-----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, OQtv6bICOc9rhLkuZiIeJ5QdbMAsVMcX7UPGvzsPNgUqP3qbL/ri+DcyXPQiHbtu PXyJslVaY2cc0fmGiRzKMg== 0000018808-94-000017.txt : 19940513 0000018808-94-000017.hdr.sgml : 19940513 ACCESSION NUMBER: 0000018808-94-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08222 FILM NUMBER: 94527406 BUSINESS ADDRESS: STREET 1: 77 GROVE ST CITY: RUTLAND STATE: VT ZIP: 05701 BUSINESS PHONE: 8027732711 10-Q 1 10-Q FILING FOR FIRST QTR ENDED 03/31/94 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 Form 10-Q ___ |_x_| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended__March 31, 1994___ ___ |___| TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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) Incorporated in Vermont 03-0111290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 77 Grove Street, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) 802-773-2711 (Registrant's telephone number, including area code) _____________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 30, 1994 there were outstanding 11,671,561 shares of Common Stock, $6 Par Value.
CENTRAL VERMONT PUBLIC SERVICE CORPORATION PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended March 31 1994 1993 Operating Revenues $83,885 $85,319 Operating Expenses Operation Purchased power 37,693 35,811 Production and transmission 5,373 5,367 Other operation 9,024 9,046 Maintenance 2,401 2,250 Depreciation 4,066 3,736 Other taxes, principally property taxes 2,673 2,540 Taxes on income 8,288 9,722 Total operating expenses 69,518 68,472 Operating Income 14,367 16,847 Other Income and Deductions Equity in earnings of affiliates 803 984 Allowance for equity funds during construction 20 19 Other income (expenses), net 28 (471) Benefit for income taxes 12 6 Total other income and deductions, net 863 538 Total Operating and Other Income 15,230 17,385 Interest Expense Interest on long-term debt 2,487 2,457 Other interest 161 136 Allowance for borrowed funds during construction (26) (36) Total interest expense, net 2,622 2,557 Net Income 12,608 14,828 Retained Earnings at Beginning of Period 61,879 55,438 74,487 70,266 Cash Dividends Declared Preferred stock 547 664 Common stock 4,111 50 Total dividends declared 4,658 714 Retained Earnings at end of Period $69,829 $69,552 _______ _______ Earnings Available for Common Stock $12,061 $14,164 Average shares of common stock outstanding 11,609,642 11,241,877 Earnings per Share of Common Stock $1.04 $1.26 Dividends per Share of Common Stock $.3550 $.3550
CENTRAL VERMONT PUBLIC SERVICE CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in thousands) March 31 December 31 1994 1993 (Unaudited) Assets Utility Plant, at original cost $425,771 $421,929 Less accumulated depreciation 116,404 112,299 309,367 309,630 Construction work in progress 7,994 8,388 Nuclear fuel, net 1,233 1,390 Net utility plant 318,594 319,408 Investments and Other Assets Investments in affiliates, at equity 27,078 26,963 Non-utility investments 29,941 30,123 Non-utility property, less accumulated depreciation 3,621 3,203 Total investments and other assets 60,640 60,289 Current Assets Cash 2,845 823 Temporary investments, at cost which approximates market 10,124 1,162 Accounts receivable 21,059 18,614 Unbilled revenues 5,083 10,959 Materials and supplies, at average cost 4,607 4,641 Prepayments 2,780 3,098 Other current assets 4,548 4,821 Total current assets 51,046 44,118 Regulatory Assets and Other Deferred Charges 61,167 56,335 Total Assets $491,447 $480,150 ________ ________ Capitalization and Liabilities Capitalization Common stock, $6 par value, authorized 19,000,000 shares; outstanding 11,657,070 shares and 11,562,219 shares, respectively $ 69,942 $ 69,373 Other paid-in capital 43,833 42,584 Retained earnings 69,829 61,879 Total common stock equity 183,604 173,836 Preferred and preference stock 8,054 15,054 Preferred stock with sinking fund requirements 20,000 20,000 Long-term debt 122,414 122,419 Total capitalization 334,072 331,309 Long-term Lease Arrangements 21,281 21,553 Current Liabilities Short-term debt 677 1,356 Current portion of long-term debt 525 4,850 Accounts payable 5,559 7,002 Accounts payable - affiliates 7,568 7,488 Accrued interest 2,708 564 Accrued income taxes 8,629 788 Dividends declared 507 664 Other current liabilities 24,276 23,913 Total current liabilities 50,449 46,625 Deferred Credits Deferred income taxes 52,194 52,028 Deferred investment tax credits 8,687 8,785 Yankee Atomic purchased power contract 9,333 9,768 Environmental cleanup 4,900 4,900 Restructuring costs 4,442 - Other deferred credits 6,089 5,182 Total deferred credits 85,645 80,663 Total Capitalization and Liabilities $491,447 $480,150 ________ ________
