall ex officio be Trustee hereunder. The recitals and statements in this Supplemental Indenture and in the bonds shall be taken as statements by the Company alone, and shall not be considered as made by or as imposing any obligation or liability upon the Trustee, nor shall the Trustee be held responsible for the legality or validity of this Supplemental Indenture or of the bonds, and the Trustee makes no covenants or representations, and shall not be responsible, as to and for the effect, authorization, execution, delivery or recording of this Supplemental Indenture. SECTION 3. This Supplemental Indenture shall become void when the Original Indenture as heretofore supplemented and amended shall be void. SECTION 4. The Mortgage as supplemented hereby is ratified and con- firmed in all respects. SECTION 5. If and to the extent that any provision of this Supplemental Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939 as amended by the Trust Indenture Reform Act of 1990, through operation of Section 318(c), such imposed duties shall control. SECTION 6. This Supplemental Indenture may be simultaneously executed in any number of counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. IN WITNESS WHEREOF, said CENTRAL VERMONT PUBLIC SERVICE CORPORATION has caused this instrument to be signed, and its corporate seal attested by its Secretary or Assistant Secretary to be hereunto affixed, by Robert H. Young, its Executive Vice President and Agent in that behalf duly authorized, and said THE FIRST NATIONAL BANK OF BOSTON, in token of its acceptance of the trust herein created, has caused this instrument to be executed in its corporate name and its corporate seal to be hereto affixed by one of its Authorized Officers, all as of the day and year first above written. CENTRAL VERMONT PUBLIC SERVICE CORPORATION, BY Robert H. Young Robert H. Young Its Executive Vice President and Agent. Attest: Carole L. Root (Corporate Carole L. Root, Assistant Secretary Seal) Signed, sealed and delivered on behalf of Central Vermont Public Service Corporation in the presence of: Gale Levatino Gale Levatino Patricia Mitiguy Patricia Mitiguy THE FIRST NATIONAL BANK OF BOSTON, as Trustee as aforesaid, James E. Mogavero James E. Mogavero Authorized Officer. Signed, sealed and delivered on (Corporate behalf of The First National Bank Seal) of Boston in the presence of: Henry W. Seemore, Jr. Henry W. Seemore, Jr. Robert Dougherty Robert Dougherty SCHEDULE A. DESCRIPTION OF PROPERTIES. All land and premises, rights, privileges and easements conveyed or purported to have been conveyed to the Company in and by the following described deeds and the records thereof are hereby incorporated herein by reference: Properties acquired after December 10, 1991 or not previously described: (1)Deed from Craig A. Cota and Joan D. Cota, dated March 27, 1991, Recorded in Book 36, Page 505 of the West Rutland Land Records in the County of Rutland and State of Vermont. (2)Deed from Timothy A. Nichols and Brenda M. Nichols, dated October 16, 1991, Recorded in Book 66, Page 238-239 of the Arlington Land Records in the County of Bennington and State of Vermont. (3)Deed from Marion E. Sevigny, Roy A. Calkins, Carmen M. Bigelow, Paul R. Calkins, Zana A. Tauriainen and Leland E. Calkins, dated April 17, 1992, Recorded in Book 214, Pages 415-420 of the St. Johnsbury Land Records in the County of Caledonia and State of Vermont. (4)Deed from Martin W. Bowen, Jr. and Marilyn A. Bowen, dated April 8, 1993, Recorded in Book 323, Page 156-157 of the Rutland City Land Records in the County of Rutland and State of Vermont. Also, all property of every kind whatsoever, including land and premises, rights, privileges, easements, transmission lines, substations and distribution lines, in the following towns: IN NEW LONDON COUNTY, STATE OF CONNECTICUT: Waterford IN HARTFORD COUNTY, STATE OF CONNECTICUT: Berlin IN CUMBERLAND COUNTY, STATE OF MAINE: Yarmouth IN SULLIVAN COUNTY, STATE OF NEW HAMPSHIRE: Charleston Cornish Plainfield Claremont Newport Unity IN CHESHIRE COUNTY, STATE OF NEW HAMPSHIRE: Chesterfield Hinsdale IN GRAFTON COUNTY, STATE OF NEW HAMPSHIRE: Bath Lyman Orford Haverhill Lyme Piermont IN WASHINGTON COUNTY, STATE OF NEW YORK: Granville Hampton IN RENSSELAER COUNTY, STATE OF NEW YORK: Hoosick IN ADDISON COUNTY, STATE OF VERMONT: Addison Leicester Ripton Bridport Lincoln Salisbury Bristol Middlebury Shoreham Cornwall Monkton Starksboro Ferrisburg New Haven Vergennes Goshen Orwell Weybridge Granville Panton Whiting Hancock IN BENNINGTON COUNTY, STATE OF VERMONT: Arlington Manchester Searsburg Bennington Peru Shaftsbury Dorset Pownal Sunderland Glastenbury Rupert Winhall Landgrove Sandgate Woodford IN CALEDONIA COUNTY, STATE OF VERMONT: Barnet Lyndon Walden Danville Ryegate Waterford Kirby St. Johnsbury Wheelock IN CHITTENDEN COUNTY, STATE OF VERMONT: Buels Gore Essex Milton Burlington Huntington Underhill Colchester Jericho Westford IN ESSEX COUNTY, STATE OF VERMONT: Concord Guildhall Victory Granby Lunenburg IN FRANKLIN COUNTY, STATE OF VERMONT: Bakersfield Fletcher Richford Berkshire Franklin Sheldon Enosburg Georgia St. Albans City Fairfax Highgate St. Albans Town Fairfield Montgomery Swanton IN LAMOILLE COUNTY, STATE OF VERMONT: Belvidere Eden Johnson Cambridge Hyde Park IN ORANGE COUNTY, STATE OF VERMONT: Bradford Fairlee Thetford Braintree Newbury Tunbridge Brookfield Randolph Vershire Chelsea Strafford West Fairleee IN ORLEANS COUNTY, STATE OF VERMONT: Lowell Irasburg IN RUTLAND COUNTY, STATE OF VERMONT: Benson Middletown Springs Sherburne Brandon Mt. Holly Shrewsbury Castleton Mt. Tabor Sudbury Chittenden Pawlet Tinmouth Clarendon Pittsfield Wallingford Danby Pittsford Wells Fair Haven PoultneyWest Haven Hubbardton Proctor West Rutland Ira Rutland City Mendon Rutland Town IN WASHINGTON COUNTY, STATE OF VERMONT: Northfield Roxbury IN WINDHAM COUNTY, STATE OF VERMONT: Athens Guilford Stratton Brattleboro Jamaica Townshend Brookline Londonderry Vernon Dover Marlboro Wardsboro Dummerston Newfane Westminster Grafton Rockingham Windham IN WINDSOR COUNTY, STATE OF VERMONT: Andover Hartland Sharon Baltimore Ludlow Springfield Barnard Norwich Stockbridge Bethel Plymouth Weathersfield Bridgewater Pomfret Weston Cavendish Reading West Windsor Chester Rochester Windsor Hartford Royalton Woodstock STATE OF VERMONT, COUNTY OF RUTLAND, ss. On this 8th day of December, A.D. 1993, before me, a Notary Public in and for said State, duly commissioned and acting as such, personally came Robert H. Young, Executive Vice President and Agent of said Central Vermont Public Service Corporation, to me personally known and known to me to be one of the persons named in and who executed the foregoing instrument, and who being duly sworn by me deposed and said: that he resides in Rutland, Vermont; that he is Executive Vice President of Central Vermont Public Service Corporation, the Corporation described in and which executed the foregoing instrument as party of the first part; that he knows the seal of said Corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said Corporation, and that he signed his name thereto by like order, and he acknowledged and declared that he executed the foregoing instrument and affixed the seal of said Central Vermont Public Service Corporation thereto as its Agent by authority of the Board of Directors of said Corporation, and acknowledged the same to be his free act and deed, and the free act and deed of said Corporation. WITNESS my hand and official seal the day and year aforesaid. Patricia Mitiguy Patricia Mitiguy, Notary Public My commission expires February 10, 1995 (Notarial Seal) THE COMMONWEALTH OF MASSACHUSETTS, COUNTY OF SUFFOLK, SS. On this 10th day of December, A.D. 1993, before me, a Notary Public in and for said Commonwealth, duly commissioned and acting as such, personally came James E. Mogavero, an Authorized Officer of The First National Bank of Boston, to me known and known to me to be one of the persons named in and who executed the foregoing instrument, and who being duly sworn by me deposed and said: that he resides in Boston, Massachusetts; that he is an Authorized Officer of The First National Bank of Boston, the corporation described in and which executed the foregoing instrument as party of the second part; that he knows the seal of said Bank; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said Bank, and that he signed his name thereto by like authority, and he acknowledged the same to be his free act and deed, and the free act and deed of said Bank. And said James E. Mogavero, an Authorized Officer of said The First National Bank of Boston, further acknowledged that he accepted the trust hereinbefore created for, and on behalf of, said The First National Bank of Boston, Trustee, upon the terms therein named. WITNESS my hand and official seal the day and year aforesaid. Shawn P. George Shawn P. George, Notary Public My Commission Expires: 9/2/99 (Notarial Seal) ENDORSEMENT. The First National Bank of Boston, Trustee, being the mortgagee in the foregoing Supplemental Indenture, hereby consents to the cutting of any timber standing upon any of the lands covered by said Supplemental Indenture and the Mortgage referred to in said Supplemental Indenture and to the sale of any such timber so cut and of any personal property covered by said Original Indenture and said Supplemental Indenture to the extent, but only to the extent, that such sale is permitted under the provisions of said Original Indenture. Dated: Boston, Massachusetts, December 10, 1993. THE FIRST NATIONAL BANK OF BOSTON, BY James E. Mogavero James E. Mogavero Authorized Officer. Signed, sealed and acknowledged on behalf of The First National Bank of Boston in the presence of: Henry W. Seemore, Jr. Henry W. Seemore, Jr. Robert Dougherty Robert Dougherty (Corporate Seal) CENTRAL VERMONT PUBLIC SERVICE CORPORATION RESOLUTIONS ESTABLISHING SERIES JJ, KK, LL, MM, NN and OO BONDS AND MATTERS CONNECTED THEREWITH. I, CAROLE L. ROOT, hereby certify that I am Assistant Secretary of Central Vermont Public Service Corporation and that the following is a true copy of the resolutions adopted at a duly convened meeting of the Board of Directors of said Corporation held on December 7, 1993, at which a quorum was present and acting throughout: On motion duly made and seconded, the following resolutions relating to the bonds of Series KK were unanimously passed: Resolved: that this Board of Directors of Central Vermont Public Service Corporation hereby determines upon a thirty- sixth series of bonds to be issued from time to time upon proper resolutions of the Board of Directors under the terms of an Indenture of Mortgage between this Company and The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929 (but actually executed October 24, 1929), as amended, and duly recorded, among other places, in the Office of the City Clerk of Rutland, Vermont, and in Washington County, New York, Liber 150 of Mortgages, Page 51, Grafton County, New Hampshire, Registry of Deeds, Liber 616, Folio 484, Sullivan County, New Hampshire, Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the office of the Secretary of State of Vermont; that said series shall be designated as Series KK and that the bonds of said series shall be designated as "First Mortgage 5.30% Bonds, Series KK"; that said bonds shall be in the form of registered bonds without coupons; that each of said bonds shall be dated as of the date of the interest payment day thereof next preceding the date of issue, to which interest has been paid, unless (a) issued on an interest payment day, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of any interest payment day thereof, in which event it shall bear the date of its issue, except that bonds of Series KK issued prior to June 15, 1994 in exchange for other bonds of Series KK shall be dated so that no gain or loss of interest shall result; each bond of Series KK shall bear interest from the date thereof; said bonds (subject to the provisions of said Indenture of Mortgage) to be limited in express aggregate principal amount to $10,000,000, to bear interest from the date thereof at the rate of 5.30% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal thereof becomes due and payable, and to bear interest on overdue principal and (to the extent enforceable under applicable law) on overdue installments of interest at the rate of 6.30% per annum, and to mature December 15, 1998, to be substantially in the form to be authorized at this meeting; said bonds to be in the denomination of $1,000 and multiples thereof. Said bonds of Series KK may be redeemed as a whole or in part in multiples of one thousand dollars at any time or from time to time prior to maturity, upon the notice and in the manner and with the effect provided in said Indenture of Mortgage and particularly in Article V thereof, subject to the provisions of Sections 2, 4 and 5 of Article 1 of the Thirty-Eighth Supplemental Indenture to be authorized at this meeting, or in connection with the application pursuant to Article IX of said Indenture of Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, any such redemption to be made at the applicable percentages of the principal amounts thereof specified in the forms of the definitive Series KK bonds to be authorized at this meeting, together in each case with accrued and unpaid interest to the date of redemption; provided, however, that said bonds of Series KK shall not be redeemed at the option of the Company on or before December 15, 1994, and said bonds of Series KK shall be subject and entitled to the benefits of optional redemption provisions as set forth in said Supplemental Indenture and referred to in said form of the bonds of Series KK, which optional redemption provisions are hereby approved. Subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the principal of the bonds of Series KK shall be payable at the principal office of the Trustee in the City of Boston, Massachusetts, or its successor in trust under said Indenture of Mortgage, in coin or currency of the United States of America which at the time of payment is legal tender for public and private debts; and subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the interest on the bonds of Series KK shall be payable in like coin or currency at the office or agency of this Company in the City of Boston, Massachusetts, or, at the option of the holders, in the Borough of Manhattan, City and State of New York. Resolved: that this Board hereby approves the following forms of registered bonds without coupons of Series KK, subject to such changes, insertions and omissions in each, not substantially at variance with said forms, as may be determined upon and approved by the President or one of the Vice Presidents of this Company and approved by the Trustee; and that the execution of said bonds by the President or one of the Vice Presidents of this Company and the authentication thereof by the Trustee shall be conclusive evidence that each so executed is within the authority conveyed by this resolution: (FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES KK) No. RKK-- $ CENTRAL VERMONT PUBLIC SERVICE CORPORATION FIRST MORTGAGE 5.30% BOND SERIES KK Due December 15, 1998 CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation (hereinafter called the Company), for value received, hereby promises to pay to or registered assigns, the sum of DOLLARS on the fifteenth day of December, 1998, and to pay to the registered holder interest on said sum from the date hereof, at the rate of 5.30% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal hereof becomes due and payable, and at the rate of 6.30% per annum on any overdue principal and (to the extent enforceable under applicable law) on any overdue installment of interest. The principal of this bond shall be payable at the principal office of The First National Bank of Boston in the City of Boston, Massachusetts, or its successor in trust under the Indenture of Mortgage hereinafter referred to, in coin or currency of the United States of America which, at the time of payment, is legal tender for public and private debts, and the interest on this bond shall be payable, in like coin or currency, at the office or agency of the Company in the City of Boston, Massachusetts or, at the option of the registered holder, in the Borough of Manhattan, City and State of New York. This bond is one of the bonds issued and to be issued from time to time under and in accordance with, and, irrespective of the designation thereof or of the series in which issued, all equally secured by, an Indenture of Mortgage or Deed of Trust dated as of October 1, 1929 (hereinafter as supplemented, modified and confirmed by thirty-eight supplemental indentures, counterparts of which are on file with the Trustee, and by all other indentures supplemental to any or all thereof, collectively called the "Mortgage"), and any and all such supplemental indentures, between the Company and Old Colony Trust Company or The First National Bank of Boston, as Trustee, to which Mortgage reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which releases and other dispositions of the property covered by the Mortgage may be made, and the rights of the holders of said bonds and of the Trustee in respect of such security; but neither the foregoing reference to the Mortgage nor any provision of this bond or of the Mortgage shall affect or permit any impairment of the absolute, unconditional and unalterable obligation of the Company to pay, at the maturities herein provided, the principal of and premium (if any) and interest on this bond as herein provided. By the terms of the Mortgage the bonds to be secured thereby are issuable in series, which may vary as to date, amount, date of maturity, rate of interest, and in other respects as in the Mortgage provided. The bonds of Series KK shall not be subject to redemption, prepayment, purchase or other retirement prior to maturity except: (a) in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money (in connection with a redemption or purchase pursuant to said Article IX, and upon the notice and in the manner and with the effect provided in the Mortgage, the bonds of Series KK, of which this is one, may be redeemed or purchased by the Company, subject to the limitations contained in the Mortgage or any of the bonds of Series KK, at any time and from time to time prior to maturity, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series KK to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsection 2(b) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to the principal amount being redeemed or purchased); or (b) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof at any time after December 15, 1994 and prior to December 15, 1998 at a redemption price of 100% of the principal amount of the bonds of Series KK to be redeemed plus accrued and unpaid interest thereon to the date of redemption, together with a premium equal to the Make- Whole Premium Amount (as defined in subsection 2(b) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to such principal amount then to be redeemed. In case of certain events of default specified in the Mortgage, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Mortgage. No recourse shall be had for the payment of the principal or interest of this bond, or for any claim based hereon, or otherwise in respect hereof or of the Mortgage, to or against any incorporator, stockholder, officer or director, past, present or future, of the Company, either directly or through the Company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers being waived and released by the holder hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond is transferable by the registered holder hereof, in person or by attorney duly authorized, at said office of the Trustee, upon surrender and cancellation of this bond, and upon any such transfer a new registered bond or bonds, without coupons, of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee or its successor in trust under the Mortgage of the certificate endorsed hereon. IN WITNESS WHEREOF, Central Vermont Public Service Corporation has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, this day of , 199 . CENTRAL VERMONT PUBLIC SERVICE CORPORATION By ______________________________________ President Attest: _____________________________ Secretary (FORM OF ENDORSEMENT FOR ALL REGISTERED SERIES KK BONDS) FOR VALUE RECEIVED hereby sell(s), assigns(s) and transfer(s) unto , the within bond issued by Central Vermont Public Service Corporation, and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said bond on the books of said Company, with full power of substitution in the premises. Dated: ________________ _______________________________ In the presence of: ______________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF SUCH ACT. (FORM OF TRUSTEE'S CERTIFICATE FOR ALL SERIES KK BONDS) This bond is one of the bonds of the series designated therein, described in the within-mentioned Mortgage. THE FIRST NATIONAL BANK OF BOSTON, Trustee By ____________________________________ Authorized Officer Resolved: that this Company's First Mortgage 5.30% Bonds, Series KK, to be issued under said Indenture of Mortgage shall be executed in the name of this Company by the manual or facsimile sig- nature of its President or one of its Vice Presidents and shall have affixed thereto the corporate seal of this Company (which may be facsimile) attested by the manual or facsimile signature of its Secretary or an Assistant Secretary. Resolved: that, subject to obtaining the approval of the Vermont Public Service Board, this Board hereby authorizes the issue of $10,000,000 in principal amount of said First Mortgage 5.30% Bonds, Series KK, which series have been determined upon and established at this meeting, to be issued in respect of payment, cancellation, redemption or discharge of an aggregate principal amount of $3,000,000 First Mortgage Bonds, Series P, $3,000,000 First Mortgage Bonds, Series R, and $4,000,000 First Mortgage Bonds, Series S, pursuant to and in conformity with the provisions of said Indenture of Mortgage, as amended, particularly Section 2 of Article II thereof. Resolved: that this Board of Directors hereby authorizes The First National Bank of Boston, Trustee under said Indenture of Mortgage, from time to time to authenticate, on application of the President or any Vice President of this Company, and deliver on the written order of the President or any Vice President $10,000,000 in principal amount of said First Mortgage 5.30% Bonds, Series KK, in such definitive forms and denominations authorized by resolutions of this Board as he may specify, but only upon said The First National Bank of Boston, Trustee, being satisfied that all the requirements of Article II of said Indenture of Mortgage, as amended, relating to the issue of bonds in respect of payment, cancellation, redemption or discharge of bonds have been complied with and upon the deposit with the Trustee of the documents required under said Article II. Whereas, by Section 12 of Article III of the Indenture of Mortgage of this Company to The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929, this Company covenanted "that it will, upon reasonable request, execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of this Mortgage, especially to make subject to the lien hereof any property now owned or hereafter acquired by it, which it is herein provided shall be subject to the lien hereof", and, by Section 1 of Article XVI thereof, it is provided, among other things, that this Company and the Trustee may enter into such indentures supplemental thereto as may be deemed necessary or desirable "to assign, convey, confirm, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances as shall be therein specifically described, additional property or properties of the Company, for the equal and proportionate benefit and security, except as herein otherwise expressly provided, of the holders and owners of all bonds at any time issued and outstanding under this Mortgage", and "to add to the covenants or agreements of the Company for the protection of the bondholders and of the trust estate", and "to provide the terms and conditions of redemption of the bonds, and/or for a special sinking fund for the retirement of the bonds of any particular series then about to be issued", and "for any other purpose not inconsistent with the terms of this Mortgage and which shall not impair the security of the same", NOW, THEREFORE, BE IT Resolved: that this Board hereby approves the Supplemental Indenture to be dated as of December 10, 1993, setting forth the terms of the Company's First Mortgage 5.30% Bonds, Series KK, and authorizes and directs the President or any Vice President of this Company for the time being in office, each as such officer and as agent of this Company, to execute and seal with the corporate seal of this Company (which shall be attested by the Secretary or an Assistant Secretary of this Company for the time being in office), and deliver to The First National Bank of Boston, Trustee, a Thirty-Eighth Supplemental Indenture to be dated as of December 10, 1993, substantially in the form presented to this meeting, subject to such changes, insertions and omissions as may be determined and approved by the President or Vice President of this Company executing the same, that such determination and approval are within the authority conveyed by this resolution to be conclusively evidenced by the execution of said Supplemental Indenture on behalf of this Company and such execution being a sufficient identification thereof for all purposes as the Supplemental Indenture hereby authorized. Resolved: that this Company hereby appoints The First National Bank of Boston, a national banking association having its principal office in the City of Boston, as the Boston paying agent of this Company for the purpose of paying the interest on this Company's First Mortgage 5.30% Bonds, Series KK, to be issued under and secured by the Indenture of Mortgage dated as of October 1, 1929 (but actually executed October 24, 1929), as amended and supplemented, made and entered into by and between this Company and said The First National Bank of Boston as Trustee, and hereby designates the principal office of said The First National Bank of Boston as the office or agency of this Company in Boston, Massachusetts, at which payment may be made to or upon the written order of the holders of the registered bonds of Series KK. On motion duly made and seconded, the following resolutions relating to the bonds of Series LL were unanimously passed: Resolved: that this Board of Directors of Central Vermont Public Service Corporation hereby determines upon a thirty- seventh series of bonds to be issued from time to time upon proper resolutions of the Board of Directors under the terms of an Indenture of Mortgage between this Company and The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929 (but actually executed October 24, 1929), as amended, and duly recorded, among other places, in the Office of the City Clerk of Rutland, Vermont, and in Washington County, New York, Liber 150 of Mortgages, Page 51, Grafton County, New Hampshire, Registry of Deeds, Liber 616, Folio 484, Sullivan County, New Hampshire, Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the office of the Secretary of State of Vermont; that said series shall be designated as Series LL and that the bonds of said series shall be designated as "First Mortgage 5.54% Bonds, Series LL"; that said bonds shall be in the form of registered bonds without coupons; that each of said bonds shall be dated as of the date of the interest payment day thereof next preceding the date of issue, to which interest has been paid, unless (a) issued on an interest payment day, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of any interest payment day thereof, in which event it shall bear the date of its issue, except that bonds of Series LL issued prior to June 15, 1994 in exchange for other bonds of Series LL shall be dated so that no gain or loss of interest shall result; each bond of Series LL shall bear interest from the date thereof; said bonds (subject to the provisions of said Indenture of Mortgage) to be limited in express aggregate principal amount to $5,000,000, to bear interest from the date thereof at the rate of 5.54% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal thereof becomes due and payable, and to bear interest on overdue principal and (to the extent enforceable under applicable law) on overdue installments of interest at the rate of 6.54% per annum, and to mature December 15, 2000, to be substantially in the form to be authorized at this meeting; said bonds to be in the denomination of $1,000 and multiples thereof. Said bonds of Series LL may be redeemed as a whole or in part in multiples of one thousand dollars at any time or from time to time prior to maturity, upon the notice and in the manner and with the effect provided in said Indenture of Mortgage and particularly in Article V thereof, subject to the provisions of Sections 2, 4 and 5 of Article 1 of the Thirty-Eighth Supplemental Indenture to be authorized at this meeting, or in connection with the application pursuant to Article IX of said Indenture of Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, any such redemption to be made at the applicable percentages of the principal amounts thereof specified in the forms of the definitive Series LL bonds to be authorized at this meeting, together in each case with accrued and unpaid interest to the date of redemption; provided, however, that said bonds of Series LL shall not be redeemed at the option of the Company on or before December 15, 1994, and said bonds of Series LL shall be subject and entitled to the benefits of optional redemption provisions as set forth in said Supplemental Indenture and referred to in said form of the bonds of Series LL, which optional redemption provisions are hereby approved. Subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the principal of the bonds of Series LL shall be payable at the principal office of the Trustee in the City of Boston, Massachusetts, or its successor in trust under said Indenture of Mortgage, in coin or currency of the United States of America which at the time of payment is legal tender for public and private debts; and subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the interest on the bonds of Series LL shall be payable in like coin or currency at the office or agency of this Company in the City of Boston, Massachusetts, or, at the option of the holders, in the Borough of Manhattan, City and State of New York. Resolved: that this Board hereby approves the following forms of registered bonds without coupons of Series LL, subject to such changes, insertions and omissions in each, not substantially at variance with said forms, as may be determined upon and approved by the President or one of the Vice Presidents of this Company and approved by the Trustee; and that the execution of said bonds by the President or one of the Vice Presidents of this Company and the authentication thereof by the Trustee shall be conclusive evidence that each so executed is within the authority conveyed by this resolution: (FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES LL) No. RLL-- $ CENTRAL VERMONT PUBLIC SERVICE CORPORATION FIRST MORTGAGE 5.54% BOND SERIES LL Due December 15, 2000 CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation (hereinafter called the Company), for value received, hereby promises to pay to or registered assigns, the sum of DOLLARS on the fifteenth day of December, 2000, and to pay to the registered holder interest on said sum from the date hereof, at the rate of 5.54% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal hereof becomes due and payable, and at the rate of 6.54% per annum on any overdue principal and (to the extent enforceable under applicable law) on any overdue installment of interest. The principal of this bond shall be payable at the principal office of The First National Bank of Boston in the City of Boston, Massachusetts, or its successor in trust under the Indenture of Mortgage hereinafter referred to, in coin or currency of the United States of America which, at the time of payment, is legal tender for public and private debts, and the interest on this bond shall be payable, in like coin or currency, at the office or agency of the Company in the City of Boston, Massachusetts or, at the option of the registered holder, in the Borough of Manhattan, City and State of New York. This bond is one of the bonds issued and to be issued from time to time under and in accordance with, and, irrespective of the designation thereof or of the series in which issued, all equally secured by, an Indenture of Mortgage or Deed of Trust dated as of October 1, 1929 (hereinafter as supplemented, modified and confirmed by thirty-eight supplemental indentures, counterparts of which are on file with the Trustee, and by all other indentures supplemental to any or all thereof, collectively called the "Mortgage"), and any and all such supplemental indentures, between the Company and Old Colony Trust Company or The First National Bank of Boston, as Trustee, to which Mortgage reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which releases and other dispositions of the property covered by the Mortgage may be made, and the rights of the holders of said bonds and of the Trustee in respect of such security; but neither the foregoing reference to the Mortgage nor any provision of this bond or of the Mortgage shall affect or permit any impairment of the absolute, unconditional and unalterable obligation of the Company to pay, at the maturities herein provided, the principal of and premium (if any) and interest on this bond as herein provided. By the terms of the Mortgage the bonds to be secured thereby are issuable in series, which may vary as to date, amount, date of maturity, rate of interest, and in other respects as in the Mortgage provided. The bonds of Series LL shall not be subject to redemption, prepayment, purchase or other retirement prior to maturity except: (a) in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money (in connection with a redemption or purchase pursuant to said Article IX, and upon the notice and in the manner and with the effect provided in the Mortgage, the bonds of Series LL, of which this is one, may be redeemed or purchased by the Company, subject to the limitations contained in the Mortgage or any of the bonds of Series LL, at any time and from time to time prior to maturity, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series LL to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsection 2(c) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to the principal amount being redeemed or purchased); or (b) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof at any time after December 15, 1994 and prior to December 15, 2000 at a redemption price of 100% of the principal amount of the bonds of Series LL to be redeemed plus accrued and unpaid interest thereon to the date of redemption, together with a premium equal to the Make- Whole Premium Amount (as defined in subsection 2(c) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to such principal amount then to be redeemed. In case of certain events of default specified in the Mortgage, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Mortgage. No recourse shall be had for the payment of the principal or interest of this bond, or for any claim based hereon, or otherwise in respect hereof or of the Mortgage, to or against any incorporator, stockholder, officer or director, past, present or future, of the Company, either directly or through the Company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers being waived and released by the holder hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond is transferable by the registered holder hereof, in person or by attorney duly authorized, at said office of the Trustee, upon surrender and cancellation of this bond, and upon any such transfer a new registered bond or bonds, without coupons, of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee or its successor in trust under the Mortgage of the certificate endorsed hereon. IN WITNESS WHEREOF, Central Vermont Public Service Corporation has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, this day of , 199 . CENTRAL VERMONT PUBLIC SERVICE CORPORATION By ______________________________________ President Attest: _____________________________ Secretary (FORM OF ENDORSEMENT FOR ALL REGISTERED SERIES LL BONDS) FOR VALUE RECEIVED hereby sell(s), assigns(s) and transfer(s) unto , the within bond issued by Central Vermont Public Service Corporation, and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said bond on the books of said Company, with full power of substitution in the premises. Dated: ________________ _______________________________ In the presence of: _____________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF SUCH ACT. (FORM OF TRUSTEE'S CERTIFICATE FOR ALL SERIES LL BONDS) This bond is one of the bonds of the series designated therein, described in the within-mentioned Mortgage. THE FIRST NATIONAL BANK OF BOSTON, Trustee By ____________________________________ Authorized Officer Resolved: that this Company's First Mortgage 5.54% Bonds, Series LL, to be issued under said Indenture of Mortgage shall be executed in the name of this Company by the manual or facsimile sig- nature of its President or one of its Vice Presidents and shall have affixed thereto the corporate seal of this Company (which may be facsimile) attested by the manual or facsimile signature of its Secretary or an Assistant Secretary. Resolved: that, subject to obtaining the approval of the Vermont Public Service Board, this Board hereby authorizes the issue of $5,000,000 in principal amount of said First Mortgage 5.54% Bonds, Series LL, which series have been determined upon and established at this meeting, to be issued in respect of payment, cancellation, redemption or discharge of an aggregate principal amount of $1,000,000 First Mortgage Bonds, Series S and $3,500,000 First Mortgage Bonds, Series Y and in respect of extensions and purchased property, pursuant to and in conformity with the provisions of said Indenture of Mortgage, as amended, particularly Sections 2 and 4 of Article II thereof. Resolved: that this Board of Directors hereby authorizes The First National Bank of Boston, Trustee under said Indenture of Mortgage, from time to time to authenticate, on application of the President or any Vice President of this Company, and deliver on the written order of the President or any Vice President $5,000,000 in principal amount of said First Mortgage 5.54% Bonds, Series LL, in such definitive forms and denominations authorized by resolutions of this Board as he may specify, but only upon said The First National Bank of Boston, Trustee, being satisfied that all the requirements of Article II of said Indenture of Mortgage, as amended, relating to the issue of bonds in respect of payment, cancellation, redemption or discharge of bonds and in respect of extensions and purchased property have been complied with and upon the deposit with the Trustee of the documents required under said Article II. Whereas, by Section 12 of Article III of the Indenture of Mortgage of this Company to The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929, this Company covenanted "that it will, upon reasonable request, execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of this Mortgage, especially to make subject to the lien hereof any property now owned or hereafter acquired by it, which it is herein provided shall be subject to the lien hereof", and, by Section 1 of Article XVI thereof, it is provided, among other things, that this Company and the Trustee may enter into such indentures supplemental thereto as may be deemed necessary or desirable "to assign, convey, confirm, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances as shall be therein specifically described, additional property or properties of the Company, for the equal and proportionate benefit and security, except as herein otherwise expressly provided, of the holders and owners of all bonds at any time issued and outstanding under this Mortgage", and "to add to the covenants or agreements of the Company for the protection of the bondholders and of the trust estate", and "to provide the terms and conditions of redemption of the bonds, and/or for a special sinking fund for the retirement of the bonds of any particular series then about to be issued", and "for any other purpose not inconsistent with the terms of this Mortgage and which shall not impair the security of the same, NOW, THEREFORE, BE IT Resolved: that this Board hereby approves the Supplemental Indenture to be dated as of December 10, 1993, setting forth the terms of the Company's First Mortgage 5.54% Bonds, Series LL, and authorizes and directs the President or any Vice President of this Company for the time being in office, each as such officer and as agent of this Company, to execute and seal with the corporate seal of this Company (which shall be attested by the Secretary or an Assistant Secretary of this Company for the time being in office), and deliver to The First National Bank of Boston, Trustee, a Thirty-Eighth Supplemental Indenture to be dated as of December 10, 1993, substantially in the form presented to this meeting, subject to such changes, insertions and omissions as may be determined and approved by the President or Vice President of this Company executing the same, that such determination and approval are within the authority conveyed by this resolution to be conclusively evidenced by the execution of said Supplemental Indenture on behalf of this Company and such execution being a sufficient identification thereof for all purposes as the Supplemental Indenture hereby authorized. Resolved: that this Company hereby appoints The First National Bank of Boston, a national banking association having its principal office in the City of Boston, as the Boston paying agent of this Company for the purpose of paying the interest on this Company's First Mortgage 5.54% Bonds, Series LL, to be issued under and secured by the Indenture of Mortgage dated as of October 1, 1929 (but actually executed October 24, 1929), as amended and supplemented, made and entered into by and between this Company and said The First National Bank of Boston as Trustee, and hereby designates the principal office of said The First National Bank of Boston as the office or agency of this Company in Boston, Massachusetts, at which payment may be made to or upon the written order of the holders of the registered bonds of Series LL. On motion duly made and seconded, the following resolutions relating to the bonds of Series MM were unanimously passed: Resolved: that this Board of Directors of Central Vermont Public Service Corporation hereby determines upon a thirty- eighth series of bonds to be issued from time to time upon proper resolutions of the Board of Directors under the terms of an Indenture of Mortgage between this Company and The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929 (but actually