10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.   20549

FORM 10-K/A
(Amendment No. 1)

(Mark One)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005
OR
[   ]	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)

Vermont (State or other jurisdiction of incorporation or organization)	03-0111290 (IRS Employer Identification No.)
77 Grove Street, Rutland, Vermont (Address of principal executive offices)		05701 (Zip Code)
Registrant's telephone number, including area code			(802) 773-2711

;
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which 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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes         No    X   

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes         No    X   

     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 incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]         Accelerated filer [X]         Non-accelerated filer [   ]

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes         No    X   

     The aggregate market value of voting and non-voting common equity held by non affiliates of the registrant as of June 30, 2005 (2^nd quarter) was approximately $188,588,871 (based on the $18.50 per share closing price of the Company's Common Stock, $6 Par Value, as reported on the New York Stock Exchange Market on June 30, 2005). In determining who are affiliates of the Company for purposes of computation, it is assumed that directors, officers, and other persons who held on December 31, 2005, more than 5 percent of the issued and outstanding Common Stock of the Company are "affiliates" of the Company. The characterization of such directors, officers, and other persons as affiliates is for the purposes of this computation only and should not be construed as a determination or admission for any other purpose.

     On February 28, 2006 there were outstanding 12,301,915 shares of voting Common Stock, $6 Par Value.

DOCUMENTS INCORPORATED BY REFERENCE

     The Company's Definitive Proxy Statement relating to its Annual Meeting of Stockholders held on May 2, 2006 filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Act of 1934, is incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of our Form 10-K filed on March 31, 2006.

EXPLANATORY NOTE

     We are filing this amendment to the Annual Report on Form 10-K of Central Vermont Public Service Corporation (the "Company"), for the year ended December 31, 2005, which was filed with the Securities and Exchange Commission on March 31, 2006, to include Exhibits 99.1, 99.2, 23.1 and 23.2 within Part IV, Item 15 of the Form 10-K. Our investments in Vermont Yankee Nuclear Power Corporation and Vermont Electric Power Company Inc. meet certain 'significance' tests pursuant to Rule 3-09 of SEC Regulation S-X. Exhibits 99.1 and 99.2 include the financial statements and related Reports of Independent Registered Public Accounting Firm and Exhibits 23.1 and 23.2 include the consents of the independent registered public accounting firms. No other information in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, is hereby amended.

     This Amendment No. 1 does not reflect events that have occurred after the original filing of the Form 10-K or update the information set forth in the Form 10-K subsequent to such original filing date.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

23.1

23.2

24.1

31

32

99.1

99.2 Independent Auditors' Consent

Independent Auditors' Consent

Power of Attorney executed by Directors and Officers of Company

Rule 13a-14(a)/15d-14(a) Certifications

Section 1350 Certifications

Financial statements of Vermont Yankee Nuclear Power Corporation

Financial statements of Vermont Electric Power Corporation, Inc.

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
                                         (Registrant)

By:   /s/ Pamela J. Keefe                                       
       Pamela J. Keefe
       Vice President, Principal Financial Officer, and Treasurer

January 19, 2007

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on January 19, 2007 by the following persons on behalf of the registrant and in the capacities indicated.

Signature	Title
Robert H. Young*   /s/ Pamela J. Keefe          (Pamela J. Keefe) Robert L. Barnett* Frederic H. Bertrand* Janice B. Case* Robert G. Clarke* Bruce M. Lisman* Mary Alice McKenzie* William R. Sayre* Janice L. Scites* William J. Stenger* Douglas J. Wacek*	President and Chief Executive Officer, and Director (Principal Executive Officer) Vice President, Chief Financial Officer, and Treasurer (Principal Accounting Officer) Director Director Director Director Director Chair of the Board of Directors Director Director Director Director

By:   /s/ Pamela J. Keefe         
        (Pamela J. Keefe)
         Attorney-in-Fact for each of the persons indicated.

* Such signature has been affixed pursuant to a Power of Attorney filed as an exhibit hereto and incorporated herein
   by reference thereto.

EX-23

EXHIBIT 23.1

Independent Auditors' Consent

The Board of Directors of
Vermont Yankee Nuclear Power Corporation:

We consent to the use of our report dated January 30, 2006 included herein with respect to the balance sheets of Vermont Yankee Nuclear Power Corporation as of December 31, 2005 and 2004 and the related statements of income and retained earnings, capitalization and cash flows for each of the years in the three-year period ended December 31, 2005 appearing in the December 31, 2005 Annual Report on Form 10-K/A of Central Vermont Public Service Corporation.

/s/ KPMG LLP

Burlington, Vermont
January 19, 2007

EX-23

EXHIBIT 23.2

Independent Auditors' Consent

The Board of Directors of
Vermont Electric Power Company, Inc.:

We consent to the use of our report dated March 17, 2006 included herein with respect to the balance sheet of Vermont Electric Power Company, Inc. as of December 31, 2005, and the related statements of income, stockholders' equity, and cash flows for the year ended December 31, 2005 appearing in the December 31, 2005 Annual Report on Form 10-K/A of Central Vermont Public Service Corporation.

/s/ KPMG LLP

Burlington, Vermont
January 19, 2007

EX-24

EXHIBIT 24.1 POWER OF ATTORNEY           KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chief Executive Officer and Vice President, Chief Financial Officer, and Treasurer and the undersigned Directors of Central Vermont Public Service Corporation, a Vermont Corporation, which corporation proposes to file with the Securities and Exchange Commission an Annual Report on Form 10-K/A for the year ended December 31, 2005, under the Securities Exchange Act of 1934, as amended, does each for himself/herself and not for one another, hereby constitute and appoint Robert H. Young and Pamela J. Keefe and each of them, his/her true and lawful attorneys, in his/her name, place and stead, to sign his/her name to said proposed Annual Report on Form 10-K and any and all amendments thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to grant and hereby granting to said individuals, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do regarding the preparation, execution, filing of Form 10-K.           IN WITNESS WHEREOF, each of the undersigned has hereunto set their hand as of the 15th day of January, 2007.
/s/ Robert H. Young         Robert H. Young President and Chief Executive Officer and Director	/s/ Mary Alice McKenzie        Mary Alice McKenzie Chair of the Board of Directors
/s/ Pamela J. Keefe          Pamela J. Keefe Vice President, Chief Financial Officer, and Treasurer	/s/ Robert L. Barnett             Robert L. Barnett, Director /s/ Frederic H. Bertrand        Frederic H. Bertrand, Director /s/ Janice B. Case                 Janice B. Case, Director /s/ Robert G. Clarke             Robert G. Clarke, Director /s/ Bruce M. Lisman             Bruce M. Lisman, Director /s/ William R. Sayre             William R. Sayre, Director /s/ Janice L. Scites                Janice L. Scites, Director /s/ William J. Stenger           William J. Stenger, Director /s/ Douglas J. Wacek           Douglas J. Wacek, Director

EX-31

EXHIBIT 31.1

CERTIFICATIONS OF THE CEO AND CFO PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) OR RULE 15d-14(a)

I, Robert H. Young, certify that:

1. I have reviewed this annual report on Form 10-K/A of Central Vermont Public Service Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this report.

Dated: January 19, 2007

/s/ Robert H. Young                 
Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATIONS OF THE CEO AND CFO PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) OR RULE 15d-14(a)

I, Pamela J. Keefe, certify that:

1. I have reviewed this annual report on Form 10-K/A of Central Vermont Public Service Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this report.

Dated: January 19, 2007

/s/ Pamela J. Keefe                 
Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

            In connection with Amendment No. 1 to the Annual Report of Central Vermont Public Service Corporation (the "Company") on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I Robert H. Young, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

            (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

            (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  /s/ Robert H. Young      
(Robert H. Young)
Chief Executive Officer
January 19, 2007

A signed original of this written statement required by Section 906 has been provided to Central Vermont Public Service Corporation ("CVPS") and will be retained by CVPS and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

            In connection with Amendment No. 1 to the Annual Report of Central Vermont Public Service Corporation (the "Company") on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I Pamela J. Keefe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

            (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

            (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  /s/ Pamela J. Keefe              
(Pamela J. Keefe)
Chief Financial Officer
January 19, 2007

A signed original of this written statement required by Section 906 has been provided to Central Vermont Public Service Corporation ("CVPS") and will be retained by CVPS and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

EXHIBIT 99.1

Independent Auditors' Report

The Stockholders and Board of Directors of
Vermont Yankee Nuclear Power Corporation:

We have audited the accompanying balance sheets of Vermont Yankee Nuclear Power Corporation (the "Company") as of December 31, 2005 and 2004, and the related statements of income and retained earnings, capitalization and cash flows for each of the years in the three-year period ended December 31, 2005. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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, 2005 and 2004, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Burlington, Vermont
January 30, 2006

Page 1 of 18

VERMONT YANKEE NUCLEAR POWER CORPORATION STATEMENTS OF INCOME (in thousands, except per share data)
	Years ended December 31,
	2005	2004	2003
Operating revenues Operating expenses:    Purchased Power    Nuclear fuel expense (NOTE 3)    Other operating expense (NOTE 2f)    Taxes on income (NOTE 9)    Other taxes    Total operating expenses Operating income (loss) Other income (expense):    Spent fuel disposal trust income (NOTES 4 and 7)    Interest income on income tax refunds    Taxes on other income (NOTE 9)    Other, net    Total other income, net Income before interest expense Interest expense:    Interest on spent fuel disposal fee obligation (NOTE 7)    Other interest    Total interest expense Net income	$160,613  162,805  1,383  (70) (3,202)          18  160,934         (321) 3,676  2,996  (2,260)        338      4,750      4,429      3,769             -     3,769       $660	$167,399  166,029  1,344  643  (743)          39  167,312           87  2,766  - -  (838)         60     1,988      2,075      1,537             -     1,537        $538	$187,123  187,742  1,314  (2,655) 34           20  186,455           668  3,695  - -  (1,014)         473     3,154      3,822      1,283           3  1,286        $2,536
Basic earnings per share of common stock Average shares outstanding	$3.17  208.4	$2.58  208.4	$7.35  345.4

See accompanying notes to financial statements.