CENTRAL VERMONT PUBLIC SERVICE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended March 31 1994 1993 Cash Flows Provided (Used) By Operating Activities Net income $12,608 $14,828 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 4,066 3,736 Deferred income taxes and investment tax credits 185 1,627 Allowance for equity funds during construction (20) (19) Net deferral and amortization of nuclear refueling replacement energy and maintenance costs 1,452 1,049 Amortization of property losses 486 1,130 Amortization of nuclear fuel 156 188 Decrease in accounts receivable 3,356 2,232 Decrease in accounts payable (999) (3,588) Increase in accrued income taxes 7,841 5,455 Decrease in other working capital items 3,003 3,749 Other, net (970) (1,632) Net cash provided by operating activities 31,164 28,755 Investing Activities Increase in temporary investments (8,962) (8,433) Construction and plant expenditures (3,913) (5,331) Conservation and load management expenditures (1,254) (1,109) Investments in affiliates (39) - Non-utility investments 182 (3,345) Other investments, net (151) (92) Net cash used in investing activities (14,137) (18,310) Financing Activities Sale of common stock 1,818 2,155 Short-term debt, net (679) (2,100) Retirement of preferred stock (7,000) - Retirement of long-term debt (4,330) (6,666) Common and preferred dividends paid (4,814) (3,975) Other - (43) Net cash used in financing activities (15,005) (10,629) Net Increase (Decrease) in Cash 2,022 (184) Cash at Beginning of Period 823 2,714 Cash at end of Period $ 2,845 $ 2,530 _______ _______ Supplemental Cash Flow Information Cash paid during the year for: Interest (net of amounts capitalized) $ 392 $ 1,126 Income taxes (net of refunds) $ 572 $ 2,957
CENTRAL VERMONT PUBLIC SERVICE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1994 Note 1 - Accounting Policies The Company's significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in its 1993 Annual Report on Form 10-K filed with the Securities and Exchange Commission. For interim reporting purposes, the Company follows these same basic accounting policies but considers each interim period as an integral part of an annual period. Effective January 1, 1994, the Company adopted SFAS No. 112, Employer's Accounting for Postemployment Benefits. See Note 4. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. Note 2 - 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, the Trafton Hoisington Landfill and the Bennington Landfill, 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. Note 3 - Accounts Receivable In 1988 the Company entered into an agreement to sell up to $20 million of certain accounts receivable and unbilled revenues. At March 31, 1994 and December 31, 1993, 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, were set aside for this recourse liability. Accounts receivable and unbilled revenues are reflected net of sales of $6.8 million and $5.2 million, respectively, at March 31, 1994 and $4.7 million and $7.3 million, respectively, at December 31, 1993. Accounts receivable are also reflected net of an allowance for uncollectible accounts of $1.2 million at March 31, 1994 and $1.1 million at December 31, 1993. Note 4 - Postemployment Benefits Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 112, Employer's Accounting for Postemployment Benefits. The accumulated postemployment benefit obligation of approximately $1.1 million, consisting of long-term disability benefits is reflected in the accompanying balance sheet both as a regulatory asset and deferred postemployment benefit obligation (current and non-current). The post- employment benefit cost to be charged to expense in 1994 is estimated to be $165,000. The Company anticipates that the SFAS No. 112 treatment of postemployment benefits will be allowed for rate-making purposes, therefore, no material effect on financial position or on results of operation is expected in connection with the adoption. Note 5 - Voluntary Retirement and Severance Programs In the first quarter of 1994, the Company offered a Voluntary Retirement Program (VRP) which was accepted by 42 employees. The estimated benefit obligation as of March 31, 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. Additionally, the Company offered a Voluntary Severance Program (VSP) to certain employees. Eligible employees had until April 22, 1994 to apply. This program was accepted by 32 employees. The Company also announced a layoff of 20 employees on May 9, 1994. The VRP, VSP and layoff combined with attrition since mid-1993, yields a total work force reduction of approximately 14%. The Company is currently evaluating the 1994 benefit obligation for the VSP and for employees affected by the layoff and will record these obligations in the second quarter of 1994. For rate-making purposes, the Company received an Accounting Order from the PSB dated March 11, 1994, requiring the Company to defer all of these program costs and amortize them over a five-year period beginning June 1, 1994 through May 31, 1999. The timing and recoverability of these costs will be determined in the Company's current rate proceedings.