executed October 24, 1929), as amended, and duly recorded, among other places, in the Office of the City Clerk of Rutland, Vermont, and in Washington County, New York, Liber 150 of Mortgages, Page 51, Grafton County, New Hampshire, Registry of Deeds, Liber 616, Folio 484, Sullivan County, New Hampshire, Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the office of the Secretary of State of Vermont; that said series shall be designated as Series MM and that the bonds of said series shall be designated as "First Mortgage 6.01% Bonds, Series MM"; that said bonds shall be in the form of registered bonds without coupons; that each of said bonds shall be dated as of the date of the interest payment day thereof next preceding the date of issue, to which interest has been paid, unless (a) issued on an interest payment day, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of any interest payment day thereof, in which event it shall bear the date of its issue, except that bonds of Series MM issued prior to June 15, 1994 in exchange for other bonds of Series MM shall be dated so that no gain or loss of interest shall result; each bond of Series MM shall bear interest from the date thereof; said bonds (subject to the provisions of said Indenture of Mortgage) to be limited in express aggregate principal amount to $7,500,000, to bear interest from the date thereof at the rate of 6.01% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal thereof becomes due and payable, and to bear interest on overdue principal and (to the extent enforceable under applicable law) on overdue installments of interest at the rate of 7.01% per annum, and to mature December 15, 2003, to be substantially in the form to be authorized at this meeting; said bonds to be in the denomination of $1,000 and multiples thereof. Said bonds of Series MM may be redeemed as a whole or in part in multiples of one thousand dollars at any time or from time to time prior to maturity, upon the notice and in the manner and with the effect provided in said Indenture of Mortgage and particularly in Article V thereof, subject to the provisions of Sections 2, 4 and 5 of Article 1 of the Thirty-Eighth Supplemental Indenture to be authorized at this meeting, or in connection with the application pursuant to Article IX of said Indenture of Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, any such redemption to be made at the applicable percentages of the principal amounts thereof specified in the forms of the definitive Series MM bonds to be authorized at this meeting, together in each case with accrued and unpaid interest to the date of redemption; provided, however, that said bonds of Series MM shall not be redeemed at the option of the Company on or before December 15, 1994, and said bonds of Series MM shall be subject and entitled to the benefits of optional redemption provisions as set forth in said Supplemental Indenture and referred to in said form of the bonds of Series MM, which optional redemption provisions are hereby approved. Subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the principal of the bonds of Series MM shall be payable at the principal office of the Trustee in the City of Boston, Massachusetts, or its successor in trust under said Indenture of Mortgage, in coin or currency of the United States of America which at the time of payment is legal tender for public and private debts; and subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the interest on the bonds of Series MM shall be payable in like coin or currency at the office or agency of this Company in the City of Boston, Massachusetts, or, at the option of the holders, in the Borough of Manhattan, City and State of New York. Resolved: that this Board hereby approves the following forms of registered bonds without coupons of Series MM, subject to such changes, insertions and omissions in each, not substantially at variance with said forms, as may be determined upon and approved by the President or one of the Vice Presidents of this Company and approved by the Trustee; and that the execution of said bonds by the President or one of the Vice Presidents of this Company and the authentication thereof by the Trustee shall be conclusive evidence that each so executed is within the authority conveyed by this resolution: (FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES MM) No. RMM-- $ CENTRAL VERMONT PUBLIC SERVICE CORPORATION FIRST MORTGAGE 6.01% BOND SERIES MM Due December 15, 2003 CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation (hereinafter called the Company), for value received, hereby promises to pay to or registered assigns, the sum of DOLLARS on the fifteenth day of December, 2003, and to pay to the registered holder interest on said sum from the date hereof, at the rate of 6.01% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal hereof becomes due and payable, and at the rate of 7.01% per annum on any overdue principal and (to the extent enforceable under applicable law) on any overdue installment of interest. The principal of this bond shall be payable at the principal office of The First National Bank of Boston in the City of Boston, Massachusetts, or its successor in trust under the Indenture of Mortgage hereinafter referred to, in coin or currency of the United States of America which, at the time of payment, is legal tender for public and private debts, and the interest on this bond shall be payable, in like coin or currency, at the office or agency of the Company in the City of Boston, Massachusetts or, at the option of the registered holder, in the Borough of Manhattan, City and State of New York. This bond is one of the bonds issued and to be issued from time to time under and in accordance with, and, irrespective of the designation thereof or of the series in which issued, all equally secured by, an Indenture of Mortgage or Deed of Trust dated as of October 1, 1929 (hereinafter as supplemented, modified and confirmed by thirty-eight supplemental indentures, counterparts of which are on file with the Trustee, and by all other indentures supplemental to any or all thereof, collectively called the "Mortgage"), and any and all such supplemental indentures, between the Company and Old Colony Trust Company or The First National Bank of Boston, as Trustee, to which Mortgage reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which releases and other dispositions of the property covered by the Mortgage may be made, and the rights of the holders of said bonds and of the Trustee in respect of such security; but neither the foregoing reference to the Mortgage nor any provision of this bond or of the Mortgage shall affect or permit any impairment of the absolute, unconditional and unalterable obligation of the Company to pay, at the maturities herein provided, the principal of and premium (if any) and interest on this bond as herein provided. By the terms of the Mortgage the bonds to be secured thereby are issuable in series, which may vary as to date, amount, date of maturity, rate of interest, and in other respects as in the Mortgage provided. The bonds of Series MM shall not be subject to redemption, prepayment, purchase or other retirement prior to maturity except: (a) in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money (in connection with a redemption or purchase pursuant to said Article IX, and upon the notice and in the manner and with the effect provided in the Mortgage, the bonds of Series MM, of which this is one, may be redeemed or purchased by the Company, subject to the limitations contained in the Mortgage or any of the bonds of Series MM, at any time and from time to time prior to maturity, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series MM to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsection 2(d) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to the principal amount being redeemed or purchased); or (b) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof at any time after December 15, 1994 and prior to December 15, 2003 at a redemption price of 100% of the principal amount of the bonds of Series MM to be redeemed plus accrued and unpaid interest thereon to the date of redemption, together with a premium equal to the Make- Whole Premium Amount (as defined in subsection 2(d) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to such principal amount then to be redeemed. In case of certain events of default specified in the Mortgage, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Mortgage. No recourse shall be had for the payment of the principal or interest of this bond, or for any claim based hereon, or otherwise in respect hereof or of the Mortgage, to or against any incorporator, stockholder, officer or director, past, present or future, of the Company, either directly or through the Company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers being waived and released by the holder hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond is transferable by the registered holder hereof, in person or by attorney duly authorized, at said office of the Trustee, upon surrender and cancellation of this bond, and upon any such transfer a new registered bond or bonds, without coupons, of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee or its successor in trust under the Mortgage of the certificate endorsed hereon. IN WITNESS WHEREOF, Central Vermont Public Service Corporation has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, this day of , 199 . CENTRAL VERMONT PUBLIC SERVICE CORPORATION By ______________________________________ President Attest: _____________________________ Secretary (FORM OF ENDORSEMENT FOR ALL REGISTERED SERIES MM BONDS) FOR VALUE RECEIVED hereby sell(s), assigns(s) and transfer(s) unto , the within bond issued by Central Vermont Public Service Corporation, and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said bond on the books of said Company, with full power of substitution in the premises. Dated: _______________ ________________________________ In the presence of: ______________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF SUCH ACT. (FORM OF TRUSTEE'S CERTIFICATE FOR ALL SERIES MM BONDS) This bond is one of the bonds of the series designated therein, described in the within-mentioned Mortgage. THE FIRST NATIONAL BANK OF BOSTON, Trustee By ________________________________ Authorized Officer Resolved: that this Company's First Mortgage 6.01% Bonds, Series MM, to be issued under said Indenture of Mortgage shall be executed in the name of this Company by the manual or facsimile sig- nature of its President or one of its Vice Presidents and shall have affixed thereto the corporate seal of this Company (which may be facsimile) attested by the manual or facsimile signature of its Secretary or an Assistant Secretary. Resolved: that, subject to obtaining the approval of the Vermont Public Service Board, this Board hereby authorizes the issue of $7,500,000 in principal amount of said First Mortgage 6.01% Bonds, Series MM, which series have been determined upon and established at this meeting, to be issued in respect of extensions and purchased property, pursuant to and in conformity with the provisions of said Indenture of Mortgage, as amended, particularly Section 4 of Article II thereof. Resolved: that this Board of Directors hereby authorizes The First National Bank of Boston, Trustee under said Indenture of Mortgage, from time to time to authenticate, on application of the President or any Vice President of this Company, and deliver on the written order of the President or any Vice President $7,500,000 in principal amount of said First Mortgage 6.01% Bonds, Series MM, in such definitive forms and denominations authorized by resolutions of this Board as he may specify, but only upon said The First National Bank of Boston, Trustee, being satisfied that all the requirements of Article II of said Indenture of Mortgage, as amended, relating to the issue of bonds in respect of extensions and purchased property have been complied with and upon the deposit with the Trustee of the documents required under said Article II. Whereas, by Section 12 of Article III of the Indenture of Mortgage of this Company to The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929, this Company covenanted "that it will, upon reasonable request, execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of this Mortgage, especially to make subject to the lien hereof any property now owned or hereafter acquired by it, which it is herein provided shall be subject to the lien hereof", and, by Section 1 of Article XVI thereof, it is provided, among other things, that this Company and the Trustee may enter into such indentures supplemental thereto as may be deemed necessary or desirable "to assign, convey, confirm, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances as shall be therein specifically described, additional property or properties of the Company, for the equal and proportionate benefit and security, except as herein otherwise expressly provided, of the holders and owners of all bonds at any time issued and outstanding under this Mortgage", and "to add to the covenants or agreements of the Company for the protection of the bondholders and of the trust estate", and "to provide the terms and conditions of redemption of the bonds, and/or for a special sinking fund for the retirement of the bonds of any particular series then about to be issued", and "for any other purpose not inconsistent with the terms of this Mortgage and which shall not impair the security of the same", NOW, THEREFORE, BE IT Resolved: that this Board hereby approves the Supplemental Indenture to be dated as of December 10, 1993, setting forth the terms of the Company's First Mortgage 6.01% Bonds, Series MM, and authorizes and directs the President or any Vice President of this Company for the time being in office, each as such officer and as agent of this Company, to execute and seal with the corporate seal of this Company (which shall be attested by the Secretary or an Assistant Secretary of this Company for the time being in office), and deliver to The First National Bank of Boston, Trustee, a Thirty-Eighth Supplemental Indenture to be dated as of December 10, 1993, substantially in the form presented to this meeting, subject to such changes, insertions and omissions as may be determined and approved by the President or Vice President of this Company executing the same, that such determination and approval are within the authority conveyed by this resolution to be conclusively evidenced by the execution of said Supplemental Indenture on behalf of this Company and such execution being a sufficient identification thereof for all purposes as the Supplemental Indenture hereby authorized. Resolved: that this Company hereby appoints The First National Bank of Boston, a national banking association having its principal office in the City of Boston, as the Boston paying agent of this Company for the purpose of paying the interest on this Company's First Mortgage 6.01% Bonds, Series MM, to be issued under and secured by the Indenture of Mortgage dated as of October 1, 1929 (but actually executed October 24, 1929), as amended and supplemented, made and entered into by and between this Company and said The First National Bank of Boston as Trustee, and hereby designates the principal office of said The First National Bank of Boston as the office or agency of this Company in Boston, Massachusetts, at which payment may be made to or upon the written order of the holders of the registered bonds of Series MM. On motion duly made and seconded, the following resolutions relating to the bonds of Series NN were unanimously passed: Resolved: that this Board of Directors of Central Vermont Public Service Corporation hereby determines upon a thirty- ninth series of bonds to be issued from time to time upon proper resolutions of the Board of Directors under the terms of an Indenture of Mortgage between this Company and The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929 (but actually executed October 24, 1929), as amended, and duly recorded, among other places, in the Office of the City Clerk of Rutland, Vermont, and in Washington County, New York, Liber 150 of Mortgages, Page 51, Grafton County, New Hampshire, Registry of Deeds, Liber 616, Folio 484, Sullivan County, New Hampshire, Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the office of the Secretary of State of Vermont; that said series shall be designated as Series NN and that the bonds of said series shall be designated as "First Mortgage 6.27% Bonds, Series NN"; that said bonds shall be in the form of registered bonds without coupons; that each of said bonds shall be dated as of the date of the interest payment day thereof next preceding the date of issue, to which interest has been paid, unless (a) issued on an interest payment day, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of any interest payment day thereof, in which event it shall bear the date of its issue, except that bonds of Series NN issued prior to June 15, 1994 in exchange for other bonds of Series NN shall be dated so that no gain or loss of interest shall result; each bond of Series NN shall bear interest from the date thereof; said bonds (subject to the provisions of said Indenture of Mortgage) to be limited in express aggregate principal amount to $3,000,000, to bear interest from the date thereof at the rate of 6.27% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal thereof becomes due and payable, and to bear interest on overdue principal and (to the extent enforceable under applicable law) on overdue installments of interest at the rate of 7.27% per annum, and to mature December 15, 2008, to be substantially in the form to be authorized at this meeting; said bonds to be in the denomination of $1,000 and multiples thereof. Said bonds of Series NN may be redeemed as a whole or in part in multiples of one thousand dollars at any time or from time to time prior to maturity, upon the notice and in the manner and with the effect provided in said Indenture of Mortgage and particularly in Article V thereof, subject to the provisions of Sections 2, 4 and 5 of Article 1 of the Thirty-Eighth Supplemental Indenture to be authorized at this meeting, or in connection with the application pursuant to Article IX of said Indenture of Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, any such redemption to be made at the applicable percentages of the principal amounts thereof specified in the forms of the definitive Series NN bonds to be authorized at this meeting, together in each case with accrued and unpaid interest to the date of redemption; provided, however, that said bonds of Series NN shall not be redeemed at the option of the Company on or before December 15, 1994, and said bonds of Series NN shall be subject and entitled to the benefits of optional redemption provisions as set forth in said Supplemental Indenture and referred to in said form of the bonds of Series NN, which optional redemption provisions are hereby approved. Subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the principal of the bonds of Series NN shall be payable at the principal office of the Trustee in the City of Boston, Massachusetts, or its successor in trust under said Indenture of Mortgage, in coin or currency of the United States of America which at the time of payment is legal tender for public and private debts; and subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the interest on the bonds of Series NN shall be payable in like coin or currency at the office or agency of this Company in the City of Boston, Massachusetts, or, at the option of the holders, in the Borough of Manhattan, City and State of New York. Resolved: that this Board hereby approves the following forms of registered bonds without coupons of Series NN, subject to such changes, insertions and omissions in each, not substantially at variance with said forms, as may be determined upon and approved by the President or one of the Vice Presidents of this Company and approved by the Trustee; and that the execution of said bonds by the President or one of the Vice Presidents of this Company and the authentication thereof by the Trustee shall be conclusive evidence that each so executed is within the authority conveyed by this resolution: (FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES NN) No. RNN-- $ CENTRAL VERMONT PUBLIC SERVICE CORPORATION FIRST MORTGAGE 6.27% BOND SERIES NN Due December 15, 2008 CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation (hereinafter called the Company), for value received, hereby promises to pay to or registered assigns, the sum of DOLLARS on the fifteenth day of December, 2008, and to pay to the registered holder interest on said sum from the date hereof, at the rate of 6.27% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal hereof becomes due and payable, and at the rate of 7.27% per annum on any overdue principal and (to the extent enforceable under applicable law) on any overdue installment of interest. The principal of this bond shall be payable at the principal office of The First National Bank of Boston in the City of Boston, Massachusetts, or its successor in trust under the Indenture of Mortgage hereinafter referred to, in coin or currency of the United States of America which, at the time of payment, is legal tender for public and private debts, and the interest on this bond shall be payable, in like coin or currency, at the office or agency of the Company in the City of Boston, Massachusetts or, at the option of the registered holder, in the Borough of Manhattan, City and State of New York. This bond is one of the bonds issued and to be issued from time to time under and in accordance with, and, irrespective of the designation thereof or of the series in which issued, all equally secured by, an Indenture of Mortgage or Deed of Trust dated as of October 1, 1929 (hereinafter as supplemented, modified and confirmed by thirty-eight supplemental indentures, counterparts of which are on file with the Trustee, and by all other indentures supplemental to any or all thereof, collectively called the "Mortgage"), and any and all such supplemental indentures, between the Company and Old Colony Trust Company or The First National Bank of Boston, as Trustee, to which Mortgage reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which releases and other dispositions of the property covered by the Mortgage may be made, and the rights of the holders of said bonds and of the Trustee in respect of such security; but neither the foregoing reference to the Mortgage nor any provision of this bond or of the Mortgage shall affect or permit any impairment of the absolute, unconditional and unalterable obligation of the Company to pay, at the maturities herein provided, the principal of and premium (if any) and interest on this bond as herein provided. By the terms of the Mortgage the bonds to be secured thereby are issuable in series, which may vary as to date, amount, date of maturity, rate of interest, and in other respects as in the Mortgage provided. The bonds of Series NN shall not be subject to redemption, prepayment, purchase or other retirement prior to maturity except: (a) in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money (in connection with a redemption or purchase pursuant to said Article IX, and upon the notice and in the manner and with the effect provided in the Mortgage, the bonds of Series NN, of which this is one, may be redeemed or purchased by the Company, subject to the limitations contained in the Mortgage or any of the bonds of Series NN, at any time and from time to time prior to maturity, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series NN to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsection 2(e) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to the principal amount being redeemed or purchased); or (b) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof at any time after December 15, 1994 and prior to December 15, 2008 at a redemption price of 100% of the principal amount of the bonds of Series NN to be redeemed plus accrued and unpaid interest thereon to the date of redemption, together with a premium equal to the Make- Whole Premium Amount (as defined in subsection 2(e) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to such principal amount then to be redeemed. In case of certain events of default specified in the Mortgage, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Mortgage. No recourse shall be had for the payment of the principal or interest of this bond, or for any claim based hereon, or otherwise in respect hereof or of the Mortgage, to or against any incorporator, stockholder, officer or director, past, present or future, of the Company, either directly or through the Company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers being waived and released by the holder hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond is transferable by the registered holder hereof, in person or by attorney duly authorized, at said office of the Trustee, upon surrender and cancellation of this bond, and upon any such transfer a new registered bond or bonds, without coupons, of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee or its successor in trust under the Mortgage of the certificate endorsed hereon. IN WITNESS WHEREOF, Central Vermont Public Service Corporation has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, this day of , 199 . CENTRAL VERMONT PUBLIC SERVICE CORPORATION By _____________________________________ President Attest: _____________________________ Secretary (FORM OF ENDORSEMENT FOR ALL REGISTERED SERIES NN BONDS) FOR VALUE RECEIVED hereby sell(s), assigns(s) and transfer(s) unto , the within bond issued by Central Vermont Public Service Corporation, and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said bond on the books of said Company, with full power of substitution in the premises. Dated: ___________________ _______________________________ In the presence of: _____________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF SUCH ACT. (FORM OF TRUSTEE'S CERTIFICATE FOR ALL SERIES NN BONDS) This bond is one of the bonds of the series designated therein, described in the within-mentioned Mortgage. THE FIRST NATIONAL BANK OF BOSTON, Trustee By ______________________________ Authorized Officer Resolved: that this Company's First Mortgage 6.27% Bonds, Series NN, to be issued under said Indenture of Mortgage shall be executed in the name of this Company by the manual or facsimile sig- nature of its President or one of its Vice Presidents and shall have affixed thereto the corporate seal of this Company (which may be facsimile) attested by the manual or facsimile signature of its Secretary or an Assistant Secretary. Resolved: that, subject to obtaining the approval of the Vermont Public Service Board, this Board hereby authorizes the issue of $3,000,000 in principal amount of said First Mortgage 6.27% Bonds, Series NN, which series have been determined upon and established at this meeting, to be issued in respect of extensions and purchased property, pursuant to and in conformity with the provisions of said Indenture of Mortgage, as amended, particularly Section 4 of Article II thereof. Resolved: that this Board of Directors hereby authorizes The First National Bank of Boston, Trustee under said Indenture of Mortgage, from time to time to authenticate, on application of the President or any Vice President of this Company, and deliver on the written order of the President or any Vice President $3,000,000 in principal amount of said First Mortgage 6.27% Bonds, Series NN, in such definitive forms and denominations authorized by resolutions of this Board as he may specify, but only upon said The First National Bank of Boston, Trustee, being satisfied that all the requirements of Article II of said Indenture of Mortgage, as amended, relating to the issue of bonds in respect of extensions and purchased property have been complied with and upon the deposit with the Trustee of the documents required under said Article II. Whereas, by Section 12 of Article III of the Indenture of Mortgage of this Company to The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929, this Company covenanted "that it will, upon reasonable request, execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of this Mortgage, especially to make subject to the lien hereof any property now owned or hereafter acquired by it, which it is herein provided shall be subject to the lien hereof", and, by Section 1 of Article XVI thereof, it is provided, among other things, that this Company and the Trustee may enter into such indentures supplemental thereto as may be deemed necessary or desirable "to assign, convey, confirm, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances as shall be therein specifically described, additional property or properties of the Company, for the equal and proportionate benefit and security, except as herein otherwise expressly provided, of the holders and owners of all bonds at any time issued and outstanding under this Mortgage", and "to add to the covenants or agreements of the Company for the protection of the bondholders and of the trust estate", and "to provide the terms and conditions of redemption of the bonds, and/or for a special sinking fund for the retirement of the bonds of any particular series then about to be issued", and "for any other purpose not inconsistent with the terms of this Mortgage and which shall not impair the security of the same", NOW, THEREFORE, BE IT Resolved: that this Board hereby approves the Supplemental Indenture to be dated as of December 10, 1993, setting forth the terms of the Company's First Mortgage 6.27% Bonds, Series NN, and authorizes and directs the President or any Vice President of this Company for the time being in office, each as such officer and as agent of this Company, to execute and seal with the corporate seal of this Company (which shall be attested by the Secretary or an Assistant Secretary of this Company for the time being in office), and deliver to The First National Bank of Boston, Trustee, a Thirty-Eighth Supplemental Indenture to be dated as of December 10, 1993, substantially in the form presented to this meeting, subject to such changes, insertions and omissions as may be determined and approved by the President or Vice President of this Company executing the same, that such determination and approval are within the authority conveyed by this resolution to be conclusively evidenced by the execution of said Supplemental Indenture on behalf of this Company and such execution being a sufficient identification thereof for all purposes as the Supplemental Indenture hereby authorized. Resolved: that this Company hereby appoints The First National Bank of Boston, a national banking association having its principal office in the City of Boston, as the Boston paying agent of this Company for the purpose of paying the interest on this Company's First Mortgage 6.27% Bonds, Series NN, to be issued under and secured by the Indenture of Mortgage dated as of October 1, 1929 (but actually executed October 24, 1929), as amended and supplemented, made and entered into by and between this Company and said The First National Bank of Boston as Trustee, and hereby designates the principal office of said The First National Bank of Boston as the office or agency of this Company in Boston, Massachusetts, at which payment may be made to or upon the written order of the holders of the registered bonds of Series NN. On motion duly made and seconded, the following resolutions relating to the bonds of Series OO were unanimously passed: Resolved: that this Board of Directors of Central Vermont Public Service Corporation hereby determines upon a fortieth series of bonds to be issued from time to time upon proper resolutions of the Board of Directors under the terms of an Indenture of Mortgage between this Company and The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929 (but actually executed October 24, 1929), as amended, and duly recorded, among other places, in the Office of the City Clerk of Rutland, Vermont, and in Washington County, New York, Liber 150 of Mortgages, Page 51, Grafton County, New Hampshire, Registry of Deeds, Liber 616, Folio 484, Sullivan County, New Hampshire, Records, Vol. 234, Page 531, in the Office of the Secretary of State of Connecticut, in the offices of the clerks of certain other towns and cities in the State of Vermont, and in the office of the Secretary of State of Vermont; that said series shall be designated as Series OO and that the bonds of said series shall be designated as "First Mortgage 6.90% Bonds, Series OO"; that said bonds shall be in the form of registered bonds without coupons; that each of said bonds shall be dated as of the date of the interest payment day thereof next preceding the date of issue, to which interest has been paid, unless (a) issued on an interest payment day, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of any interest payment day thereof, in which event it shall bear the date of its issue, except that bonds of Series OO issued prior to June 15, 1994 in exchange for other bonds of Series OO shall be dated so that no gain or loss of interest shall result; each bond of Series OO shall bear interest from the date thereof; said bonds (subject to the provisions of said Indenture of Mortgage) to be limited in express aggregate principal amount to $17,500,000, to bear interest from the date thereof at the rate of 6.90% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal thereof becomes due and payable, and to bear interest on overdue principal and (to the extent enforceable under applicable law) on overdue installments of interest at the rate of 7.90% per annum, and to mature December 15, 2023, to be substantially in the form to be authorized at this meeting; said bonds to be in the denomination of $1,000 and multiples thereof. Said bonds of Series OO may be redeemed as a whole or in part in multiples of one thousand dollars at any time or from time to time prior to maturity, upon the notice and in the manner and with the effect provided in said Indenture of Mortgage and particularly in Article V thereof, subject to the provisions of Sections 2, 4 and 5 of Article 1 of the Thirty-Eighth Supplemental Indenture to be authorized at this meeting, or in connection with the application pursuant to Article IX of said Indenture of Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, any such redemption to be made at the applicable percentages of the principal amounts thereof specified in the forms of the definitive Series OO bonds to be authorized at this meeting, together in each case with accrued and unpaid interest to the date of redemption; provided, however, that said bonds of Series OO shall not be redeemed at the option of the Company on or before December 15, 1994, and said bonds of Series OO shall be subject and entitled to the benefits of optional redemption provisions as set forth in said Supplemental Indenture and referred to in said form of the bonds of Series OO, which optional redemption provisions are hereby approved. Subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the principal of the bonds of Series OO shall be payable at the principal office of the Trustee in the City of Boston, Massachusetts, or its successor in trust under said Indenture of Mortgage, in coin or currency of the United States of America which at the time of payment is legal tender for public and private debts; and subject to the provisions of Section 6 of Article 1 of said Supplemental Indenture the interest on the bonds of Series OO shall be payable in like coin or currency at the office or agency of this Company in the City of Boston, Massachusetts, or, at the option of the holders, in the Borough of Manhattan, City and State of New York. Resolved: that this Board hereby approves the following forms of registered bonds without coupons of Series OO, subject to such changes, insertions and omissions in each, not substantially at variance with said forms, as may be determined upon and approved by the President or one of the Vice Presidents of this Company and approved by the Trustee; and that the execution of said bonds by the President or one of the Vice Presidents of this Company and the authentication thereof by the Trustee shall be conclusive evidence that each so executed is within the authority conveyed by this resolution: (FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES OO) No. ROO-- $ CENTRAL VERMONT PUBLIC SERVICE CORPORATION FIRST MORTGAGE 6.90% BOND SERIES OO Due December 15, 2023 CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation (hereinafter called the Company), for value received, hereby promises to pay to or registered assigns, the sum of DOLLARS on the fifteenth day of December, 2023, and to pay to the registered holder interest on said sum from the date hereof, at the rate of 6.90% per annum, payable semiannually on the fifteenth day of June and December in each year, until the principal hereof becomes due and payable, and at the rate of 7.90% per annum on any overdue principal and (to the extent enforceable under applicable law) on any overdue installment of interest. The principal of this bond shall be payable at the principal office of The First National Bank of Boston in the City of Boston, Massachusetts, or its successor in trust under the Indenture of Mortgage hereinafter referred to, in coin or currency of the United States of America which, at the time of payment, is legal tender for public and private debts, and the interest on this bond shall be payable, in like coin or currency, at the office or agency of the Company in the City of Boston, Massachusetts or, at the option of the registered holder, in the Borough of Manhattan, City and State of New York. This bond is one of the bonds issued and to be issued from time to time under and in accordance with, and, irrespective of the designation thereof or of the series in which issued, all equally secured by, an Indenture of Mortgage or Deed of Trust dated as of October 1, 1929 (hereinafter as supplemented, modified and confirmed by thirty-eight supplemental indentures, counterparts of which are on file with the Trustee, and by all other indentures supplemental to any or all thereof, collectively called the "Mortgage"), and any and all such supplemental indentures, between the Company and Old Colony Trust Company or The First National Bank of Boston, as Trustee, to which Mortgage reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which releases and other dispositions of the property covered by the Mortgage may be made, and the rights of the holders of said bonds and of the Trustee in respect of such security; but neither the foregoing reference to the Mortgage nor any provision of this bond or of the Mortgage shall affect or permit any impairment of the absolute, unconditional and unalterable obligation of the Company to pay, at the maturities herein provided, the principal of and premium (if any) and interest on this bond as herein provided. By the terms of the Mortgage the bonds to be secured thereby are issuable in series, which may vary as to date, amount, date of maturity, rate of interest, and in other respects as in the Mortgage provided. The bonds of Series OO shall not be subject to redemption, prepayment, purchase or other retirement prior to maturity except: (a) in connection with the application pursuant to Article IX of the Mortgage of moneys received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money (in connection with a redemption or purchase pursuant to said Article IX, and upon the notice and in the manner and with the effect provided in the Mortgage, the bonds of Series OO, of which this is one, may be redeemed or purchased by the Company, subject to the limitations contained in the Mortgage or any of the bonds of Series OO, at any time and from time to time prior to maturity, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at a redemption or purchase price of 100% of the principal amount of the bonds of Series OO to be redeemed or purchased plus accrued interest thereon to the date of redemption or purchase, together with a premium equal to the Make-Whole Premium Amount (as defined in subsection 2(f) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to the principal amount being redeemed or purchased); or (b) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof at any time after December 15, 1994 and prior to December 15, 2018 at a redemption price of 100% of the principal amount of the bonds of Series OO to be redeemed plus accrued and unpaid interest thereon to the date of redemption, together with a premium equal to the Make- Whole Premium Amount (as defined in subsection 2(f) of Article 1 of the Supplemental Indenture dated as of December 10, 1993) with respect to such principal amount then to be redeemed; or (c) at the option of the Company, and upon the notice and in the manner and with the effect provided in the Mortgage, as a whole or in part in the principal amount of $1,000 or any integral multiple thereof, at any time on or after December 15, 2018 and prior to December 15, 2023, at a redemption price of 100% of the principal amount of the bonds of Series OO to be redeemed plus accrued and unpaid interest thereon to the date of redemption but without premium. In case of certain events of default specified in the Mortgage, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Mortgage. No recourse shall be had for the payment of the principal or interest of this bond, or for any claim based hereon, or otherwise in respect hereof or of the Mortgage, to or against any incorporator, stockholder, officer or director, past, present or future, of the Company, either directly or through the Company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers being waived and released by the holder hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond is transferable by the registered holder hereof, in person or by attorney duly authorized, at said office of the Trustee, upon surrender and cancellation of this bond, and upon any such transfer a new registered bond or bonds, without coupons, of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee or its successor in trust under the Mortgage of the certificate endorsed hereon. IN WITNESS WHEREOF, Central Vermont Public Service Corporation has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries, this day of , 199 . CENTRAL VERMONT PUBLIC SERVICE CORPORATION By _____________________________________ President Attest: _____________________________ Secretary (FORM OF ENDORSEMENT FOR ALL REGISTERED SERIES OO BONDS) FOR VALUE RECEIVED hereby sell(s), assigns(s) and transfer(s) unto , the within bond issued by Central Vermont Public Service Corporation, and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said bond on the books of said Company, with full power of substitution in the premises. Dated: _______________ ________________________________ In the presence of: _____________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF SUCH ACT. (FORM OF TRUSTEE'S CERTIFICATE FOR ALL SERIES OO BONDS) This bond is one of the bonds of the series designated therein, described