Page 2 of 18

VERMONT YANKEE NUCLEAR POWER CORPORATION BALANCE SHEETS (in thousands, except share data)
	December 31,
	2005	2004
ASSETS Long-term investments, at fair value:    Spent fuel disposal trust (NOTES 2b, 4, 6 and 7)    Other investments (NOTES 2b, 4 and 6)    Total long-term investments	$120,639        1,341      121,980	$118,864        1,053     119,917
Current assets:    Cash and cash equivalents (NOTE 2d)    Accounts receivable from sponsors (NOTE 1)    Tax refunds and other receivables    Total current assets	11,358  15,387          22    26,767	7,384  16,618          598     24,600
Deferred charges:    Deferred DOE enrichment site decontamination and       decommissioning fee (NOTE 3)    Accumulated deferred income taxes (NOTE 9)    Other deferred charges (NOTES 3, 4 and 11)    Total deferred charges	2,485     164   1,736   4,385	3,768  2,628      629   7,025
TOTAL ASSETS	$153,132	$151,542
CAPITALIZATION AND LIABILITIES Capitalization:    Common stock ($100 par; authorized 400,100 shares; issued       208,422 shares)    Additional paid-in capital    Retained earnings    Total capitalization Commitments and contingencies (NOTES 5, 8 and 12) Spent fuel disposal fee and accrued interest (NOTES 6 and 7) Current liabilities:    Accounts payable    Current portion of DOE enrichment site decontamination and       decommissioning fee (NOTE 3)    Accrued taxes    Other current liabilities (NOTE 2e)    Total current liabilities	$20,842  (16,114)          33      4,761  128,725  15,209  1,420  31         130    16,790	$20,842  (16,068)           21       4,795  124,956  16,370  1,370  213        337    18,290
Deferred credits and other liabilities:    Accrued DOE enrichment site decontamination       and decommissioning fee (NOTE 3)    Accrued employee benefits (NOTE 11)    Accumulated deferred income taxes and investment credit (NOTE 9)    Other deferred credits (NOTES 3, 4 and 9)    Total deferred credits and other liabilities	- -  1,812  1,044          -  2,856	1,370  1,415  271      445  3,501
TOTAL CAPITALIZATION AND LIABILITIES	$153,132	$151,542

See accompanying notes to financial statements.

Page 3 of 18

VERMONT YANKEE NUCLEAR POWER CORPORATION STATEMENTS OF STOCKHOLDER'S EQUITY (In thousands, except share data)
	Shares	Amount at Par Value	Treasury Stock	Additional Paid In Capital	Retained Earnings	Total
Balance - December 31, 2002    Net Income    Regular Cash Dividends Declared on       Common Stock    Liquidating dividend payments    Treasury Stock Balance - December 31, 2003	400,014              -  400,014	$40,001             -  40,001	$(4,350) (3,730) (8,080)	$14,226  (41,373)            -  (27,147)	$1,325  2,536  (3,861)            -  -	$51,202  2,536  (3,861) (41,373) (3,730) 4,774
Net Income    Regular Cash Dividends Declared on       Common Stock    Retire Treasury Stock Balance - December 31, 2004	(191,592) 208,422	(19,159) 20,842	8,080  -	11,079  (16,068)	538  (517)          -  21	538  (517)          -  4,795
Net Income    Regular Cash Dividends Declared on       Common Stock    Liquidating Cash Dividend Declared on       Common Stock Balance - December 31, 2005	-  208,422	-  $20,842	-  $-	(46) $(16,114)	660  (648)          -  $33	660  (648)         (46) $4,761

See accompanying notes to financial statements.

Page 4 of 18

VERMONT YANKEE NUCLEAR POWER CORPORATION STATEMENTS OF CASH FLOWS (in thousands)
	Years ended December 31,
	2005	2004	2003
Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by      operating activities:    Deferred tax expense    Amortization of deferred investment tax credits    Nuclear fuel disposal fee interest accrual    Spent fuel disposal trust earnings    Decrease (increase) in accounts receivable    Decrease in tax refunds and other receivables    Decrease in accounts payable and accrued liabilities    Decrease in accrued taxes    Net change in other assets and liabilities       Total adjustments Net cash provided by (used for) operating activities	$660  3,251  (40) 3,769  (3,676) 1,231  576   (1,177) (182) 227  3,979  4,639	$538  (423) - -  1,537  (2,766) (3,395) - -  (92) (44) 360  (4,823) (4,285)	$2,536  (255) - -  1,283  (3,695) 4,266  10,084  (4,218) (79) 240  7,626  10,162
Cash flows from investing activities:    Withdrawal from spent fuel disposal trust for income tax payments    Investment in Rabbi Trust    Investment in company owned life insurance Net cash provided by (used for) investing activities	292  (90)    (173)      29	5,948  (107) (131) 5,710	- -  (152) (110) (262)
Cash flows from financing activities:    Dividend payments out of retained earnings    Liquidating dividend payments    Repurchase common stock Net cash used for financing activities	(648) (46)          (694)	(517) - -         -  (517)	(3,861) (41,373) (3,729) (48,963)
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	3,974  7,384  $11,358	908  6,476  $7,384	(39,063) 45,539  $6,476

See accompanying notes to financial statements.

Page 5 of 18

NOTES TO FINANCIAL STATEMENTS

NOTE 1. Nature of Business

Vermont Yankee Nuclear Power Corporation ("the Company") was incorporated under the laws of the State of Vermont on August 4, 1966. The Company was formed by a group of New England utilities for the purpose of constructing and operating a nuclear-powered electric generating plant ("the Plant"). The names of the sponsoring utilities (collectively "the Sponsors") and their respective entitlement percentages of the capacity and output of the Plant are as follows: Central Vermont Public Service Corporation with 35.0%, New England Power Company with 22.5%, Green Mountain Power Corporation with 20.0%, The Connecticut Light and Power Company with 9.5%, Central Maine Power Company with 4.0%, Public Service Company of New Hampshire with 4.0%, Cambridge Electric Light Company with 2.5%, and Western Massachusetts Electric Company with 2.5%. The Company repurchased the shares of its common stock held by five of the eight Sponsors in 2003 and retired the shares in 2004. Custom Investment Corporation (a wholly - -owned subsidiary of Central Vermont Public Service Corporation), Green Mountain Power Investment Company (a wholly-owned subsidiary of Green Mountain Power Corporation) and Central Maine Power Company are the remaining stockholders of the Company.

The Company sold the Plant to Entergy Nuclear Vermont Yankee, LLC ("ENVY") on July 31, 2002 after having signed a Purchase and Sale Agreement (as amended, the "PSA") on August 15, 2001. Under the PSA, in addition to paying the purchase price, ENVY assumed the Company's obligation to operate and decommission the Plant in exchange for the transfer of ownership of the Plant and related assets (including but not limited to, the Vermont Yankee Nuclear Power Station and site; corporate offices and training facility; nuclear fuel inventories; switchyards and transformers; materials and supplies inventories; decommissioning trust funds; assets funding employee benefit plans assumed by Entergy; insurance policies; licenses and permits) and liabilities (including but not limited to, decommissioning liabilities and associated costs; pre-sale spent nuclear fuel; employee benefit liabilities; environmental liabilities; and nuclear liabilities) to ENVY. Assets specifically excluded from the sale included the Vermont Yankee Spent Fuel Disposal Trust and any short or long term financial instruments. Liabilities specifically excluded were the pre-1983 spent fuel disposal cost liability; outstanding debt, including bonds and bank facilities; and any potential liabilities associated with pre-closing off-site disposal of hazardous materials. Sale proceeds were sufficient to retire all of the Company's then current debt including its First Mortgage Bonds and borrowings under its Secured Credit Agreement.

The PSA requires the Company to purchase from ENVY essentially all of the current capacity of the Plant through March 21, 2012 pursuant to a Power Purchase Agreement (as amended, the "PPA") with prices that generally range from 3.9 cents to 4.5 cents per kilowatt-hour. The PPA prices are subject to a "low market adjuster" beginning in 2005 that provides for lower power purchase prices if the market price of power is significantly less than the PPA price.

The Company has entered into Power Contracts, Additional Power Contracts and 2001 Amendatory Agreements (collectively, as amended, the "Power Contracts") with each of the Sponsors that have been accepted for filing with the Federal Energy Regulatory Commission ("FERC"). Under the terms of the Power Contracts each of the Sponsors is entitled and obligated to pay the Company an amount equal to its entitlement percentage of the Company's total operating expenses, an allowed return on equity, its respective proportion of PSA and PPA costs, and to repurchase from the Company the output of the Plant in the stated entitlement percentages.

The Plant commenced commercial operation on November 30, 1972, and except during maintenance and refueling outages, has been in full operation since that time. The Plant currently has a gross maximum dependable capacity of approximately 535 megawatts although ENVY is involved in regulatory proceedings attempting to increase the output by approximately twenty percent. Under the Company's agreements with ENVY, the Company was allowed a thirty day period to exclusively negotiate for the purchase of some or all of the additional power. The Company's right to these exclusive negotiations expired during 2004 without reaching agreement, and the Company has no further right or obligation to purchase the additional output.

The Plant is currently licensed by the Nuclear Regulatory Commission to operate until March 21, 2012, although ENVY has announced its intention to seek a 20 year license extension. Other nuclear plants have successfully extended their

Page 6 of 18

operating licenses. In the event that ENVY extends the operating license of the Plant, the Company's agreements with ENVY allow the Company a thirty day period to exclusively negotiate for the purchase of some or all of the additional output though there is no obligation to do so. There are other nuclear plants, including some in the Northeast, that have shut down prior to the end of their license lives for economic reasons. As a result of the sale of the Plant, shutting down and decommissioning the Plant is no longer a responsibility of the Company, and in the event of a plant shutdown, the Company is under no obligation to supply power to the Sponsors.