CENTRAL VERMONT PUBLIC SERVICE CORPORATION Summarized income statement information for Vermont Yankee Nuclear Power Corporation follows (dollars in thousands, except per share amounts): Three Months Ended March 31 1994 1993 Operating revenues $39,169 $39,649 Operating expenses 35,526 35,582 Operating income 3,643 4,067 Other income, net 238 218 Total operating and other income 3,881 4,285 Interest expense 2,198 2,148 Net income $ 1,683 $ 2,137 _______ _______ Average shares of common stock outstanding 392,481 392,481 Earnings per share of common stock $4.29 $5.44
CENTRAL VERMONT PUBLIC SERVICE CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 1994 Earnings Overview Earnings per share of common stock for the three months ended March 31, 1994 were $1.04 compared to $1.26 for the corresponding period last year. Earnings available for common stock for these respective periods were $12,061,000 and $14,164,000. The decline in earnings for the first quarter is due to several factors described in results of operations below. On March 28, 1994, the Vermont Public Service Board (PSB) held a hearing and subsequently approved the Vermont Department of Public Service's motion, filed on March 21, 1994, to consolidate two open dockets: 1) a PSB ordered investigation into the Company's cost of service and resulting rates opened in November 1993 and 2) the Company's request for an 8.9% general rate increase filed February 15, 1994. Hearings are scheduled to take place during the third quarter of 1994 and any resulting change in rates will take effect November 1, 1994. RESULTS OF OPERATIONS Operating Revenues and MWH Sales A summary of MWH sales and operating revenues for the three months ended March 31, 1994 and 1993 (and the related percentage changes from 1993) is set forth below:
Three Months Ended March 31 Percentage Percentage MWH Increase Revenues (000's) Increase 1994 1993 (Decrease) 1994 1993 (Decrease) Residential 295,960 292,015 1.4 $33,470 $33,973 (1.5) Commercial 216,712 220,144 (1.6) 25,473 26,079 (2.3) Industrial 110,230 110,185 - 9,477 9,674 (2.0) Other retail 1,916 1,846 3.8 434 419 3.6 Total retail sales 624,818 624,190 .1 68,854 70,145 (1.8) Less: DPS sales - 14,091 (100.0) - 953 (100.0) Total Company retail sales 624,818 610,099 2.4 68,854 69,192 (.5) Resale sales: Firm 5,152 22,909 (77.5) 211 951 (77.8) Entitlement 248,652 269,254 (7.7) 10,474 10,921 (4.1) Other 127,271 42,348 200.5 3,038 968 213.8 Total resale sales 381,075 334,511 13.9 13,723 12,840 6.9 Other revenues - - - 1,308 3,287 (60.2) Total sales 1,005,893 944,610 6.5 $83,885 $85,319 (1.7) _________ _______ _______ _______
Retail MWH sales for the three month period ended March 31, 1994 were flat compared to last year's first quarter. The Company's annual forecast indicates a moderate increase in MWH sales for 1994. Retail revenues have decreased $1.3 million or 1.8% for the first quarter compared to the same period last year. Overall, retail MWH sales and revenues reflect the State's continued sluggish economy and the effectiveness of Conservation and Load Management programs. The Company's retail MWH sales increased 2.4% and related revenues decreased .5% due to the 250 KWH Department of Public Service (DPS) block which effective September 1, 1993 is being supplied by the Company. While this 250 KWH block provides for increased KWH sales for the Company, the non-seasonal uniform rate of 8.811 cents per KWH is less than the Company's peak rates for residential customers, causing the reduction in revenue. This revenue reduction will be offset by increased revenues during the Company's off-peak rate season (April-November). From February 1, 1993, through August 31, 1993, the Vermont Public Service Board approved, on an interim basis, a 150 KWH/month 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 the non-seasonal uniform rate of 9.009 cents per KWH. Due to current market conditions, some of the Company's firm resale customers chose not to extend their contracts beyond October 1993. However, one of those customers opted to purchase power from the Company based on market rates. Entitlement MWH sales decreased by 20,602 MWH or 7.7% and the corresponding revenues decreased $.4 million or 4.1%. This decrease is attributable to the reduced sell-back of the Hydro-Quebec Schedules A, C-1, and C-2 power. The 84,923 MWH increase ($2.1 million) in other resale sales resulted from increased sales to NEPOOL and other utilities in New England. The first quarter of 1993 included approximately $1.9 million of revenues deferred from 1991 to 1993 resulting in a decrease of 60.2% in other revenues for the first quarter of 1994. Net Purchased Power and Production Costs The components of net purchased power and production fuel costs for the three months ended March 31, are as follows (dollars in thousands):