in the within-mentioned Mortgage. THE FIRST NATIONAL BANK OF BOSTON, Trustee By ____________________________________ Authorized Officer Resolved: that this Company's First Mortgage 6.90% Bonds, Series OO, to be issued under said Indenture of Mortgage shall be executed in the name of this Company by the manual or facsimile sig- nature of its President or one of its Vice Presidents and shall have affixed thereto the corporate seal of this Company (which may be facsimile) attested by the manual or facsimile signature of its Secretary or an Assistant Secretary. Resolved: that, subject to obtaining the approval of the Vermont Public Service Board, this Board hereby authorizes the issue of $17,500,000 in principal amount of said First Mortgage 6.90% Bonds, Series OO, which series have been determined upon and established at this meeting, to be issued in respect of extensions and purchased property, pursuant to and in conformity with the provisions of said Indenture of Mortgage, as amended, particularly Section 4 of Article II thereof. Resolved: that this Board of Directors hereby authorizes The First National Bank of Boston, Trustee under said Indenture of Mortgage, from time to time to authenticate, on application of the President or any Vice President of this Company, and deliver on the written order of the President or any Vice President $17,500,000 in principal amount of said First Mortgage 6.90% Bonds, Series OO, in such definitive forms and denominations authorized by resolutions of this Board as he may specify, but only upon said The First National Bank of Boston, Trustee, being satisfied that all the requirements of Article II of said Indenture of Mortgage, as amended, relating to the issue of bonds in respect of extensions and purchased property have been complied with and upon the deposit with the Trustee of the documents required under said Article II. Whereas, by Section 12 of Article III of the Indenture of Mortgage of this Company to The First National Bank of Boston (successor trustee to Old Colony Trust Company), Trustee, dated as of October 1, 1929, this Company covenanted "that it will, upon reasonable request, execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of this Mortgage, especially to make subject to the lien hereof any property now owned or hereafter acquired by it, which it is herein provided shall be subject to the lien hereof", and, by Section 1 of Article XVI thereof, it is provided, among other things, that this Company and the Trustee may enter into such indentures supplemental thereto as may be deemed necessary or desirable "to assign, convey, confirm, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances as shall be therein specifically described, additional property or properties of the Company, for the equal and proportionate benefit and security, except as herein otherwise expressly provided, of the holders and owners of all bonds at any time issued and outstanding under this Mortgage", and "to add to the covenants or agreements of the Company for the protection of the bondholders and of the trust estate", and "to provide the terms and conditions of redemption of the bonds, and/or for a special sinking fund for the retirement of the bonds of any particular series then about to be issued", and "for any other purpose not inconsistent with the terms of this Mortgage and which shall not impair the security of the same", NOW, THEREFORE, BE IT Resolved: that this Board hereby approves the Supplemental Indenture to be dated as of December 10, 1993, setting forth the terms of the Company's First Mortgage 6.90% Bonds, Series OO, and authorizes and directs the President or any Vice President of this Company for the time being in office, each as such officer and as agent of this Company, to execute and seal with the corporate seal of this Company (which shall be attested by the Secretary or an Assistant Secretary of this Company for the time being in office), and deliver to The First National Bank of Boston, Trustee, a Thirty-Eighth Supplemental Indenture to be dated as of December 10, 1993, substantially in the form presented to this meeting, subject to such changes, insertions and omissions as may be determined and approved by the President or Vice President of this Company executing the same, that such determination and approval are within the authority conveyed by this resolution to be conclusively evidenced by the execution of said Supplemental Indenture on behalf of this Company and such execution being a sufficient identification thereof for all purposes as the Supplemental Indenture hereby authorized. Resolved: that this Company hereby appoints The First National Bank of Boston, a national banking association having its principal office in the City of Boston, as the Boston paying agent of this Company for the purpose of paying the interest on this Company's First Mortgage 6.90% Bonds, Series OO, to be issued under and secured by the Indenture of Mortgage dated as of October 1, 1929 (but actually executed October 24, 1929), as amended and supplemented, made and entered into by and between this Company and said The First National Bank of Boston as Trustee, and hereby designates the principal office of said The First National Bank of Boston as the office or agency of this Company in Boston, Massachusetts, at which payment may be made to or upon the written order of the holders of the registered bonds of Series OO. On motion duly made and seconded, the following resolution relating to the bonds of Series KK, LL, MM, NN and OO was unanimously passed: Resolved: that the officers of this Company and its counsel be and they are, and each of them singly is, hereby authorized to do any and all acts or things and to execute any and all documents necessary or, in the opinion of the officer or officers or counsel so acting, desirable to carry out the purposes of the foregoing resolutions and each of them. And I further certify that the foregoing resolutions have not since been amended or rescinded and are now in full force and effect. IN WITNESS WHEREOF I have hereunto set my hand as such Assistant Secretary and have affixed the corporate seal of said Corporation this 7th day of December, 1993. Carole L. Root Carole L. Root Assistant Secretary (Corporate Seal) EX-10 3 EXHIBIT 10 ENCLOSURES OF FORM 10-K 10.78 PROSPECTUS CENTRAL VERMONT PUBLIC SERVICE CORPORATION 77 Grove Street Rutland, Vermont 05701 802-773-2711 CENTRAL VERMONT PUBLIC SERVICE CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS 150,000 shares of Common Stock ($6.00 Par Value) This Prospectus describes the material features of the Central Vermont Public Service Corporation Stock Option Plan for NonEmployee Directors (the "Plan"). The Plan provides for automatic awards to Directors of Central Vermont Public Service Corporation (the "Company") of options to purchase shares of the Company's $6 par value Common Stock. Awards may be made under the Plan with respect to an aggregate of up to 150,000 shares of the Company's Common Stock, subject to certain proportional adjustments. In general, options are exercisable only (i) within the period beginning six months after the date of grant and ending five years after the date of grant and (ii) at a fixed price equal to the fair market value of the stock at the time the option is granted. This Prospectus relates to the shares of the Company's Common Stock to be issued to Directors of the Company upon exercise of options granted under the Plan and may not be used for any reoffers or resales of such shares. It is suggested that this Prospectus be retained for future reference. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This document constitutes a prospectus covering securities that have been registered under the Securities Act of 1933. The date of this Prospectus is April 30, 1993. TABLE OF CONTENTS Page AVAILABLE INFORMATION ........................................ ii INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............... iii DESCRIPTION OF THE STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS General Information Administration of the Plan............................... 2 Eligibility.............................................. 2 Number of Shares; Option Periods; Exercise............... 2 Limited Extension of Option Periods...................... 3 Cashless Exercise........................................ 3 Stock for Withholding.................................... 3 Change in Control........................................ 4 Nontransferability and Termination of Options............ 4 Fair Market Value of Common Stock........................ 5 Shares Subject to Plan.....................................5 Adjustments Upon Changes in Stock........................ 5 Effective Date and Duration of Plan...................... 5 Unfunded Plan............................................ 6 Amendment and Termination................................ 6 Short-Swing Trading Liability............................ 6 Restrictions Upon Reoffer or Resale of Shares............ 7 FEDERAL INCOME TAX CONSEQUENCES............................... 8 Effect of Share for Share Exercise....................... 8 Additional Information................................... 8 (i) AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files proxy statements, reports and other information with the Securities and Exchange Commission (the "Commission"). Such proxy statements, reports and other information may be inspected at the public reference facilities maintained at the Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices in New York (26 Federal Plaza, New York, New York 10007), Los Angeles (5757 Wilshire Boulevard, Suite 500 East, Los Angeles, California 90036-3648) and Chicago (Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604). Copies of such material may be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is listed for trading on the New York Stock Exchange ("NYSE") under the trading symbol "CV" (often reported in the financial press as "CVtPS or CentlVtPS"). Reports, proxy statements and other information concerning the Company prepared pursuant to the Exchange Act are also on file with the NYSE and may be inspected at the offices of the NYSE at 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement under the Securities Act of 1933 with respect to the securities offered hereby. This Prospectus does not contain all of the information set forth in such Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission, and reference is hereby made to the Registration Statement and exhibits thereto for further information with respect to the Company and the securities to which this Prospectus relates. The principal executive offices of the Company are located at 77 Grove Street, Rutland, Vermont 05701, telephone (802) 773-2711. No dealer, salesman or any other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus and if given or made such information or representations must not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any of the securities offered hereby in any State to any person to whom it is unlawful to make such offer in such State. Neither the delivery of this Prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof. However, if any material change occurs in the Company's affairs at a time when the Prospectus is required to be delivered, the Company will amend or supplement this Prospectus appropriately. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1992; 2. The Company's definitive proxy statement dated March 30, 1993 in connection with its annual meeting of stockholders held on May 4, 1993; 3. The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, as amended by filing dated October 13, 1992; and 4. Current Reports on Form 8-K dated January 21, and April 28, 1993. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this Prospectus and prior to the filing by the Company of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in any other subsequently filed document which is deemed to be incorporated herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to: Joseph M. Kraus, Corporate Secretary, Central Vermont Public Service Corporation, 77 Grove Street, Rutland, Vermont 05701 (telephone (802) 773-2711). DESCRIPTION OF THE STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS General Information The purpose of the Central Vermont Public Service Corporation Stock Option Plan for Non-Employee Directors (the "Plan") is to enhance the ability of the Company to attract and retain individuals of high caliber to serve on the Company's Board of Directors, by facilitating the participation of such persons as stockholders in the future success and profitability of the Company. The Plan offers the non-employee Directors of the Company the opportunity to purchase shares of the Company's Common Stock, $6.00 par value ("Common Stock"), through the exercise of stock options granted to them under the Plan. A stock option entitles the optionee to purchase shares of Common Stock at the option price and during the option period specified in the Plan. All options granted under the Plan will be governed by separate agreements between the Company and the individual Directors that will specify the terms and conditions of the awards consistent with the provisions of the Plan. This Prospectus contains summaries of certain provisions of the Plan. Such statements are qualified in their entirety by reference to the Plan document, a copy of which is on file with the Commission as an exhibit to the Company's registration statement covering the shares to be issued pursuant to the Plan. A copy of the Plan is also on file at the office of the Corporate Secretary at 77 Grove Street, Rutland, Vermont 05701 and may be inspected by participants during normal business hours. In the case of any conflict or apparent conflict between the description contained herein and the full text of the Plan, the text of the Plan will control. The Plan is not subject to the provisions of the Employment Retirement Income Security Act of 1974 ("ERISA") and is not qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended. The shares issuable upon the exercise of a stock option will generally consist of shares reacquired by the Company and held in treasury. If from time to time there is not a sufficient number of treasury shares available, authorized but unissued Common Stock will be issued under the Plan. The proceeds received by the Company from the sale of Common Stock under the Plan will be used for the Company's general corporate purposes. The amount of such proceeds will depend upon a number of factors, including the number of shares purchased, the option prices paid and whether the shares are newly-issued or treasury shares. All inquiries, notices and other correspondence relating to the Plan should be addressed to Joseph M. Kraus, Secretary, Central Vermont Public Service Corporation, 77 Grove Street, Rutland, Vermont 05701. References in this Prospectus to the masculine gender should be deemed to refer as well to the feminine gender as the context may require. Administration of the Plan Awards of stock options under the Plan are automatic. The Plan specifies, among other things, the number of shares to be covered by options, the dates of grant, the option price and the exercise period. Accordingly, the administration of the Plan is in all significant respects, self-executing. Eligibility Eligibility for awards under the Plan is limited to those individuals serving on the Board of Directors while the Plan is in effect who are neither officers nor employees of the Company or any of its 50% or more controlled subsidiaries. As of the date of this Prospectus, the Company's Board of Directors consists of ten individuals. All of such persons, except Mr. Thomas C. Webb, President and Chief Executive Officer of the Company, are eligible to participate in the Plan. Mr. Webb is, however, eligible to receive awards under a Stock Option Plan for Key Employees, similar in purpose and scope to the Plan described in this Prospectus. Number of Shares: Option Periods: Exercise Under the Plan, options will be granted annually to each eligible Director to purchase 2,250 shares of the Company's Common Stock at a price equal to the fair market value of the optioned stock on the date the option is granted. Options for 2,250 shares will be awarded to each then eligible,Director on the first business day after each of the 1993, 1994, 1995, 1996 and 1997 annual meetings of the Company's stockholders. None of the options granted or to be granted under the Plan will be designed to qualify for tax purposes as so-called incentive stock options under Section 422A of the Internal Revenue Code. Except as described below under the caption "Limited Extension of Option Period," options are exercisable in whole or in part at any time during the period beginning six months after the date of grant and ending five years after the date of grant. Any exercise of an option must be made in accordance with the terms of the option agreement and the Plan. Payment may be made in cash or in other shares of the Company's Common Stock held by the Director, valued at their fair market value on the date the stock option is exercised. Payment may also be made pursuant to the cashless exercise provisions described below, so named because the Participant is not required to pay the option price with preexisting cash assets, but instead funds the option price through the sale by his or her broker of some or all of the shares. An optionee will have no rights as a stockholder with respect to any shares covered by an option prior to the exercise of such option and subsequent delivery of stock certificates to him. Limited Extension of Option Period In the event that an option period expires at a time when a limited trading period has been declared by the Corporate Secretary and is in effect, the option period of such option shall be automatically extended for a period of thirty (30) days following termination of such limited trading period by the Corporate Secretary. Cashless Exercise The Plan permits a so-called "cashless exercise" of a Stock Option, in accordance with the following general procedures: The Participant must notify the Corporate Secretary of his or her intent to exercise. Written instructions will then be prepared and delivered to the Company and the participant's broker indicating the Participant's cashless election and instructing the Company to deliver to the broker the Common Stock issuable upon exercise. The exercise of the Participant's stock options will be executed on the same day that the broker is able to sell the stock. The broker will then withhold from the proceeds of the sale and deliver to the Company an amount, in cash, equal to the option price. An additional amount for federal and state tax withholdings may also be withheld and delivered to the Company at the Participant's election. Because a cashless exercise involves a sale of Company stock, Participants should be aware of the possibility of short-swing trading consequences under Section 16(b) of the Exchange Act. See "Short Swing Trading Liability," below. Stock for Withholding The Plan permits a Participant to elect to have the Company satisfy the federal and state income tax withholding requirements that apply upon exercise of a Stock Option by having the Company retain from the shares deliverable to the Participant upon exercise that number of shares of Common Stock having a fair market value equal to the amount of the tax withholding liability. Participants are cautioned, however, that adverse short-swing trading consequences may arise if this feature is utilized outside a so-called "window period." See "Short-Swing Trading Liability" below. Change in Control In the event of a change in control of the Company, each outstanding stock option not otherwise presently exercisable will become immediately exercisable in full. For purposes of the Plan a "change in control" of the Company occurs: (i) when any person (including a "group" as defined in Section 13(d)(3) of the Exchange Act) acquires 20% or more of the combined voting power of the Company's outstanding securities; or (ii) if those members presently constituting at least three-quarters of the Directors ("Incumbent Directors"), together with any successors to such Directors approved by at least three-quarters of the Incumbent Directors, no longer constitute three-quarters of the Directors at any time; or (iii) when any person (including a "group" as defined in Section 13(d)(3) of the Exchange Act) owns, controls or holds the power to vote 10% or more of the Company's outstanding voting securities and immediately following the acquisition of such securities such corporation or partnership is a public utility holding company or the Company is in danger of losing its exemption from registration under the Public Utility Holding Company Act of 1935 or the Company is required to register under such Act. Nontransferability and Termination of Options Options granted under the Plan are not assignable or transferable except upon the death of the Director-participant and during his lifetime are exercisable only by him. If a Director-participant dies at a time when he is entitled to exercise a stock option, then such option may be exercised in whole or in part by his executor or administrator or the person to whom such option is transferred b,y will or the applicable laws of descent and distribution, at any time within three years after such death or retirement. In no event, however, may such stock option be exercised in any such situation more than five years after the date of the grant. If a Director-participant ceases to be a member of the Board of Directors for any reason other than death at a time when he is entitled to exercise a stock option, then such option may be exercised in whole or in part at any time within three months of such cessation; provided, however, that except as otherwise described above under the caption "Limited Extension of Option Period," no such stock option be may exercised more than five years after the date of grant of such option. Fair Market Value of Common Stock Under the Plan, the fair market value of the Company's Common Stock as of a particular date is deemed to be the average of the high and low quoted selling prices for a share of Common Stock on such date, as reported on the composite tape on such date (or, if the applicable date is not a business day, the next preceding business day). If no sale takes place on the date in question, the fair market value will be deemed to be the average of the bid and asked prices on such date. Shares Subject to Plan The total number of shares of the Company's Common Stock with respect to which awards may be made under the Plan is 150,000 shares, subject to proportional adjustment, as described below. The Plan provides that if stock options expire or terminate in whole or in part before being exercised, for any reason, the shares covered thereby will be available for future stock option grants under the Plan. Shares with respect to which a stock option has been exercised, in whole or in part, will not be available for future awards. Adjustments Upon Changes in Stock In the event of a stock dividend, stock split or other change in corporate structure or capitalization affecting the Company's Common Stock which becomes effective after adoption of the Plan, the Committee will make appropriate adjustments in the number and kind of shares of Stock subject to the Plan, the number and kind of shares of stock covered by each outstanding stock option, the option price and the fair market value of the stock. In the event of a dissolution or liquidation of the Company, a consolidation or merger in which the Company is not the surviving corporation or in which a majority of its outstanding shares are so converted or exchanged, all Qutstanding options will terminate. The Company must, however, make all outstanding options immediately exercisable at least 20 days before such dissolution, liquidation, consolidation or merger or must arrange for any corporation succeeding to the business and assets of the Company to issue to participants replacement options on such corporation's stock which will to the extent possible preserve the value of the options being surrendered. Effective Date and Duration of Plan The Plan became effective upon its approval by the Company's Stockholders at their Annual Meeting held on May 5, 1992. Options will be awarded annually under the Plan beginning in 1993, with the last such award occurring on the first business day following the 1997 Annual Meeting of the Company's stockholders. The Plan does not provide for any extensions. Unfunded Plan The Plan, insofar as it provides for grants, will be unfunded, and the Company will not be required to segregate any assets that may at any time be represented by grants under the Plan. Any liability of the Company to any person with respect to any grant under the Plan will be based solely upon any contractual obligations that may be created pursuant to the Plan. No such obligation of the Company may be construed as giving any participant or other person or entity any interest of any kind in any assets of the Company or any Subsidiary nor will any such obligation create a trust of any kind or a fiduciary relationship between the Company and any such person. Amendment and Termination The Board of Directors may from time to time amend, suspend or terminate the Plan but stockholder approval is needed for any amendment that (1) materially increases the aggregate number of shares available under the Plan (except as described above under the caption "Adjustments Upon Changes in Stock"); (2) materially changes the eligibility requirements for participation in the Plan; or (3) materially increases the benefits accruing to participants under the Plan, within the meaning of Rule 16b-3 under the Exchange Act. The provisions of the Plan governing the matters referred to in clauses (1) through (3) of the preceding paragraph, as well as matters relating to (i) the number of shares for which stock options may be awarded, (ii) the exercise price of options, (iii) the timing of awards or (iv) the duration of option periods, may not be amended more than once every six (6) months, except for amendments to ensure compliance with the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules and regulations thereunder. Short-Swinq Tradinq Liability Directors are considered to be corporate "insiders" under Section 16 of the Securities Exchange Act of 1934 and, accordingly are subject to the "short swing" profit provisions of Section 16(b) of the Exchange Act. Section 16(b) generally provides that if an insider buys and sells securities of the Company within any six month period, any profit must be forfeited to the Company. The grant and exercise of Stock Options under the Plan are ordinarily exempt from short-swing trading liability. However, Participants should be aware that the sale of Common Stock by the broker which occurs as part of a cashless exercise is not so exempt and may be matched against a purchase made within the preceding or following six months to result in Section 16(b) short-swing trading liability. Participants are also advised that the withholding of shares in payment of a Participant's federal and state tax liability upon exercise of a stock option will not be exempt from Section 16 (i.e., will be treated as a "sale") unless the withholding election is made during a "window period" beginning on the third business day following the date of release of annual or quarterly financial data about the Company and ending on the twelfth business day following such date. Directors should consider carefully the short swing profit provisions of the Exchange Act before exercising any stock options through the cashless exercise procedures or when making any other purchases or sales of Company Stock. Restrictions Upon Reoffer or Resale of Shares Because of their status as Directors of the Company, Participants may be deemed to be affiliates of the Company under applicable rules and regulations of the Securities and Exchange Commission. An affiliate is generally defined as any person who, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the issuing company. Affiliates are generally subject to the same registration and prospectus delivery requirements under the Securities Act of 1933, as is the issuing company in connection with sales of company stock. This Prospectus is not available for reoffers or resales by affiliates of Common Stock acquired upon the exercise of options granted under the Plan. Such reoffers or resales may be made only pursuant to a separate prospectus filed in accordance with the applicable rules and regulations of the Securities and Exchange Commission or pursuant to the exemptive provisions of the Securities Act of 1933 and the rules and regulations thereunder, including Rule 144 of the Commission. The Plan provides that the Company may require that a person exercising a stock option agree in writing to hold for investment and not for resale any shares of Common Stock issued to him under the Plan and to dispose of such shares only in compliance with applicable rules and regulations. Such agreement will be required only if, in the opinion of counsel to the Company, it is necessary or desirable in order to comply with applicable laws and regulations relating to the sale of securities. FEDERAL INCOME TAX CONSEQUENCES The following discussion summarizes the Company's understanding of the more significant federal income tax consequences associated with the Plan under the provisions of the Internal Revenue Code of 1986 (the "Code"), as amended. The Company has not undertaken to provide personal tax or financial advice to Participants and the following general discussion should not be interpreted as such. No income will be recognized by a Participant for federal income tax purposes when an option is granted. Except as noted below under the caption "Additional Information," at the time an option is exercised, a Participant will recognize as ordinary income the difference between the fair market value of the Common Stock on the date the option is exercised and the option price (that is, the fair market value on the date the option was granted). Any gain or loss that a Participant realizes on a subsequent disposition of Common Stock acquired upon the exercise of a stock option will be treated as long-term or short-term capital gain or loss, depending on the period during which the Participant held such shares. For purposes of determining the amount of such gain or loss, the tax basis in the shares will be the market value of such shares on the exercise date. The exercise of a stock option will entitle the Company to claim a business expense deduction equal to the amount of income realized by the Participant. Effect of Share for Share Exercise If a Participant elects to tender previously acquired shares of the Company's Common Stock in partial or full payment of the option price, the transaction will be treated as a tax-free exchange to the extent of the number of shares tendered. Additional shares received will result in ordinary income equal to the value of such shares. Additional Information In general, a Participant will recognize taxable income upon exercise of a Stock Option, assuming that no disposition of the shares following exercise of the Stock Option occurs within six months after the date of grant. In those unusual circumstances in which the exercisability of a Stock Option is accelerated within six months of the date of grant, such as upon a change of control, a Participant will not recognize taxable gain until expiration of the six-month period following the date of grant of the Stock Option; provided, however, that a Participant may elect to recognize taxable gain immediately in such circumstances by filing a written election with the Internal Revenue Service pursuant to Section 83(b) of the Internal Revenue Code. The Company is entitled to a corresponding tax deduction when the Participant recognizes taxable income. If a change in control of the Company occurs accelerating the exercise of outstanding stock options, and if such accelerated exercise is deemed a "control payment" (within the meaning of Section 280G of the Code), a Participant may be subject to a 20% federal excise tax on all or a portion of such control payment, if such control payment and other control payments exceed certain limits contained in Section 280G of the Code. In such event, the Company would not be allowed a business deduction with respect to the amount of such control payment. The rules governing the tax treatment of options and shares acquired on the exercise thereof are quite technical, so that the above description of tax consequences is necessarily general in nature and does not purport to be complete. Moreover, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. Consequently, participants are urged to consult with their personal tax advisers for information with respect to the tax consequences that would pertain to their particular circumstances, including tax consequences under applicable state and local income tax laws. 10.79 OFFICERS INSURANCE PLAN This Agreement, entered into as of the date set forth on the Summary Schedule, which is attached hereto and made a part hereof, by and between CENTRAL VERMONT PUBLIC SERVICE CORPORATION (hereinafter "Company") and the Executive named on the Summary Schedule (hereinafter "Executive"). WHEREAS, the Executive has provided valuable services to the Company and the Company desires to retain the Executive's valuable services and to aid in providing retirement and death benefits to the Executive and his/her beneficiaries; and WHEREAS, the Executive is a highly compensated managerial employee; NOW THEREFORE, the Company and the Executive in consideration of the terms and conditions set forth herein hereby mutually covenant and agree as follows: 1.Retirement Benefit: The Company will commence paying the Executive within thirty (30) days after the Executive's normal retirement date, provided the Executive is employed by the Company on his/her normal retirement date, the amount per month set forth on the Summary Schedule guaranteed for fifteen (15) years. If the Executive dies after becoming entitled to payments, but before the payments guaranteed for fifteen (15) years have been paid, the unpaid balance of the payment guaranteed for fifteen (15) years will continue to be paid by the Company to the beneficiaries named in the Summary Schedule. 2.Early Retirement Benefit: In the event the Executive's employment with the Company terminates prior to the Executive's normal retirement date for any reason other than death of the Executive or cause (gross misconduct), the Executive has attained the age of 55 and has been employed by the Company for at least 10 years, then within thirty (30) days of the date of such termination, or reaching the age of 60, whichever is later, the Company will commence paying the Executive the monthly retirement benefit set forth on the Summary Schedule for fifteen years reduced by such amount as shall be determined by the Company, however, such reduction shall not be more than five percent (5%) for each full year that the early retirement date precedes the normal retirement date. 3.Death Benefit: If the Executive dies after payments of monthly benefits to the Executive have commenced, or if the Executive terminates after age 55 and prior to age 60, pursuant to Paragraphs 1 or 2 above, then the Company shall pay to the Executive's beneficiaries as an additional benefit, the sum of One Hundred Thousand Dollars ($100,000.00). 4.Leave of Absence: The Company may grant the Executive one or more leaves of absence during which time the Executive shall be considered to be in the employ of the Company for purposes of this Agreement. 5. Assignability: The benefits provided by this Agreement will not be subject to garnishment, attachment or any other legal process by the creditors of the Executive or of any person or persons designated as beneficiaries of the agreement. 6.Employment and Other Rights: This Agreement creates no rights whatsoever in the Executive to continue in the employ of the Company for any length of time, nor does it create any rights in the Executive or obligations on the part of the Company except as set forth herein. 7.Anti-Alienability Clause: Neither the Executive nor any beneficiary shall transfer, assign, pledge, mortgage or encumber any of the benefits and payments hereunder. The benefits shall not be subject to seizure, lien, judgement, alimony, levy, garnishment, or attachment. In the event that the Executive or any Beneficiary shall attempt any of the above acts, then the payment of installment payments or benefits by the Company shall immediately cease and terminate. 8.No Effect On Other Plans: Nothing contained herein shall affect any right or privilege of the Executive with regard to other employee plans the Company has, or may have in the future. 9.Financial Hardship: The Company may, in its sole discretion, pay the balance of the account, or any portion thereof to the Executive or any Beneficiary herein, provided that the Executive or Beneficiary has a demonstrable need due to financial hardship. The decision of whether or not financial hardship exists, or whether or not any payments herein shall be made, shall at all times rest solely with the Company, in its sole discretion. 10.Reorganization of the Company: The Company agrees that it will not merge or consolidate with any other company, business corporation, partnership, or organization, and/or that it will not permit any of its activities to be taken over unless and until the succeeding or continuing corporation expressly assumes all rights, duties, privileges and obligations herein set forth. With regard to a default with respect to this provision, the Executive or Beneficiary shall have a continuing lien on all corporate assets, including transferred assets, until the Company's obligations herein are completely and totally fulfilled. 11.Unsecured Provision: The rights of the Executive under this Agreement, and of any Beneficiary shall be solely those of an unsecured creditor of the Company. Any asset acquired by the Company in connection with any obligation herein shall not be deemed to be held in trust for the Executive or Beneficiary. All such assets remain general, unpledged assets of the Company. 12.Communications: Any notice or communication shall be made in writing and addressed as the case may be to the principal offices of the Company and the principal residence of the Executive. Each part shall notify the other of a change of address of the principal office and principal residence. 13.Facility of Payment: Any installment or payment required to be made by the Company under this Agreement, to any person entitled to said payment, with the person being under a legal disability at the time, then said payment may be made in any of the following ways, by the Company, in its sole discretion. Directly to the person. 2.To the legal representative of the person. 3.To some near relative of the person, said payment to be used for the latter's benefit. 4.Directly for the payment of expenses relating to the health, maintenance, support and education of the person. Any such payment by the Company shall be a discharge of the obligation to make said payment. The company shall not be liable for making the payment to any of the parties enumerated above. 14.Arbitration: In the event of any dispute arising between the parties of this Agreement, the parties agree that such controversy shall be settled by arbitration, in accordance with the rules of the American Arbitration Association. One arbitrator shall be named by each party involved in the dispute, with an additional arbitrator named by the arbitrators so chosen. 15.State Law: This Agreement shall be construed under the laws of the State of Vermont. 16.Revocability: This Agreement may be revoked or amended in whole or part by a writing signed by both parties hereto except as set forth in Paragraph 17 below. 17.Amendment: Notwithstanding any other provision of this Agreement, in the event of a substantial change in the Federal Income Tax Laws affecting the economic viability of this plan, the Board of Directors may amend the plan by freezing the Executive's salary level for purposes of this Plan at the level as of date of such amendment. 18.Whole Agreement: This writing contains the whole Agreement, with no other understandings or provisions other than what is considered herein. Executed as of this _______ day of _______________, 19_______. IN PRESENCE OF: _______________________________ _____________________________ Executive CENTRAL VERMONT PUBLIC SERVICE CORPORATION _______________________________ By___________________________ Duly Authorized Agent OFFICERS INSURANCE PLAN SUMMARY SCHEDULE 1.Name of Executive:___________________________________________ 2.Address:___________________________________________________ ___________________________________________________ 3.Date of Agreement: November 15, 1993 4.Monthly Retirement Benefit: __________________________ of the Executive's salary from the Company for the calendar year before retirement or termination of employment divided by 12. 5.Beneficiaries:__________________________________ __________________________________ __________________________________ In the event there are no surviving beneficiaries, then the benefit shall be paid to the Executor or Administrator of the last survivor of the Executive and said beneficiaries. 6.Normal Retirement Date:______________________________________ Executed this __________ day of ____________________, 19_____. ___________________________________ _______________________________ Witness Executive CENTRAL VERMONT PUBLIC SERVICE CORPORATION ________________________________By_____________________________ Witness Duly Authorized Agent DIRECTORS SUPPLEMENTAL DEFERRED COMPENSATION PLAN 10.80 ARTICLE I PURPOSE The purpose of this plan is to permit members of the Board of Directors of Central Vermont Public Service Corporation and subsidiary companies an opportunity to defer receipt of salary, bonus or incentive payments; and to enable the Corporation to attract and retain outstanding individuals to serve as directors. ARTICLE II DEFINITIONS When used herein the following terms have the meanings indicated unless a different meaning is clearly required by the context. 1. "Administrator": The person, persons or committee appointed by the Board of Directors of the Corporation to administer this Plan. 2. "Corporation": Central Vermont Public Service Corporation and subsidiary companies, and its corporate successors. 3. "Deferred Compensation Agreement": Written agreement between the Corporation and a Participant in substantially the form attached hereto as Exhibit A and made a part hereof. 4. "Designated Beneficiary": One or more beneficiaries, as designated in writing to the administrator, to whom payments otherwise due to or for the benefit of a Participant are to be made in the event of the Participant's death. If no written designation is made by a Participant, or if the beneficiary is not in existence at the Participant's death, or if the beneficiary predeceases the Participant, the Participant is deemed to have designated his estate as beneficiary. 