NOTE 2. Summary of Significant Accounting Policies

(a) Regulations and Operations - The Company is subject to regulations prescribed by the FERC, and the Public Service Board of the State of Vermont with respect to accounting and other matters. In accordance with Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation, the Company records certain assets and liabilities in accordance with the economic effects of the rate making process. The Company recognizes revenue pursuant to the terms of the Power Contracts, Additional Power Contracts and Amendatory Agreements filed with the FERC. The Sponsors, a group of eight New England utilities, are severally obligated to pay the Company each month their entitlement percentage of amounts equal to the Company's total operating expenses, an allowed return on equity (7.5% since July 31, 2002) and any PPA costs incurred on a unit contingent basis. All Sponsors are committed to such payments regardless of the Plant's operating level or whether the Pl ant is out of service during the period.

(b) Long-Term Investments - The Company accounts for its investments in long-term funds at fair value as required by Statement of Financial Accounting Standards No. 115. See NOTE 4 for further discussion of this accounting method. The cash surrender values of Company owned life insurance policies are presumed to represent their fair values. Increases and decreases in cash surrender values other than those resulting from premium payments or withdrawals are recorded to income or expense as appropriate.

(c) Taxes on Income - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(d) Cash and Cash Equivalents - The Company considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents.

(e) Other Current Liabilities - Other current liabilities include the Company's estimate of costs incurred for which no invoice has been received by the balance sheet date and accrued payroll and benefit costs.

(f) Other Operating Expense - Other operating expense consists of costs incurred by the Company during the period for various items including employee salaries, employee benefits, attorneys, accountants, contractors, insurance, telephone and office supplies. The credit amount reported for Other Operating Expense in 2005 is a result of insurance return premiums totaling more than $1.5 million that were received during the year. Insurance return premiums of $1.3 million were received in 2004. The credit amount reported for Other Operating Expense in 2003 resulted from refunds of prior year expenses totaling more than $4.6 million that were received during the year, including insurance return premiums and an amount paid to the Company relating to expenses incurred to cure fuel defects that were discovered in 2001 and 2002.

g) Earnings Per Common Share - Basic 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. Diluted earnings per common share have not been disclosed as they do not differ from basic earnings per share.

(h) Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Page 7 of 18

NOTE 3. Deferred Charges and Deferred Credits

DOE Enrichment Site Decontamination and Decommissioning Fee

In October 1992, Congress passed the Energy Policy Act of 1992. The Act requires, among other things, that certain utilities help pay for the cleanup of the United States Department of Energy ("DOE") enrichment facilities over a fifteen year period. The Company's annual fee is based on its historical share of enrichment services provided by DOE and is indexed to inflation. The fees are not adjusted for subsequent business as DOE's cost of sales has since included 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. The Company amortizes the annual fee payments over twelve months beginning in the month of payment and recorded $1.4 million in nuclear fuel expense related to this fee in 2005, $1.3 million in 2004 and $1.3 million in 2003.

In 2005, the Company paid the fourteenth of the fifteen annual charges. As of December 31, 2005, the Company had recognized a current accrued liability of $1.4 million for the remaining fee payment expected to be made in 2006, and a corresponding regulatory asset of $2.5 million which represents the total amount to be included in future billings to the Sponsors under the Power Contracts including the unrecovered portion of the 2005 fee payment of $1.1 million. As of December 31, 2004, the Company had recognized a current accrued liability of $1.4 million for the fee payment expected to be made in 2005, a non-current liability of $1.4 million for the expected final annual fee payment due in 2006, and a corresponding regulatory asset of $3.8 million including the unrecovered portion of the 2004 fee payment of $1.0 million. Under the terms of the sale of Plant assets to ENVY, the Company retained this liability and will make the remaining payment as required by the Energy Policy Act of 1992.

Other Deferred Charges and Other Deferred Credits

In 2001, FERC approved a settlement agreement between the Company and intervening parties that included, among other things, a settlement on the regulatory treatment of costs incurred in conjunction with initiatives to sell the Plant and related assets and liabilities. The agreement provided for the refund of a portion of the costs incurred in pursuit of the then terminated sale transaction, and the authorization for the Company and the affected Sponsors to recover this refund through amortization, with a return. As of December 31, 2005 and 2004, $0.5 million and $0.6 million, respectively, of the $0.8 million refund remained to be recovered through March 2012. See also NOTE 11 as both the regulatory asset resulting from the difference between the amount authorized by the FERC for postretirement benefits expense and the actual amount of the expense for both 2005 and 2004, and offsets to the additional minimum pension liabilities as of both December 31, 2005 and 2004 are also included in Other Defer red Charges.

Realized gains (losses) on investments in debt and equity securities in the Spent Fuel Disposal Trust and the Rabbi Trust (see NOTE 4) have the effect of reducing (increasing) billings to customers. Accordingly, the Company includes any net unrealized gain or loss (i.e. the difference between their cost and market values) as an increase to Other Deferred Charges or Other Deferred Credits as appropriate. Net unrealized losses of $1.1 million as of December 31, 2005 are included in Other Deferred Charges and net unrealized gains of $0.4 million as of December 31, 2004 are included in Other Deferred Credits.

NOTE 4. Long-Term Investments

The Company accounts for its investments in certain debt and equity securities by classifying each such security as either trading, available-for-sale or held-to-maturity. Both trading and available-for-sale securities must be reflected on the balance sheets at their aggregate fair values. Held-to-maturity securities are reflected on the balance sheets at amortized cost.

The Company has long-term investments in two trust funds. The securities included in the Spent Fuel Disposal Trust represent funds invested by the Company for which the earnings and principal will be used to pay the DOE fee for spent fuel discharged prior to April 7, 1983. Under the terms of the Plant sale to ENVY, the Company retained the Spent Fuel Disposal Trust and the related obligation to the DOE. See NOTE 7 for further details. Although the Company collected this fee from its Sponsors in rates, it has elected to defer payment as permitted by the contract with DOE. The Company also has investment securities in a Rabbi Trust intended to fund nonqualified pension benefits for its executives under the terms of their respective employment contracts.

Page 8 of 18

The Company classifies securities held in the Spent Fuel Disposal Trust and the Rabbi Trust as available-for-sale. As of December 31, 2005 and 2004, the reported Trust balances include net unrealized losses of $1.1 million, and net unrealized gains of $0.4, respectively. The Company has recorded corresponding adjustments in Deferred Charges or Deferred Credits since any realized gains (losses) have the effect of reducing (increasing) billings to customers. The cost and estimated market values of long-term investments in the Spent Fuel Disposal Trust and the Rabbi Trust at December 31 are as follows (dollars in thousands):

	2005		2004
Spent Fuel Disposal Trust:    US Treasury obligations    Municipal obligations    Corporate and other bonds    Accrued interest and money market funds Rabbi Trust:    Fixed income mutual funds    Equity mutual funds    Accrued interest and money market funds	Cost $67,938 33,701 17,287 2,859 $121,785 $147 198       -  $345	Market $67,251 33,455 17,074 2,859 $120,639 $145 222       -  $367	Cost $48,481 50,992 14,065 4,938 $118,476 $96 106       47 $249	Market $48,487 51,384 14,055 4,938 $118,864 $95 123       47 $265

At December 31, gross unrealized gains (losses) pertaining to long-term investment securities in the Spent Fuel Disposal Trust and the Rabbi Trust were as follows (dollars in thousands):

	2005	2004
Unrealized gains on US Treasury obligations Unrealized losses on US Treasury obligations Unrealized gains on municipal obligations Unrealized losses on municipal obligations Unrealized gains on corporate and other bonds Unrealized losses on corporate and other bonds Unrealized losses on fixed income mutual funds Unrealized gains on equity mutual funds	$15  (702) 102  (348) 15  (228) (2)         24  $(1,124)	$280  (274) 466  (74) 70  (80) (1)      17  $404

The following table shows the gross unrealized losses and fair values of investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2005 (dollars in thousands):

	< 12 months		> 12 months		Total Investments With Unrealized Losses
	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
US Treasury obligations Municipal obligations Corporate and other bonds Fixed income mutual funds	$45,823 $16,977 $8,491 $-	$(423) $(156) $(131) $-	$15,972 $7,032 $3,808 $145	$(279) $(192) $(97) $(2)	$61,795 $24,009 $12,299 $144	$(702) $(348) $(228) $(2)

Page 9 of 18

For the years ended December 31, gross realized gains (losses) pertaining to long-term investment securities were as follows (dollars in thousands):

	2005			2004			2003
	Total Sale	Gross Realized		Total Sale	Gross Realized		Total Sale	Gross Realized
	Proceeds	Gain	Loss	Proceeds	Gain	Loss	Proceeds	Gain	Loss
Spent Fuel Disposal Trust Rabbi Trust	$189,411 $194	$418 $6	$(687) $-	$197,663 $27	$251 $5	$(624) $-	$121,242 $9	$505 $1	$(248) $-

The average duration of the underlying investments in the fixed income mutual funds in the Rabbi Trust at December 31, 2005 and 2004, were 3.5 and 2.9 years, respectively. Maturities of fixed income securities in the Spent Fuel Disposal Trust at December 31, shown at face values are as follows (dollars in thousands):

	2005	2004
Within one year One to five years Five to ten years Over ten years	$19,995 61,658 10,367    24,740 $116,760	$25,180 57,486 8,939    18,875 $110,480

In addition to the long-term investments in marketable securities above, the Company has also invested in company owned life insurance policies on the lives of its executives. The cash surrender values of these policies are presumed to represent their fair values. As of December 31, 2005 and 2004, the fair values of these policies were $974 thousand and $788 thousand, respectively, which together with the fair value of investment securities in the Rabbi Trust total the $1,341 thousand and $1,053 thousand, respectively, reported as the fair values of Other Investments in the Balance Sheets.