1994 1993 Units Amount Units Amount Purchased: Capacity (MW) 577 $20,571 560 $20,600 Energy (MWH) 972,468 17,122 911,100 15,211 Production fuel (MWH) 95,677 566 85,543 636 Total purchased power and production costs 38,259 36,447 Entitlement and other resale sales (MWH) 375,923 13,512 311,602 11,889 Net purchased power and production fuel costs $24,747 $24,558 _______ _______
The Company's net purchased power and production fuel costs for the first three months of 1994 have remained relatively equal compared to the same period last year. The increase of $1.9 million in energy costs is offset by a decrease in capacity and production fuel costs of $99,000 and an increase of $1.6 million in Entitlement and other resale sales. The $1.9 million increase in energy costs is due to a 6.7% or 61,369 MWH increase in the amount of MWH purchased totaling $1.0 million and a 5.5% increase in the average cost per KWH purchased totaling $.9 million. The Company has equity ownership interests in four nuclear generating companies: Vermont Yankee, Maine Yankee, Connecticut Yankee and Yankee Atomic. The Company also owns 18 hydroelectric generating units, two gas-fired and one diesel peaking units, and leases and operates two hydroelectric generating stations from wholly owned subsidiaries. In addition, the Company maintains joint-ownership interests in Joseph C. McNeil, Wyman #4 and Millstone #3. The purchased power and production costs described above are partially offset for ratemaking purposes by revenues from sales to NEPOOL, Hydro-Quebec and other utilities in New England. Such sales amounted to $13.5 million for 375,923 MWH and $11.9 million for 311,602 MWH, for the three months ended March 31, 1994 and 1993, respectively. Depreciation The increase in depreciation expense is due to property additions and the installation of new Computer Systems in the second half of 1993. Income Taxes Federal and state income taxes fluctuate with the level of pre-tax earnings. Pre-tax earnings decreased 14.9% for the first quarter of 1994 compared with the same period in 1993. Equity in Earnings of Affiliates Equity in earnings of affiliates decreased 18.4% for the three months ended March 31, 1994, as compared with the same period in 1993. This decrease is attributable to a lower rate of return allowed by the Federal Energy Regulatory Commission to some of the Company's nuclear generating affiliates. Other Income (Expenses), Net For the three months ended March 31, 1994, other income (expenses), net increased $500,000. In the first quarter of 1993 and 1994, the Company wrote-off $1.1 million and $439,000, respectively, representing the non-recoverability portion of the Company's investment in the Seabrook project from some of the Company's firm resale customers. Cash Dividends Declared Preferred In January 1994, the Company redeemed at premium 280,000 shares of preferred stock 9% dividend series. This redemption resulted in a decrease in preferred dividends declared for the first quarter of 1994 compared to the same period last year. Common In November 1992, the Company's Board of Directors declared a quarterly common dividend of approximately $4.0 million payable February 12, 1993. This advanced declaration accounts for the increase in common dividends declared for the first three months of 1994 compared to 1993. 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 100% of the Company's construction and Conservation and Load Management expenditures of $5.2 million and $6.4 million for the three months ended March 31, 1994 and 1993, respectively. 