5. "Director": A person who has been elected to such a position by the shareholders of the Corporation. 6. "Normal Retirement": Retirement as a Director from the Corporation on or after the later of attainment of age seventy (70) and completion of five (5) years of Plan participation. 7. "Normal Retirement Date": The first day of the month coinciding with or next following the date on which a Participant first meets the requirement for Normal Retirement. 8. "Participant": A Director who is or hereafter becomes eligible to participate in the Plan and does participate by electing, in the manner specified herein, to defer compensation pursuant to the Plan. 9. "Participant's Account": The Participant's Account shall be the amount deferred by the Participant pursuant to the Deferred Compensation Agreement, Exhibit A, plus interest as determined by the Administrator in accordance with the table attached hereto as Exhibit B. However, the Participant understands and accepts that the present value of the Plan cost to the Corporation shall remain less than zero and that all risks of change in the credited interest rate used, mortality and tax law changes are to be assumed by the Participant. This may result in additional Plan deferrals which will be reflected in the balance of the Participant's Account. 10. "Plan": The Deferred Compensation Plan for Directors of Central Vermont Public Service Corporation contained herein, and as may be amended from time to time hereafter. 11. "Plan Year": A twelve month period commencing January 1 and ending the following December 31 with the first Plan year commencing January 1, 1990. 12. "Termination": When a Director's service with the Corporation terminates. ARTICLE III ELIGIBILITY AND PARTICIPATION 1. Eligibility. Any Director of the Corporation. 2. Participation. An eligible Director participates in the Plan by irrevocably electing, in the manner specified herein, to defer a predetermined amount for each year for five (5) consecutive Plan Years. ARTICLE IV RETIREMENT BENEFITS 1. Normal Retirement Benefit. (a) Upon retirement as a Director of the Corporation on or after his Normal Retirement Date, a Participant shall become entitled to his/her Normal Retirement Benefit. This Normal Retirement Benefit shall be determined by the amount in the Participant's Account as of the date of retirement and shall be retirement and shall be paid out in the form of a level fifteen (15) year annuity certain, payable in one hundred eighty (180) equal monthly installments. For purposes of establishing the retirement annuity the fixed monthly payments will be based upon the account value at the date of retirement, with interest computed in the future based on the 60 months interest credited to your account prior to retirement. Payment of the Normal Retirement Benefit commences on the first day of the first month after the Participant's Normal Retirement Date and continues on the first day of each month thereafter until one hundred eighty (180) monthly payments have been made. ARTICLE V SURVIVOR BENEFITS 1. Events. The Company will pay to a Participant's Designated Beneficiary a Survivor Benefit as defined in this Article V in the event a Participant's death occurs as follows: (a) while serving as a Director of the Corporation and while a Participant under the Plan; (b) after becoming entitled to a Retirement Benefit under Article IV hereof, but prior to commencement of payment of such benefit; or (c) after annuity benefits have commenced, but prior to the completion of one hundred eighty (180) monthly benefit payments. 2. Amount, The amount of Survivor Benefit pursuant to this Article V will be determined as follows: (a) The Survivor Benefit will be equal to the value of the Participant's Account as of the date of death plus interest determined in the same manner as Normal Retirement Benefit pursuant to Article IV-1(a) if the Participant's death occurs while serving as a director of the Corporation and while a Participant under the Plan. An additional survivor benefit shall be paid to the Designated Beneficiary which shall be equal to the annual amount deferred by the Director and paid each year for a fifteen (15) year period. Payments shall be made on a monthly basis for one hundred eighty (180) months certain. (b) The Survivor Benefit will be equal to the continuation of the monthly benefit payable to the Participant if the Participant's death occurs after benefit payments have commenced to him/her. 3. Duration. Payment of the Survivor Benefit to a Designated Beneficiary pursuant to this Article V commences on the first day of the month following the death of a Participant and continues on the first day of each month thereafter until a total of one hundred eighty (180) monthly payments have been made to the Participant or his Designated Beneficiary. ARTICLE VI TERMINATIONS In the event a Participant's relationship as a Director of the Corporation terminates for any reason other than death, or Normal Retirement, the Participant will have his/her account paid as follows: (i) If the Participant's Account is under $25,000 it shall be paid within thirty (30) days of the date of termination; (ii) If the Participant's Account is over $25,000, it shall be paid in one hundred eighty (180) monthly installments commencing at the time early retirement benefits would have been paid had he/she continued to be employed by the Corporation as an annuity based on an interest rate equal to the interest rate credited to the Account for the five (5) years prior to the early retirement date. ARTICLE VII AMENDMENT AND TERMINATION The Corporation reserves the right, at any time or from time to time, by action of its Board of Directors, to modify or amend in whole or in part any or all provisions of the Plan. In addition, the Corporation reserves the right by action of its Board of Directors to terminate the Plan in whole or in part. Such termination shall not affect the amount in the Participant's Account as of the date of such modification, amendment or termination. In addition, such modification, amendment or termination shall not affect the Deferred Compensation Agreements under which benefit payments had commenced prior to such modification, amendment or termination of the Plan. Should such modification, amendment or termination occur during the 5-year deferral period, Participant is released from obligation to continue deferrals. ARTICLE IX MISCELLANEOUS 1. Suicide. Except as hereafter provided no benefit will be payable under the Plan to a Participant or his Designated Beneficiary in the event the Participant dies as a result of suicide with twenty-four (24) months of entering this Plan. In the event of such suicide, the Participant's Designated Beneficiary will receive within a reasonable period of time a lump sum equal to the actual amounts deferred by the Participant under the Plan. 2. Non-Alienation of Benefits. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan shall be void. 3. No Trust Created. The obligations of the Corporation to make payments hereunder shall constitute a liability of the Corporation to a Participant. Such payments shall be made from the general funds of the Corporation, and the Corporation shall not be required to establish or maintain any special or separate fund, or purchase or acquire life insurance on Participant's life, or otherwise to segregate assets to assure that such payment shall be made, and neither a Participant, his estate nor Designated Beneficiary shall have any interest in any particular asset of the Corporation by reason of its obligations hereunder. Nothing contained in the Plan shall create or be construed as creating a trust of any kind or other fiduciary relationship between the Corporation and a Participant or any other person. 4. Neither the execution of this Plan nor any action taken by the Corporation pursuant to this Plan shall be held or construed to confer on a Participant any legal right to be continued as a Director of the Corporation nor restrict the right of any Participant to terminate his role as a Director of the Corporation. 5. Designation of Beneficiary. Participants shall file with the Corporation a notice in writing designating one or more Designated Beneficiaries to whom payments otherwise due to or for the benefit of the Participant hereunder shall be made in the event of his death prior to the complete payment of such benefit. Participants shall have the right to change the beneficiary or beneficiaries so designated from time to time; provided, however, that any change shall not become effective until received in writing by the Administrator. 6. Claims for Benefits. Each Participant or Designated Beneficiary must claim any benefit to which entitled under this Plan by a written notification to the Administrator. If a claim is denied, it must be denied within a reasonable period of time, and be contained in a written notice stating the following: the specific reason for the denial; specific reference to the Plan provision on which the denial is based; description of additional information necessary for the claimant to present to present his claim, if any, and an explanation of why such material is necessary. The claimant will have sixty (6) days to request a review of the denial by the Administrator, which will provide a full and fair review. The request for review must be in writing delivered to the Administrator. The claimant may review pertinent documents, and he may submit issues and comments in writing. The decision by the Administrator with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension (such as for hearing). In no event shall the decision be delayed beyond one hundred twenty (120) days after receipt of the request for review. The decision shall be written in a manner calculated to be understood by the claimant, and it shall include specific reasons and refer to specific Plan provisions as to its effect. 7. Binding Effect. Obligations incurred by the Corporation pursuant to this Plan shall be binding upon and insure to the benefit of the Corporation, its successors and assigns, and the Participant and the beneficiary or beneficiaries designated pursuant to section 5 of this Article IX. 8. Entire Plan. This document and any amendments contains all the terms and provisions of the Plan and shall constitute the entire Plan, any other alleged terms or provisions being of no effect. ARTICLE X CONSTRUCTION 1. Governing Law. This Plan shall be construed and governed in accordance with the laws of the State of Vermont. 2. Gender. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. 3. Headings, etc. The cover page of this Plan, the Table of Contents and all headings used in this Plan are for convenience of reference only and are not part of the substance of this Plan. THIS PLAN is adopted and becomes effective this ______day of _______________________, 19_____. __________________________________ Chairman of the Board Attest: _________________________________ Secretary (Corporate Seal) EXHIBIT A DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is made this the ________ day of _______, 19___, between Central Vermont Public Service Corporation, a Vermont corporation (hereinafter the "Corporation"), and _____________________________ and Director of the Corporation (hereinafter called "Participant"). WHEREAS, the Board of Directors of the Corporation has approved a Deferred Compensation Plan for the purpose of attracting and retaining outstanding individuals to function as Directors of the Corporation; and WHEREAS, such Deferred Compensation Plan provides that the Participant become eligible to participate upon execution of a Deferred Compensation Agreement; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the Corporation and the Participant agree as follows: 1. Participation. This Agreement is made to evidence the Participant's participation in the Deferred Compensation Plan for Officers of Central Vermont Public Service Corporation (hereinafter the "Plan"), to set forth the amount of the Participant's Normal Retirement Benefit and Survivor Benefit under the Plan. 2. Adoption of Plan. The Plan (and its provisions), as it now exists and as it may be amended hereafter, is incorporated herein and made a part of this Agreement. 3. Definitions. When used herein, the terms which are defined in the Plan shall have the meanings given them in the Plan, unless a different meaning is clearly required by the context. 4. Deferrals. Pursuant to Article III of the Plan, the Participant hereby elects to defer the receipt of, and the Corporation hereby elects to defer the payment of salary, bonus or incentive payments in the amount of ____________________________________ ($_____________) dollars per year for each of the Plan years ending December 31, ____, ________, ________, _________, and ___________. 5. Retirement Benefit. The Participant's Normal and Early Retirement Benefits are as defined in Article IV of the Plan. 6. Survivor Benefit. The Participant's Survivor Benefit is as defined in Article V of the Plan. 7. Entire Agreement. This Agreement contains the entire agreement and understanding by and between the Corporation and the Participant, and no representations, promises, agreements or understandings, written or oral, not contained herein shall be of any force or effect. IN WITNESS WHEREOF, the parties have executed this Agreement in Duplicate originals as of the day and year entered above. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By: _________________________________ Chairman of the Board Attest: _____________________________________ Secretary (Corporate Seal) PARTICIPATING DIRECTOR: ________________________ (L.S) Participant DESIGNATION OF BENEFICIARY DEFERRED COMPENSATION PLAN FOR DIRECTORS OF CENTRAL VERMONT PUBLIC SERVICE CORPORATION As a participant in the Deferred Compensation Plan for Directors of Central Vermont Public Service Corporation, I hereby designate the following person(s) as "Designated Beneficiary", as that term is defined and used in the Plan: I understand that the Designated Beneficiary named above may be changed or revoked by me at any time by filing a new designation in writing with the Administrator. Date _______________________ _________________________ Signature of Participant OFFICERS SUPPLEMENTAL DEFERRED COMPENSATION PLAN 10.81 ARTICLE I PURPOSE The purpose of this plan is to permit Officers of Central Vermont Public Service Corporation and subsidiary companies an opportunity to defer receipt of salary, bonus or incentive payments; and to enable the Corporation to attract and retain outstanding individuals to function as officers. ARTICLE II DEFINITIONS When used herein the following terms have the meanings indicated unless a different meaning is clearly required by the context. 1. "Administrator": The person, persons or committee appointed by the Board of Directors of the Corporation to administer this Plan. 2. "Corporation": Central Vermont Public Service Corporation and subsidiary companies, and its corporate successors. 3. "Deferred Compensation Agreement": Written agreement between the Corporation and a Participant in substantially the form attached hereto as Exhibit A and made a part hereof. 4. "Designated Beneficiary": One or more beneficiaries, as designated in writing to the administrator, to whom payments otherwise due to or for the benefit of a Participant are to be made in the event of the Participant's death. If no written designation is made by a Participant, or if the beneficiary is not in existence at the Participant's death, or if the beneficiary predeceases the Participant, the Participant is deemed to have designated his estate as beneficiary. 5. "Officer": A person who has been elected to such a position by the Board of Directors of the Corporation. 6. "Early Retirement": Retirement as an Officer from the Corporation on or after the later of attainment of age fifty-five (55) and the completion of five (5) years of Plan participation but prior to meeting the requirements for Normal Retirement as provided in section 8 of this Article II. 7. "Early Retirement Date": The first day of the month coinciding with or next following the date on which a Participant, having met the requirements for Early Retirement, retires as an Officer from the Corporation. 8. "Normal Retirement": Retirement as an Officer from the Corporation on or after the later of attainment of sixty-five (65) and the completion of five (5) years of Plan participation. 9. "Normal Retirement Date": The first day of the month coinciding with or next following the date on which a Participant first meets the requirement for Normal Retirement. 10. "Participant": An Officer who is or hereafter becomes eligible to participate in the Plan and does participate by electing, in the manner specified herein, to defer compensation pursuant to the Plan. 11. "Participant's Account": The Participant's Account shall be the amount deferred by the Participant pursuant to the Deferred Compensation Agreement, Exhibit A, plus interest as determined by the Administrator in accordance with the table attached hereto as Exhibit B. However, the Participant understands and accepts that the present value of the Plan cost to the Corporation shall remain less than zero and that all risks of change in the credited interest rate used, mortality and tax law changes are to be assumed by the Participant. This may result in additional Plan deferrals which will be reflected in the balance of the Participant's Account. 12. "Plan": The Deferred Compensation Plan for Officers of Central Vermont Public Service Corporation contained herein, and as may be amended from time to time hereafter. 13. "Plan Year": A twelve month period commencing January 1 and ending the following December 31 with the first Plan year commencing January 1, 1990. 14. "Termination": When an Officer's employment with the Corporation terminates or is terminated for any reason. ARTICLE III ELIGIBILITY AND PARTICIPATION 1. Eligibility. Any Officer of the Corporation. 2. Participation. An eligible Officer participates in the Plan by irrevocably electing, in the manner specified herein, to defer a predetermined amount for each year for five (5) consecutive Plan Years. ARTICLE IV RETIREMENT BENEFITS 1. Normal Retirement Benefit. (a) Upon retirement as an Officer of the Corporation on or after his Normal Retirement Date, a Participant shall become entitled to his/her Normal Retirement Benefit. This Normal Retirement Benefit shall be determined by the amount in the Participant's Account as of the date of retirement and shall be retirement and shall be paid out in the form of a level fifteen (15) year annuity certain, payable in one hundred eighty (180) equal monthly installments. For purposes of establishing the retirement annuity the fixed monthly payments will be based upon the account value at the date of retirement, with interest computed in the future based on the 60 months interest credited to your account prior to retirement. Payment of the Normal Retirement Benefit commences on the first day of the first month after the Participant's Normal Retirement Date and continues on the first day of each month thereafter until one hundred eighty (180) monthly payments have been made. 2. Early Retirement Benefit. (a) Upon Early Retirement, a Participant becomes entitled to his Early Retirement Benefit. The Early Retirement Benefit shall be determined by the amount in the Participant's Account as of the date of Early retirement and shall be paid out in the form of a level fifteen (15) year annuity certain payable in one hundred eighty (180) monthly installments and calculated in the same manner as the Normal Retirement Benefit. (b) A Participant may have payment of his Early Retirement Benefit commence on the first day of the first month after his/her Early Retirement Date or on the first day of any subsequent month preceding his/her Normal Retirement Date if election is made in writing and delivered to the Administrator at least thirty (30) days before annuity starting date. ARTICLE V SURVIVOR BENEFITS 1. Events. The Company will pay to a Participant's Designated Beneficiary a Survivor Benefit as defined in this Article V in the event a Participant's death occurs as follows: (a) While serving as an Officer of the Corporation and while a Participant under the Plan; (b) after becoming entitled to a Retirement Benefit under Article IV hereof, but prior to commencement of payment of such benefit; or (c) after annuity benefits have commenced, but prior to the completion of one hundred eighty (180) monthly benefit payments. 2. Amount. The amount of Survivor Benefit pursuant to this Article V will be determined as follows: (a) The Survivor Benefit will be equal to the value of the Participant's Account as of the date of death plus interest determined in the same manner as Normal Retirement Benefit pursuant to Article IV-l(a) If the Participant's death occurs while serving as an Officer of the Corporation and while a Participant under the Plan. (b) The Survivor Benefit will be equal to the continuation of the monthly benefit payable to the Participant if the Participant's death occurs after benefit payments have commenced to him/her. 3. Duration. Payment of the Survivor Benefit to a Designated Beneficiary pursuant to this Article V commences on the first day of the month following the death of a Participant and continues on the first day of each month thereafter until a total of one hundred eighty (180) monthly payments have been made to the Participant or his Designated Beneficiary. ARTICLE VI TERMINATIONS In the event a Participant's relationship as an Officer of the Corporation terminates for any reason other than death, Early Retirement or Normal Retirement, the Participant will have his/her account paid as follows: (i) If the Participant's Account is under $25,000 it shall be paid within thirty (30) days of the date of termination; (ii) If the Participant's Account is over $25,000, it shall be paid in one hundred eighty (180) monthly installments commencing at the time early retirement benefits would have been paid had he/she continued to be employed by the Corporation as an annuity based on an interest rate equal to the interest rate credited to the Account for the five (5) years prior to the early retirement date. ARTICLE VII AMENDMENT AND TERMINATION The Corporation reserves the right, at any time or from time to time, by action of its Board of Directors, to modify or amend in whole or in part any or all provisions of the Plan. In addition, the Corporation reserves the right by action of its Board of Directors to terminate the Plan in whole or in part. Such termination shall not affect the amount in the Participant's Account as of the date of such modification, amendment or termination. In addition, such modification, amendment or termination shall not affect the Deferred Compensation Agreements under which benefit payments had commenced prior to such modification, amendment or termination of the Plan. Should such modification, amendment or termination occur during the 5-year deferral period, Participant is released from obligation to continue deferrals. ARTICLE IX MISCELLANEOUS 1. Suicide. Except as hereafter provided no benefit will be payable under the Plan to a Participant or his Designated Beneficiary in the event the Participant dies as a result of suicide with twenty-four (24) months of entering this Plan. In the event of such suicide, the Participant's Designated Beneficiary will receive within a reasonable period of time a lump sum equal to the actual amounts deferred by the Participant under the Plan. 2. Non-Alienation of Benefits. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan shall be void. 3. No Trust Created. The obligations of the Corporation to make payments hereunder shall constitute a liability of the Corporation to a Participant. Such payments shall be made from the general funds of the Corporation, and the Corporation shall not be required to establish or maintain any special or separate fund, or purchase or acquire life insurance on Participant's life, or otherwise to segregate assets to assure that such payment shall be made, and neither a Participant, his estate nor Designated Beneficiary shall have any interest in any particular asset of the Corporation by reason of its obligations hereunder. Nothing contained in the Plan shall create or be construed as creating a trust of any kind or other fiduciary relationship between the Corporation and a Participant or any other person. 4. No Employment Agreement. Neither the execution of this Plan nor any action taken by the Corporation pursuant to this Plan shall be held or construed to confer on a Participant any legal right to be continued as an Officer of the Corporation nor restrict the right of any Participant to terminate his role as an Officer of the Corporation. 5. Designation of Beneficiary. Participants shall file with the Corporation a notice in writing designating one or more Designated Beneficiaries to whom payments otherwise due to or for the benefit of the Participant hereunder shall be made in the event of his death prior to the complete payment of such benefit. Participants shall have the right to change the beneficiary or beneficiaries so designated from time to time; provided, however, that any change shall not become effective until received in writing by the Administrator. 6. Claims for Benefits. Each Participant or Designated Beneficiary must claim any benefit to which entitled under this Plan by a written notification to the Administrator. If a claim is denied, it must be denied within a reasonable period of time, and be contained in a written notice stating the following: the specific reason for the denial; specific reference to the Plan provision on which the denial is based; description of additional information necessary for the claimant to present to present his claim, if any, and an explanation of why such material is necessary. The claimant will have sixty (6) days to request a review of the denial by the Administrator, which will provide a full and fair review. The request for review must be in writing delivered to the Administrator. The claimant may review pertinent documents, and he may submit issues and comments in writing. The decision by the Administrator with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension (such as for hearing). In no event shall the decision be delayed beyond one hundred twenty (120) days after receipt of the request for review. The decision shall be written in a manner calculated to be understood by the claimant, and it shall include specific reasons and refer to specific Plan provisions as to its effect. 7. Binding Effect. Obligations incurred by the Corporation pursuant to this Plan shall be binding upon and insure to the benefit of the Corporation, its successors and assigns, and the Participant and the beneficiary or beneficiaries designated pursuant to section 5 of this Article IX. 8. Entire PIan. This document and any amendments contains all the terms and provisions of the Plan and shall constitute the entire Plan, any other alleged terms or provisions being of no effect. ARTICLE X CONSTRUCTION 1. Governing Law. This Plan shall be construed and governed in accordance with the laws of the State of Vermont. 2. Gender. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. 3. Headings, etc. The cover page of this Plan, the Table of Contents and all headings used in this Plan are for convenience of reference only and are not part of the substance of this Plan. THIS PLAN is adopted and becomes effective this day of , l9 . For Central Vermont Public Service Corporation Attest: Secretary (Corporate Seal) EXHIBIT A DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is made this the day of , 19 , between Central Vermont Public Service Corporation, a Vermont corporation (hereinafter the "Corporation"), and and Officer of the Corporation (hereinafter called "Participant"). WHEREAS, the Board of Directors of the Corporation has approved a Deferred Compensation Plan for the purpose of attracting and retaining outstanding individuals to function as Officers of the Corporation; and WHEREAS, such Deferred Compensation Plan provides that the Participant become eligible to participate upon execution of a Deferred Compensation Agreement; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the Corporation and the Participant agree as follows: 1. Participation. This Agreement is made to evidence the Participant's participation in the Deferred Compensation Plan for Officers of Central Vermont Public Service Corporation (hereinafter the "Plan"), to set forth the amount of the Participant's Normal Retirement Benefit and Survivor Benefit under the Plan. 2. Adoption of Plan. The Plan (and its provisions), as it now exists and as it may be amended hereafter, is incorporated herein and made a part of this Agreement. 3. Definitions. When used herein, the terms which are defined in the Plan shall have the meanings given them in the Plan, unless a different meaning is clearly required by the context. 4. Deferrals. Pursuant to Article III of the Plan, the Participant hereby elects to defer the receipt of, and the Corporation hereby elects to defer the payment of salary, bonus or incentive payments in the amount of ($ ) dollars per year for each of the Plan years ending December 31, , , , , and . 5. Retirement Benefit. The Participant's Normal and Early Retirement Benefits are as defined in Article IV of the Plan. 6. Survivor Benefit. The Participant's Survivor Benefit is as defined in Article V of the Plan. 7. Entire Agreement. This Agreement contains the entire agreement and understanding by and between the Corporation and the Participant, and no representations, promises, agreements or understandings, written or oral, not contained herein shall be of any force or effect. IN WITNESS WHEREOF, the parties have executed this Agreement in Duplicate originals as of the day and year entered above. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By: Attest: Secretary (Corporate Seal) PARTICIPATING OFFICER: (L.S) Participant DESIGNATION OF BENEFICIARY DEFERRED COMPENSATION PLAN FOR OFFICERS OF CENTRAL VERMONT PUBLIC SERVICE CORPORATION As a Participant in the Deferred Compensation Plan for Officers of Central Vermont Public Service Corporation, I hereby designated the following person(s) as "Designated Beneficiary", as that term is defined and used in the Plan: I understand that the Designated Beneficiary named above may be changed or revoked by me at any time by filing a new designation in writing with the Administrator. Date 10.82 TRANSMISSION SERVICE AGREEMENT Dated: September 1, 1993 This Agreement sets out the terms and conditions under which Central Vermont Public Service Corporation and Green Mountain Power Corporation will provide each other transmission and interconnection service. TABLE OF CONTENTS RECITALS ...............................................1 ARTICLE I ..............................................2 GENERAL TERMS AND CONDITIONS.........................2 1.1 Availability..................................2 1.2Obligations of the Parties.....................2 1.3Facilities.....................................2 1.4Termination....................................3 1.5Amendment......................................5 1.6Rights-of-Way..................................5 1.7Continuity of Service..........................6 1.8Metering.......................................8 1.9Use of Facilities..............................9 1.10Withdrawal of Facilities.....................11 1.11Liability....................................11 1.12Access.......................................12 1.13Billings and Payment.........................12 1.14Effect of Federal and State laws.............14 1.15Assignability................................14 1.16Communications between the Parties...........15 1.17Character of Service.........................15 1.18Captions.....................................16 1.19Operating Procedures.........................16 1.20Dispute Resolution...........................16 1.21Severability.................................17 1.22Entitlements.................................18 1.23New Interconnection Points...................18 1.24Peak Demand Adjustments......................18 ARTICLE II.............................................19 Rate Provisions.....................................19 2.1Monthly Charges...............................19 2.2Demand Charge Formula.........................20 2.3Remedies......................................23 ARTICLE III............................................23 Contingencies and Options...........................23 3.1Contingencies.................................23 3.2Options.......................................26 ACKNOWLEDGMENT OF ARBITRATION..........................29 ATTACHMENT A TRANSMISSION SERVICE AGREEMENT This Agreement dated as of September 1, 1993, is entered into by and between CENTRAL VERMONT PUBLIC SERVICE CORPORATION, a Vermont corporation with principle offices at 77 Grove Street, Rutland, Vermont ("Central Vermont", or "CV"), and GREEN MOUNTAIN POWER CORPORATION, a Vermont corporation with principle offices at 25 Green Mountain Drive, Post Office Box 850, South Burlington, Vermont 05402 ("Green Mountain" or the "GMP") (together the "Parties"). RECITALS WHEREAS Central Vermont is a provider of utility services which owns, operates and maintains certain transmission and distribution facilities (together the "CV System"); and WHEREAS Green Mountain is a provider of utility services which owns, operates and maintains certain transmission and distribution facilities (together the "GMP System"); and WHEREAS the Parties desire to take service from each other over the Interconnection and Delivery Points between the CV System and the GMP System as more particularly described on Attachment A (the "Interconnection and/or Delivery Points") and to provide for the development of such additional Interconnection Points as are beneficial to the Parties; and WHEREAS the Parties desire this agreement to supersede all existing transmission contracts between them; WHEREAS the Parties desire to contract with each other for transmission and interconnection service as more particularly described herein; NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: ARTICLE I General Terms and Conditions 1.1 Availability. Service under this Agreement is available from Central Vermont for flows across the CV System and from Green Mountain for flows across the GMP System at the Interconnection and/or Delivery Points identified on Attachment A for a term of fifteen (15) years from the date that service commences unless otherwise agreed to or as provided for herein. The Parties expressly acknowledge that the service that will be provided and charged for at Wilder are deliveries by CVPS to serve GMP's load at Wilder and incidental deliveries to Wilder by CVPS for use by CVPS are not to be used in the calculations of demand for either CVPS or GMP. 1.2 Obligations of the Parties. Each Party, by taking service under and entering into this Agreement, agrees to take and pay for, and to furnish, the service, subject to the terms and conditions of this Agreement, including Article 1.5, as it may be in effect from time to time, and subject to the action of such regulatory authorities having jurisdiction. The Parties understand and agree that their obligation to provide service and to take service hereunder is expressly conditioned upon the receipt of all necessary regulatory approvals for this Agreement in the form as executed as may be necessary or required for the provision of service hereunder. In the event that such approvals are not received, the Parties agree to participate in further discussions, including mediation, in order to attempt to reach agreement on the terms and conditions for the provision of the transmission and interconnection service provided for herein. Central Vermont and Green Mountain shall have the obligation to operate in accordance with good utility practice, including the New England Power Pool ("NEPOOL") emergency load-reduction program, and upon request, to consult with each other in regard thereto. No provision of this Agreement shall become effective unless this Agreement is approved without change by FERC or any other regulatory body exercising jurisdiction. 1.3 Facilities. It is expressly understood that each party will construct, reconstruct, own, operate and maintain such facilities on its system as are necessary to provide transmission and interconnection service to the other party as required through the interconnection points identified in Attachment A to this Agreement, as it may be amended from time to time, subject to the provisions of Article 3 below and the following conditions: (a) any facilities to be constructed or reconstructed shall satisfy the supplying Party's design criteria, or must be modified to satisfy those criteria, which criteria may be modified from time to time in accordance with good utilitypractice; and (b) all appropriate and necessary licenses and permits are secured from the regulatory bodies having jurisdiction. 1.4 Termination. This Agreement may be terminated at any time if both Central Vermont and Green Mountain agree to the termination. If there is no agreement to terminate, the Agreement will remain in full force and effect for a term of fifteen (15) years from the date that service is commenced as described in Article 1.1, or from such other date as provided for in accordance with this Agreement. Upon termination, nothing shall obligate the Parties to take said transmission or interconnection service or to provide said service. Notwithstanding the above, the receiving party at any interconnection point may elect to terminate service at that interconnection point upon six months written notice to the supplying party. In the event of such termination the receiving party shall, within 30 days of termination of service, reimburse the supplying party for any unrecovered Project Costs, as described in Article 2.2, with respect to that interconnection point, and shall have no further obligation to make payment pursuant to this Agreement with respect to the terminated interconnection point, assuming no service is taken. The parties shall modify Attachment A to reflect the termination of service at any interconnection point pursuant to this section. Once a party terminates service hereunder, that service may not be reinstated except with the consent of the supplying party or upon payment of all charges hereunder by the receiving party as if there had been no termination. Any cost to the supplying party resulting from the restoration of service after termination is a project cost hereunder which is the responsibility of the receiving party. With respect to Johnson Interconnection, service will be terminated on the effective date of the Transmission Contract between CVPS and the Northern Loop Companies. 1.5 Amendment. Nothing in this Agreement shall be construed as affecting either Party's right at any time to apply to the Federal Energy Regulatory Commission to amend their respective Transmission Charges (TC) described in Article 2.2 of this Agreement. Other provisions of this Agreement may be amended by the written agreement of the Parties. In the event that a Party exercises its right to seek to amend said Transmission Charge, the other Party shall be afforded the same rights concerning the change in rates as customers taking service pursuant to said rate. 1.6 Riqhts-of-Way. The obligations of the Parties are subject to and conditioned upon securing and retaining all rights-of-way, franchises, locations, permits and other rights and approvals necessary in order to permit service and or to construct, reconstruct or modify facilities required hereunder, including approval of this Agreement, and each party agrees to use its best efforts to secure and retain all such rights-of-way, franchises, permits and other rights and approvals throughout the pendency of this Agreement. 1.7 continuitY of Service. The Parties shall use their best efforts to provide service under this Agreement but shall not be responsible for any failure to supply service, nor for interruption, reversal of flow, or abnormal voltage of the supply, if such failure, interruption, reversal or abnormal voltage is without willful default or gross negligence. The Parties do not guarantee to deliver or transmit a constant supply of electricity hereunder and the supplying Party shall not be considered to be in default hereunder, and shall be excused from delivering and transmitting electricity hereunder, if and to the extent that it shall be prevented from doing so by storm, flood, lightning, earthquake, fire, explosion, equipment failure, civil disturbance, labor dispute, act of God or the public enemy, action of a court or public authority, or any other cause beyond that Party's reasonable control. Whenever the integrity of the supplying Party's System or the supply of electricity is threatened by conditions on that Party's System or on the systems with which it is directly or indirectly interconnected, or whenever it is necessary or desirable to aid in the restoration of service, the supplying Party may, in its reasonable judgment, curtail or interrupt electric service or reduce voltage to the receiving Party, and such curtailment, interruption or reduction shall not constitute willful default by the supplying Party. When the supplying Party interrupts or varies electric service to make repairs to or changes in its facilities, such action shall be taken upon reasonable notice to the receiving Party, or without notice in an emergency when such notification would be impracticable or would prolong a dangerous situation. The priority of the transmission service hereunder follows service by the supplying party to its retail and firm wholesale transmission customers and before any other customers, unless the receiving Party has declined to pay for needed facilities in Paragraph 3.1.C. For purposes of this section, firm wholesale transmission customers as to Central Vermont are those customers taking service under Tariffs R-3, R-12, RS-2 and the so-called Northern Loop customers, or any successor tariffs thereto. Interruption of service for reasons beyond the control of the supplying Party or for purposes of repair or restoration of the system as described above shall not relieve the receiving Party of its obligations to make payment under this Agreement. If, however, due to the supplying Party's failure to perform in accordance with good utility practice, facilities are unavailable or out of service, billings to the receiving Party shall be proportionately reduced for the duration of the outage. 