NOTE 5. Debt Obligations and Lines of Credit

The Company had no long-term debt obligations at December 31, 2005 or 2004. The Company had an available line of credit of $3.5 million as of both December 31, 2005 and 2004. The Company's current line of credit expires on May 31, 2006. The line of credit is to help fund a substantial financial assurance requirement with ISO New England (the independent system operator of New England's electricity supply and wholesale electricity marketplace) if required. There were no borrowings under this line of credit during either 2005 or 2004.

NOTE 6. Disclosures About the Fair Value of Financial Instruments

The carrying amounts for cash and temporary investments, accounts receivable from Sponsors, accounts payable, and accrued liabilities approximate their fair values because of their short maturities. Long-term funds are carried at fair market values which are estimated based on quoted market prices for these or similar investments.

The estimated fair value of the Company's financial instruments as of December 31, are summarized as follows (dollars in thousands):

	2005		2004
Spent Fuel Disposal Trust Spent fuel disposal fee and accrued interest Rabbi Trust Cash surrender value of life insurance policies	Cost Amount $121,785 $128,725 $345 $974	Estimated Fair Value $120,639 $128,725 $367 $974	Cost Amount $118,476 $124,956 $249 $788	Estimated Fair Value $118,864 $124,956 $265 $788

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.

Page 10 of 18

NOTE 7. Spent Fuel Disposal

Under the Nuclear Waste Policy Act of 1982, DOE is responsible for the disposal of spent nuclear fuel and high-level radioactive waste. The Company, as required by that Act, signed a contract with DOE to provide for the disposal of spent nuclear fuel and high-level radioactive waste from its nuclear generation station beginning no later than January 31, 1998. The contract obligated the Company to pay a one-time fee of approximately $39.3 million for disposal costs for all spent fuel discharged through April 6, 1983, and a fee payable quarterly equal to one mill per kilowatt-hour of nuclear generated and sold electricity after April 6, 1983. With the exception of the pre-1983 disposal cost responsibility, this contract was assigned to ENVY effective with the sale.

Although the $39.3 million for the one-time fee has been collected from the Sponsors in rates, the Company elected to defer payment to DOE as permitted by the DOE contract. The fee plus accrued interest must be paid no later than the first delivery of spent fuel to DOE currently not expected before 2010. Interest accrues on the unpaid obligation based on the thirteen-week Treasury Bill rate and is compounded quarterly. Through 2005, the Company has accumulated $120.6 million in an irrevocable trust to be used exclusively for meeting this obligation ($128.7 million including accrued interest) at some future date, provided the DOE complies with the terms of the aforementioned contract. Under the terms of the sale agreement, the Company retained the spent fuel trust fund assets and the related obligation to make this payment to the DOE when it becomes due.

The DOE's delivery schedule has not been met and is expected to be delayed significantly. It is not certain when DOE will accept spent nuclear fuel and high-level radioactive waste from civilian nuclear power plants, although DOE has stated that the earliest would be 2010. Various legal proceedings have been brought against DOE and the federal government to enforce the DOE's obligation to dispose of spent nuclear fuel and seeking damages resulting from DOE's breach of those obligations. In July 1996, the U.S. Court of Appeals for the District of Columbia Circuit ruled that DOE had an unconditional obligation to begin disposing of the utilities' spent nuclear fuel by January 31, 1998, and that the absence of a DOE interim storage facility did not excuse DOE from that obligation. In November 1997, the same Court declined to order DOE to accept spent nuclear fuel, saying that the utilities had another potentially adequate remedy under their DOE contracts.

Beginning in February 1998, a series of lawsuits were filed with the U.S. Court of Federal Claims seeking damages from the Government for DOE's breach of its obligation to begin disposing of the utilities' spent fuel by the 1998 deadline. On August 31, 2000, the U.S. Court of Appeals for the Federal Circuit decided appeals from rulings in four of these cases, ruling that the utilities were entitled to sue in the U.S. Court of Federal Claims for breach of contract damages and need not first submit equitable adjustment claims to the DOE Contracting Officer.

In accordance with the terms of the PSA, the Company retained certain rights to pursue claims related to DOE's defaults under the DOE spent fuel disposal contract. The Company filed its lawsuit against the Government for DOE's breach in the U.S. Court of Federal Claims on July 30, 2002.

In most of the pending cases (including the Company's), the Government has filed motions for partial summary judgment regarding the rate of spent nuclear fuel acceptance and on the issue of whether the contracts with DOE cover the disposal of Greater Than Class C Radioactive Waste. The Company and some of the other suing utilities have filed cross-motions for summary judgment on the acceptance rate issue. The Government has also filed motions to dismiss takings claims in those cases (including the Company's) which include such claims as well as motions to dismiss illegal exaction claims in cases which include such claims.

On April 16, 2003, the Chief Judge of the U.S. Court of Federal Claims issued an order designating six of the spent fuel damages cases (but not the Company's case) as "lead" or "accelerated" cases and ordered that the remaining cases (including the Company's case) be stayed unless affirmatively ordered to proceed by the presiding judge in any individual case. On January 15, 2004, the judge presiding over the case issued an order lifting the stay. Subsequent to the stay being lifted, the Company on January 30, 2004, filed an amended complaint. On September 17, 2004, the Company and the Government requested, and on October 6, 2004, the court agreed to stay the case until the end of 2004. On January 18, 2005, the Company and the Government jointly requested the court to stay the case until the

Page 11 of 18

earlier of July 1, 2005 or a ruling by the Federal Circuit in Indiana Michigan Power Co. v. United States. On July 1, 2005, the Company and the Government again jointly requested, and on July 5, 2005, the court agreed to stay the case until the later of the end of 2005 or a ruling by the Federal Circuit in Indiana Michigan Power Co. v. United States.  On September 9, 2005, the Federal Circuit issued its ruling in Indiana Michigan, which concluded that utilities could recover mitigation damages as they are incurred, but not future damages.  On December 6, 2005, the trial judge presiding over the Company's case transferred the case to a newly appointed judge of the same court.

The Company cannot predict the outcome of this matter at this time.

NOTE 8. Other Legal Matters

In April 2004, in response to a Nuclear Regulatory Commission inspection conducted during the Plant's scheduled refueling outage, ENVY (the purchaser of the Plant from the Company on July 31, 2002) reported that two short spent fuel rod segments were not in what ENVY believed to be their documented location in the spent fuel storage pool.  According to ENVY, in 1979 the fuel rod segments were placed in a special stainless steel container in the spent fuel pool.  After initial document review and visual inspection of the spent fuel storage pool, ENVY did not locate the fuel rod segments.

By letter dated May 5, 2004, ENVY notified the Company that based on the terms of the Purchase and Sale Agreement dated August 21, 2001, and facts available at the time, it was ENVY's view that costs associated with the spent fuel rod segment inspection effort were the responsibility of the Company.  The letter also stated that if it was determined that the segments were incorrectly shipped to an off-site location, all liabilities with respect to those actions are that of the Company as well. By letter dated May 20, 2004, the Company responded that based on the information at the time, there was no basis for ENVY's claim.  Subsequently ENVY's continuing documentation review led to the discovery of the fuel rod segments in a specially designed container in the spent fuel storage pool.

The Nuclear Regulatory Commission ("NRC") issued an inspection report dated December 2, 2004, which confirmed that ENVY successfully located the two fuel rod segments and that no additional problem with accounting for special nuclear material exists at the Plant.  On June 22, 2005, the NRC issued a Notice of Violation on this matter deciding not to impose a civil monetary penalty because of the extensive corrective actions taken by the licensee.

The Company cannot predict the outcome of this matter at this time.

NOTE 9. Taxes on Income

The Company uses the asset and liability method of accounting for income taxes. This 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"). The components of income tax (benefit) expense for the years ended December 31, are as follows (dollars in thousands):

	2005	2004	2003
Taxes on operating income: Current federal income tax Deferred federal income tax Current state income tax Deferred state income tax Investment tax credit adjustment Taxes on other income: Current federal income tax Current state income tax Total income taxes	$(5,058) 2,467  (1,355) 784        (40) (3,202) 1,785      475  2,260  $(942)	$(250) (311) (70) (112)       -  (743) 648      190  838  $95	$335  (213) (46) (42)       -  34  742      272  1,014  $1,048

Page 12 of 18

The principal items comprising the difference between the total income tax (benefit) expense and the amount calculated by applying the statutory federal income tax rate to income before tax for the years ended December 31, are as follows (dollars in thousands):

	2005	2004	2003
Income before income tax Federal statutory rate Federal statutory tax expense State income taxes, net of federal income tax benefit Earnings exempt from federal income tax Tax settlement Valuation allowance (federal only) Investment credit Other Total income tax (benefit) expense provided	$(282) 34% (96) (63) (480) (354) 97  (40) (6) $(942)	$633  34% 215  5  (544) - -  385  - -  34  $95	$3,584  35% 1,255  120  (595) - -  365  - -  (97) $1,048

The significant components of deferred tax (benefit) expense for the years ended December 31, are as follows (dollars in thousands):

	2005	2004	2003
DOE Decommissioning & Decontamination deduction    over (under) financial statement expense Capital loss and minimum tax credit carry-forward Pension expense deduction under financial statement expense Employee benefits deduction under financial statement expense Valuation allowance Other, net	$3,302  4  (44) (69) 88  (30) $3,251	$(404) (285) (99) (78) 432  11  $(423)	$(415) - -  (117) (47) 432  (108) $(255)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, are presented below (dollars in thousands):

	2005	2004
Deferred tax assets:    DOE Decommissioning & Decontamination    Pension, retiree and other employee benefit liabilities    Capital loss and minimum tax credit carry-forward    Other       Total deferred tax assets       Less valuation allowance       Net deferred tax assets Deferred tax liabilities:    DOE Decommissioning & Decontamination    Deferred prior sale costs       Total deferred tax liabilities       Net deferred tax asset (liability)	$-  825  281        -  1,106  (942) 164  (845) (199) (1,044) $(880)	$2,457  712  285        28  3,482  (854) 2,628  - -  (231) (231) $2,397

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the expected availability of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income prior to the expiration of the deferred tax assets governed by the Internal Revenue Code. The valuation allowances are

Page 13 of 18

largely the result of liabilities that will more likely than not, not be deductible until after the expiration of the Plant operating license, and the Company considers it more likely than not that taxable income at that time will not be sufficient to realize the full value of the deferred tax assets. A valuation allowance has also been made because of the Company's expectation that it will more likely than not, not be able to benefit by its minimum tax credit carry-forward since it results from the Spent Fuel Trust investments in tax exempt securities and the Spent Fuel Trust is expected to continue to be invested in a similar manner. In addition, the Company's otherwise taxable income is expected to be even more limited in the future.