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 $44 million. In January 1994, the Company redeemed $7 million of the 9.00% Series Preferred Stock, $25 Par Value, and plans to reissue approximately $7 million of Preferred Stock in 1994. The Company's capital structure has remained consistent with the Company's long-range financial objectives: a debt ratio of 45% or lower and an equity ratio higher than 45%. At March 31, 1994, the Company's capitalization including the current portion of long-term debt, consisted of 55% common equity, 8% preferred stock and 37% long-term debt. The credit ratings of the Company's securities as of March 31, 1994, 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. Non-Utility Catamount Energy Corporation, a subsidiary of the Company, maintains 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 Limited Partnership's Project Debt Service Reserve Fund. This Letter of Credit is for a one year term with annual extensions available and requires fees totaling 2.375% of credit available. SmartEnergy Services, Inc., also a subsidiary of the Company, maintains a $1.0 million revolving line of credit with a bank to provide working capital and financing assistance for investment purposes. Financial obligations of the non-utility wholly owned subsidiaries are non-recourse to the Company. Conservation and Load Management (C&LM) 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 1993 were $9.5 million and are planned to be approximately $5.4 million in 1994. The amount of expenditures is 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 some 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 are more expensive to defer. 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 the Company's rates which is consolidated with the Company's request for an 8.9% general rate increase filed on February 15, 1994. 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 February 28, 1994, the New Hampshire Public Utilities Commission (NHPUC) approved the 1994 C&LM programs and projected related expenditures and lost revenues of the Company's wholly owned New Hampshire subsidiary, Connecticut Valley Electric Company Inc. These expenditures and lost revenues are recovered along with shareholder incentives for 1993 program activity through a C&LM percentage adjustment clause effective March 1, 1994. The NHPUC also authorized a pilot program for direct billing of certain C&LM costs to certain commercial and industrial customers. Diversification In January 1994, Catamount Energy Corporation (CEC) purchased an additional 4.185% limited partnership interest in Rumford Cogeneration Company. Currently, CEC has four wholly owned subsidiaries with four operating projects in place. CEC and its subsidiaries contributed $311,000 to the Company's earnings for the three months ended March 31, 1994. SmartEnergy Services, Inc.'s (SES) purpose is to cost effectively provide reliable, energy efficient products and services, including the rental of electric water heaters. In 1993, SES purchased a 5% interest in Green Technologies, Inc. of Bolder, Colorado. Green Technologies manufactures various energy-saving products, including the GreenPlug electricity saver. SES has signed an agreement to market the GreenPlug and other energy-saving products to utilities in the United States and Canada. 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. 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. CENTRAL VERMONT PUBLIC SERVICE CORPORATION PART II - OTHER INFORMATION Item 1. Legal Proceedings. 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 generation 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. Items 2 through 5. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - None. (b) There were no reports on Form 8-K for the quarter ended March 31, 1994. Pursuant to the requirements 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 James M. Pennington James M. Pennington, Controller (Authorized Officer and Chief Accounting Officer) Dated May 12, 1994 CENTRAL VERMONT PUBLIC SERVICE CORPORATION Form 10-Q Table of Contents PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Statement of Income and Retained Earnings for the three months ended March 31, 1993 and 1992 3 Consolidated Balance Sheet as of March 31, 1993 and December 31, 1992 4 Consolidated Statement of Cash Flows for the three months ended March 31, 1993 and 1992 5 Notes to Consolidated Financial Statements 6-8 Summarized income statement information for Vermont Yankee Nuclear Power Corporation 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-15 PART II. OTHER INFORMATION 16 SIGNATURE 17 -----END PRIVACY-ENHANCED MESSAGE-----