1.8 Metering. The Parties agree to install and maintain metering, at the Point(s) of Interconnection and Delivery, capable of recording data in such detail as to calculate billing determinants under this Agreement. For existing interconnections at the date of this contract signing, existing metering shall be used. For any new interconnection the supplying company shall install and maintain metering as described herein. (a) Should metering be required by the supplying Party at a point or points other than the Point(s) of Interconnection and/or Delivery, the metering equipment shall be compensated to register values which would have been recorded if the equipment had been located at the Point of Interconnection or Delivery. (b) The accuracy of the metering equipment shall be verified by proper test and adjusted as close as practical to 100% accuracy at least once each year. The work of testing and adjusting any meter for accuracy shall be performed at the expense of the Supplying Party; provided that if the receiving Party shall request additional verification of the accuracy of any meter in any twelve (12) month period, and the meter proves to be accurate within two (2) percent up or down, the expense of such verification shall be borne by the receiving Party. The receiving Party shall be given the opportunity to witness the additional verification. (c) If such equipment is found to be inaccurate by more than two (2) percent up or down, the equipment shall be made accurate and the meter readings for the period of inaccuracy shall be adjusted to correct such inaccuracies as far as the same can be reasonably ascertained, but no adjustment prior to the beginning of the fourth preceding month shall be made except by agreement of the Parties. (d) In the event that the supplying Party's meters fail to register properly during any billing period, the demand and loss adjustments shall be estimated by the supplying Party based upon the best available data and such data shall be made available to the receiving Party upon request. (e) If requested by the supplying Party, the receiving Party agrees to supply, free of cost, at the Point(s) of Interconnection and/or Delivery or such other points, suitable location(s) for the installation of the supplying Party's metering equipment. Such location(s) shall be established by agreement between the Parties. (f) Upon request of any Party, metering records with respect to service provided hereunder shall be made available for inspection and pertinent summaries thereof shall be forwarded from time to time. 1.9 Use of Facilities. (a) The receiving Party shall exercise diligence to operate its electric system to maintain a power factor of not less than 90 percent (90%) lagging as measured on a monthly basis. Such power factor may be adjusted by mutual agreement or, failing mutual agreement, by rules as developed pursuant to the NEPOOL Agreement. (b) The receiving Party shall operate its Interconnections and/or Delivery Points in a manner as not to interfere with service to the supplying Party's other customers, and further shall balance the load on the various portions of its system so that the electric load at the Points of Interconnection and/or Delivery of the two systems will be as nearly equal as practical on each of the three phases with a load differential between the highest phase and the lowest phase not exceeding the ratio of 1:1.3. (c) The supplying Party reserves the right to establish an electric load limit through the Points of Interconnection and/or Delivery for voltage, amperage or other electrical characteristics for both normal and emergency operations in accordance with good utility practice. Should these limits be exceeded at any time, the supplying Party may, without penalty, interrupt its provision of service hereunder for the duration of the period that the load limit is exceeded. The supplying Party shall restore service when, in its sole judgment, it can reasonably provide electric service in a safe and reliable manner without effecting its deliveries to the supplying Party's customers. (d) With respect to each Interconnection and/or Delivery Point the Parties agrees to provide each year, on or before May 1st, an updated five (5) year forecast of the following information for said point(s): (i) their expected winter and summer peak loads including power factor; (ii) any and all completed, in progress, and/or expected changes to their sub-transmission systems; and (iii) any and all completed, in progress, and/or expected changes to their generation facilities. This information shall be provided so that the Parties may properly plan for required increases in the capacity of their respective systems. 1.10 Withdrawal of Facilities. At such time as the Parties' obligations under this Agreement terminate, the Parties may, at their sole independent discretion, terminate their Interconnections and/or Delivery Points with each other's facilities. Effective on the date of any such termination, the Parties shall have no further obligations under this Agreement with respect to the Interconnection and/or Delivery Point(s) or related facilities and shall have the right, but not the obligation, to dismantle and remove its related interconnection facilities. 1.11 Liability. Each Party shall indemnify and save the other harmless from and against all costs and damages by reason of bodily injury, death, or damage to property caused by or sustained on facilities it owns or controls as a result of performance under this Agreement. However, each Party shall be solely responsible for and shall bear: (i) all costs arising from any events resulting in bodily injury, death, or damage to property caused by the actions of its own employees, contractors, or agents no and to construct and maintain its lines and circuits in and at all places required by the supplying Party and owned, leased or controlled by the receiving Party as necessary to perform this Agreement. The receiving Party gives to the supplying Party the right for its duly authorized agents and employees to enter the premises of the receiving Party at all reasonable times for the purpose of reading meters, keeping in repair or removing its property, or inspecting its work incident to rendering service under this Agreement. 1.13 Billings and Payment. (a) All meters shall be read monthly and all bills rendered monthly by the supplying Party in such reasonable detail as the receiving Party may request. All monthly bills may be estimated, subject to correction by the supplying Party to adjust for changes in the Transmission Charge (TC) as may be allowed under its respective Federal Energy Regulatory Commission approved tariff for the provision of transmission service, as amended from time to time, and to correct from estimated values for all other billing determinants. Such adjustments shall be made annually. If a Party is unable to obtain the reading of a meter, it may estimate the reading. All bills shall be due and payable upon presentation. In the event of a dispute as to the amount of any bill, the disputing Party will notify the other Party of the amount in dispute and will pay the total bill including the disputed amount. In such event, the Parties shall use their best efforts to resolve such dispute within a reasonable amount of time not to exceed sixty (60) days from the date of such notice. The supplying Party shall refund, with simple interest at the rate described in paragraph (c), any portion of the disputed amount ultimately found to be improper. (b) No Party shall have the right to challenge the accuracy of any bill, invoice or statement, nor bring any court or administrative action of any kind questioning the accuracy of the same after a period of eighteen (18) months from the date it is rendered. In the case of a bill, invoice or statement containing estimates, the receiving Party shall not have the right to challenge its accuracy after a period of twelve (12) months from the date it is adjusted to reflect the actual amounts due. The receiving party's rights hereunder relate to the mathematical accuracy of the billing computations provided with the bill and the compliance of the rates and charges with this Agreement, and do not relate to the justness and reasonableness of the rates and charges or the cost of service data underlying them, which subjects are covered by Article 2.2. (c) When all or part of any bill shall remain unpaid for more than thirty (30) days from the mailing thereof, the receiving Party shall pay to the supplying Party simple interest at one-hundred-twenty (120) percent of the then prime rate offered by the Bank of Boston, its successors or assigns, with such interest to be computed on the unpaid amount from and after the thirtieth (3Oth) day from the date of the mailing of said bill until the date upon which the payment is received by the supplying Party. 1.14 Effect of Federal and State Laws. The obligations of the Parties hereunder are subject to any present and future federal and state laws, regulations, orders or other requirements duly promulgated; provided, however, that the Parties' obligation to provide service hereunder is expressly conditioned upon the receipt of necessary regulatory approvals for this Agreement in the form as executed. 1.15 Assignability. This Agreement shall inure to the benefit of, and shall bind, the successors of the Parties hereto but shall not be assignable without the prior written consent of the Parties; provided, however, that both Parties shall retain a unilateral right to assign this Agreement to an affiliate corporation. 1.16 Communications between the Parties. Except for bills or statements, any notice, demand or request provided for in this Agreement shall be deemed to be properly given or made, within three (3) business days of the date thereof, if set forth in writing and delivered or sent by certified mail, return receipt requested, postage prepaid to the Party at their principal offices as first described above or at such other location(s) as may be agreed to by the Parties in writing. For Central Vermont, attention: Senior Vice President - Engineering and Energy Supply Planning For Green Mountain, attention: Assistant Vice President for Operations and Maintenance. 1.17 Character of Service. Service under this Agreement shall be one of four types: A, B, C, or D. All such service will be furnished in the form of three-phase sixty-hertz alternating current at the nominal voltage for each Interconnection and/or Delivery Point as set forth on Attachment A. (a) "Type A" is described as transmission and interconnection service taken across any Interconnection and/or Delivery Point for periods greater than 168 hours in any calendar year. (b) "Type B" is described as transmission and interconnection service taken across any Interconnection and/or Delivery Point for over 96 hours up to and including 168 hours in any calendar year. (c) "Type C" is described as transmission and interconnection service taken across any Interconnection and/or Delivery Point for over 48 hours up to and including 96 hours in any calendar year. (d) "Type D" is described as transmission and interconnection service taken across any Interconnection and/or Delivery Point up to and including 48 hours in any calendar year. (d) The calculation of the rates for Types of Service A, B, C, and D are described in the Rate Provision of Article II, under Section 2.2. 1.18 CaPtions. The caption headings contained in this Agreement are provided for convenience and shall not be deemed to be a part of this Agreement. 1.19 Operating Procedures. All interconnected operations engaged in pursuant to this Agreement shall be conducted in accordance with such operating protocols and agreements as may be agreed to by the Parties from time to time. In accordance herewith, the Parties shall make such arrangements with the electric systems with which they are connected to assure adherence to said operating protocols and agreements. 1.20 Dispute Resolution. The Parties shall attempt in good faith to resolve between themselves any disputes that may arise hereunder. In the event that the Parties are unable to resolve any such dispute, the matter shall be immediately referred to the executives of the Parties who have authority to resolve the dispute. If these executives are unable to agree upon a solution within thirty (30) days, the Parties shall have recourse to mediation, arbitration, or other alternative dispute resolution device of their mutual selection. If the Parties cannot agree on an alternative dispute resolution device, arbitration shall be selected. Any arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association unless otherwise agreed upon. The award rendered by any arbitrator or resolution reached in any alternative dispute resolution proceeding shall, to the extent applicable law permits, be final and binding and judgment may be entered upon it in accordance with the applicable law in any court or regulatory body having jurisdiction thereof. 1.21 Severability. Should any clause, sentence or paragraph of this Agreement be judicially declared invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement unless said clause, sentence or paragraph shall go to the heart of this Agreement, and the Parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable, or void shall be deemed to have been stricken and the remainder shall have the same force and effect as if said part or parts had never been included 1.22 Entitlements. (a) "Entitlement" means the portion of the capability of a generating unit to which the purchaser is entitled as an owner (either solely or in common) or as a purchaser pursuant to a unit or system power contract, less any part thereof which the purchaser is selling pursuant to a unit or system power contract. (b) The purchaser may wheel Entitlements over a supplying Party's System without additional charge to the extent that the purchaser's Entitlement megawatt level is below that of the combined annual Customer Demand (CD) determined for all Interconnection and Delivery Points in accordance with Article 2.2 below. 1.23 New Interconnection Points. Any additional Interconnection and/or Delivery Points subsequently constructed between the Parties shall be deemed added to Attachment A and shall be subject to this Agreement. 1.24 Peak Demand Adjustments. Due to the nature of interconnected electrical systems, unusual circumstances outside of the control of the receiving Party may occur from time to time at the request of the supplying Party which will increase the amount of power provided by the supplying Party over firm Interconnection points. If such circumstances occur as the result of a request by the supplying Party, the receiving Party shall be held harmless of and from any and all costs which may arise hereunder and the Parties agree to exclude any demands thus arising from the calculation of peak demand pursuant to Article II hereof. Such requests may be made by the supplying Party orally however, they shall be followed up in writing as provided for in paragraph 1.16 above. ARTICLE II Rate Provisions 2.1 Monthly Charges. For each Interconnection/Delivery Point identified on Attachment A, the receiving Party shall pay to the supplying party the following monthly charges as described below: (a) A Demand Charge which is determined in accordance with Article 2.2; (b) A Customer Charge consisting of a direct assignment of regulatory commission expenses and related costs which can be identified as pertaining to the receiving Party in connection with service under this Agreement within the service year exclusive of any costs included in the calculation of the Reservation Demand pursuant to paragraph 2.2 below; (c) To the extent that the receiving party fails to maintain the power factor as described in paragraph 1.9, the supplying party may charge for KVAR of excess reactive demand determined by multiplying the excess reactive demand by the Supplying Party's rate for excess KVAR as set out in that Party's FERC approved transmission tariff as amended from time to time. At each Interconnection/Delivery Point, the excess reactive demand will be the difference between the peak recorded reactive demand (KVAR) and 50% of the peak recorded kilowatt (kW) demand during the billing month; (d) A Delivery Charge consisting of an assignment of the costs incurred by the supplying Party in operating and maintaining the Interconnection/Delivery Point(s) and other facilities developed or reconstructed in connection with the provision of service hereunder, including associated property taxes and allowance for working capital and in performing the metering and billing provided for in this Agreement; and (e) A Loss Adjustment charge consisting of all incremental losses incurred by the supplying Party in the provision of service hereunder. The supplying Party will determine the loss value based on the superimposition of electricity transmitted hereunder on other electricity flowing within that Party's System to supply its own loads and its obligations to others. The loss values may be adjusted by the supplying Party from time to time consistent with changes in its System losses as determined by that Party. Initial losses to be used are as per Attachment A. 2.2 Demand Charge Formula. The annual Demand Charge is calculated and pro-rated monthly in accordance with the following formula: Demand Charge = the receiving Party's Demand * Transmission Charge DC = CD * TC Where: Customer's Demand = the greater of Reservation Demand or the Actual Demand CD = the greater of RD or MD and Reservation Demand = (Project Cost * Annual Carrying Charge) divided by the Transmission Charge RD = (PC * AC) / TC Project Cost PC = the sum of all costs incurred by the supplying Party in the development of new facilities and/or reconstruction of facilities from time to time as required, and in pursuit of regulatory approvals as necessary for the supplying Party to provide service hereunder including, without implied limitation, in the case of Central Vermont and the Bennington Delivery Point all costs which are incurred in accordance with a certain Memorandum of Understanding, dated January 12, 1993, and entered into by and between the Parties. AC = The Annual Carrying Charge applicable to each investment made in accordance with the terms and conditions of this Agreement. = (i) * [(l+i)^n]/6[(l+i)^n]-l) i = The "Weighted Pre-tax Rate" calculated using the supplying Party's capital structure of Equity, Debt, and Preferred, and the FERC allowed pre-tax annual rates for Equity, Debt and Preferred, as determined: (a) for CV, in accordance with its FERC ELECTRIC TARIFF, Original Volume No. 3, as amended from time to time; and (b) for GMP, in accordance with Paragraph 3 of GMP's Transmission Contracts referred as FERC Schedules numbers 64, 68, 72 and 73 in FERC Docket No. ER 92-330-000 amended from time to time. n = The term which is the number of years from the commencement of service from the new facilities or reconstruction of facilities required pursuant to this Agreement (the "investment") to the completion of the term of this Agreement, as in effect at the time the decision to make the investment is made. To the extent that t he term of the Agreement is extended by mutual consent, the (n) value shall not be adjusted for existing investments. Any extended term for this Agreement, shall be used in determining the (n) value for investments made after the extension of said term. TC = As applicable, Central Vermont's transmission capacity charge as established in accordance with Article 2.2 of its FERC ELECTRIC TARIFF, Original Volume No. 3, as amended from time to time; or Green Mountain's transmission capacity charge as established in accordance with Paragraph 3 of GMP's Transmission Contracts referred as FERC Schedules numbers 64, 68, 72 and 73 in FERC Docket No. ER92-330-000 as amended from time to time. and Modified Demand (MD) = Is the product of the Actual Demand (AD) and the Demand Modifier (DM). MD = AD * DM Actual Demand (AD) = The receiving Party's peak electrical demand for the calendar year as metered for each Interconnection/Delivery point. For the calendar year in which service is first taken, the period for measuring peak demand shall be from the commencement of service through December 31 of that year. For billing purposes, peak electric demand shall estimated by the supplying Party annually based on the twelve months of the preceding calendar year. For the initial year of the Agreement, these estimated demand values are identified on Attachment A. A true-up will be done at the end of each year and reflected, with interest, in the January billing of the following year. Demand Modifier (DM) = For Type A Service the DM shall be 100%. For Type B Service the DM shall be 75%. For Type C Service the DM shall be 50~. For Type D the DM shall be 0%. 2.3 Remedies. If any bill remains unpaid for more than sixty (60) days, upon providing such Party with thirty (30) days written notice and opportunity to cure the default, the supplying Party may suspend its provision of service hereunder until full payment has been made of all amounts due. The foregoing remedy shall not be deemed to be a waiver of any other remedies to which either party is legally entitled. ARTICLE III Contingencies and Options 3.1 Contingencies. (a) Periodically as agreed to by the Parties, but at least within five (5) years from the date that service is first provided hereunder, each Party shall perform and the other shall pay for a study to determine if additional facilities are required in order to allow for flows across the Interconnection and Delivery Points identified on Attachment A. If the studiesdemonstrate that flows are materially greater than can reliably be served with existing facilities at any Interconnection or Delivery Point, the supplying Party shall determine what additional facilities or modification to existing facilities must be developed in order to provide for continued service hereunder. (b) Any facility modifications or additions shall be the responsibility of the supplying Party and that Party shall make and pay for such facility additions or modifications subject to the terms of paragraph (c) of this Section. (c) The results of said studies and notice of the supplying Party's intent to develop additional facilities shall be provided to the receiving Party at its address as first described above. If the receiving Party notifies the supplying Party within six (6) month of the date of said notice that it does not desire that the additional facilities be developed or modification to existing facilities be performed, the supplying Party's recommendations shall be deemed to have been rejected. In such event, the supplying Party shall continue to provide service throughout the remainder of the term of this Agreement or until the receiving Party elects to terminate service at the Interconnection Point pursuant to Section 1.4., provided, however, that such service shall be provided only to the extent that the Party has the capability to do so. Should capability not be available at any time throughout the remainder of the Agreement, said service may be interrupted by the supplying Party during those times without penalty. Nothing in this section shall relieve the receiving Party of its obligation to make payments as provided for in this Agreement and no adjustment in the rate shall be made on account of the interruptions in said service . (d) If the receiving Party does not reject the supplying Party's recommendations, the supplying Party shall construct, reconstruct, own, operate and maintain such additional facilities, or make modifications to such existing facilities, as are necessary for the continued provision of service as determined by the studies. The supplying Party's duty to develop said additional facilities, or modify its existing facilities, shall be subject to its receipt of all necessary approvals of regulatory bodies of competent jurisdiction. Should the supplying Party fail to obtain said approvals, said service may be interrupted by the supplying Party without penalty. Nothing in this section shall relieve the receiving Party of its obligation to make payments as provided for in this Agreement and no adjustment in the rate shall be made on account of the interruptions in said service. (e) Unless otherwise provided for herein, the full cost incurred in the performance of said studies and in the development of such additional facilities, or modification to existing facilities, as are required to provide the service contemplated by this Agreement shall be deemed to be Project Costs (PC) within the meaning of the Reservation Demand (RD) formula described in Article 2.2. Once such costs are incurred by the supplying Party, said Reservation Demand (RD) shall be adjusted by including the additional Project Costs (PC) and amending the Annual Carrying Charge (AC) such that the full costs of these additional facilities and studies are recovered by the supplying Party in the remaining term of this Agreement. (f) Nothing in this section shall obligate the supplying Party to pay wheeling charges to third parties, without equal compensation from the receiving Party, for wheeling by third Parties or for use of their facilities in the provision of service to the receiving Party. 3.2 Options. Extend no build. (a) When each supplying Party conducts the studies described in Article 3.1(a), it shall determine if and to what extent it can provide service to the receiving Party for a term greater than that provided for by this Agreement. Should the supplying Party determine that it has the capability to continue service pursuant to this Agreement for a term materially greater than that provided for in Article 1.1, the Party will offer to extend the term, by a writing sent to the receiving Party at its address as first described above. Such offer shall be made on terms agreeable to the supplying Party. If the receiving Party notifies the supplying Party within six (6) months of the date of said notice that it does not desire to extend the term as offered, the supplying Party's offer shall be deemed to have been rejected. If the receiving Party fails to notify the supplying Party within six (6) months, or if the receiving Party accepts the offer, the receiving Party shall be deemed to have agreed to an extension of the term of this Agreement and the Agreement's term shall be extended accordingly. (b) Extend, build. When a supplying Party conducts a study as described in Article 3.1(b), that Party may, at its sole discretion, propose to develop additional facilities which would allow for the continuation of service to the receiving Party pursuant to this Agreement for a term greater than that provided for in Article 1.1, and shall so notice the receiving Party. If the receiving Party notifies the supplying Party within six (6) month of the date of said notice that it does not desire to extend the term as offered, the offer shall be deemed to have been rejected. If the receiving Party fails to notify the supplying Party within six (6) months, or if the receiving Party accepts the offer, the receiving Party shall be deemed to have agreed to an extension of the term of this Agreement and the Agreement's term shall be extended accordingly. The full cost incurred in the development of such additional facilities as are required to provide the service for the additional term shall be deemed to be Project Costs (PC) within the meaning of the Reservation Demand (RD) formula described in Article 2.2. Once such costs are incurred by the supplying Party, said Reservation Demand (RD) shall be adjusted by including the additional Project Costs (PC) and amending the Annual Carrying Charge (AC) such that the full cost of these additional facilities are recovered by the supplying Party in the remaining term of this Agreement as amended. ACKNOWLEDGMENT OF ARBITRATION The Parties hereto understand that this Agreement contains an agreement to arbitrate. After signing this document, the Parties understand that, to the extent the law permits, they will not be able to bring a law suit concerning any dispute that may arise which is covered by the arbitration agreement, unless the dispute involves a question of constitutional or civil rights. Instead the Parties agree to submit any such dispute to an impartial arbitrator. THIS AGREEMENT made at Rutland, Vermont. CENTRAL VERNONT PUBLIC SERVICE CORPORATION /s/ Marc Schaefer Director, Power Supply GREEN MOUNTAIN POWER CORPORATION /s/ Craig T. Myotte Asst. Vice President ATTACHMENT A INTERCONNECTION AND/OR DELIVERY POINTS Location Type Supplier Purchaser Nominal Estimated Loss Estimated Service Voltage Demand Factor Reservation (KV) (KW) % Demand (MW) Vergennes A GMP CVPS 46 3,000 .50 0 Vergennes A CVPS GMP 46 10,000 .75 0 Wilder A CVPS GMP 46 10,000 .20 0 Ryegate A GMP CVPS 35 10,000 .50 0 Bennington D CVPS GMP 69 0 1.05 0 Vernon D CVPS GMP 69 0 6.53 0 Vernon D GMP CVPS 69 0 6.53 0 Johnson D CVPS GMP 35 0 5.5 summer 0 8.0 winter TWENTY-NINTH AGREEMENT AMENDING 10.16.24 NEW ENGLAND POWER POOL AGREEMENT THIS AGREEMENT, dated as of the 1st day of May, 1993 is entered into by the signatories hereto for the amendment by them of the New England Power Pool Agreement dated as of September 1, 1971 (the "NEPOOL Agreement"), as previously amended by twenty-eight (28) amendments, the most recent of which was dated as of September 15, 1992. WHEREAS, Participant generation resources, other than hydroelectric units, whose annual hours of operation are restricted by regulatory requirements, contract terms or engineering or operating constraints, may require treatment different from that otherwise provided in the NEPOOL Agreement for Capability Responsibility and energy billing purposes; and WHEREAS, the signatory Participants have determined to amend the NEPOOL Agreement in the manner specified below in order to provide for a modified Capability Responsibility and energy billing treatment for restricted generation resources. NOW THEREFORE, the signatories hereby agree as follows: SECTION I TEXT OF AMENDMENTS A. Amendment of Section 9.2(b)(2) Section 9.2(b)(2) of the NEPOOL Agreement is amended by inserting the following additional provisions immediately following the present final paragraph of Section 9.2(b)(2): The New Unit Adjustment Factor for any Restricted Unit for which proposed plans were submitted subsequent to November 1, 1990 for review pursuant to Section 10.4 (or, in the case of a unit with a rated capacity of less than 5MW, for which notification was first given to NEPOOL subsequent to November 1, 1990) and for the Peabody Municipal Light Plant's Waters River #2 unit shall be determined in accordance with the formula previously specified in this Section 9.2(b)(2), modified as follows: n = K1(c-C) + K2(f-F) + K3(m-M) + K4(d-D) + K5(f-F)c2 + K6(2500-a) The symbols used in the above formula, as modified, shall have the meanings previously specified, except that the symbols "K6" and "a" shall have the following meanings: K6 is a scaling factor of 0.0001. a is as follows: for units with more than 2500 annual hours available for operation, "a" = 2500, for units with annual hours available for operation between 500 and 2500, inclusive, "a" = annual hours available for operation, and for units with annual hours available for operation less than 500 hours, "a" = -7500; provided, however, that a Participant may elect to avoid, in whole or part, the effect on its Capability Responsibility of a Restricted Unit's availability being limited to 2500 hours or less a year by agreeing to leave unfilled a portion of its dispatchable load allocation in accordance with rules to be adopted by the Operations Committee. B. Amendment of Section 12.6 The first two sentences of Section 12.6 of the NEPOOL Agreement are amended to read as follows: If pursuant to Section 12.5A, a Participant is deemed to have received energy service in any hour when the Participant (i) had Entitlements in one or more generating units which were available for service but were not scheduled for operation by NEPEX at their full available Reserve Capability (or, to the extent applicable, at their full available Temporary Reserve Capability) and which, in the case of any Restricted Unit, had an unused portion of an available Restricted Unit Operational Allowance and/or (ii) had Scheduled Outage Service Entitlements, the Participant shall be deemed to have received Economy Flow Service and/or Scheduled Outage Service in an amount equal to the lesser of: (a) the amount of energy service the Participant is deemed to have received pursuant to Section 12.5A, or (b) the amount of energy service which could have been provided from its share of (1) the unused portion of the available Reserve or Temporary Reserve Capabilities of the units described in (i) above, as limited in the case of any Restricted Unit by the unused portion of its available Restricted Unit Operational Allowance, plus (2) its Scheduled Outage Service Entitlements. Economy Flow Service is service which a Participant is deemed to receive at any time to replace service which it could have provided at the time from units described in (i) above, and the amount of Economy Flow Service which it is deemed to receive at the time shall not exceed the amount of energy service which could have been provided from its share of the unused portions of the available Reserve Capabilities (or, to the extent applicable, the unused portion of the available Temporary Reserve Capabilities or the unused portion of the available Restricted Unit Operational Allowances, whichever is controlling) of such units. C. Addition of Definitions of "Restricted Unit" and "Restricted Unit Operational Allowance". The NEPOOL Agreement is amended by adding the following definitions following the definition of "Reserve Savings Shares" in Section 15.37A: 15.37B. Restricted Unit is a generating unit, other than a hydroelectric unit, that is restricted in annual hours available for operation by regulatory requirements, contract terms or actual engineering or operating constraints. Planned or forced outages due to maintenance requirements are not considered restrictions in annual hours available for operation. 15.37C. Restricted Unit Operational Allowance ("Allowance") for a Participant's Entitlement in a Restricted Unit for any calendar year (or for the term of the Entitlement in any year, if such term is for a shorter period than the year) is the number of hours for which the Restricted Unit is available for operation during the year or such shorter period, whichever is applicable. The Allowance for a Participant's Entitlement in a Restricted Unit for any year or shorter period shall be deemed to be exhausted when (i) the number of hours that the Operations Committee determines the Participant would have used its Restricted Unit Entitlement to minimize the Participant's overall energy costs in the absence of NEPEX dispatch, plus (ii) the number of hours that the Participant is deemed to receive Scheduled Outage Service with respect to its Entitlement in the Restricted Unit during the year or such shorter period pursuant to Section 12.6, equals the Allowance. D. Modification of Definition of "Scheduled Outage Service Entitlement". The definition of "Scheduled Outage Service Entitlement" in Section 15.38B of the NEPOOL Agreement is amended to read as follows: 15 . 38B Scheduled Outage Service Entitlement of a Participant is the amount of Scheduled Outage Service which the Participant is entitled to receive in any hour with respect to a generating unit which is scheduled by the Operations Committee to be out of service, in whole or in part, for maintenance during a period approved for it by the Operations Committee for Scheduled Outage Service and is in fact out of service, in whole or in part, for any reason during the approved period. Such amount is equal to the lesser of (i) the portion of the Participant's share of the Reserve Capability of such unit which is unavailable for service times an estimated average availability of such unit between its periodic scheduled outages or (ii) in the case of any generating unit with a currently applicable Temporary Reserve Capability, the portion of the Participant's share of the Temporary Reserve Capability which is unavailable for service; provided, however, that (a) in the case of any Limited Fuel Unit, the amount of a Participant's Scheduled Outage Service Entitlement shall be reduced, if appropriate, to take account of any limit on the availability of stream flow or fuel to operate the unit during the outage period, and (b) in the case of any Restricted Unit, the Participant's Scheduled Outage Service Entitlement shall be limited to the unused portion, if any, of its currently available Restricted Unit Operational Allowance for the unit. The Operations Committee shall develop rules for establishing the estimated average availability of each unit between scheduled outages. Such rules shall become effective upon approval by the Management Committee. SECTION II EFFECTIVENESS OF AGREEMENT Following its execution by the requisite number of Participants, this Agreement, and the amendments provided for above, shall become effective on August 1, 1993, or on such later date as the Federal Energy Regulatory Commission shall provide that such amendment shall become effective. SECTION III USAGE OF DEFINED TERMS The usage in this Agreement of terms which are defined in the NEPOOL Agreement shall be deemed to be in accordance with the definitions thereof in the NEPOOL Agreement. SECTION IV COUNTERPARTS This Agreement may be executed in any number of counterparts and each executed counterpart shall have the same force and effect as an original instrument and as if all the parties to all the counterparts had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereof, and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. IN WITNESS WHEREOF, each of the signatories has caused a counterpart signature page to be executed by its duly authorized representative, as of the 1st day of May, 1993. COUNTERPART SIGNATURE PAGE TO TWENTY-NINTH AGREEMENT AMENDING NEW ENGLAND POWER POOL AGREEMENT DATED AS OF MAY 1, 1993 The NEPOOL Agreement, being dated as of September 1, 1971, and being previously amended by twenty-eight (28) amendments, the most recent prior amendment being an amendment dated as of September 15, 1992. By: Robert de R. Stein Name: Senior Vice President Title: Engineering & Energy Resources Address: Central Vermont Public Service Corp. 77 Grove St. Rutland, VT 05701 CONFORMED COPY COUNTERPART SIGNATURE PAGE TO TWENTY-NINTH AGREEMENT AMENDING NEW ENGLAND POWER POOL AGREEMENT DATED AS OF MAY 1, 1993 The NEPOOL Agreement, being dated as of September 1, 1971, and being previously amended by twenty-eight (28) amendments, the most recent prior amendment being an amendment dated as of September 15, 1992. Ashburnham Municipal Light Department By: /s/ Robert W. Gould Manager 86 Central Street P.O. Box 823 Ashburnham, MA 01430 Bangor Hydro-Electric Company By: /s/ Carroll R. Lee Vice President, Operations 33 State Street P.O. Box 932 Bangor, ME 04402-0932 Boston Edison Company By: /s/ B.W. Reznicek Chairman, President and Chief Executive Officer 800 Boylston Street Boston, MA 02199 Boylston Municipal Light Department By: /s/ H. Bradford White Jr. Manager Tivnan Road, P.O. Box 560 Boylston, MA 01505 Braintree Electric Light Department By: /s/ Walter R. McGrath General Manager 44 Allen Street Braintree, MA 02184 Central Maine Power Company By: /s/ Donald F. Kelly Senior Vice President Edison Drive Augusta, ME 04336 Commonwealth Electric Company By: /s/ James J. Keane Vice President - Power Supply and Transmission 2421 Cranberry Highway Wareham, MA 02571 Concord Municipal Light Plant By: /s/ Daniel J. Sack Superintendent 135 Keyes Road Concord, MA 01742 Connecticut Municipal Electric Energy Cooperative By: /s/ Maurice R. Scully Executive Director 30 Stott Avenue Norwich, CT 06360 Eastern Utilities Associates By: /s/ Donald G. Pardus Chairman/CEO P.O. Box 2333 Boston, MA 02107 Fitchburg Gas and Electric Light Company By: /s/ David K. Foote Senior Vice President 216 Epping Road Exeter, NH 03833 Georgetown Municipal Light Department By: /s/ Edward Stanley Manager Moulton and West Main Streets Georgetown, MA 01833 Groton Electric Light Department By: /s/ Roger H. Beeltje Manager P.O. Box 679 Groton, MA 01450 Hingham Municipal Lighting Plant By: /s/ Joseph R. Spadea. Jr. General Manager 19 Elm Street Hingham, MA 02043 Holden Municipal Light Department By: /s/ Edla Ann Bloom Director 94 Reservoir Street Holden, MA 01520 Holyoke Gas & Electric Department By: /s/ George E. Leary Manager 70 Suffolk Street Holyoke, MA 01040 Littleton Electric Light and Water Department By: /s/ Curtis J. Lanciani General Manager 39 Ayer Road Littleton, MA 01460 Marblehead Municipal Light Department By: /s/ Richard L. Bailey General Manager 80 Commercial Street, Box 369 Marblehead, MA 01945 Middleborough Gas & Electric Department By: /s/ John W. Dunfey General Manager 32 South Main Street Middleboro, MA 02346 Middleton Municipal Electric Department By: /s/ William E. Kelley Interim Manager 197 North Main Street Middleton, MA 01949 New England Electric System By: /s/ Jeffrey D. Tranen Vice President 25 Research Drive Westborough, MA 01582 Northeast Utilities Companies The Connecticut Light and Power Company By: /s/ Bernard M. Fox President and Chief Operating Officer P.O. Box 270 Hartford, CT 06141-0270 Western Massachusetts Electric Company By: /s/ Bernard M. Fox President and Chief Operating Officer P.O. Box 270 Hartford, CT 06141-0270 Holyoke Water Power Company By: /s/ Bernard M. Fox President and Chief Operating Officer P.O. Box 270 Hartford, CT 06141-0270 Holyoke Power and Electric Company By: /s/ Bernard M. Fox President and Chief Operating Officer P.O. Box 270 Hartford, CT 06141-0270 Public Service Company of New Hampshire By: /s/ W. T. Frain. Jr. Senior Vice President 1000 Elm Street Manchester, NH 03105 Pascoag Fire District By: /s/ Thomas J. Beauregard Chairman P.O. Box 107 Pascoag, Rhode Island 02859 Paxton Light Department By: /s/ Harold L. Smith Manager 578 Pleasant Street Paxton, MA 01612 Princeton Municipal Light Department By: /s/ Sharon A. Staz General Manager P.O. Box 247 Princeton, MA 01541-0247 Rowley Municipal Lighting Plant By: /s/ G. Robert Merry Manager 47 Summer Street Rowley, MA 01969 Shrewsbury's Electric Light Plant By: /s/ Thomas R. Josie General Manager 100 Maple Avenue Shrewsbury, MA 01545 Town of South Hadley Electric Light Department By: /s/ Wayne D. Doerpholz Manager 85 Main Street South Hadley, MA 01075 Taunton Municipal Lighting Plant By: /s/ Joseph M. Blain General Manager P.O. Box 870 Taunton, MA 02780 Templeton Municipal Light Plant By: /s/ Gerald Skelton Manager/Engineer 2 School Street Baldwinville, MA 01436 The United Illuminating Company By: /s/ Richard J. Grossi Chairman and Chief Executive Officer 157 Church Street New Haven, CT 06506-0901 UNITIL Power Corporation By: /s/ David K. Foote Senior Vice President 216 Epping Road Exeter, NH 03833 Vermont Electric Power Company, Inc. By: /s/ Richard W. Mallary President P.O. Box 548 Rutland, VT 05702-0548 Central Vermont Public Service Corporation By: /s/ Robert de R. Stein Senior Vice President- Engineering & Energy Resources 77 Grove Street Rutland, VT 05701 Franklin Electric Light Company By: /s/ Hugh H. Gates President P.O. Box 96 Franklin, VT 05457 Green Mountain Power Corporation By: /s/ John V. Cleary President & Chief Executive Officer P.O. Box 850 South Burlington, VT 05402 Vermont Marble Power Division of OMYA, Inc. By: /s/ John M. Mitchell Executive Vice President 61 Main Street Proctor, VT 05765 Village of Jacksonville By: /s/ Earle S. Holland President Board of Trustees P.O. Box 73 Jacksonville, VT 05342 Village of Ludlow Electric Light Department By: /s/ Donald Ellison Chairman, Board of