NOTE 10. Supplemental Cash Flow Information

The following information supplements the cash flow information provided in the Statements of Cash Flows (dollars in thousands):

Cash paid during the year for:
   Interest
   Income taxes 2005

$- 
$327  2004

$- 
$436  2003

$3 
$900 

NOTE 11. Pension and Post Retirement Welfare Benefit Plans

The Company has a qualified defined benefit pension plan and a nonqualified excess defined benefit pension plan which cover all of its current employees. The benefits provided under the plans are based on years of service and final average earnings, integrated with Social Security benefits. The Company also has a supplemental unfunded nonqualified pension plan for one of its former employees providing benefits based on final earnings. Additional minimum pension plan liabilities of $36 thousand and $33 thousand were recorded by the Company as of December 31, 2005 and 2004, respectively. The Company has recorded offsetting deferred charges as these amounts are expected to be included in future year billings. Therefore no related intangible asset or other comprehensive income has been recorded.

The Company has a postretirement welfare benefit plan providing medical, dental and life insurance benefits to retired employees and their covered dependents funded through a Voluntary Employee Beneficiary Association Trust. Company billing and funding for the postretirement welfare benefit plan are as filed and approved by FERC. The accrued benefit costs recognized on the balance sheets at December 31, 2005 and 2004 have offsetting deferred charges, as they are expected to be included in future year billings. The Company currently has one retiree.

The measurement date used to determine pension and other postretirement benefit measures for the pension plan and the postretirement benefit plan is December 31.

Reconciliation of the beginning and ending benefit obligation balances for the plans (dollars in thousands):

	2005	2004
Pension plan benefits (aggregated) Beginning of year projected benefit obligation    Service cost    Interest cost    Actuarial loss    Benefits paid       End of year projected benefit obligation Accumulated Benefit Obligation (aggregated)	$1,397  28  79  27  (78) $1,453  $1,088	$1,246  57  74  35  (15) $1,397  $1,099
Postretirement welfare plan benefits Beginning of year projected benefit obligation    Service cost    Interest cost    Actuarial (gain) loss    Benefits paid       End of year benefit obligation	$674  18  36  (167) (11) $550	$545  17  34  80  (2) $674

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Reconciliation of the beginning and ending fair value of assets for the plans (dollars in thousands):

	2005	2004
Pension plan assets (aggregated) Beginning of year fair value of assets Actual return on assets Company contributions Benefits paid End of year fair value of assets	$169  6  76  (78) $173	$116  10  58  (15) $169
Postretirement welfare benefits Beginning of year fair value of assets Actual return on assets Company contributions Benefits paid End of year fair value of assets	$390  18  84  (11) $481	$285  23  84  (2) $390

Reconciliation of the funded status of the plans as of December 31 (dollars in thousands):

	2005	2004
Pension plans (aggregated) Projected benefit obligation (PBO) Fair value of assets (FVA) PBO in excess of FVA    Unrecognized prior service cost    Unrecognized actuarial loss       Net amount recognized	$(1,453)      173  (1,280) 199  77  $(1,004)	$(1,397)      169  (1,228) 276  46  $(906)
Amounts recognized in the balance sheets:    Accrued benefit liability    Additional minimum liability    Other deferred charges       Net amount recognized	(1,004) (36) 36  $(1,004)	(906) (33) 33  $(906)
Postretirement welfare plans Accumulated postretirement benefit obligation (APBO) Fair value of assets (FVA) APBO in excess of FVA    Unrecognized prior service cost    Unrecognized actuarial loss       Net amount recognized	$(550) 481  (69) 44  2  $(23)	$(674) 390  (284) 66       193  $(25)
Amounts recognized in the balance sheets:    Accrued benefit cost       Net amount recognized	$(23) $(23)	$(25) $(25)

Page 15 of 18

Net periodic benefit costs recognized for the periods ended December 31 (dollars in thousands):

	2005	2004	2003
Pension benefits (aggregated) Service cost Interest cost Expected return on assets Net amortization:    Prior service cost    Net actuarial loss (gain)       Total amortization       Net expense recognized	$28  79  (10) 77      -  77  $174	$57  74  (8) 146      -  146  $269	$71  81  - -  159     45  204  $356
Postretirement welfare benefits Service cost Interest cost Expected return on assets Net amortization:    Net actuarial loss    Prior service cost       Total amortization       Net expense recognized	$18  36  (15) 21  22  43  $82	$17  34  (11) 47  22  69  $109	$14  30  (8) 25  22  47  $83

Weighted average assumptions used as of December 31:

Discount rate
Compensation scale
Expected return on assets (postretirement welfare benefit plan)
Expected return on assets (defined benefit pension plan) 2005
5.75%
4.00%
4.00%
6.50% 2004
5.75%
4.00%
4.00%
6.50% 2003
6.00%
4.00%
4.00%
6.50%

The Company's overall expected long-term rate of return on assets is 4.00% for the postretirement welfare benefit plan and 6.50% for the defined benefit pension plan. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.

For measurement purposes, a 10% percent annual rate of increase in the per capita cost of covered medical benefits was assumed for 2006. The rate was assumed to decrease by 1% per year until an ultimate rate of 6% is reached in 2010. A 7% percent annual rate of increase in the per capita cost of covered dental benefits was assumed for 2006. The rate was assumed to decrease to the ultimate rate of 6% in 2007. A one percentage point change in assumed health care cost trend rates would have the following effects on the information for the postretirement welfare plans:

Effect on total service and interest cost components
Effect on accumulated postretirement benefit obligation 1% Increase
$6
$67 1% Decrease
$(5)
$(56)

Page 16 of 18

The weighted-average asset allocations for the Company's pension and postretirement benefit plans at December 31, 2005 and 2004, by asset category are as follows:

	2005	2004
Pension plan:    Equity securities    Debt securities    Cash and equivalents	60% 39%     1% 100%	55% 43%     2% 100%
Postretirement benefit plan:    Equity securities    Debt securities    Cash and equivalents	60% 39%     1% 100%	55% 43%     2% 100%

The current asset allocation targets for both the plans is 60% equity, 39% fixed income and 1% cash, reflecting the mid to long-term nature of the liabilities associated with the plans. The primary goals in the management of plan assets are to maintain the funds purchasing power and to maximize the mid to long-term total returns within a moderate risk environment by seeking both current income and the potential for long-term growth.

The Company expects to contribute approximately $77 thousand to the pension plans and $84 thousand to the postretirement welfare benefit plan in 2006. Estimated future benefit payments are as follows (dollars in thousands):

	Pension	Postretirement Welfare
2006 2007 2008 2009 2010 2011 - 2015	$78 $78 $96 $122 $122 $577	$12 $13 $21 $35 $37 $184

NOTE 12. Commitments and Contingencies

(a) Insurance - With the sale of the Plant to ENVY in 2002, ENVY assumed all liabilities for past and future events which could result in retrospective premiums being assessed against the Company for policies the Company maintained up to the date of the sale under the Price-Anderson Act and by Nuclear Electric Insurance Limited ("NEIL"). The Company no longer purchases any policy which has, as a condition of coverage, any Price-Anderson retrospective premium obligation.

While the Company has canceled its Primary and Excess nuclear property policies with NEIL, it has purchased a NEIL Business Interruption/Extra Expense policy to cover costs associated with an extended shutdown of the Plant attributable to an insurable peril. As this is a NEIL policy with full membership rights and obligations, the policy has a maximum retrospective premium obligation of $138 thousand.

(b) Industry Restructuring and Other Regulatory Developments - The electric utility industry has been in a period of transition which, to some extent, has resulted in a shift away from cost of service based rates to market based rates. Most states in which the Company's Sponsors operate have explored or, in some cases, have implemented plans to bring greater competition, customer choice, and market influence to the industry while retaining the benefits associated with the current regulatory system.

Page 17 of 18

The Company cannot predict what effect these restructuring plans will have on the Company or its Sponsors. It is possible, however, that these restructuring orders or other regulatory actions could have a material adverse effect on one or more of the Sponsors, which could, in turn, have a material adverse effect on the Company.

In June 2005, Standard & Poor's Rating Services ("S&P") downgraded the corporate credit rating of Central Vermont Public Service Corporation ("CVPS") from an investment grade of BBB- to a rating of BB+, which is below investment grade. The downgrade was in response to an April 2005 Vermont Public Service Board rate order requiring CVPS to provide customers with a rate refund of approximately $6 million in June 2005 and to reduce rates by 2.75% percent effective April 1, 2005. CVPS has an entitlement percentage under the Power Contracts of 35%, the largest of any of the Company's eight Sponsors, and through its wholly owned subsidiary, Custom Investment Corporation, owns 58.9% of the Company's outstanding common stock.