Commissioners P.O. Box 289 Ludlow, VT 05149 Village of Morrisville Water and Light Department By: /s/ James C. Fox Superintendent P.O. Box 325 Morrisville, VT 05661-0325 Village of Northfield Electric Department By: /s/ Kevin O'Donnell Municipal Manager 26 South Main Street Northfield, VT 05663 Readsboro Electric By: /s/ Annette Caruso Clerk P.O. Box 247 Readsboro, VT 05350 Wakefield Municipal Light Department By: /s/ William J. Wallace General Manager 9 Albion Street Wakefield, MA 01880 Westfield Gas & Electric Light Department By: /s/ Daniel Golubek General Manager 100 Elm Street Westfield, MA 01085 THIRTIETH AGREEMENT AMENDING 10.16.25 NEW ENGLAND POWER POOL AGREEMENT THIS AGREEMENT, dated as of the 1st day of June, 1993 is entered into by the signatories hereto for the amendment by them of the New England Power Pool Agreement dated as of September 1, 1971 (the "NEPOOL Agreement"), as previously amended by twenty- eight (28) amendments, the most recent of which was dated as of September 15, 1992, and as proposed to be amended by a pending twenty-ninth amendment dated as of May 1, 1993. WHEREAS, the signatory Participants propose to amend the provisions on NEPOOL planning in the NEPOOL Agreement, and to provide for new categories of Pool-Planned Facilities and Pool- Planned Purchases and to couple this with a change in the definition of Pool-Planned Unit to reference only existing Units; and WHEREAS, the proposed amendments are intended, among other things, to facilitate the use of revenue bond financing by Participants which are Massachusetts municipal utilities, and to avoid in the future controversies over criteria for the designation of Pool-Planned Units. NOW THEREFORE, the signatories hereby agree as follows: SECTION I AMENDMENTS Section 1. Amendment of Section 7.12 Section 7.12(j) is amended to read as follows: (j) coordinating the review of proposed plans of Participants pursuant to Sections 10.1, 10.4 and 11.1 and coordinating the submission of recommendations to the Management Committee regarding such proposed plans; Section 7.12 is further amended by deleting the "and" at the end of Subsection (i) and by adding the following new Subsections at the end of the Section: (1 ) (m) (k) to the extent appropriate, enabling the planning and installation of reliable and economical bulk power supply and related facilities of NEPOOL by establishing reasonable criteria, guidelines and methods relating to the appropriate provisions for integrated bulk power supply planning and related facilities on behalf of all the NEPOOL Participants; preparing forecasts of the aggregate coincidental Adjusted Load of the Participants and of the Annual and Monthly Peaks and the Adjusted Annual and Monthly Peaks of each of the Participants for use by the Management Committee in estimating "C"and "E" for purposes of Section 9.2(a); and coordinating with neighboring pools, non-Participants and the regional reliability council on matters of regional planning and regional reliability. Section 2. Amendment of Section 9.4(a) Section 9.4(a) is amended to read as follows: (a) At the conclusion of each Capability Period, the Operations Committee shall determine whether each Participant has satisfied its Capability Responsibility obligation for each month during such Capability Period. If the minimum monthly System Capability of a Participant during a month was less than its Capability Responsibility, the number of Kilowatts of its deficiency shall be computed and the Participant shall pay a Capability Responsibility adjustment charge for the month computed at the rate prescribed by Section 9.4(b). For purposes of Sections 9.4(a) and 9.4(d), the minimum monthly System Capability of a Participant for a month during a Capability Period is equal to the sum of (i) the Participant's lowest System Capability (as determined without taking into account any Entitlements in Pool-Planned Facilities initially placed in commercial operation during the Capability Period) for any day during the month, plus (ii) for each Pool-Planned Facility initially placed in commercial operation during the Period on or prior to the first day of the third month of the Period, one-sixth of (A) the amount of the Participant's Entitlement, if any, in such Facility times (B) the number of full months during such period that such Facility was in commercial operation, subject to the right of the Participant to elect, by written notice received by the chairman of the Operations Committee prior to the end of the Period, not to receive credit under this clause (ii), plus (iii) for each Pool-Planned Facility initially placed in commercial operation during the period on or prior to the first day of the month and for which no credit was given under clause (ii), the amount of the Participant's Entitlement, if any, in such Facility. Retirements made on the last day of any month shall not be deducted from System Capability for that month. Section 3. Amendment of Section 10.1 Section 10.1 is amended to read as follows: 10.1 Recommendation of Additional Facilities The Management Committee shall periodically review the need for, and shall recommend, additions to and changes in generating and transmission facilities of the Participants, or sales to or purchases of power from Non-Participants, to meet the reliability standards established by it pursuant to Section 5.13 and the other objectives of NEPOOL. In making its review and recommendations, the Management Committee shall give due consideration to (i) reports of the Policy Planning Committee as to any alternatives proposed by the Policy Planning Committee, and (ii) such other matters as the Management Committee deems pertinent. The Management Committee shall specify the type, range of capacity, target date for initial commercial operation and other appropriate characteristics of recommended facilities. At least once every three years the Management Committee shall adopt a ten-year NEPOOL expansion plan specifying the type and timing of additional generating units, PTF facilities and other resources recommended for commercial operation during the period of the expansion plan. The Management Committee shall also periodically review the need for, and shall recommend, arrangements to meet the reliability standards established by it pursuant to Section 5.13 and the other objectives of NEPOOL, under which Participants, affiliates of Participants or other persons may effect additions to and changes in generating and transmission facilities for use by Participants. Any such facilities shall be eligible for designation as Pool-Planned Facilities under Section 11.1. Section 4. Amendment of Section 10.6 Section 10.6 is amended to read as follows: 10.6 Increase in Reserves Because of Non-NEPOOL Planned Unit or Facility If a Participant has at any time an Entitlement in a generating unit placed in commercial operation after October 31, 1975, which is not a Pool-Planned Unit or a Pool-Planned Facility and with respect to which no significant firm commitments to manufacturers or constructors were made on or before November 1, 1971, and as a result of the character, size or operation of such unit NEPOOL reserves are required to be increased, such Participant shall be responsible for providing (at its expense and, if more than one Participant has an Entitlement in the unit, in proportion to its Entitlement in such unit) the required additional NEPOOL reserves for so long as, and to the extent that, such increase is required by reason of such unit, or until such unit is accepted by the Management Committee as a Pool-Planned Unit or a Pool-Planned Facility; provided that such Entitlement shall be included in the Participant's System Capability for Capability Responsibility purposes. Section 5. Amendment of Section 11.1 Section 11.1 is amended to read as follows: 11.1 Pool Access Objectives; Designation of Pool-Planned Facilities or Purchases It is an objective of NEPOOL that each Participant shall have an appropriate opportunityto meet its Capability Responsibility from Pool- Planned Facilities. It is recognized that in the past Participants have satisfied their generating needs in various ways, as sole or joint owners of generating units, as joint owners of interests in generating companies, as purchasers from other Participants or Non-Participants under Unit Contracts or as wholesale customers, although some smaller Participants have indicated a desire to change their mode of participation in the future by ceasing to be wholesale customers in whole or part. It is anticipated that such smaller Participants and their suppliers will work out individual arrangements covering the phase-out of present contracts and that in many cases this may best be accomplished over a five-to-ten year period. Furthermore, Participants have participated in transmission facilities as sole owners, as joint owners of interests in transmission companies, or by entering into joint long-term support arrangements, and it is expected that this diversity will continue in the future because of the varying situations of the Participants. Many of the joint arrangements have been arranged or facilitated by NEPOOL action, and it is a continuing objective of NEPOOL to facilitate, in appropriate circumstances, joint generation and transmission arrangements through the designation of Pool-Planned Facilities and Pool-Planned Purchases. A Participant which proposes, or whose affiliate proposes, a joint arrangement for the installation with other Participants of an additional generating unit rated 25 MW (gross) or above or a transmission facility rated 69 kV or above, or for a purchase jointly with other Participants of a Unit Contract Entitlement from a Non-Participant may submit, in such form, manner and detail as the Management Committee or the Policy Planning Committee may reasonably prescribe, a request to the Management Committee to designate the generating unit or the transmission facility as a Pool-Planned Facility or the purchase as a Pool-Planned Purchase, as the case may be. If the request relates to an additional generating unit or transmission facility to be installed by the Participant or its affiliate, the request shall be submitted at or before the time the Participant's plan for the facility is submitted pursuant to Section 10.4. It shall be a condition to the granting of the requested Pool-Planned status for a generating unit or purchase that the share of the unit or purchase which the Participant proposes to make available for joint participation be at least a 25~ share and that it be offered first to all other Participants on a fair and nondiscriminatory basis, before any offering is made to Non-Participants. The Policy Planning Committee shall review the Participant's proposal to determine its consistency with NEPOOL objectives and shall report the results of its review to the Management Committee. If the Management Committee determines, on the basis of the Policy Planning Committee's report and such other information as the Management Committee deems appropriate, that the proposal is consistent with NEPOOL objectives and that the Participant has made the offer of joint participation contemplated by this Section, if required, (whether or not such offer has been accepted by one or more other Participants), it shall designate the proposed generating unit or transmission facility as a pool-Planned Facility, or shall designate the purchase as a Pool-Planned Purchase, as the case may be. Provided the Participant has offered at least 25 of the capacity to other Participants through joint ownership or unit contract participation, the Management Committee may not unreasonably withhold designation as a Pool-Planned Facility of a generating unit proposed to be constructed by one or more Participants in order to satisfy their anticipated Capability Responsibilities and/or to provide an appropriate mix of their generating capabilities if the needs of such Participants in these regards have not been satisfied from other units or facilities designated as Pool-Planned on a basis consistent with the following objectives: (a) Each Participant should have a reasonable opportunity to satisfy its load over some reasonable time period with a mix of generation reasonably comparable as to economics and types to that being developed for New England. (b) No Participant should be required to subject itself to an excessively disproportionate exposure to backup power costs or reserve obligations as a result of having to take any Entitlement which is excessively follows: disproportionately large as compared to the Participant's size, or as the result, during any sustained period, of having to take a disproportionate portion of its capacity from immature units. (c) No Participant which has maintained an integrated system in the past should be required to impair the attractiveness of its securities in the capital markets by making unreasonably large capital investments in new generation or by becoming dependent upon other Participants for a substantially disproportionate amount of its System Capability. Section 6. Amendment of Section 15.33 Section 15.33 is amended to read as follows: Pool-Planned Unit is one of the following units: New Haven Harbor Unit 1 (Coke Works), Mystic Unit 7, Canal Unit 2, Potter Unit 2, Wyman Unit 4, Stony Brook Units 1, lA, lB, lC, 2A and 2B, Millstone Unit 3, Seabrook Unit 1 and Waters River Unit 2 (to the extent of 7 megawatts of its Summer Capability and 12 megawatts of its Winter Capability). Section 7. Addition of New Section 15.33A The Agreement is amended by adding new Section 15.33A as 15.33A Pool-Planned Facility and Pool-Planned Purchase are, respectively, (a)(i) a generating unit or transmission facility designated as a "Pool-Planned Facility" pursuant to Section 11.1 or (ii) which was designated as a "Pool-Planned facility" pursuant to Section 10.1 prior to January 1, 1993, and (b) a purchase from a Non-Participant designated by the Management Committee as a "Pool-Planned Purchase" pursuant to Section 11.1; provided that a "Pool-Planned Purchase" will not be entitled to transfer rights under Section 13.2(c), but Section 13.2(c) shall continue to be effective as to existing and new purchases from Hydro-Quebec utilizing the HQ Interconnection. SECTION II Following its execution by the requisite number of Participants, this Agreement, and the amendments provided for above, shall become effective on September 30, 1993, or on such later date as the Federal Energy Regulatory Commission shall provide that such amendment shall become effective. SECTION III USAGE OF DEFINED TERMS The usage in this Agreement of terms which are defined in the NEPOOL Agreement shall be deemed to be in accordance with the definitions thereof in the NEPOOL Agreement. SECTION IV COUNTERPARTS This Agreement may be executed in any number of counterparts and each executed counterpart shall have the same force and effect as an original instrument and as if all the parties to all the counterparts had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereof, and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. IN WITNESS WHEREOF, each of the signatories has caused a counterpart signature page to be executed by its duly authorized representative, as of the 1st day of June, 1993. COUNTERPART SIGNATURE PAGE TO THIRTIETH AGREEMENT AMENDING NEW ENGLAND POWER POOL AGREEMENT DATED AS OF JUNE 1, 1993 The NEPOOL Agreement, being dated as of September 1, 1971, and being previously amended by twenty-eight (28) amendments (with a pending twenty-nine (29) amendment dated as of May 1, 1993), the most recent prior amendment which has become effective being an amendment dated as of September 15, 1992. Name: Title: Address COUNTERPART SIGNATURE PAGE TO THIRTIETH AGREEMENT AMENDING NEW ENGLAND POWER POOL AGREEMENT DATED AS OF JUNE 1, 1993 The NEPOOL Agreement, being dated as of September l, 1971, and being previously amended by twenty-eight (28) amendments (with a pending twenty-nine (29) amendment dated as of May 1, 1993), the most recent prior amendment which has become effective being an amendment dated as of September 15, 1992. /s/ Robert de R. Stein Robert de R. Stein CENTRAL VERMONT PUBLIC SERVICE CORP. Title: Senior Vice President - Engineering Address: 77 Grove St. Rutland, VT 05701 10.63.1 OPERATING COMMITTEE VERMONT JOINT OWNERS - HYDRO-QUEBEC OPERATING AGREEMENT No. VJO-HQ-93-01 TERTIARY ENERGY (hereinafter, the "Agreement") RENEWAL OF VJO-HQ-92-02 Whereas "Tertiary Energy" is defined in Supplement III of the Interconnection Agreement between HYDRO-QUEBEC and the VERMONT JOINT OWNERS dated February 23, 1987 (hereinafter the "Interconnection Agreement") as energy which is not otherwise covered in the Interconnection Agreement or in any other agreement between the parties, and which can be supplied by either party to the other, over and above the supplying party's commitments or requirements for its own system; Whereas the conditions, rates, and charges for Tertiary Energy shall be as agreed upon by the Operating Committee from time to time as speci- fied in Supplement III; Now therefore, the members of the Operating Committee unanimously agree to the sale of Tertiary Energy by HYDRO-QUEBEC to the VERMONT JOINT OWNERS in accordance with the Interconnection Agreement and under the following terms and conditions: Effective date and term: This Agreement shall be effective from September 1, 1993 at 00:00 hours and shall terminate on August 31, 1994 at 24:00 hours. This Agreement may be renewed by mutual agreement of the parties. Amount of Energy: The maximum amount of Tertiary Energy available for purchase for each month of the Agreement will be: 37,675 MWh September 1993 30,825 MWh October 1993 30,825 MWh November 1993 42,470 MWh December 1993 46,237 MWh January 1994, 44,525 MWh February 1994 46,237 MWh March 1994 23,975 MWh April 1994 34,250 MWh May 1994 44,182 MWh June 1994 45,210 MWh July 1994 45,210 MWh August 1994 at a maximum rate of delivery of 137 MWh per hour. Energy price: The unit price applicable for each megawatthour of Tertiary Energy shall be equal to 17.75 $ US/MWh. Should the energy be generated from thermal resources on the HYDRO-QUEBEC system or from a third party purchase, the Tertiary Energy price shall be equal to 120% of the total cost of providing such Tertiary Energy. Fixed Compensation: Whether Tertiary Energy is delivered or not, the VERMONT JOINT OWNERS shall pay to HYDRO-QUEBEC a minimum amount of 17,080.00$ US per month for the duration of this Agreement. During the term of this Agreement, if the maximum rate of delivery is greater than 20 Mwh per hour without exceeding 137 MWh per hour, then the monthly compensation shall be increased by an amount equal to 1,100.00$ US/MWh per hour for the amount in excess of 20 MWh per hour. If the energy delivered is from a third party purchase, any expenses charged to HYDRO-QUEBEC other than the cost of such energy shall be passed on directly to the VERMONT JOINT OWNERS. Concurrently the compensation shall be reduced on an hourly pro-rata basis for the amount of hours the energy comes from a third party purchase. Special Case: Notwithstanding the above, the fixed compensation for the month of September 1993 shall be equal to 57,260.00$ US for a rate of delivery of 61 MWh per hour. Scheduling: Scheduling under this Agreement shall be conducted in the following manner: Monthly schedules: On or before the 5th working day of the preceding month, VERMONT JOINT OWNERS or their mandatary under the Interconnection Agreement shall notify HYDRO-QUEBEC of its intention to purchase Tertiary Energy under this Agreement. Such notification shall include the amount of Tertiary Energy expected for deliveries and the hourly rate of delivery during the following month. Weekly schedules: On or before 10:00 hours each Tuesday of the preceding week, the VERMONT JOINT OWNERS or their mandatary under the Interconnection Agreement shall submit to HYDRO-QUEBEC a preliminary hourly schedule for Tertiary Energy deliveries during the upcoming week. Hourly schedule changes. The VERMONT JOINT OWNERS or their mandatary under the Interconnection Agreement can make on-shift schedule changes to the previously submitted weekly schedule for economic reasons. HYDRO-QUEBEC can make on-shift schedule changes to the previously submitted weekly schedule for the following reasons: (i) interruptibility provisions described within the Agreement, or, (ii) the price of energy is going to change due to the operation of or a change of operation in HYDRO-QUEBEC's thermal units, or, (iii) the price of energy is going to change due to the purchase of energy from a third party. Notifications of such changes shall be made 35 minutes prior to the start of the hour the change is to take place. If the change is due to the operation of the thermal units or to a third party purchase, the VERMONT JOINT OWNERS or their mandatary under the Interconnection Agreement shall notify HYDRO-QUEBEC 30 minutes prior to the start of the hour if they desire to accept deliveries during the coming hour. Interruptibility Provisions: Deliveries under this Agreement may be interrupted by HYDRO-QUEBEC, without creating any deficiencies, for the following reasons: (i) HYDRO-QUEBEC's implementation of voltage reduction or load shedding procedures, (ii) to prevent the violation of voltage, stability, or thermal transmission criteria, (iii) transfer limitations on the interconnection facilities or, (iv) the unavailability of the interconnection facilities. The interconnection facilities include without limitation, the isolated production equipment, the 450 kV DC line between Radisson and Sandy Pond, the converter substations of Radisson, Nicolet and Sandy Pond and of Des Cantons and Comerford and the associated transformation equipment. Delivery Point: The Tertiary Energy under this Agreement shall be delivered on the Radisson - Nicolet - Sandy Pond 450kV DC interconnection. Should this interconnection be unavailable, energy may be delivered on the Des Cantons - Comerford interconnection. The delivery point shall be the point where such transmission lines described above, cross the boundary between Quebec and the United States of America. It is understood that HYDRO-QUEBEC shall not be obligated to switch load on shift to Des Cantons - Comerford interconnection for the sole purpose of delivery of the Tertiary Energy under this Agreement. Delivery Deficiency: If HYDRO-QUEBEC is unable to deliver for reasons other than those listed above, part or all of the energy scheduled by the VERMONT JOINT OWNERS or their mandatary under the Interconnection Agreement, such energy may be rescheduled during the remaining term of the Agreement. If HYDRO-QUEBEC is unable to deliver a part or all of the energy scheduled by the VERMONT JOINT OWNERS or rescheduled as provided herein above, HYDRO-QUEBEC shall pay to VERMONT JOINT OWNERS an amount equal to 50% of the price of the energy not delivered. If energy cannot be delivered because the total amount of energy to be delivered on the Radisson - Nicolet - Sandy Pond interconnection or the Des Cantons - Comerford interconnection is less than the minimum loading level of those facilities, no Deficiency will result and the energy not delivered will not be rescheduled. Acknowledgment: The parties agree that deliveries of energy under this Agreement shall reduce HYDRO-QUEBEC's obligations under the Firm Energy Contract between HYDRO-QUEBEC and the NEW ENGLAND UTILITIES dated as of October 14, 1985 ("the Firm Energy Contract"), in accordance with Article 2.2 of said Firm Energy Contract. COMITE D'EXPLOITATON VJO-HQ /s/ M. Bernard Guertin par: M. Bernard Guertin /s/ Gilbert Neveu par: Gilbert Neveu Date: September 9, 1993 VJO-HQ OPERATING COMMlTTEE /s/ Marc Schaefer per: Marc Schaefer /s/ A. Norman Terreri per: A. Norman Terreri Date: 93/9/9 OPERATING COMMITTEE VERMONT JOINT OWNWERS-HYDRO-QUEBEC OPERATING AGREEMENT No. VJO-HQ-92-02 (amendment 1) The members of the Operating Committe unnimously agree to the following modification to the agreement VJO-HQ-92-02: the second paragraph of the section headed Amount of Energy is hereby deleted and replaced by the following: "However the amount of Tertiary Energy deliveries will be limited to 35.6522% of the above amounts of energy (with a maximum rate of delivery of 41 MWh per hour) through April 30, 1993 and to 39.1304% of the above amounts of energy (with a maximum rate of delivery of 45 MWh per hour) from May 1, 1993 until the Export Licence (EL-169) is modified to allow for maximum deliveries." HYDRO-QUEBEC /s/ M. Bernard Guertin par: M. Bernard Guertin /s/ Gilbert Nevue par: Gilbert Neveu Date: VERMONT JOINT OWNERS /s/ Marc Schaefer per:Marc Schaefer /s/ A. Norman Terreri per: A.Norman Terreri Date: 6-25-93 10.75.1 AMENDMENT AGREEMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT This AMENDMENT AGREEMENT NO. 1, dated as December 21, 1988, is among CENTRAL VERMONT PUBLIC SERVICE CORPORATION, CENTRAL VERMONT PUBLIC SERVICE CORPORATION as Service Agent and THE FIRST NATIONAL BANK OF BOSTON. WHEREAS, the parties hereto are parties to that certain Receivables Purchase Agreement dated as of November 29, 1988 (the "Purchase Agreement"), and wish to amend a certain provision of the Purchase Agreement; NOW THEREFORE, the parties hereto hereby agree as follows: 1. Amendment of Purchase Agreement. Section 9.4 of the Purchase Agreement is hereby amended by adding the following to the end thereof: "Notwithstanding the foregoing, the Seller agrees that the Bank may disclose information obtained by the Bank pursuant to this Agreement to participants or potential participants in its Undivided Interest, provided that such participants agree to be bound by the confidentiality requirements set forth herein." 2. Miscellaneous. Except as otherwise expressly provided by this Amendment Agreement No. 1, all of the terms, conditions and provisions of the Purchase Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Purchase Agreement, as amended hereby, shall continue in full force in effect, and that this Amendment Agreement No. 1 and the Purchase Agreement shall be read and construed as one instrument. This Amendment Agreement No. 1 shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties hereto have executed this Amendment Agreement No. 1 as of the date first written above. THE FIRST NATIONAL BANK OF CENTRAL VERMONT PUBLIC SERVICE BOSTON CORPORATION, Individually and as Service Agent By: /s/ Daniel G. Head, Jr. By: /s/ Jonathan W. Booraem Title: Assistant Vice President Title: Treasurer 10.75.2 BANK OF BOSTON November 27, 1989 Central Vermont Public Service Corporation 77 Grove Street Rutland, VT 05701 Attention: Jonathan W. Booraem, Treasurer Re: Receivables Purchase Agreement dated as of November 29, 1988 (the "Agreement") Dear Jonathan: As you are aware, Schedule 1.1 of the Agreement set forth a list of Customers whose Outstanding Accounts may be included as Eligible Accounts notwithstanding the fact that the aggregate Face Amount of such Outstanding Accounts exceeds $250,000 as at any date of determination. We have discussed, and you have agreed, that such Schedule should be modified to include Stratton Mountain Corp. and to exclude Vermont Castings, Inc. from such list of Customers. Accordingly, effective as of the date of this letter, Schedule 1.1 shall be replaced in its entirety by a new Schedule 1.1 in the form attached hereto. Except as modified hereby, the Agreement and all of the terms and conditions thereof are ratified and remain in full force and effect. Very truly yours, THE FIRST NATIONAL BANK OF BOSTON By /s/ Daniel G. Head Jr. Assistant Vice President AGREED: CENTRAL VERMONT PUBLIC SERVICE CORPORATION By:/S/ Jonathan W. Booraem Title: Treasurer Date: December 4, 1989 SCHEDULE 1.1 General Electric Co. Sherburne Corporation Boise Cascade Corporations Express Foods Inc. Eveready Plant Grand Union Store E.H.V. Industries, Inc. Johnson Controls, Inc. Mack Molding Co. Stratton Mountain Corp. White Pigment Plant Wyeth Nutritionals Tambrands Inc. C & S Wholesale Grocers, Inc. Price Chopper #41 C.P.M. Inc. Bratt. Kiln Drying & Mill Co. Stanley Tools The Rutland Hospital 10.75.3 CENTRAL VERMONT PUBLIC SERVICE CORPORATION Second Amendment and Extension Agreement to Receivables Purchase Agreement This Second Amendment and Extension Agreement (this "Amendment") dated as of November 29, 1990 to Receivables Purchase Agreement dated as of November 29, 1988, as amended by a Letter Agreement dated December 4, 1989 (as so amended, the "Agreement") between CENTRAL VERMONT PUBLIC SERVICE CORPORATION (the "Seller") and THE FIRST NATIONAL BANK OF BOSTON (the "Bank"). Capitalized terms used herein but not defined shall have the meanings assigned to them in the Agreement. WHEREAS, pursuant to Section2.1(b) of the Agreement, the Purchase Commitment of the Bank is scheduled to terminate on the second anniversary of the Closing Date, as extended for one-year periods from time to time, currently extended to November 29, 1991; and WHEREAS, by means of a letter dated October 3, 1990 from the Seller to the Bank the Seller has requested that the Purchase Commitment be extended for an additional one-year period beyond November 29, 1991, and the Bank is willing to so extend the Purchase Commitment on the terms and conditions contained herein; and WHEREAS, the Bank and the Seller wish to amend the Agreement to reflect changes made by Duff & Phelps Inc. in its senior debt rating schedule, and conform the rate-setting dates for LIBO Rates to current market practice; NOW, THEREFORE, the Bank and the Seller agree as follows: Section 1. Amendments to the Agreement. (a) Section10(e) of the Agreement is hereby amended by deleting the phrase "shall exceed D&P 8" appearing therein and substituting therefor the phrase "shall fall below D&P BBB+". (b) The definition of "LIBO Rate" contained in Exhibit A to the Agreement is hereby amended by deleting the phrase "third Business Day" appearing in the third line thereof and substituting therefor the phrase "second Business Day". Section 2. Extension of the Purchase Termination Date. The Bank hereby agrees that the Purchase Commitment shall be renewed for an additional one-year period, such that the Purchase Termination Date referred to in Section2.1(b) shall now occur on November 29, 1992. Section 3. Representations and Warranties. The Seller represents and warrants as follows: (a) The execution, delivery and performance by the Seller of this Amendment and the Purchase Documents as amended hereby are within the corporate powers of the Seller and have been duly authorized by all requisite corporate action by the Seller, do not contravene (i) the Seller's Articles of Association or by-laws or (ii) any law, rule, order, regulation or contractual restriction (including, without limitation, any restriction in the Indenture) binding on or affecting the Seller, and do not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties. (b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery of this Amendment or the perfo~mance by the Seller of the Purchase Documents as amended hereby. (c) This Amendment and the Purchase Documents as amended hereby are the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (d) The representations and warranties contained in Section6 of the Agreement are true and correct as of the date hereof as though made on and as of the date hereof (except that references to financial statements in Section6.5 of the Agreement shall be deemed to refer to the most recent financial statements delivered by the Seller thereunder). (e) No Termination Event or event that, with the giving of notice or passage of time or both would become a Termination Event, has occurred and is continuing. Section 4. Miscellaneous. (a) This Amendment and the modifications to the Agreement set forth herein shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. (b) On and after the date hereof, each reference in the Agreement to "this Agreement" or words of like import shall mean and be deemed to be a reference to the Agreement as amended hereby. (c) Except as amended and modified hereby, the Agreement is in all respects ratified and confirmed as of the date hereof, and the terms, covenants and agreements therein shall remain in full force and effect. (d) This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date and year first above written. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By: /s/ Jonathan W. Booraem Title: Treasurer THE FIRST NATIONAL BANK OF BOSTON By: /s/ Daniel G. Head, Jr. Title: Assistant Vice President 10.75.4 CENTRAL VERMONT PUBLIC SERVICE CORPORATION Third Amendment and Extension Agreement to Receivables Purchase Agreement This Third Amendment and Extension Agreement (this "Amendment") dated as of November 29, 1991 to Receivables Purchase Agreement dated as of November 29, 1988, as amended by Amendment Agreement No. 1 dated as of December 21, 1988, a Letter Agreement dated November 27, 1989 and a Second Amendment and Extension Agreement dated as of November 29, 1990 (as so amended, the "Agreement") between CENTRAL VERMONT PUBLIC SERVICE CORPORATION (the "Seller") and THE FIRST NATIONAL BANK OF BOSTON (the "Bank"). Capitalized terms used herein but not defined shall have the meanings assigned to them in the Agreement. WHEREAS, pursuant to Section2.1(b) of the Agreement, the Purchase Termination Date is scheduled to occur on the second anniversary of the Closing Date, as extended for one-year periods from time to time, currently extended to November 29, 1992; and WHEREAS, by means of a letter dated November 8, 1991 from the Seller to the Bank the Seller has requested that the Purchase Termination Date be extended for an additional one-year period beyond November 29, 1992, and the Bank is willing to so extend the Purchase Termination Date on the terms and conditions contained herein; and WHEREAS, the Bank and the Seller wish to amend the Agreement to lower the minimum rating assigned by Duff & Phelps Inc. to the senior debt of the Seller that would constitute a Termination Event, to conform such rating to the minimum level required for ratings by Standard ~ Poor's Corporation, and add a one-year Funding Period option for LIBO Rates; NOW, THEREFORE, the Bank and the Seller agree as follows: Section 1. Amendments to the Agreement. (a) 10(e) of the Agreement is hereby amended by deleting the phrase "shall fall below D&P BBB+" appearing therein and substituting therefor the phrase "shall fall below D&P BBB". (b) The definition of "Funding Period" contained in Exhibit A to the Agreement is hereby amended by deleting the phrase "three or six months thereafter," appearing in the fifth and sixth lines and tenth line thereof and substituting therefor in each such place the phrase "three, six or twelve months thereafter,". Section 2. Extension of the Purchase Termination Date. The Bank hereby agrees that the Purchase Termination Date referred to in 2.1(b) shall be extended for an additional one-year period, such that the Purchase Termination Date shall now occur on November 29, 1993. Section 3. Representations and Warranties. The Seller represents and warrants as follows: (a) The execution, delivery and performance by the Seller of this Amendment and the Purchase Documents as amended hereby are within the corporate powers of the Seller and have been duly authorized by all requisite corporate action by the Seller, do not contravene (i) the Seller's Articles of Association or by-laws or (ii) any law, rule, order, regulation or contractual restriction (including, without limitation, any restriction in the Indenture) binding on or affecting the Seller, and do not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties. (b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery of this Amendment or the performance by the Seller of the Purchase Documents as amended hereby. (c) This Amendment and the Purchase Documents as amended hereby are the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (d) The representations and warranties contained in Section6 of the Agreement are true and correct as of the date hereof as though made on and as of the date hereof (except that references to financial statements in Section6.5 of the Agreement shall be deemed to refer to the most recent financial statements delivered by the Seller thereunder). (e) No Termination Event or event that, with the giving of notice or passage of time or both would become a Termination Event, has occurred and is continuing. Section 4. Miscellaneous. (a) This Amendment and the modifications to the Agreement set forth herein shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. (b) On and after the date hereof, each reference in the Agreement to "this Agreement" or words of like import shall mean and be deemed to be a reference to the Agreement as amended hereby. (c) Except as amended and modified hereby, the Agreement is in all respects ratified and confirmed as of the date hereof, and the terms, covenants and agreements therein shall remain in full force and effect. (d) This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date and year first above written. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By: /s/ Jonathan W. Booraem Title: Treasurer THE FIRST NATIONAL BANK OF BOSTON By: Daniel G. Head, Jr. Title: Assistant Vice President 10.75.5 CENTRAL VERMONT PUBLIC SERVICE CORPORATION Fourth Amendment and Extension Agreement to Receivables Purchase Agreement This Fourth Amendment and Extension Agreement (this "Amendment") dated as of November 29, 1992 to Receivables Purchase Agreement dated as of November 29, 1988, as amended by Amendment Agreement No. 1 dated as of December 21, 1988, Letter Agreement dated November 27, 1989, Second Amendment and Extension Agreement dated as of November 29, 1990, and Third Amendment and Extension Agreement dated as of November 29, 1991 (as so amended, the "Agreement") between CENTRAL VERMONT PUBLIC SERVICE CORPORATION (the "Seller") and THE FIRST NATIONAL BANK OF BOSTON (the "Bank"). Capitalized terms used herein but not defined shall have the meanings assigned to them in the Agreement. WHEREAS, pursuant to Section2.1(b) of the Agreement, the Purchase Termination Date is scheduled to occur on the second anniversary of the Closing Date, as extended for one-year periods from time to time, currently extended to November 29, 1993; and WHEREAS, by means of a letter dated September 11, 1992 from the Seller to the Bank the Seller has requested that the Purchase Termination Date be extended for an additional one-year period beyond November 29, 1993, and the Bank is willing to so extend the Purchase Termination Date, on the terms and conditions contained herein; and WHEREAS, the Seller and the Bank wish to make certain other changes to the Agreement, on the terms and conditions contained herein; NOW, THEREFORE, the Bank and the Seller agree as follows: Section 1. Amendments to the Agreement. (a) Section2.7(a)(iii) of the Agreement is hereby amended by deleting the phrase "on the Debit Dates occurring on the 15th day of each February, May, August and November of each year," and substituting therefor the phrase "on the first Business Day of each March, June, September and December of each year,". (b) Section2.7(a)(iv) of the Agreement is hereby amended by deleting the phrase "on each of the Debit Dates described in clause (iii) above," and substituting therefor the phrase "on each of the dates described in clause (iii) above,". (c) SectionSection2.5(c), 2.7(a)(vii), 2.7(b), 2.7(c) and 2.7(d) of the Agreement are hereby amended by inserting the phrase "or other date on which the Bank shall debit the Collection Account" after the phrase "On each Debit Date" appearing in the first line of each such subsection. (d) Section10(g)(ii) of the Agreement is hereby amended by deleting the percentage "4%" appearing therein and substituting therefor the percentage "8%". (e) Section10(i) of the Agreement is hereby amended by inserting the phrase "or other date on which the Bank shall debit the Collection Account" after the phrase "on any Debit Date" appearing in the third line thereof. (f) The definition of "Eligible Account(s)" contained in Exhibit A to the Agreement is hereby amended by deleting said definition in its entirety and substituting therefor the following: "Eligible Account(s) - any Outstanding Account (other than an Excluded Account) from a Customer which is an electric retail person, which Outstanding Account has not been outstanding for more than 60 days past the date of billing with respect thereto." (g) The definition of "Excluded Account(s)" contained in Exhibit A to the Agreement is hereby amended by deleting said definition in its entirety and substituting therefor the following: "Excluded Account(s) - (a) any Outstanding Accounts arising from the rental of water heaters, (b) unless the Bank shall have consented in writing, the Outstanding Accounts of any Customer other than those Customers listed on Schedule 1.1 hereto (as such Schedule may be amended from time to time with the prior written consent of the Bank) when the aggregate Face Amount of such Outstanding Accounts (other than Unbilled Accounts) exceeds $250,000 as of any date of determination, (c) unless the Bank shall have consented in writing, any Outstanding Accounts arising from sales of electricity to Vermont Electric Power Cooperative, Inc., Washington Electric Cooperative, Inc., Connecticut Valley Electric Company Inc. or any other firm wholesale Person, and (d) any Outstanding Accounts the sale and assignment of which is prohibited by federal or state law." (h) Exhibits D-l and D-2 to the Agreement are hereby amended by deleting said Exhibits and substituting therefor new Exhibits D-l and D-2 in the forms attached hereto as Exhibits D-l and D-2. (i) Schedule 1.1 to the Agreement is hereby amended by deleting said Schedule 1.1 and substituting therefor a new Schedule 1.1 in the form attached hereto as Schedule 1.1. Section 2. Extension of the Purchase Termination Date. The Bank hereby agrees that the Purchase Termination Date referred to in cv4,62.1(b) shall be extended for an additional one-year period, such that the Purchase Termination date shall now occur on November 29, 1994. Section 3. Representations and Warranties. The Seller represents and warrants as follows: (a) The execution and delivery of this Amendment and the and performance by the Seller of the Purchase Documents as amended hereby are within the corporate powers of the Seller and have been duly authorized by all requisite corporate action by the Seller, do not contravene (i) the Seller's Articles of Association or by-laws or (ii) any law, rule, order, regulation or contractual restriction (including, without limitation, any restriction in the Indenture) binding on or affecting the Seller, and do not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties. (b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery of this Amendment or the performance by the Seller of the Purchase Documents as amended hereby. (c) This Amendment and the Purchase Documents as amended hereby are the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (d) The representations and warranties contained in Section6 of the Agreement are true and correct as of the date hereof as though made on and as of the date hereof (except that references to financial statements in Section 6.5 of the Agreement shall he deemed to refer to the most recent financial statements delivered by the Seller thereunder). (e) No Termination Event or event that, with the giving of notice or passage of time or both would become a Termination Event, has occurred and is continuing. Section 4. Miscellaneous. (a) This Amendment and the modifications to the Agreement set forth herein shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. (b) On and after the date hereof, each reference in the Agreement to "this Agreement" or words of like import shall mean and be deemed to be a reference to the Agreement as amended hereby. (c) Except as amended and modified hereby, the Agreement is in all respects ratified and confirmed as of the date hereof, and the terms, covenants and agreements therein shall remain in full force and effect. (d) ThiS Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date and year first above written. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By: /s/ Jonathan W. Booraem Title: Treasurer THE FIRST NATIONAL BANK OF BOSTON By: /s/ Daniel G.Head, Jr. Title: Vice President SCHEDULE 1.1 CENTRAL VERMONT PUBLIC SERVICE CORPORATION CERTAIN CUSTOMERS General Electric Co. Killington, LTD Wyeth Nutritionals Grand Union Store Specialty Paperboard Eveready Battery Co. EHV Industries Stratton Mountain Inn Bryant Grinder Co. Vermont Castings Johnson Controls Inc. Mack Molding Windsor Minerals C & S Wholesale Groc The Rutland Hospital Tambrands Inc. OMYA Brattleboro Kiln Dry Price Chopper Middlebury College EXHIBIT D-1 MONTHLY REPORT MONTH ENDING , 19 _ $ (000) To be used when Undivided Interest of Purchasers as at month end set forth above does not exceed an amount equal to 80% of the lowest Eligible Account Balance during the most recent 12 months for which actual data is available. (a) Undivided Interest as at month end above is $__________. (b) Lowest Eligible Account Balance over 12 months is $_____________. (c) .8 times (b) = $___________. (a) is less than or equal to (c). Item Description 1. Outstanding Accounts (billed) $_________ 2. Outstanding Accounts (unbilled) $_________ 3. - Eligible Accounts Over 60 Days Past Due ($__________) 4. - Excluded Customer Accounts Greater Than $250,000 ($__________) 5. - Customer deposits and interest ($__________) 6. - Excluded wholesale Customer Accounts (l) ($__________) 7. - Estimated Water Heater Rentals ($__________) 8. Eligible Accounts 9. Undivided Interest 10. Fractional Undivided Interest (line 9 divided by line 8) 11. Fractional Accounts over 60 days past due (line 3 divided by [line 1 plus line 2]) (1) Excluded Accounts: Vermont Electric Cooperative, Inc., Washington Cooperative, Inc., Connecticut Valley Electric Company Inc. and other firm wholesale Persons EXHIBIT D-2 MONTHLY REPORT MONTH ENDING _________________, 19 _ $(000) To be used when Undivided Interest of the Purchasers as at month end set forth above is equal to an amount which exceeds 80% of the lowest Eligible Account Balance during the most recent 12 months for which actual data is available. (a) Undivided Interest as at month end above is $_________. (b) Lowest Eligible Account Balance over 12 months is $________________. (c) .8 times (b) = $____________. (a) is less than or equal to (c). Daily Formula: Item Description 1. Prior Day's Ending Balance of Eligible Accounts $__________ 2. - Customer Accounts Daily Cash Receipts ($__________) 3. +Daily Eligible Sales (1) $__________ 4. Change in Eligible Accounts Over 60 Days Past Due(2 From Prior Month divided by # Days in Reporting Month ($__________) 5. - Excluded Customer Accounts Greater Than $250,000 (3) ($__________) 6. - Customer deposits and interest ($__________) 7. - Excluded wholesale Customer Accounts (4) ($__________) 8. - Estimated Water Heater Rentals ($__________) 9. Eligible Accounts $ 10. Undivided Interest $ 11. Fractional Undivided Interest (line 10 divided by line (9) 12. Fractional Accounts over 60 days past due (line 4 divided by [line 1 minus line 2 plus line 3]) (1) Aggregate Eligible Sales for the month(including estimated Daily Unbilled Accounts) - # Days in Month (2) Difference From Prior Month's Amount Using Latest Aging Report Available (3) Difference From Prior Month's Amount Using Latest Data Available (4) Excluded Accounts Difference From Prior Month's Amount Using Latest Available Data at Billing Date: Vermont Electric Cooperative, Inc., Washington Cooperative, Inc., Connecticut Valley Electric Company Inc. and other firm wholesale Persons EX-13 4 EXHIBIT 13 OF FORM 10K Exhibit EX-13 SELECTED FINANCIAL DATA (Dollars in thousands, except per share amounts)
1993 1992 1991 1990 1989 For the year Operating revenues $279,389 $275,375 $233,469 $231,565 $227,391 Net income $ 21,292 $ 21,422 $ 18,576 $ 17,531 $ 18,245 Earnings available for common stock $ 18,634 $ 18,764 $ 17,514 $ 16,533 $ 17,247 Consolidated return on average common stock equity 11.0% 11.8% 11.8% 12.0% 13.0% Earnings per share of common stock $1.64 $1.71 $1.65 $1.62 $1.73 Cash dividends paid per share of common stock $1.42 $1.39 $1.39 $1.37 $1.34 Book value per share of common stock $15.03 $14.21 $14.03 $13.68 $13.32 Net cash provided by operating activities $ 36,833 $ 48,904 $ 42,033 $ 23,591 $ 34,852 Dividends paid $ 18,112 $ 18,174 $ 15,677 $ 14,978 $ 14,104 Construction and plant expenditures $ 20,519 $ 20,503 $ 18,950 $ 21,202 $ 28,045 At end of year Long-term debt $122,419 $107,879 $130,163 $129,790 $114,750 Total capitalization (excluding current portion of debt) $331,309 $302,023 $316,897 $286,424 $263,955 Total assets $480,150 $451,052 $430,748 $406,426 $366,216
Exhibit EX-13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Earnings Overview The company's 1993 earnings were $18.6 million or $1.64 per share of common stock, equating to an 11.0% return on average common stock equity. Earnings for 1993 compare to $18.8 million in 1992 and $17.5 million in 1991. Return on average common stock equity was 11.8% for 1992 and 1991. The company earned a 12.0% return on its Vermont utility business reflecting the lower return allowed by the Vermont Public Service Board (PSB) for 1993. On non-utility investments, the company earned a combined return of 6.2% resulting from a 5.5% return from Catamount Energy Corporation and 12.2% return from SmartEnergy Services, Inc. See Note 3 to the Consolidated Financial Statements for additional details on the company's non-utility investments. Earnings for 1993 reflect a charge of $821,000 or $.07 per common share to write-off the non-recoverable portion of the company's investment in the Seabrook project from some of the company's firm resale customers. These customers have decided not to extend their contracts beyond October 1993. As discussed below, 1993 earnings reflect the lower allowed return on equity for Vermont's retail business of 12.0%. A 2.4% increase in the dividend rate and three-for-two common stock split became effective in February 1993. In September 1993, the PSB approved the agreement, reached in April 1993, between the company and the Vermont Department of Public Service (DPS) regarding the reasonableness of the company's retail rates. As part of the agreement, the company agreed to reduce its maximum return on equity for Vermont retail business from 12.5% to 12.0% for 1993 and accelerated the recovery of $1.5 million of Conservation and Load Management (C&LM), also referred to as Demand Side Management, costs in 1993. In November 1993, the PSB opened an investigation into the company's cost of service and resulting rates as indicated in its September 1993 order. Although the company believes its current rate levels are justified, this investigation could result in a refund of revenues previously collected. The results of this investigation are expected to be known by the third quarter of 1994. As discussed below, the company has filed for a general rate increase in 1994. Due to increasing competitive pressures in the industry, uncertainties with Vermont's business environment and slow growth associated with the recession, the company, in September 1993, announced a cost-cutting plan to mitigate future rate increases. The plan targets $20 million in annual cost reductions by the end of 1995 including costs of power, C&LM and operation and maintenance. Consistent with its cost-cutting goals, in the first quarter of 1994, the company offered a series of programs to employees including voluntary retirement and voluntary resignation. The company's expectation is that it will reduce its work force by 10% to 15% by the end of 1995. See Note 9 to the Consolidated Financial Statements for additional information related to the voluntary programs. Despite its cost-cutting efforts, the company filed for a general rate increase of 8.9% on February 15, 1994 to become effective November 1, 1994. This will be the company's first rate increase since September 1991 for its Vermont retail service area. Results of Operations Operating revenues and MWH sales A summary of MWH sales and operating revenues for 1993 and 1992 (and the related percentage changes from 1992) is set forth below:
Percentage Percentage MWH Sales Increase Revenues (000's) Increase 1993 1992 (Decrease) 1993 1992 (Decrease) Residential 958,102 971,740 (1.4) $ 99,101 $100,574 (1.5) Commercial 842,694 837,053 .7 86,553 86,276 .3 Industrial 400,117 420,470 (4.8) 30,741 32,030 (4.0) Other retail 7,480 7,544 (.8) 1,706 1,700 .4 Total retail sales 2,208,393 2,236,807 (1.3) 218,101 220,580 (1.1) Less: DPS sales 25,714 101,653 (74.7) 1,558 6,470 (75.9) Total company retail sales 2,182,679 2,135,154 2.2 216,543 214,110 1.1 Resale sales: Firm 62,564 87,911 (28.8) 2,747 3,635 (24.4) Entitlement 908,819 1,070,799 (15.1) 42,417 43,400 (2.3) Other 286,249 316,069 (9.4) 6,445 7,859 (18.0) Total resale sales 1,257,632 1,474,779 (14.7) 51,609 54,894 (6.0) Other revenues - - - 5,162 6,371 (19.0) Deferred revenues - - - 6,075 - - Total 3,440,311 3,609,933 (4.7) $279,389 $275,375 1.5 _________ _________ ________ ________
Year-to-year fluctuations in total retail MWH sales are primarily affected by customer growth, C&LM programs as well as relative prices of alternate energy sources, weather patterns and conservation induced by price changes and income elasticity responses of customers. Total retail MWH sales and revenues for 1993 decreased 1.3% and 1.1%, respectively, reflecting the state's continued sluggish economy, the effectiveness of C&LM programs and the loss of one industrial customer. However, the company's retail MWH sales and revenues increased 2.2% and 1.1%, respectively, due to the reduction of the DPS block discussed below. Through August 31, 1993, a source of electricity obtained by the DPS from the New York Power Authority (NYPA) and from Ontario Hydro was nominally sold by the DPS directly to the company's retail customers. Sales made by the DPS are excluded from total company retail sales because they do not represent sales of electricity from the company's power sources. When the DPS's sources were not sufficient on a short-term basis, the company provided back-up energy and capacity to meet the DPS's block requirements. Under this arrangement, the company was fully reimbursed for all back-up energy and capacity. The DPS MWH sales decreased 74.7% compared to 1992 because effective February 1, 1993, the PSB approved a 150 KWH joint block supplied by both the company and the DPS, whereby the DPS provided residential customers with the first 25 KWH and the company provided the remaining 125 KWH. The 125 KWH were sold at a non-seasonal (12-month fixed) rate of 9.009 cents per KWH. In August 1993, the company and the DPS proposed a second agreement superseding the first, creating a 250 KWH block. This proposal was approved by the PSB August 19, 1993 and became effective with bills rendered September 1, 1993. Under the latter agreement, the company provides all of the 250 residential KWH at a non-seasonal rate of 8.811 cents per KWH. Effective May 1, 1993, one of the company's firm resale customers opted to purchase power from the company based on market rates. Firm resale MWH sales and revenues declined further because several firm resale customers chose not to extend their contracts beyond October 1993. Entitlement sales decreased 15.1% or 161,980 MWH for 1993 compared to 1992. The decrease is due to the scheduled refueling and unplanned shutdowns of Vermont Yankee reducing sales to UNITIL, and Commonwealth Electric under a swap arrangement. In addition, in 1992 the company was able to sell a portion of its Vermont Yankee entitlement to Public Service Company of New Hampshire. Other resale MWH sales for 1993 decreased by 9.4% and related revenues decreased 18.0%. These variances reflect current market conditions in Vermont and New England and the greater availability of low cost energy in the region. These sales, made on a short-term basis, include sales to NEPOOL and other utilities in New England. Other resale sales are further reduced due to fewer MWH sales to the DPS as a result of the agreements described above. The company continues to make every effort to maintain or increase resale sales despite the weak market for capacity and energy that is expected in the near-term. The company received contract fees from the DPS for delivering the DPS energy to customers and for providing billing and collection services. Under this contractual arrangement, the company received approximately $.9 million in 1993, $2.5 million in 1992 and $2.6 million in 1991. These fees are reflected in Other revenues in the preceding table. Although these revenues decreased in 1993 because of the agreements described above, this decline was offset by an increase in the company's retail revenues. In 1993 the company recognized $6.0 million of deferred revenues. This amount reflects the $7.5 million which the PSB required the company to defer from 1991 to 1993, offset by the accelerated recovery of $1.5 million in C&LM costs per agreement reached between the company and the DPS described in Earnings Overview. Recognizing the deferred revenues in 1993 allowed the company to offset higher 1993 operating costs, thereby mitigating the need for increased rates in 1993. The table below analyzes the components of increases or decreases in revenues (including DPS sales) compared to the prior year (dollars in thousands): 1993 1992 Revenue increase (decrease) from: Retail MWH sales $(2,395) $ 4,747 Retail rates (84) 10,730 Changes in firm resale sales (888) (158) Changes in entitlement sales (983) 23,770 Changes in other resale sales 14 (3,857) Changes in other revenues 306 707 Deferred revenues 6,075 7,271 Net increase over prior year $ 2,045 $43,210 _______ _______ The 1.3% decrease in 1993 retail MWH sales described above resulted in a $2.4 million decrease in retail revenues. Retail MWH sales in 1992 were higher by 2.4%, compared to 1991 resulting in a $4.7 million increase in retail revenues. The increase in retail rates for 1992 is due to the 7.8% retail rate increase that became effective with bills rendered September 1, 1991. The $23.8 million increase in entitlement sales for 1992 resulted primarily from the swap arrangement with Commonwealth Electric and the sell-back of the Hydro-Quebec Schedule A and Schedule C-1 power. The $3.8 million decrease in other resale sales for 1992 resulted primarily from a decrease in sales to NEPOOL. Deferred revenues of $6.0 million in 1993 relate to the recognition of 1991 deferred revenues described above. Purchased power The company purchases approximately 90% of its power needs under several contracts that have various durations. Over 30% of these purchases are from affiliated companies whereby the company receives its entitlement share of the output. The company's purchased power portfolio assures that a mix of sources and fuel types are available to meet the company's long-term load growth while providing short and intermediate term opportunities to purchase or sell capacity and energy to reduce overall power costs. The percentages of the company's energy sources from certain long-term commitments and company-owned generating units were as follows: Year Ended December 31 1993 1992 1991 Nuclear generating companies 34% 34% 45% Canadian imports 28 25 22 PSNH--coal 8 7 8 Company-owned hydro 5 5 6 Jointly owned units 4 4 3 Other sources 21 25 16 100% 100% 100% ____ ____ ____ The company has equity ownership interests in four nuclear generating companies: Vermont Yankee (VY), Maine Yankee (MY), Yankee Atomic (YA) and Connecticut Yankee (CY). The VY nuclear plant, which provides approximately one-third of the company's power supply, was unavailable from March 6 through April 21, 1992 and from August 27 through October 24, 1993 due to its scheduled refueling outages, and had unscheduled outages from April 7 to April 16, 1993 and December 6 to December 20, 1993. No major unscheduled outages were experienced during 1992. The MY plant was shut down for refueling and maintenance from February 14 through April 19, 1992 and from July 30 through October 13, 1993. See Note 2 to the Consolidated Financial Statements for details related to YA. The CY plant was shut down for refueling and for an extended outage from October 17, 1991 through March 18, 1992 and was shut down for a scheduled refueling outage from May 15 through July 21, 1993. Millstone #3 was shut down from July 31 through November 7, 1993 for a refueling outage. During scheduled refueling outages, the company purchases more costly replacement energy from NEPOOL and other sources to satisfy energy needs. In accordance with current rate-making treatment, the company defers and amortizes to expense over their respective fuel cycles the incremental replacement energy and maintenance costs associated with these refueling outages for the Yankee plants and the Millstone #3 jointly owned nuclear generating unit. During 1993, the company deferred $2.4 million and $6.5 million of replacement energy and capacity costs, respectively, for VY, MY, CY and Millstone #3. In 1984, the company and other Vermont utilities signed a long-term purchased power contract with the DPS for 150 MW of power provided by Hydro-Quebec. During 1987, the company and eight other Vermont utilities signed a long-term purchased power contract with Hydro-Quebec for up to 450 MW of power until 2020. Approval of the 450 MW contract was received in 1990. See Note 11 to the Consolidated Financial Statements for further details related to the Hydro-Quebec power contracts. Under a 30-year contract, which expires in 1998, the company purchases 46.98 MW of capacity from Merrimack #2, a coal-fired generating plant owned by Northeast Utilities (N.U.). Vermont Electric Power Company, Inc., representing Vermont utilities, and N.U. negotiated an agreement which assures the continuation of this contract under its original terms, thereby resolving past uncertainty relating to the contractual price of capacity and the availability of the unit to the company. The company also owns 18 hydroelectric generating units which have a total nameplate capability of 37.5 MW and two gas-fired and one diesel peaking units with a combined nameplate capability of 28.9 MW and leases and operates two hydroelectric generating stations from wholly owned subsidiaries with a combined nameplate capability of 3.7 MW. In addition, the company maintains joint-ownership interests in Joseph C. McNeil, a 53 MW wood, gas and oil-fired unit; Wyman #4, a 619 MW oil-fired unit; and Millstone #3, an 1149 MW nuclear unit. The company's percentage ownership in these units is 20%, 1.78% and 1.73%, respectively. The net cost components of purchased power for the past three years were as follows (dollars in thousands):
1993 1992 1991 Units Amount Units Amount Units Amount Purchased: Capacity (MW) 496 $ 86,857 478 $ 84,346 416 $ 65,057 Energy (MWH) 3,338,298 59,726 3,481,297 55,514 2,998,266 50,373 Production fuel (MWH) 313,020 1,737 324,478 2,201 286,660 2,065 Total purchased power and production fuel costs 148,320 142,061 117,495 Entitlement and other resale sales (MWH) 1,195,068 48,862 1,386,868 51,259 936,241 30,787 Net purchased power and production fuel costs $ 99,458 $ 90,802 $ 86,708 ________ ________ ________
The increase in total purchased capacity costs for 1993 is due to an increase in MW purchased, primarily from small power producers. The 1992 increase in total purchased capacity costs is attributable to a $9.7 million increase in price and $9.6 million relating to a 14.9% increase in MW purchased. Total energy costs increased $4.2 million for 1993 primarily due to a $6.5 million increase in price offset by a decrease of $2.3 million relating to a 4.1% decrease in MWH purchased. However, average cost per KWH purchased increased by 12.2%. The higher average cost is primarily due to increased MWH purchased from small power producers mandated by Federal and state legislation. Total energy costs increased $5.1 million in 1992. The increase is attributable to a 16.1% increase in MWH purchased offset by a 5% decrease in the 1992 average cost per KWH. Energy costs are directly related to the variable prices of oil, nuclear fuel and coal but more importantly, to the proportion of the company's purchased energy that comes from each of these fuel sources. The swap arrangement with Commonwealth Electric of Canal #2 power has increased the company's reliance on oil as a source of electricity. Also, some Canadian purchased power contracts are tied to fossil fuel price indices. This will increase the company's exposure to the variability of oil price volatility. Production fuel costs decreased 21.1% or $.5 million in 1993, due to lower generation by the company's jointly owned units. For 1992, production fuel costs were stable compared to 1991. In order to optimize its power mix for baseload, intermediate and peaking power, the company engages in sales and purchases with other electric utilities, primarily in New England and with NEPOOL. These transactions typically take advantage of immediate pricing and other market conditions. The profits from these transactions are used to reduce revenue requirements for rate-making purposes. As stated earlier, the company is making every effort to maintain or increase these sales despite the weak resale market for excess capacity and energy in the region. Production and transmission Phase II transmission line began operation in November 1990. This service increased the maximum capacity of the Hydro-Quebec 450 KV DC line from 690 MW to 2000 MW and extended the Phase I line from Comerford, New Hampshire to Sandy Pond, Massachusetts. The company uses this transmission path to deliver a portion of the company's long-term Hydro-Quebec firm power contract. The Phase II project cost is approximately $487 million. The company pays 5.132% of support costs of about $2.7 million annually. Also, the company is obligated to pay a 4.421% share of the Phase I Hydro-Quebec capital costs of about $.5 million annually. Under the support agreement, the company is eligible for savings associated with certain energy transactions by NEPOOL, which offset the company's support cost obligations. The increase in production and transmission expenses for 1993 was minimal. The 1992 increase of $1.2 million is due to a retroactive adjustment recorded during the second quarter of 1991 resulting from the restructuring of the Hydro-Quebec Phase II debt from 10 to 25 years, increased transmission costs from Vermont Electric Power Company, Inc. and increased generation by two of the company's jointly owned units, Millstone #3 and Wyman #4, and an increase in their operating costs. These increases were offset in part by lower generation by the Joseph C. McNeil generating plant in which the company has a 20% ownership interest. Other operation expenses Other operation expenses decreased $2.2 million for 1993 primarily due to an environmental reserve of $4.9 million established in December 1992 related to Cleveland Avenue offset in part by the recognition of a postretirement benefit obligation in accordance with Statement of Financial Accounting Standard (SFAS) No. 106 effective January 1, 1993. For more information on SFAS No. 106, see Note 9 to the Consolidated Financial Statements. Other operating expenses for 1992 include the $4.9 million reserve related to estimated costs associated with the cleanup of the coal tar deposits discovered at the company's Cleveland Avenue site. For a complete disclosure on environmental matters, see Note 11 to the Consolidated Financial Statements. The company currently provides certain postemployment benefits consisting of long-term disability benefits and expenses such costs as benefits are paid, which is consistent with current rate-making practices. In November 1992, the Financial Accounting Standards Board issued Statement No. 112 that requires accrual of the expected costs of such benefits provided after employment but before retirement. For a complete disclosure of the effect on the company's financial position at time of adoption, see Note 9 to the Consolidated Financial Statements. Depreciation The increases in depreciation expense for 1993 and 1992 are due to property additions and the installation of a new customer service information system in February 1992 and general ledger computer system in August 1993 as well as installation of phase 2 and 3 of the customer service information system in September and December 1993, respectively. Income taxes Federal and state income taxes fluctuate with the level of pretax earnings. During 1993 the company recognized additional accumulated deferred income taxes of approximately $15 million and a net corresponding asset from customers of approximately $15 million reflecting future revenues that will be required when the temporary differences reverse and are settled in rates. See Note 10 to the Consolidated Financial Statements for additional information relating to the adoption of SFAS No. 109. Also, due to the Revenue Reconciliation Act which was passed on August 10, 1993, income tax expense increased by approximately $285,000 for the year 1993. The increase in total income tax expense for 1992 resulted from a 36.4% increase in pretax earnings for the period. Other income and deductions Beginning in January 1991, the company began accruing AFDC on expenditures related to the development of software in accordance with regulatory policies. The increase in allowance for equity and borrowed funds used during construction for 1992 is primarily related to the company's investment in its customer information system which was placed in service February 3, 1992. In 1993, AFDC was lower than 1992 due to lower rates used for capitalization of these funds. Other income, net, decreased due to lower prevailing interest rates and lower levels of investments during 1993 resulting in decreased earnings from temporary cash investments offset by increased income from non-utility operations. Other income, net, increased in 1992 due to higher income from non-utility operations and interest from temporary cash investments. This increase was offset in part by the reclassification of expenses incurred in connection with the sale of accounts receivable and unbilled revenues from operating expenses and by a write-off of approximately $568,000 of Seabrook Unit 1 and 2 investments related to one of the company's wholesale customers. Interest on long-term debt Interest on long-term debt decreased $3.0 million and $.4 million for 1993 and 1992, respectively, primarily due to the company's continuing program of refinancing First Mortgage Bonds at lower interest rates. Other interest expense Other interest expense decreased $.9 million for 1993 mainly due to a FERC settlement related to certain wholesale customers. The decrease is offset in part by an increase in interest expense due to higher levels of short-term borrowings outstanding during 1993. Other interest expense decreased for 1992 due to lower levels of short-term borrowings outstanding combined with lower short-term interest rates as well as a decrease in interest expense related to the company's IRS audit. Liquidity and Capital Resources Construction The company's liquidity is primarily affected by the level of cash generated from operations and the funding requirements of its ongoing construction program. Cash flows from operating activities after dividends paid provided approximately $18.7 million in 1993, $30.7 million in 1992 and $26.4 million in 1991. Planned construction expenditures over the next five years will be directed toward reconstructing and refurbishing the company's hydro, transmission, distribution and general facilities to improve system reliability and customer service. Excluding allowance for funds used during construction, construction expenditures plus expenditures for the company's C&LM programs are estimated at $26.4 million for each of the next five years. The company expects to finance approximately 80% of these annual expenditures with funds generated from operations and plans to finance the balance with short-term and long-term debt. Financing and Capitalization Utility The level of short-term borrowings fluctuates based on seasonal corporate needs, the timing of long-term financings and market conditions. Short-term borrowings are supported by committed lines of credit and uncommitted loan facilities with several banks totaling $58 million. Short-term borrowings generally are reduced when long-term debt or equity securities are issued. In December 1993, the company issued $43 million of long-term debt, of which $14.5 million replaced First Mortgage Bonds redeemed in October 1993 and $4.325 million replaced First Mortgage Bonds redeemed in January 1994. The balance was used to reduce short-term debt outstanding. In the past, the company has been able to finance its construction program and expects to be able to meet all future commitments. In 1988, the company sold a $12 million interest in certain customers' accounts receivable and unbilled revenues. Under the sales of accounts receivable agreement the company can sell an additional $8 million of accounts receivable if certain accounts receivable ratio tests are satisfied. The original sale of customer accounts receivable and unbilled revenue was for a two-year period with an option that the company may request, on each anniversary date, an extension for an additional year. The company's capital structure has remained consistent with the company's long-range financial objectives, a debt ratio of 45% or lower, an equity ratio higher than 45%. The company's capital structure ratios (excluding amounts of long-term debt due within one year) for the past three years were as follows: December 31 1993 1992 1991 Common stock equity 52% 53% 48% Preferred stock 11 11 11 Long-term debt 37 36 41 100% 100% 100% ___ ___ ___ The credit ratings of the company's securities as of December 31, 1993, as reaffirmed by Standard & Poor's Corp. and Duff & Phelps Corp. in mid-1993 are BBB+ and A-, respectively, for First Mortgage Bonds and BBB for Preferred Stock. On December 15, 1993 the company issued $43 million of First Mortgage Bonds. The net proceeds from the issuance of the First Mortgage Bonds were used to replace First Mortgage Bonds redeemed in October 1993 and January 1994. The balance was used to repay, in part, short-term debt incurred for expenditures in connection with the company's construction program and for other corporate purposes. The company redeemed in January 1994, $7 million of the 9.00% Series Preferred Stock $25 Par Value and plans to reissue approximately $7 million of Preferred Stock in the second quarter of 1994. Non-Utility In October 1993, Catamount Energy Corporation, a non-utility subsidiary of the company, established an Irrevocable Standby Letter of Credit with a bank to borrow up to an aggregate amount of $2.3 million to replace its share of cash in the Appomattox Cogeneration's Project Debt Service Reserve Fund. This Letter of Credit is for a one-year term with annual extensions available. In December 1993, Catamount established an unsecured line of credit with a bank to borrow up to $.5 million in support of short-term working capital requirements. This line of credit matures March 1, 1994. In September 1993, SmartEnergy Services, Inc., also a non-utility subsidiary of the company, established a $1.0 million revolving line of credit with a bank to provide working capital and financing assistance for investment purposes. This line of credit is negotiable in one year. Financial obligations of the non-utility wholly owned subsidiaries are non-recourse to the company. Conservation and Load Management Programs The primary purpose of these programs is to offset the need for long-term power supply and delivery resources that are more expensive to purchase or develop than customer-efficiency programs. Expenditures in 1992 and 1993 were $4.3 million and $9.5 million, respectively, and are planned to be approximately $5.4 million in 1994. The amount of expenditures will be adjusted annually, based on the cost-effectiveness of programs compared to other options. The PSB has approved all of the company's C&LM programs delivered in Vermont, which include direct utility investments in customer premises to increase customer participation. In addition, the PSB has approved a Monitoring and Evaluation Plan utilized to evaluate the continued cost-effectiveness of the C&LM programs. In late 1993, the company filed a Petition to Amend and slow the pace of its C&LM programs in light of the excess capacity in the region which made some of the C&LM programs less effective in the near-term. The revised programs focus on improving efficiencies based on lessons learned in the past several years. In addition, the programs focus on incorporating efficiencies for new construction and remodeling programs that have long useful lives. In the Petition, the company stated it planned to implement the program amendments with or without PSB approval starting in 1994. By letter dated January 20, 1994, the PSB indicated it would not be opening proceedings concerning the Petition at this time. However, many of the issues raised in the Petition are before the PSB, along with deferred C&LM expenditures and related lost revenues from 1991 to the present, in the PSB's investigation of our rates. In addition, in Vermont, the company is involved in several cases related to C&LM activities including the role of fuel switching as a C&LM measure, the level of externalities for electricity and the role of fuel choice in new construction. In an order dated December 29, 1992, the New Hampshire Public Utilities Commission (NHPUC) approved C&LM programs of the company's wholly owned New Hampshire subsidiary, Connecticut Valley Electric Company Inc. Currently, the NHPUC staff and the company have reached agreement on all of the issues but one concerning the 1994 C&LM expenditures and related lost revenues. These expenditures and lost revenues are recovered along with shareholder incentives for 1993 program activity through a C&LM percentage adjustment clause applied March 1, 1994 through the end of 1994. The only issue awaiting clarification by the NHPUC is the method for calculating lost revenues. The agreement reached by the company and the NHPUC staff includes a pilot program through which costs of C&LM services will be billed directly to customers. Diversification Catamount Energy Corporation (Catamount) was formed for the purpose of investing in non-regulated energy-related projects. Currently, Catamount has four wholly owned subsidiaries with interests in four operating independent power projects located in Rumford, Maine; East Ryegate, Vermont; Hopewell, Virginia; and Williams Lake, British Columbia, Canada. Effective January 1, 1993, the company formed a new non-utility subsidiary, SmartEnergy Services, Inc. The purpose of this subsidiary is to cost effectively provide reliable, energy-efficient products and services, including the rental of electric water heaters. Rates The company recognizes that adequate and timely rate relief is necessary if the company is to maintain its financial strength, particularly since Vermont regulatory rules do not allow for changes in purchased power and fuel costs to be passed on to consumers through rate adjustment clauses. The company's practice of reviewing costs periodically will continue and rate increases will be requested when warranted. As part of an agreement reached with the DPS, and subsequently approved by the PSB, the company agreed not to increase general rates before August 1994. The company filed for an 8.9% general rate increase on February 15, 1994 to become effective November 1, 1994. See Earnings Overview for additional information regarding this matter. The company anticipates filing for rate increases periodically, primarily to recover increasing purchased power and other operating costs. Inflation The annual rate of inflation as measured by the Consumer Price Index was 2.7% for 1993, 2.9% for 1992 and 3.1% for 1991. The company's revenues, however, are based on rate regulation that generally recognizes only historical costs. Inflation continues to have an impact on most aspects of the business. Despite the modest impact of recent inflation, the company has been able to earn its allowed return through modest sales growth and cost containment measures. Exhibit EX-13 CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands, except per share amounts)
Year Ended December 31 1993 1992 1991 Operating Revenues $279,389 $275,375 $233,469 Operating Expenses Operation Purchased power 146,583 139,860 115,430 Production and transmission 21,188 20,340 19,180 Other operation 35,933 38,131 33,064 Maintenance 11,719 11,890 11,241 Depreciation 15,402 14,408 12,388 Other taxes, principally property taxes 10,022 9,602 9,286 Taxes on income 12,496 12,102 5,820 Total operating expenses 253,343 246,333 206,409 Operating Income 26,046 29,042 27,060 Other Income and Deductions Equity in earnings of affiliates 3,613 3,815 3,966 Allowance for equity funds during construction 35 267 287 Other income, net 827 1,383 958 Provision for income taxes (276) (311) (401) Total other income and deductions, net 4,199 5,154 4,810 Total Operating and Other Income 30,245 34,196 31,870 Interest Expense Interest on long-term debt 8,804 11,779 12,200 Other interest 226 1,148 1,461 Allowance for borrowed funds during construction (77) (153) (367) Total interest expense, net 8,953 12,774 13,294 Net Income 21,292 21,422 18,576 Preferred Stock Dividends Requirements 2,658 2,658 1,062 Earnings Available For Common Stock $ 18,634 $ 18,764 $ 17,514 Average Shares of Common Stock Outstanding 11,383,109 10,992,123 10,614,642 Earnings Per Share of Common Stock $1.64 $1.71 $1.65 Dividends Per Share of Common Stock $1.42 $1.39 $1.39 The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
Year Ended December 31 1993 1992 1991 Cash Flows Provided (Used) By Operating Activities Net income $ 21,292 $ 21,422 $ 18,576 Adjustments to reconcile net income to net cash provided by operating activities Deferred revenues (7,507) - 7,271 Depreciation 15,402 14,408 12,388 Deferred income taxes and investment tax credits 9,615 2,652 (1,855) Allowance for equity funds during construction (35) (267) (287) Net deferral and amortization of nuclear replacement energy and maintenance costs (3,797) (135) 1,842 Amortization of property losses 1,262 119 794 Amortization of nuclear fuel 515 547 217 (Increase) decrease in accounts receivable 1,127 (823) (3,403) Increase (decrease) in accounts payable (3,475) 1,433 2,080 Increase (decrease) in accrued income taxes (2,991) 3,179 (2,713) Decrease in other working capital items 2,028 1,162 574 Other, net 3,397 5,207 6,549 Net cash provided by operating activities 36,833 48,904 42,033 Investing Activities (Increase) decrease in temporary investments 597 17,978 (17,833) Construction and plant expenditures (20,519) (20,503) (18,950) Conservation and load management expenditures (9,874) (3,539) (1,946) Investments in affiliates 290 269 823 Non-utility investments (7,425) (13,536) (3,932) Other investments, net (382) (391) (208) Net cash used in investing activities (37,313) (19,722) (42,046) Financing Activities Issuance of long-term debt 43,000 - 15,000 Sale of common stock 8,325 7,988 6,609 Sale of preferred stock - - 20,000 Short-term debt, net (744) 2,100 (14,740) Retirement of long-term debt (34,216) (18,844) (14,210) Common and preferred dividends paid (18,112) (18,174) (15,677) Other 336 (180) 456 Net cash used by financing activities (1,411) (27,110) (2,562) Net Increase (Decrease) In Cash (1,891) 2,072 (2,575) Cash at Beginning of Year 2,714 642 3,217 Cash at End of Year $ 823 $ 2,714 $ 642 Supplemental Cash Flow Information Cash paid during the year for: Interest (net of amounts capitalized) $ 9,991 $ 12,565 $ 13,547 Income taxes (net of refunds) $ 5,337 $ 6,571 $ 10,733
CONSOLIDATED BALANCE SHEET (Dollars in thousands)
December 31 Assets 1993 1992 Utility Plant, at original cost $421,929 $406,695 Less accumulated depreciation 112,299 102,329 309,630 304,366 Construction work in progress 8,388 10,534 Nuclear fuel, net 1,390 1,497 Net utility plant 319,408 316,397 Investments and Other Assets Investments in affiliates, at equity 26,963 27,175 Non-utility investments 30,123 23,099 Non-utility property, less accumulated depreciation 3,203 3,151 Total investments and other assets 60,289 53,425 Current Assets Cash 823 2,714 Temporary investments, at cost which approximates market 1,162 1,759 Accounts receivable 18,614 18,988 Unbilled revenues 10,959 11,789 Materials and supplies, at average cost 4,641 4,201 Prepayments 3,098 4,093 Other current assets 4,821 4,071 Total current assets 44,118 47,615 Regulatory Assets and Other Deferred Charges 56,335 33,615 Total Assets $480,150 $451,052 The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CAPITALIZATION (Dollars in thousands)
December 31 1993 1992 Common Stock Equity Common stock, $6 par value, authorized 19,000,000 shares; outstanding 11,562,219 shares in 1993 and 11,196,576 shares in 1992 $ 69,373 $ 67,180 Other paid-in capital 42,584 36,472 Retained earnings 61,879 55,438 Total common stock equity 173,836 159,090 Cumulative Preferred and Preference Stock Preferred stock, $100 par value, authorized 500,000 shares Outstanding: Non-redeemable 4.15 % Series; 37,856 shares 3,786 3,786 4.65 % Series; 10,000 shares 1,000 1,000 4.75 % Series; 17,682 shares 1,768 1,768 5.375% Series; 15,000 shares 1,500 1,500 Redeemable 8.30 % Series; 200,000 shares 20,000 20,000 Preferred stock, $25 par value, authorized 1,000,000 shares Outstanding: 9.00% Series; 280,000 shares 7,000 7,000 Preference stock, $1 par value, authorized 1,000,000 shares Outstanding - none - - Total cumulative preferred and preference stock 35,054 35,054