In December 2005, the Company responded to a letter from ENVY related to the downgraded credit rating of CVPS. The letter requested that the Company provide adequate assurances that CVPS will timely perform its payment obligations with respect to its 35% sub-entitlement under the PPA. There has been no follow up to the Company's response and the Company cannot predict the final outcome of this matter.

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EX-99

EXHIBIT 99.2

Independent Auditors' Report

The Stockholders and Board of Directors of
Vermont Electric Power Company, Inc.:

We have audited the accompanying balance sheet of Vermont Electric Power Company, Inc. as of December 31, 2005, and the related statements of income, stockholders' equity, 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.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Electric Power Company, Inc. as of December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

March 17, 2006

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VERMONT ELECTRIC POWER COMPANY, INC. STATEMENTS OF INCOME
	Years ended December 31,
	2005	Unaudited 2004	Unaudited 2003
Operating revenues:   Transmission revenues   Sales of power   Rent of transmission facilities to others	$28,775,151  446,344     1,897,178  31,118,673	$26,128,889  465,201     1,701,242  28,295,332	$25,111,594  520,016         463,255  26,094,865
Operating expenses:   Transmission expenses:       Operations       Maintenance       Rents   Purchased power   Administrative and general expenses   Depreciation and amortization (Note 2)   Taxes:       Local, property and other       Federal and state income (Note 5)	1,686,215  3,011,246  66,549  446,344  6,991,311  5,015,948  3,963,136     1,773,050   22,953,799	1,760,010  2,612,396  62,827  465,201  6,870,206  5,497,954  3,727,702      291,499  21,287,795	1,800,924  2,959,788  64,889  520,016  6,988,011  4,963,459  3,262,305            2,805  20,562,197
Operating Income Other Income:   Interest   Equity in earnings of subsidiary (Note 8)           Total operating and other income	8,164,874  79,066      302,391  8,546,331	7,007,537  30,759      318,267  7,356,563	5,532,668  21,586      371,968  5,926,222
Interest and other expense:   Interest on first mortgage bonds   Other interest and deductions   Amortization of debt expense   Allowance for borrowed funds used during construction           Net income	4,888,671  1,465,734  86,820       (912,610) $3,017,716	5,016,729  845,066  98,139    (286,009) $1,682,638	3,844,413  867,983  91,477      (146,987) $1,269,336

See accompanying notes to financial statements.

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VERMONT ELECTRIC POWER COMPANY, INC. BALANCE SHEETS
	December 31,
	2005	Unaudited 2004
ASSETS Utility plant (Note 2)    Less accumulated depreciation and amortization Investment in Vermont Electric Transmission Company, Inc. (Note 8)	$223,847,119     (71,903,939)   151,943,180            382,980	$185,348,647     (66,884,561)   118,464,086           630,589
Current assets: Cash Bond sinking fund deposits (Note 3) Bond interest deposits Accounts receivable:    Affiliated companies    Other Materials and supplies Income tax receivable Prepaids and other assets       Total current assets	579,690  396,000  1,011,711  12,571,381  4,301,874  5,204,887  629,962         1,419,445       26,114,950	678,090  475,000  1,309,963  11,842,711  3,413,381  3,699,118  411,050         1,107,278      22,936,591
Other assets: Regulatory asset (Note 2) Alternative minimum tax (Note 5) Unamortized debt expense, net Cash surrender value Deferred project costs and other       Total other assets	4,253,887  485,468  702,445  2,908,674           936,527        9,287,001	648,284  103,584  595,278  2,633,470           206,557        4,187,173
TOTAL ASSETS	$187,728,111	$146,218,439

See accompanying notes to financial statements.

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VERMONT ELECTRIC POWER COMPANY, INC. BALANCE SHEETS
	December 31,
	2005	Unaudited 2004
CAPITALIZATION AND LIABILITIES Capitalization: Stockholders' equity (Note 6): Class B common stock; $100 par value per share. Authorized 430,000    shares; issued and outstanding 219,977 shares Class B common stock; $100 par value per share. Authorized 20,000    shares; issued and outstanding 19,901 shares Retained earnings Class C preferred stock; $100 par value per share. Authorized 125,000    shares; 97,068 shares issued and outstanding Treasury stock, 410 shares at cost First mortgage bonds, net of current maturities (Note 3) Other long-term debt, net of current maturities (Note 3)       Total capitalization Commitments and contingencies (Notes 7, 11, 13 and 14)	$21,997,700 1,990,100        183,542 24,171,342 194,136         41,048 24,406,526 56,893,000    1,533,393  82,832,919	21,496,000 1,990,100        636,811 24,122,911 485,340          41,048 24,649,299 58,521,000    1,285,477  84,455,776
Current liabilities: Current maturities of long-term obligations (Note 3) Notes payable to bank Accounts payable:    Affiliated companies    Other Accrued interest on bonds Accrued taxes Other       Total current liabilities	2,688,918 61,350,000 2,000,059 24,746,733 1,011,711 177,481     1,417,201   93,392,103	16,102,636 16,394,318 440,731 17,100,389 1,309,963 132,635     1,323,188   52,803,860
Reserves and deferred credits: Deferred tax liabilities (Note 5) Deferred compensation (Note 7) Retirement benefits liability (Note 7)       Total reserves and deferred credits	5,798,916 5,396,553          307,620     11,503,089	3,994,195 4,695,742        268,866     8,958,803
TOTAL CAPITALIZATION AND LIABILITIES	$187,728,111	$146,218,439

See accompanying notes to financial statements.

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VERMONT ELECTRIC POWER COMPANY, INC. STATEMENTS OF STOCKHOLDER'S EQUITY
	Common Stock Class B	Common Stock Class C	Preferred Stock	Treasury Stock	Retained Earnings	Total Stockholders' Equity
Balances at December 31, 2002 (unaudited) Net Income Issuance of capital Return of capital Dividends declared and paid:   Preferred stock   Common stock Balances at December 31, 2003 (unaudited)	$6,000,000                  6,000,000	$1,616,300 373,800                  1,990,100	$970,680  (194,136)                  776,544	$41,048                  41,048	$568,399  1,269,336  (349,445) (897,368) 590,922	$9,196,427  1,269,336  373,800  (194,136) (349,445) (897,368) 9,398,614
Net Income Issuance of capital Return of capital Dividends declared and paid:   Preferred stock   Common stock Balances at December 31, 2004 (unaudited)	15,496,000                    21,496,000	1,990,100	(291,204)                  485,340	41,048	1,682,638  (274,702) (1,362,047) 636,811	1,682,638  15,496,000  (291,204) (274,702) (1,326,047) 24,649,299
Net Income Issuance of capital Return of capital Dividends declared and paid:   Preferred stock   Common stock Balances at December 31, 2005	501,700                      $21,997,700	$1,990,100	(291,204)                  $194,136	$41,048	3,017,716  (250,435) (3,220,550) $183,542	3,017,716  501,700  (291,204) (250,435) (3,220,550) $24,406,526

See accompanying notes to financial statements.

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VERMONT ELECTRIC POWER COMPANY, INC. STATEMENTS OF CASH FLOWS
	Years ended December 31,
	2005	Unaudited 2004	Unaudited 2003
Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by      operating activities:    Depreciation and amortization    Amortization of debt expense    Deferred income tax expense    Retirement benefits    Deferred compensation    Equity in earnings of subsidiary    Dividends from subsidiary    Increase in cash surrender value    Changes in assets and liabilities:        Accounts receivable        Materials and supplies        Income tax receivable        Regulatory asset        Accounts payable        Regulatory liability        Other assets and liabilities           Net cash provided by operating activities	$3,017,716  5,015,948  86,820  1,804,721  38,754  700,811  (302,391) 250,000  (275,204) (1,617,163) (1,505,769) (218,912) (3,605,603) 2,882,666  - -  (1,285,162) 4,987,232	$1,682,638  5,497,954  98,139  1,411,854  (616,576) 903,716  (318,267) 275,000  (286,615) 684,618  (77,733) (189,043) (648,284) (1,102,508) (1,857,335)   2,652,593  8,110,151	1,269,336  4,963,459  91,477  1,203,210  (121,332) 206,637  (371,968) 350,000  (314,800) (1,353,214) 247,315  105,961  1,050,000  1,662,223  (2,470,106) (1,576,886) 4,941,312
Cash flows from investing activities:    Return of investment in subsidiary    Change in bond sinking fund deposits    Capital expenditures, net    Change in construction payables           Net cash used for investing activities	300,000  79,000  (38,495,042)     6,323,006  (31,793,036)	300,000  (104,000) (25,217,449)     2,371,212  (22,650,237)	200,000  (26,000) (19,318,002)        (653,410) (19,797,412)
Cash flows from financing activities:    Proceeds from bond issuance    Repayment of bonds    Debt issue costs    Proceeds of notes payable to bank    Proceeds from other long-term debt    Repayment of other long-term debt    Return of preferred stock capital    Issuance of Class B common stock    Issuance of Class C common stock    Cash dividends on common stock    Cash dividends on preferred stock           Net cash provided by financing activities	- -  (15,074,000) (193,987) 44,955,682  1,350,372  (1,070,174) (291,204) 501,700  - -  (3,220,550)     (250,435) 26,707,404	25,000,000  (1,746,000) (247,269) (20,555,682) - -  (1,168,748) (291,204) 15,496,000  - -  (1,362,047)      (274,702) 14,850,348	- -  (1,419,000) (62,404) 17,200,000  1,139,178  (1,050,561) (194,136) - -  373,800  (897,368)     (349,445) 14,740,064
Net (decrease) increase in cash Cash, beginning of year Cash, end of year	(98,400)   678,090  $579,690	310,262    367,828  $678,090	(116,036)   483,864  $367,828
Supplemental disclosure of cash flow information:    Cash paid during the year for interest, net of amounts capitalized    Cash paid for income taxes	$4,853,139  $569,125	$5,089,917  $-	$4,450,436  $-

See accompanying notes to financial statements.