December 31 1993 1992 Long-Term Debt First Mortgage Bonds 5 1/8% Series M , due 1995 4,255 4,280 6 3/4% Series N , due 1996 4,325 4,350 8 1/2% Series P , due 1999 - 3,000 8 3/4% Series R , due 2001 - 3,000 8 1/2% Series S , due 2003 - 5,000 9 1/2% Series Y , due 2003 1,000 5,500 12 1/4% Series BB, due 1998 - 6,000 12.85 % Series DD, due 1997 - 6,666 9.20 % Series EE, due 1998 7,500 7,500 9.20 % Series FF, due 2000 7,500 7,500 9.26 % Series GG, due 2002 3,000 3,000 9.97 % Series HH, due 2003 25,000 25,000 8.91 % Series JJ, due 2031 15,000 15,000 5.30 % Series KK, due 1998 10,000 - 5.54 % Series LL, due 2000 5,000 - 6.01 % Series MM, due 2003 7,500 - 6.27 % Series NN, due 2008 3,000 - 6.90 % Series OO, due 2023 17,500 - Debentures 7 %, due 1993 - 6,000 Vermont Industrial Development Authority Bonds Variable, due 2013 (2.80% at December 31, 1993) 5,800 5,800 New Hampshire Industrial Development Authority Bonds 6 7/8%, due 2009 5,500 5,500 Connecticut Development Authority Bonds Variable, due 2015 (2.75% at December 31, 1993) 5,000 5,000 Other Variable, due 1999 (6% at December 31, 1993) 389 - 127,269 118,096 Less current portion 4,850 10,217 Total long-term debt 122,419 107,879 Total Capitalization $331,309 $302,023 The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCK EQUITY (Dollars in thousands)
Other Common Stock Paid-in Retained Shares Amount Capital Earnings Total Balance, December 31, 1990 10,349,096 $62,095 $27,650 $ 51,835 $141,580 Sale of common stock 459,367 2,756 3,853 6,609 Net income 18,576 18,576 Cash dividends on capital stock: Common stock - $1.39 per share (14,679) (14,679) Cumulative preferred stock: Non-redeemable (998) (998) Redeemable (64) (64) Other paid-in capital (486) (486) Common stock issuance expenses (24) (24) Acquisition adjustment 1,166 1,166 Balance, December 31, 1991 10,808,463 64,851 30,993 55,836 151,680 Sale of common stock 388,113 2,329 5,659 7,988 Net income 21,422 21,422 Cash dividends on capital stock: Common stock - $1.39 per share (19,162) (19,162) Cumulative preferred stock: Non-redeemable (998) (998) Redeemable (1,660) (1,660) Common and preferred stock issuance expenses (180) (180) Balance, December 31, 1992 11,196,576 67,180 36,472 55,438 159,090 Sale of common stock 365,643 2,193 6,132 8,325 Net income 21,292 21,292 Cash dividends on capital stock: Common stock - $1.42 per share (12,193) (12,193) Cumulative preferred stock: Non-redeemable (998) (998) Redeemable (1,660) (1,660) Common and preferred stock issuance expenses (20) (20) Balance, December 31, 1993 11,562,219 $69,373 $42,584 $ 61,879 $173,836 The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 Summary of significant accounting policies Consolidation The consolidated financial statements include the accounts of the company and its wholly owned subsidiaries. Regulation The company is subject to regulation by the Vermont Public Service Board (PSB), the Federal Energy Regulatory Commission (FERC) and, to a lesser extent, the public utilities commissions in other New England states where the company does business, with respect to rates charged for service, accounting and other matters pertaining to regulated operations. As such, the company currently prepares its financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation, and records various regulatory assets and liabilities. In order for a company to report under SFAS No. 71, the company's rates must be designed to recover its costs of providing service, and the company must be able to collect those rates from customers. Management believes that the company currently meets the criteria for continued application of SFAS No. 71, but will continue to evaluate significant changes in the regulatory and competitive environment to assess the company's overall consistency with the criteria of SFAS No. 71. Revenues Estimated unbilled revenues are recorded at the end of accounting periods. Unbilled revenues of approximately $17.3 million, $18.6 million and $18.3 million for 1991, 1992 and 1993, respectively, are included in revenues on the Consolidated Statement of Income. On January 10, 1992, the PSB issued an Accounting Order which required the company to defer recognition of approximately $7.3 million of retail revenues that otherwise would have been recognized in 1991 and would have caused the company to report earnings in excess of the allowed return on utility common stock equity of 12.5% for 1991. In compliance with the Accounting Order the 1991 deferred revenues were recognized as revenues during 1993 offsetting higher operating and maintenance costs incurred during 1993. Maintenance Maintenance and repairs, including replacements not qualifying as retirement units of property, are charged to maintenance expense. Replacements of retirement units are charged to utility plant. The original cost of units retired plus the cost of removal, less salvage, is charged to the accumulated provision for depreciation. Depreciation The company uses the straight-line remaining life method of depreciation. Total depreciation expense was between 3.49% and 3.52% of the cost of depreciable utility plant for the years 1991 through 1993. Income Taxes As of January 1, 1993, the company adopted SFAS No. 109, which requires an asset and liability approach to determine income tax liabilities. The standard recognizes tax assets and liabilities for the cumulative effect of all temporary differences between financial statement carrying amounts and the tax bases of assets and liabilities including the impact of (1) income tax benefits associated with temporary differences previously passed on to the company's customers (flow-through), (2) the equity component of allowance for funds used during construction and (3) deferred investment tax credits. The new standard also requires the adjustment of deferred tax liabilities or assets for an enacted change in tax laws or rates, among other things. Prior year financial statements have not been restated to apply the provisions of SFAS No. 109. The income statement impact of adopting SFAS No. 109 was not material and therefore no cumulative effect of a change in accounting method is separately reflected in the accompanying financial statements. See Note 10. The deferred method under APB 11, was applied in 1992 and prior years. Deferred income taxes were provided to recognize the income tax effect of reporting certain transactions in different years for income tax and financial reporting purposes. Investment tax credits associated with utility plant are deferred and amortized ratably to income over the lives of the related properties. Investment tax credits associated with non-utility plant are recognized as income in the year realized. Allowance for Funds During Construction Allowance for funds used during construction (AFDC) is the cost, during the period of construction, of debt and equity funds used to finance construction projects. The company capitalizes AFDC as a part of the cost of major utility plant projects to the extent that costs applicable to such construction work in progress have not been included in rate base in connection with rate-making proceedings. AFDC equity represents a current non-cash credit to earnings which is recovered over the life of the property. The AFDC rates used by the company were 9.10%, 10.51% and 5.09% for the years 1991 through 1993, respectively. Regulatory Assets and Other Deferred Charges Certain costs are deferred and amortized in accordance with authorized or expected rate-making treatment. During regular nuclear refueling outages, the increased costs attributable to replacement energy purchased from NEPOOL and maintenance costs are deferred and amortized ratably to expense until the next regularly scheduled refueling shutdown. The company earns a return on the unamortized replacement energy and maintenance costs. See Note 2 to the Consolidated Financial Statements for discussion of the costs associated with the discontinued operation of the Yankee Atomic Nuclear Power Corporation nuclear power plant. Reclassifications Certain reclassifications have been made to prior year Consolidated Financial Statements to conform with the 1993 presentation. Note 2 Investments in affiliates The company uses the equity method to account for its investments in the following companies (dollars in thousands):
December 31 Ownership 1993 1992 Nuclear generating companies: Vermont Yankee Nuclear Power Corporation 31.3% $16,811 $16,847 Connecticut Yankee Atomic Power Company 2.0% 2,016 2,026 Maine Yankee Atomic Power Company 2.0% 1,349 1,331 Yankee Atomic Electric Company 3.5% 836 771 21,012 20,975 Vermont Electric Power Company, Inc.: Common stock 56.8% 3,498 3,601 Preferred stock 2,453 2,599 $26,963 $27,175
Each sponsor of the nuclear generating companies is obligated to pay an amount equal to its entitlement percentage of fuel, operating expenses (including decommissioning expenses) and cost of capital and is entitled to a similar share of the power output of the plants. The company's entitlement percentages are identical to the ownership percentages except that Vermont Yankee's entitlement percentage is 35%. The company is obligated to contribute its entitlement percentage of the capital requirements of Vermont Yankee and Maine Yankee and has a similar, but limited, obligation to Connecticut Yankee. The company is responsible for paying its entitlement percentage of decommissioning costs for Vermont Yankee, Connecticut Yankee, Maine Yankee and Yankee Atomic as follows (dollars in millions):
CVPS's Total Share of Date of Estimated CVPS's Funded Study Obligation Obligation Obligation Nuclear generating companies: Vermont Yankee 1988 $190 $66.5 $34.6 Maine Yankee 1987 $167 $3.3 $1.9 Connecticut Yankee 1992 $294.2 $5.9 $2.5 Yankee Atomic 1992 $200 $7.0 $3.1
On February 26, 1992, the Board of Directors of Yankee Atomic decided to permanently discontinue operation of their plant, and, in time, decommission the facility. The decision to prematurely retire the plant was based on continuing regulatory uncertainty and economics. The company relied on Yankee Atomic for less than 1.5% of its system capacity. Presently, purchased power costs billed to the company by Yankee Atomic, which include a provision for ultimate decommissioning of the unit, are being collected from the company's customers via existing retail and wholesale rate tariffs. On March 18, 1993, the FERC approved the settlement agreement regarding the decommissioning plan, recovery of plant investment and all issues with respect to prudency of the decision to discontinue operation. Yankee Atomic has estimated that as of December 31, 1993, its costs of discontinuing operations are approximately $345 million, which includes $200 million of decommissioning costs in 1992 dollars. The company's total current share of its cost with respect to Yankee Atomic's decision to discontinue operation is approximately $12 million. This amount is subject to ongoing review and revision and is reflected in the accompanying balance sheet both as a regulatory asset and deferred power contract obligation (current and non-current). The company believes that its proportionate share of Yankee Atomic costs will be recovered through the regulatory process and, therefore, the ultimate resolution of the premature retirement of the plant will not have a material adverse effect on the company's earnings or financial condition. Although the estimated costs of decommissioning are subject to change due to changing technologies and regulations, the company expects that the nuclear generating companies' liability for decommissioning, including any future changes in the liability, will be recovered in their rates over their operating lives. The Price-Anderson Act currently limits public liability from a single incident at a nuclear power plant to $9.4 billion, beyond that a licensee Velco operates pursuant to the terms of the 1985 Four-Party Agreement (as amended) with the company and two other major distribution companies in Vermont. Although the company owns 56.8% of Velco's outstanding common stock, the Four-Party Agreement effectively restricts the company's control of Velco, therefore, Velco's financial statements have not been consolidated. The Four-Party Agreement continues in full force and effect until May 1995 and will be extended for an additional two-year term in May 1995, and every two years thereafter, unless at least ninety (90) days prior to any two-year anniversary any party shall notify the other parties in writing that it desires to terminate the agreement as of such anniversary. No such notification has been filed by the parties. The company also owns 46.6% of Velco's outstanding preferred stock, $100 par value. Summarized financial information for Velco is as follows (dollars in thousands):
Earnings 1993 1992 1991 Transmission revenues $17,891 $16,722 $15,975 Operating income $4,423 $4,379 $4,345 Net income $1,375 $1,494 $1,549 Company's equity in net income $698 $749 $773 December 31 Investment 1993 1992 Current assets $15,181 $12,675 Non-current assets 55,018 58,146 Total assets 70,199 70,821 Less: Current liabilities 13,180 18,824 Non-current liabilities 45,626 40,064 Net assets $11,393 $11,933 Company's equity in net assets $ 5,951 $ 6,200
Note 3 Non-utility investments The company's wholly owned subsidiary, Catamount Energy Corporation (Catamount) invests in non-regulated, energy-related projects. Currently, Catamount has four wholly owned subsidiaries: Catamount Rumford Corporation, Equinox Vermont Corporation, Appomattox Vermont Corporation and Catamount Williams Lake LTD. Certain financial information for Catamount's investments is set forth in the table that follows (dollars in thousands):
Investment Generating December 31 Projects Location Capacity Fuel Ownership 1993 1992 Rumford Cogeneration Co. (Rumford) Maine 85MW Coal/Wood 10.9% $6,280 $5,926 Ryegate Associates (Equinox) Vermont 20MW Wood 33.1% $7,034 $2,619 Appomattox Cogeneration (Appomattox) Virginia 57MW Wood/Coal 50.0% $10,668 $11,803 Black liquor NW Energy Williams Lake L.P. British Columbia, 60MW Wood 8.1% $1,975 - (Williams Lake) Canada
The Rumford project was placed in service on August 1, 1990. The Ryegate and Williams Lake projects began commercial operation on November 1, 1992 and April 2, 1993, respectively. On October 26, 1992, Appomattox purchased a 50% partnership interest in Appomattox Cogeneration which owns a power sales agreement associated with a cogeneration facility currently in operation. Subsequent to December 31, 1993, Catamount purchased an additional 4.185% limited partnership interest in Rumford Cogeneration Co. This investment will increase Rumford's ownership in the project to 15.053%. At December 31, 1993, Catamount had $2.95 million in an escrow account in anticipation of this closing. Effective January 1, 1993, the company formed a new subsidiary, SmartEnergy Services, Inc. (SmartEnergy). The purpose of this subsidiary is to cost effectively provide reliable, energy efficient products and services, including the rental of electric water heaters. This subsidiary contributed $289,000 to the company's earnings for the year ended December 31, 1993. Prior to January 1, 1993, the rental electric water heater program was part of the company's core electric business and reported as non-operating income. On October 1, 1993, SmartEnergy purchased for $1.2 million, 304,125 shares (5%) of Green Technologies, Inc. common stock. Green Technologies, Inc. of Boulder, Colorado, currently manufactures Green Plug electricity savers for several types of household appliances. SmartEnergy uses the cost method of accounting for its investment in Green Technologies, Inc. Note 4 Redeemable preferred stock Commencing in 1998 the 8.30% Dividend Series Preferred Stock is redeemable at par through a mandatory sinking fund in the amount of $1.0 million per annum, and at its option, the company may redeem at par an additional non-cumulative $1.0 million per annum. Note 5 Long-term debt and sinking fund requirements Based on issues outstanding at December 31, 1993, the aggregate amount of long-term debt maturities and sinking fund requirements (exclusive of the amount that may be satisfied by property additions) are approximately $4.9 million, $4.2 million, $1.0 million, $3.0 million and $20.5 million for the years 1994 through 1998, respectively. Substantially all property and plant is subject to liens under the First Mortgage Bonds. Note 6 Financial instruments The fair value of the company's redeemable preferred stock and long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for debt of the same remaining maturation. The estimated fair values of the company's financial instruments at December 31, 1993 are as follows (dollars in thousands): Carrying Fair Amount Value Redeemable preferred stock $20,000 $22,834 Long-term debt $127,269 $137,242 Anticipated regulatory treatment of the excess of the fair value over the carrying value of the company's redeemable preferred stock and long-term debt, if they were settled at amounts approximating those above, would result in an increase in the company's rates over a prescribed amortization period. Accordingly, any settlement would not result in a material impact on the company's financial position or results of operations. Note 7 Short-term debt Utility The company uses committed lines of credit and uncommitted loan facilities to finance its construction program, on a short-term basis, and for other corporate purposes. As of December 31, 1993, the company had $19.5 million of committed lines of credit and $25 million of uncommitted loan facilities which are normally renewed upon expiration and require annual fees ranging from zero to .25% of an individual line. Borrowings under these short-term debt arrangements are at interest rates ranging from less than prime to the prime rate. The company had $1.4 million and $2.1 million of outstanding short-term debt at December 31, 1993 and 1992, respectively, at average interest rates of 3.61% for 1993 and 4.30% for 1992. Non-Utility In October 1993, Catamount established an Irrevocable Standby Letter of Credit with a bank to borrow up to an aggregate amount of $2.3 million to replace its share of cash in the Appomattox Cogeneration's Project Debt Service Reserve Fund. This Letter of Credit is for a one-year term with annual extensions available. At December 31, 1993, there were no borrowings outstanding under this Letter of Credit. Catamount believes it will not have to perform under this agreement because the likelihood of default by the primary party is remote. In November 1993, Catamount established an unsecured line of credit with a bank to borrow up to $.5 million in support of short-term working capital requirements. This line of credit matures March 1, 1994. At December 31, 1993 there were no borrowings outstanding under this line of credit. In September 1993, SmartEnergy established a $1.0 million revolving line of credit with a bank to provide working capital and financing assistance for investment purposes. This line of credit expires in one year. SmartEnergy had $696,000 of outstanding short-term debt at December 31, 1993 at average interest rate of 6.08%. Financial obligations of the non-utility wholly owned subsidiaries are non-recourse to the company. Note 8 Accounts receivable In 1988 the company entered into an agreement to sell up to $20 million of certain accounts receivable and unbilled revenues. At December 31, 1993 and 1992, a total of $12 million of accounts receivable and unbilled revenues were sold under an accounts receivable facility. A portion of the fee for using the facility is based on London Inter Bank Offered Rate (LIBOR). In order to stabilize this portion of its obligation, the company executed a swap transaction which sets the LIBOR based fee at 3.985% for the period September 29, 1992 to September 29, 1994. Accounts receivable and unbilled revenues that have been sold were transferred with limited recourse. A pool of assets, varying between 3% to 5% of the accounts receivable and unbilled revenues sold, are set aside for this potential recourse liability. Accounts receivable and unbilled revenues are reflected net of sales of $4.7 million and $7.3 million, respectively, at December 31, 1993 and $5.2 million and $6.8 million, respectively, at December 31, 1992. Accounts receivable are also reflected net of an allowance for uncollectible accounts of $.9 million and $1.1 million at December 31, 1993 and 1992, respectively. Note 9 Pension and postretirement benefits The company has a non-contributory trusteed pension plan covering all employees (union and non-union). Under the terms of the pension plan, employees are generally eligible for monthly benefit payments upon reaching the age of 65 with a minimum of five years of service. The company's funding policy is to contribute, at least, the statutory minimum to a trust. The company is not required by its union contract to contribute to multi-employer plans. The projected unit credit actuarial cost method was used to compute net pension costs and the accumulated and projected benefit obligations. The increase in the accumulated benefit obligation and projected benefit obligation for 1993 results primarily from changes in plan asumptions. The following table sets forth the funded status of the pension plan and amounts recognized in the company's balance sheet and statement of income (dollars in thousands):
December 31 1993 1992 1991 Funded status of the plan Vested benefit obligation $35,837 $27,899 $23,377 Non-vested benefit obligation 493 439 283 Accumulated benefit obligation $36,330 $28,338 $23,660 Projected benefit obligation $49,743 $39,001 $34,101 Market value of plan assets (primarily equity and fixed income securities) 46,074 39,768 37,214 Projected benefit obligation more (less) than market value of plan assets 3,669 (767) (3,113) Unrecognized net transition assets 1,768 1,929 2,090 Unrecognized prior service costs (3,568) (3,084) (1,527) Unrecognized net gain 1,498 5,314 4,817 Net pension liability included in other current liabilities $ 3,367 $ 3,392 $ 2,267 Net pension costs include the following components Service cost $ 1,491 $ 1,307 $ 1,112 Interest cost 3,377 3,065 2,705 Actual return on plan assets (6,800) (4,137) (7,640) Net amortization and deferral 3,391 890 4,683 Pension costs 1,459 1,125 860 Less amount allocated to other accounts 276 223 164 Net pension costs expensed $ 1,183 $ 902 $ 696
Assumptions used in calculating pension cost were as follows: December 31 1993 1992 1991 Weighted average discount rates 7.25% 8.50% 8.75% Expected long-term return on assets 9.75% 10.25% 10.25% Rate of increase in future compensation levels 4.75% 5.50% 6.02% The company sponsors an unfunded defined benefit postretirement medical plan that covers all employees. Effective January 1, 1993, the company adopted, on a prospective basis, Statement of Financial Accounting Standards (SFAS) No. 106, Employer's Accounting for Postretirement Benefits Other Than Pensions (OPEB) which requires accrual of the expected costs of such benefits during the employees' years of service. The following table sets forth, as of January 1, 1994, the plan's funded status and amounts recognized in the company's Balance Sheet and the amount of expense charged to the company's Statement of Income in 1993 in accordance with SFAS No. 106 (dollars in thousands): Accumulated postretirement benefit obligation Retirees $(5,098) Fully eligible active plan participants (1,207) Other active plan participants (1,293) Plan assets at fair value - Accumulated postretirement benefit obligation in excess of plan assets (7,598) Unrecognized transition obligation 6,253 Unrecognized net loss 351 Accrued postretirement benefit cost $ (994) _______ Net postretirement benefit cost for 1993 includes the following components Service cost $ 168 Interest cost 588 Amortization of transition obligation over a twenty-year period 329 Postretirement benefit cost 1,085 Less amount allocated to other accounts 205 Net postretirement benefit cost expensed $ 880 _______ A 9.5% pre-65 and 6.0% post-65 annual rate of increase in the per capita costs of covered health care benefits was assumed for 1993, decreasing to 5.5% and 4.5%, respectively, for the year 1997 and thereafter. This decrease results from changes to the retiree medical plan limiting the cost for employees retiring after 1995 to the 1995 per participant cost. Increasing the assumed health care cost trend rates by one percentage point in each year would have resulted in an increase in the accumulated postretirement benefit obligation as of January 1, 1994, of $491,000 and an increase in the aggregate of the service cost and interest cost components of net periodic postretirement benefit cost for 1993 of $42,000. A weighted average discount rate of 7.25% was used to determine the accumulated postretirement benefit obligation. Prior to 1993, the company expensed OPEB's costs as benefits were paid. Such costs totaled $537,000 and $546,000 for 1991 and 1992, respectively. In November 1992, the FASB issued SFAS No. 112, Employers' Accounting for Postemployment Benefits, effective in 1994. SFAS No. 112 requires accrual of the expected cost of postemployment benefits provided to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. The company currently provides postemployment benefits, consisting of long-term disability benefits and expenses these costs as benefits are paid, which is consistent with current rate-making practices. Such costs total $94,000, $91,000 and $156,000 for 1991 through 1993, respectively. The company will adopt SFAS No. 112 effective January 1, 1994. Management has evaluated the financial impact of the new standard, and based on preliminary results, the accumulated postemployment benefit obligation at January 1, 1994, is estimated to be approximately $1.2 million and the postemployment benefit cost to be charged to expense in 1994 will be approximately $177,000 (pre-tax). In connection with the company's cost-cutting plan, in the first quarter of 1994, the company offered a Voluntary Retirement Program (VRP) to 80 eligible employees. Eligible employees have until March 15, 1994, to participate in the VRP. If all 80 employees participated in the VRP, the company's 1994 benefit obligation would be approximately $8.8 million. This amount consists of pension benefits and postretirement medical benefits of $4.3 million and $4.5 million, respectively. However, the company does not anticipate all eligible employees to participate. Additionally, the company offered a Voluntary Severance Program (VSP) to certain employees. The benefits consist of severance pay and limited-term medical coverage. At this time, the company cannot predict how many employees will participate in the VSP or its ultimate cost. Employees that wish to participate in the VSP have from March 7, 1994 until April 22, 1994 to apply. For rate-making purposes, the company anticipates receiving an order in the first quarter of 1994 from the PSB requiring the company to defer these costs and amortize them over a five-year period. The timing and recoverability of these costs will be determined in the company's current rate proceedings. Note 10 Income taxes The components of Federal and state income tax expense are as follows (dollars in thousands): Year Ended December 31 1993 1992 1991 Federal: Current $ 2,751 $ 7,774 $ 8,039 Deferred 7,893 2,042 (914) Investment tax credits, net (391) (391) (708) 10,253 9,425 6,417 State: Current 406 1,987 37 Deferred 2,113 1,001 (233) 2,519 2,988 (196) Total Federal and state income taxes $12,772 $12,413 $ 6,221 Federal and state income taxes charged (credited) to: Operating expenses $12,496 $12,102 $ 5,820 Other income 276 311 401 $12,772 $12,413 $ 6,221 The principal components which resulted in deferred income tax expense for 1992 were additional depreciation for tax purposes $3.9 million offset by contributions in aid of construction $.9 million. The 1991 principal components were additional depreciation for tax purposes $3.9 million offset by deferred revenues $2.9 million, contributions in aid of construction $1.2 million and deferred power costs $.7 million. The principal items that comprise the difference between the total income tax expense and the amount calculated by applying the statutory Federal income tax rate to income before tax are as follows (dollars in thousands): Year Ended December 31 1993 1992 1991 Income before income tax $34,064 $33,835 $24,797 Federal statutory rate 35% 34% 34% Federal statutory tax expense $11,922 $11,504 $ 8,431 Increases (reductions) in taxes resulting from: Dividend received deduction (995) (353) (1,175) Deferred taxes on plant previously "flowed-through" 523 523 523 State income taxes net of Federal tax benefit 1,637 1,707 1,167 Investment credit amortization (391) (391) (485) Seabrook project 139 70 11 Book-to-return adjustments and other (63) (647) (2,251) Total income tax expense provided $12,772 $12,413 $ 6,221 The tax effects of temporary differences and tax carry forward that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1993 are presented below (dollars in thousands): Deferred tax assets Alternative minimum tax credit carry forward $ 1,400 Non-deductible accruals and other 4,186 Deferred compensation and pension 4,058 Environmental costs accrual 2,142 Total deferred tax assets $11,786 Deferred tax liabilities Property, plant and equipment $38,304 Net regulatory asset 13,806 Conservation and load management expenditures 5,123 Nuclear refueling costs 2,633 Other 3,948 Total deferred tax liabilities 63,814 Net deferred tax liability $52,028 _______ As discussed in Note 1, the company adopted SFAS No. 109 as of January 1, 1993. As a result of adopting SFAS No. 109, the company recognized additional net accumulated deferred income tax liabilities of approximately $15 million and a net corresponding regulatory asset from customers of approximately $15 million for future revenues that will be received when the temporary differences reverse and are settled in rates. A valuation allowance has not been recorded at December 31, 1993, as the company expects that all deferred income tax assets will be utilized in the future. On August 10, 1993, the Revenue Reconciliation Act of 1993 was passed which, among other things, increased the maximum corporate income tax rate from 34% to 35% on taxable income in excess of $10 million. The increase was effective January 1, 1993 and resulted in additional income tax expense of approximately $285,000 for 1993. The company has an alternative minimum tax credit carry forward of $1.4 million which is available to reduce future regular income taxes over an indefinite period. Note 11 Commitments and contingencies The company's power supply is acquired from a variety of sources including its own generating units, jointly owned units, long-term contracts and short-term purchases from a variety of sources. Through its investments in four nuclear generating companies, the company is entitled to receive power from those nuclear units. See Note 2 for a discussion of the company's obligations related to its investment in nuclear generating companies. Under long-term contracts with various electric utilities in the region, the company is purchasing certain percentages of the electrical output of production plants constructed and financed by those utilities. Such contracts obligate the company to pay certain minimum annual amounts representing the company's proportionate share of fixed costs, including debt service requirements (amounts necessary to retire the principal of and to pay the interest on the portion of the related long-term debt ascribed to the company) whether or not the production plants are operating. The cost of power obtained under such long-term contracts, including payments required to be made when a production plant is not operating, is reflected as "Purchased power" in the Consolidated Statement of Income. The company purchases power from a coal-fired generating plant owned by N.U. under a thirty-year contract which expires April 30, 1998. Under this contract the company is obligated to make capacity payments which amounted to approximately $3.6 million, $3.7 million and $3.8 million for 1991 through 1993, respectively. These capacity payments will vary over the contract period due to factors such as changes in N.U.'s net investment and allowed rate of return. Under various contracts, the company purchases from Hydro-Quebec capacity and associated energy. Under the terms of these contracts, the company is required to pay certain fixed capacity costs whether or not energy purchases above a minimum level described in the contracts are made. Such minimum energy purchases must be made whether or not other less expensive energy sources might be available. The state of Vermont contract, between the company and the Vermont Department of Public Service, terminates on September 22, 1995. The company receives 69 MW of firm capacity and associated energy delivered at the Highgate interconnection. The company's portion of the 1987 Hydro-Quebec contract consists of: Schedule A, 25 MW of firm capacity and associated energy to be delivered at the Highgate interconnection through September 22, 1995. All of this power is being sold back to Hydro-Quebec for the duration of the contract. This sell-back of 25 MW continues as Schedule C-1 power at the termination of the Schedule A contract. This sell-back contract is not cancelable. Schedule C-1, 31 MW and Schedule C-2, 21 MW of firm capacity and associated energy are to be delivered at the NEPOOL/Hydro-Quebec (Phase I and Phase II) interconnection through October 2012. Under a cancelable contract, the company is selling back to Hydro-Quebec 30 MW and 20 MW of its C-1 and C-2 entitlements, respectively, for the period ending October 31, 1996. Under the terms of this agreement, the company can exercise an option, on an annual basis, to cancel all or any portion of this sell-back and resume deliveries of this power under the appropriate C-1 and C-2 schedules. Further agreements allow for the interruption of the sell-back, and the provision of 50 MW of capacity and delivery of associated energy for the period March through October of a given year. The company must return this energy by the month of March of the following year or pay Hydro-Quebec 150% of the Schedule C-1 and C-2 energy price. Hydro-Quebec has the option under this sell-back agreement to buy back 50 MW for the period November 1, 1996 through October 31, 2000. This option must be exercised no later than October 31, 1994. These sell-back agreements provide the company with the necessary flexibility to minimize near-term costs while retaining the long-term benefits of the purchase contracts. Schedule B, 92 MW of firm capacity and associated energy is expected to be delivered at the Highgate interconnection for 20 years beginning September 23, 1995. The company will sell back 25 MW of Schedule B entitlement for the period September 23 through October 31, 1995. Schedule C-4a, 24 MW of firm capacity and associated energy is expected to be delivered over the NEPOOL/Hydro-Quebec (Phase I and Phase II) interconnection beginning November 1, 1996 through October 31, 2012. Joint-ownership The company's ownership interests in jointly owned generating and transmission facilities are set forth in the table that follows and recorded in the company's Consolidated Balance Sheet (dollars in thousands): MW December 31 Ownership Entitlement 1993 1992 Generating plants: Wyman #4 1.78% 11 $ 3,322 $ 3,315 Joseph C. McNeil 20.00% 11 14,821 14,821 Millstone #3 1.73% 20 75,071 75,270 Highgate transmission facility 46.08% 12,586 12,577 105,800 105,983 Accumulated depreciation 22,535 20,127 $ 83,265 $ 85,856 Wyman #4, an oil-fired generating plant, commenced commercial operation in December 1978. The Joseph C. McNeil wood, gas and oil-fired generating plant commenced commercial operation in June 1984 and the Millstone #3, a nuclear generating unit, commenced commercial operation in April 1986. The Highgate transmission interconnection with Canada was placed in service in September 1985. The company's share of operating expenses for these facilities is included in the corresponding operating accounts on the Consolidated Statement of Income. Each participant in these facilities must provide for its own financing. Environmental The company believes it operates in compliance in all material respects with all laws, regulations, orders and decrees respecting environmental control to the extent currently applicable to and effective against it. Furthermore, it is the company's policy to comply, in all material respects, with such laws, regulations, orders and decrees, including any variances granted thereunder. The company's operations and activities are subject to inspection and supervision by both state and Federal regulatory authorities including the United States Environmental Protection Agency (EPA). The company is not subject to any material fines for violation of any environmental laws or other matters which are the subject of regulatory inspection or oversight, nor is the company a responsible party in any pending or threatened proceeding instituted by the EPA under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund). The company is engaged in processes and activities to continually assess and assure its compliance with environmental laws, regulations, orders and decrees. Based on the results of these processes and activities to date, the company is not aware of any instances where it has caused or permitted a release of a hazardous substance through its operations on or about the properties owned, operated and otherwise used by the company which will likely result in any material environmental liabilities to the company. To the extent that the company has knowledge of releases of small quantities of fuel oil or other substances which have resulted from its operations, the company believes that these releases can be remedied without material adverse effect on its financial condition or the results of its operation. The company is an amalgamation of more than 100 predecessor companies which were engaged in various operations and activities prior to their being incorporated into the company. At least three of these companies were involved in the production of gas from coal for sale and distribution to customers at retail. These activities were halted by the company in the late 1940's or early 1950's. The company is continually investigating, assessing and monitoring the status of potential contaminated sites related to these and other operations of the company and its predecessors. The company's policy is to record a liability for remediation, monitoring and other related costs when it determines that such a liability is probable and estimable. Coal tar deposits have been discovered at the company's Cleveland Avenue property located in the City of Rutland, a site at which one of its predecessors operated a coal-gasification facility. Due to the presence of these deposits and the uncertainties as to potential contamination and migration off-site, the company conducted studies to determine the magnitude and extent of the coal tar releases. Based on the results of this initial work, the company engaged a consultant to assist in evaluating clean-up methodologies and estimate the cost to clean up the site. These studies presently indicate that the cost to remediate this site will be approximately $5 million. This amount was charged to expense in the fourth quarter of 1992. The company has yet to determine whether insurance proceeds are available to offset this expense. The company has been contacted by the owners and potentially responsible parties (together the PRPs) of two former municipal landfills located in Vermont concerning the company's alleged prior use of those facilities for the disposal of waste materials. The PRPs allege that the company may be liable for costs in connection with the response, investigation and clean-up of these facilities pursuant to the applicable state and Federal law. At this time, the company has no information which would indicate that it is liable in connection with the remediation efforts ongoing at either site. Further investigation of the company's potential liability for these facilities is presently being conducted. The company is not subject to any pending or threatened litigation with respect to any other sites nor has the EPA or other state or Federal agency sought contribution from the company for their study or remediation. Dividend restrictions The indentures relating to long-term debt and the Articles of Association contain certain restrictions on the payment of cash dividends on capital stock. Under the most restrictive of such provisions, approximately $50 million of retained earnings was not subject to dividend restriction at December 31, 1993. Leases and support agreements The company participated with other electric utilities in the construction of the Phase I Hydro-Quebec transmission facilities in northeastern Vermont, which were completed at a total cost of approximately $140 million. Under a support agreement relating to the company's participation in the facilities, the company is obligated to pay its 4.42% share of Phase I Hydro-Quebec capital costs over a 20-year recovery period through and including 2006. The company also participated in the construction of Phase II Hydro-Quebec transmission facilities constructed throughout New England, which were placed in service in November 1990 with a total cost of approximately $487 million. Under a similar support agreement, the company is obligated to pay its 5.132% share of Phase II Hydro-Quebec capital costs over a 25-year recovery period through and including 2015. All costs under these support agreements are recorded as purchased transmission expense in accordance with the company's rate-making policies. Future minimum payments will be approximately $3.2 million for each year from 1994 through 2015 and will decline thereafter. The company's percentage shares of the net capital cost of these facilities, totaling approximately, $22.6 million, are classified in the accompanying Consolidated Balance Sheet as "Utility Plant" and "Long-term Lease Arrangements" (current and non-current). Minimum rental commitments of the company under non-cancelable leases as of December 31, 1993, are not material. Total rental expense entering into the determination of net income, consisting principally of vehicle and equipment rentals, was approximately $2.6 million, $3.0 million and $3.1 million for the years 1991 through 1993, respectively. As discussed in Notes 1 and 10 to the consolidated financial statements, effective January 1, 1993, the company changed its method of accounting for income taxes. ARTHUR ANDERSEN & CO. Boston, Massachusetts February 7, 1994 EX-21 5 EXHIBIT 21.1 OF FORM 10-K Exhibit 21-1 List of Subsidiaries of Registrant State in which Incorporated Connecticut Valley Electric Company Inc. (a)(F1) New Hampshire Vermont Electric Power Company, Inc. (b)(F2) Vermont Central Vermont Public Service Corporation - Bradford Hydroelectric, Inc. (a)(F1) Vermont Central Vermont Public Service Corporation - East Barnet Hydroelectric, Inc. (a)(F1) Vermont CV Energy Resources, Inc. (a)(F1) Vermont Catamount Rumford, Inc. (a)(F1) Vermont Equinox Vermont Corporation (a)(F1) Vermont Appomattox Vermont Corporation (a)(F1) Vermont Catamount Energy Corporation (a)(F1) Vermont Catamount Williams Lake, Ltd. (a)(F1) Vermont SmartEnergy Services, Inc. (a)(F1) Vermont - --------------------------------------------------- (FN) (F1) (a) Included in consolidated financial statements (F2) (b) Separate financial statements do not need to be filed under Regulation S-X, Rule 1-02(v) defining a "significant subsidiary", and Rule 3-09, which sets forth the requirement for filing separate financial statements of subsidiaries not consolidated. -----END PRIVACY-ENHANCED MESSAGE-----