Page 6 of 19

NOTES TO FINANCIAL STATEMENTS

NOTE 1. Summary of Significant Accounting Principles
(a) Description of Business - Vermont Electric Power Company, Inc. ("VELCO" or the "Company") owns and operates an electric power transmission system in the State of Vermont. VELCO has transmission contracts with the State of Vermont, acting by and through the Vermont Department of Public Service, and with all of the electric utilities providing service in the State of Vermont. These transmission contracts have been reviewed and approved by the Federal Energy Regulatory Commission ("FERC"). The transmission contracts provide, among other things, for VELCO to earn an annual return equal to 11.5% of the par value of its Class B voting and Class C non-voting common stock. These earnings are distributed quarterly as dividends to VELCO's stockholders. VELCO has an agreement for single-unit power purchases of electricity, which it resells at cost to certain of its stockholders and other electric utilities in the State of Vermont.

VELCO, through its wholly owned subsidiary, Vermont Electric Transmission Company, Inc. ("VETCO") described in Note 8, constructed and maintains the Vermont portion of a transmission line used to transmit power purchased by the New England Power Pool on behalf of New England electric utilities from Hydro-Quebec, a Canadian utility. To assist VELCO in making its initial capital contribution to VETCO, the participating Vermont electric utilities purchased all of the shares of VELCO's Class C preferred stock.

VELCO's common and preferred stock are owned by various Vermont utilities. Central Vermont Public Service Corporation ("CVPS") owns 48% of VELCO's Class B and 31% of its Class C common stock and 47% of its Class C preferred stock.

VELCO also has agreements with various stockholders and other Vermont utilities to act as agent in order to provide a single entity that can accumulate costs related to the combined utilities' participation in certain joint projects. VELCO bills these costs, along with any direct costs incurred, to the participating Vermont utilities in accordance with each participant's obligations. These agency transactions are not reflected as part of VELCO's operations; however, operating expenses may be indirectly impacted from year to year, depending on the significance and nature of the activities performed by VELCO.

(b) Regulatory Accounting - Electric utilities are subject to certain accounting standards that are not applicable to other business enterprises in general. The Company applies the provisions of Statement of Financial Accounting Standard No. 71, Accounting for the Effects of Certain Types of Regulation ("FAS 71"), which requires regulated entities, in appropriate circumstances, to establish regulatory assets or liabilities, and thereby defer the income statement impact of certain charges or revenues because they are expected to be collected or refunded through future customer billings. The distribution and transmission businesses remain subject to rate regulation and continue to meet the criteria for application of SFAS 71.

The Company and its utility subsidiary follow accounting policies prescribed by the Federal Energy Regulatory Commission ("FERC") and the Vermont Department of Telecommunications and Energy ("VDTE").

(c) Utility Plant - Utility plant in service is stated at cost. Major expenditures for plant and those which substantially increase useful lives are capitalized. The Company provides for depreciation of utility plant in service using annual rates to amortize the cost of depreciable assets over their estimated useful lives using the straight-line method of depreciation. When assets are retired or otherwise disposed of, their costs are removed from plant, and such costs, plus removal cost, less salvage, are charged against accumulated depreciation. Rights of way, transmission equipment, communications equipment, buildings and office equipment are depreciated over 75 years, 30 years, 20 years, 30 years and 5 to 10 years, respectively.

The Company accounts for asset retirement obligations in accordance with SFAS No. 143. SFAS 143 establishes accounting and reporting standards for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operations of long-lived asset,

Page 7 of 19

except for certain obligations under lease arrangements. SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

(d) Materials and Supplies Inventory - Materials and supplies are stated at the lower of cost or market. Cost is determined on a weighted average basis.

(e) Unamortized Debt Expense - Costs associated with the original issuance of long-term debt has been capitalized and amortized over the term of the debt using the effective interest rate method. Amortization expense amounted to $86,820 in 2005, $98,139 in 2004 and $91,477 in 2003.

(f) Regulatory Asset - On December 9, 2005, the FERC approved a filing allowing the Company to begin amortizing over a ten year period the deferred depreciation charges the Company incurred when taking depreciation under the bond sinking fund method. No amortization has been taken to date. The regulatory asset which accounts for the difference between depreciation reported in the financial statements and depreciation previously recovered in rates is $4,253,887.

(g) Revenue Recognition - Revenue is billed monthly based on estimated cost of service plus an 11.5% return on capital. The effect of unbilled revenue at the end of the accounting period represents the difference between billed and actual costs for the month of December.

(h) Impairment of Long-Lived Assets - In accordance with SFAS No. 144, long-lived assets, such as utility plant, and regulatory assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of on asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate ass et and liability sections of the balance sheet.

(i) Allowance for Borrowed Funds Used During Construction ("AFUDC") - AFUDC is the estimated cost, during the period of construction, of funds used for the construction program. AFUDC is not currently realized in cash, but is recovered in the form of increased revenue collected as a result of depreciation of the property. VELCO capitalized AFUDC at an average rate of 4.26% in 2005, 2.29% in 2004 and 2.17% in 2003.

(j) Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

(k) Pension and Other Postretirement Plans - The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and final average pay. The cost of the program is being funded currently.

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The Company also sponsors a defined benefit health care plan for substantially all employees. The Company measures the costs of its obligation based on its best estimate. The net periodic costs are recognized as employees render the services necessary to earn the postretirement benefits.

(l) Use of Estimates - The preparation of financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying amount of utility plant, deferred income taxes, environmental liabilities and obligations related to employee benefits. Actual results could differ from those estimates.

(m) Commitments and Contingencies - Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

(n) Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2. Utility Plant
Utility plant consists of the following at December 31, 2005 and 2004:

	2005	2004
Land and rights of way Transmission equipment Communications equipment Buildings and office equipment Construction work-in process Less accumulated depreciation and amortization	$15,468,547 154,937,494 7,442,613 20,019,204     25,979,261 223,847,119     71,903,939 $151,943,180	$15,199,971 133,936,307 6,908,291 17,544,782    11,759,296 185,348,647    66,884,561 $118,464,086

Depreciation and amortization expense was $5,015,948 for the year end December 31, 2005, $5,497,954 for 2004 and $4,963,459 for 2003. The historical difference between depreciation recognized in the financial statements and depreciation recovered from rate payers is recorded as a regulatory asset of $4,253,887 and $648,284 at December 31, 2005 and 2004, respectively.

Capital expenditures in 2006 are estimated to be approximately $169 million. Present intentions are to finance these expenditures through a combination of short-term borrowings, long-term borrowings and equity.

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NOTE 3. Long-Term Debt
First Mortgage Bonds: VELCO's First Mortgage Bonds outstanding include the following series at December 31, 2005 and 2004:

	2005	2004
Series L, 7.30% due through 2018 Series M, 8.00% due through 2005 Series N, 7.42% due through 2012 Series O, 6.26% due through 2034 Less bonds to be retired within one year	$9,605,000 - -  24,244,000 24,473,000 58,521,000 1,628,000 $56,893,000	$10,061,000 13,558,000 25,195,000 24,781,000 73,595,000 15,074,000 $58,521,000

On March 3, 2004, VELCO received the proceeds from the sale of its Series O First Mortgage Bonds for the principal amount of $25,000,000, which the Company used to paydown its existing line of credit.

The First Mortgage Bonds are secured by a first mortgage lien on VELCO's utility plant. The bonds to be retired through sinking fund payments within the next five years will amount to:

	2005
Year ending December 31:    2006    2007    2008    2009    2010    Thereafter           Total	$1,628,000 1,748,000 1,877,000 2,014,000 2,161,000   49,093,000 $58,521,000

The terms of the indenture, as supplemented, under which the First Mortgage Bonds were issued, require, among other restrictions, that the total of common stockholders' investment and indebtedness of VELCO subordinated to the First Mortgage Bonds must equal at least one-ninth of the aggregate principal amount of the bonds outstanding (for Series L) and one-tenth of the aggregate principal amount of the bonds outstanding (for Series M, N and O) or $6,502,333 and $5,852,100, respectively, at December 31, 2005. VELCO is in compliance with each of these requirements at December 31, 2005.

Other Long-Term Debt: Other long-term debt includes notes payable of $2,594,311 and $2,314,113 at December 31, 2005 and 2004, respectively, bearing interest at rates ranging from 3.84% to 9.31%, which mature within the next four years. The notes are secured by a lien on certain office equipment and furniture. Principal repayments for the next five years will amount to:

	2005
Year ending December 31:    2006    2007    2008    2009    2010           Total	$1,060,918 688,476 400,612 292,122 152,183 $2,594,311

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NOTE 4. Notes Payable to Bank
VELCO uses a $95,000,000 line of credit agreement with a financial institution, expiring on March 31, 2006 to provide interim financing for plant construction. As part of this agreement, VELCO agrees to pay 0.15% per annum on the daily unused line of credit amount. Average daily borrowing was $29,312,898 in 2005 at a weighted average interest rate of 4.26%. Management expects to renew the line of credit with similar terms during 2006. The outstanding balance at December 31, 2005 and 2004 amounted to $61,350,000 and $16,394,318, respectively. The line of credit was renewed through December 31, 2006.

NOTE 5. Income Taxes
Federal and state income tax expense for the years ended December 31 follows:

	2005	2004	2003
Federal:    Current    Deferred       Total federal State:    Current    Deferred       Total state	$283,966 1,062,967 1,346,933 81,076 345,041 426,117 $1,773,050	$(941,443) 1,141,024  199,581  (273,227) 365,145  91,918  $291,499	$(1,087,039) 1,067,559  (19,480) (319,371) 341,656  22,285  $2,805

The difference between the actual tax provision and the "expected" tax expense for 2005 and 2004 (computed by applying the U.S. statutory corporate tax rate to earnings before taxes) is primarily attributable to the change in equity in earnings of subsidiary, state income taxes net of federal benefit, and the effects of several non-deductible items.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2005 and 2004 are presented below:

	2005	2004
Deferred tax assets:    Deferred compensation    Other       Total gross deferred tax assets Deferred tax liabilities:    Utility plant depreciation       Net deferred tax liability	$1,469,840  880,535  2,350,375  (8,149,291) $(5,798,916)	$1,430,729  668,312  2,099,041  (6,093,236) $(3,994,195)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized through future taxable earnings.

The alternative minimum tax credits included in the accompanying balance sheets are available to offset future tax liabilities and have no expiration date.

The Company files its income tax return on a consolidated basis with VETCO. The consolidated income taxes payable are allocated between VELCO and VETCO on a separate-company basis, in accordance with a tax-sharing agreement.

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NOTE 6 - Equity Transactions
Common Stock: The Company submitted a filing with the Vermont Public Service Board, which was subsequently approved, to amend its Articles of Association to increase the number of authorized shares of its Class B common stock from 90,000 shares to 430,000 shares and to issue 160,000 shares of said stock in 2004. In December 2005 and 2004, 5,017 and 154,960 additional shares of Class B common stock were issued, respectively.

Preferred Stock: The Class C preferred stock entitles stockholders to variable rate quarterly dividends but does not entitle stockholders to vote, except under certain circumstances. Quarterly dividends and a return of capital are paid to preferred stockholders in amounts substantially equivalent to the dividends and return of capital received by the Company from VETCO.

Treasury Stock: The 2,932 shares of Class C Preferred Stock, formerly held by Vermont Electric Generation and Transmission Cooperative, Inc. ("VEG&T") and transferred to VELCO in satisfaction of obligations owing to the Company as a result of VEG&T's bankruptcy, is retained as authorized and unissued shares. Although VEG&T previously had obligations to VELCO, no balance remains as of December 31, 2005.

NOTE 7 - Pension and Other Postretirement Benefits
Defined Benefit Plan: The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and final average pay. The Company makes annual contributions to the plan equal to the maximum amount that can be deducted for income tax purposes. The measurement date used to determine pension benefits for the defined benefit pension plan is September 30.

Statement of Financial Accounting Standards No. 87, Employers' Accounting for Pensions ("FAS 87") states that if a pension plan's accumulated benefit obligation ("ABO") exceeds the fair value of plan assets, the employer shall recognize in the statement of financial position a liability that is at least equal to the unfunded ABO with an offsetting charge to other comprehensive income. Primarily due to actuarial losses, the Company's ABO at September 30, 2005 is greater than the fair value of plan assets. As such, VELCO has recognized an additional minimum pension of $63,723 and $14,080 at December 31, 2005 and 2004, respectively, reflecting this underfunded pension obligation. The Company would normally record a charge to other comprehensive income as an offset to this entry, however, under FAS 87 the Company can offset this entry with another deferred asset equal to the lessor of unrecognized prior service cost of $604,684 or the additional minimum pension liability of $63 ,723 at September 30, 2005. Therefore, the Company has not charged other comprehensive income but has instead recorded another deferred asset of $63,723 at December 31, 2005 and 2004, respectively. If in the future, capital markets recover such that the fair value of plan assets is once again greater than the ABO, the additional minimum pension liability will be removed from the Company's balance sheets.

	Pension Benefits 2005	Pension Benefits 2004
Change in benefit obligation:    Benefit obligation at beginning of year    Service Cost    Interest Cost    Actuarial loss    Benefits paid       Benefit obligation at end of year	$12,368,444  698,018  738,870  1,338,440  (905,426) $14,238,346	$11,283,496  629,220  722,326  867,696  (1,134,294) $12,368,444
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Change in plan assets:    Fair value of plan assets at beginning of year    Actual return on plan assets    Employer contribution    Benefits paid       Fair value of plan assets at end of year           Funded status Unrecognized prior service cost Unrecognized net actuarial loss           Accrued benefit cost FAS 71 regulatory asset           Accrued benefit cost Accrued benefit cost Intangible asset           Accrued benefit cost Accumulated benefit obligation	8,668,510  1,233,932  930,000  (905,426) 9,927,016  (4,311,330) 604,684  3,462,749  (243,897)               -  $(243,897) $(307,620) 63,723  $(243,897) $10,234,635	7,444,173  878,631  1,480,000  (1,134,294) 8,668,510  (3,699,934) 657,160  2,736,586  (306,188)     51,300  $(254,888) $(268,968) 14,080  $(254,888) $8,937,478
Components of net periodic benefit costs:    Service Cost    Interest Cost    Expected return on plan assets    Recognized net actuarial loss (gain)    Net amortization    Amortization of FAS 71 regulatory asset       Net periodic benefit cost	$698,018  738,870  (696,814) 75,158  52,476  51,300  $919,008	$629,220  722,326  (694,585) 32,319  30,000  68,400  $787,680	$544,593  609,029  (629,820) (22,476) 28,521  68,400  $598,247

The assumptions used to determine the benefit obligations are as follows:

	Pension Benefits 2005	Pension Benefits 2004	Pension Benefits 2003
Weighted average assumptions:    Discount rate    Expected return on plan assets    Rate of compensation increase	5.5% 7.5% 4.5%	6.0% 7.5% 4.5%	6.0% 7.5% 4.5%

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Projected benefit payments over next 10 fiscal years:

	Pension Benefit Payments
Fiscal year ending December 31:    2006    2007    2008    2009    2010    2011 - 2015    Expected contribution for next fiscal year	$356,633 $384,845 $506,368 $524,871 $582,925 $3,342,964 $900,000

The following indicates the weighted average asset allocation percentage of the fair value of total Plan assets for each major type of Plan asset as of December 31, 2005, as well as the Plan's target percentages and the permissible ranges:

	Plan Assets		Target	Permissible
Asset Class	2005	2004	percentage	Ranges	Benchmark
Equity Fixed Income    Total	66% 34% 100%	66% 34% 100%	65% 35% 100%	63% to 67% 33% to 37%	S&P 500; Russell 2500 MSCI EAFE Lehman US Aggregate; CSFB

Post Retirement Plan: The Company's current postretirement benefit plan offers health care and life insurance benefits. The Company accrues the cost of postretirement benefits during the employees' years of service. When the Company began accrual accounting for such costs in 1993, it elected to recognize previously unaccrued postretirement benefit costs, known as the transition obligation, by amortizing these costs ratably over a 20-year period. The measurement date used to determine post retirement benefits for the post retirement plan is December 31.

The FERC has established certain guidelines that all FERC-regulated companies, including the Company, must follow in order to recover postretirement benefit costs in rates. The guidelines generally allow for the recovery of postretirement benefits when accrued. However, these guidelines do require that all postretirement benefit costs be funded when accrued. The Company's current plan is to fund its annual postretirement benefits accrual by making deposits into a 401(h) account, a separate account established within the pension investment fund and through a Voluntary Employees' Benefit Association ("VEBA"). Additionally, these guidelines require the Company to advise the FERC of its plans for accruing and funding postretirement benefit costs. The Company filed its plans with the FERC in 1995, although such plans have not yet been approved by the FERC.

In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003, ("Act") became law in the United States. The Act introduces a prescription drug benefit for retirees over the age of 65 under a new Medicare Part D program. For employers, like the Company, who currently provide retiree medical programs for former employees over the age of 65, there are potential subsidies available that are inherent in the Act. The Act potentially entitles these employers to a direct tax-exempt federal subsidy. Pursuant to FSP 106-1, the Company had elected to defer recognition of the provisions of this Act until further accounting guidance became effective.

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In May 2004, the FASB issued FSP 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003. This FSP provides guidance on the accounting for the effects of the Act. The guidance indicates that, when an employer initially accounts for the subsidy, the effect on the accumulated postretirement benefits obligation should be accounted for as an actuarial gain (assuming no plan amendments are made). In addition, since the subsidy would affect the employer's share of its plan's costs, the subsidy is included in measuring the costs of benefits attributable to current service. Therefore, the subsidy should reduce service cost when it is recognized as a component of net periodic postretirement benefits cost. This FSP became effective on July 1, 2004. The Company has determined that the impact of the Act is immaterial to its financial position and results of operations.

	Postretirement Benefits 2005	Postretirement Benefits 2004
Change in benefit obligation:    Benefit obligation at beginning of year    Service Cost    Interest Cost    Actuarial loss    Benefits paid       Benefit obligation at end of year Change in plan assets:    Fair value of plan assets at beginning of year    Actual return on plan assets    Employer contribution    Benefits paid       Fair value of plan assets at end of year           Funded status Unrecognized net transition obligation Unrecognized net actuarial loss           Accrued benefit cost Adjustments for contributions FAS 71 regulatory asset           Prepaid benefit cost	$1,642,986  36,935  102,437  277,592  (226,307) $1,833,643  318,496  35,225  286,142  (226,307) 413,556  (1,420,087) 155,641  1,151,882  (112,564) 166,274                -  $53,710	$1,865,309  43,138  94,343  (270,106) (89,698) $1,642,986  243,463  24,805  139,926  (89,698) 318,496  (1,324,490) 177,875  927,647  (218,968) 263,993       7,800  $52,825

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Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1.0% increase in the trend rate would increase the postretirement accumulated benefit obligation by $27,379 and a 1.0% decrease in the trend rate would decrease the postretirement accumulated benefit obligation by $25,293 in 2005.

	Postretirement Benefits 2005	Postretirement Benefits 2004	Postretirement Benefits 2003
Components of net periodic benefit costs:    Service Cost    Interest Cost    Expected return on plan assets    Recognized net actuarial loss    Net amortization    Amortization of FAS 71 regulatory asset       Net periodic benefit cost	$36,935  102,437  (29,022) 47,155  22,234       7,800  $187,539	$43,138  94,343  (18,491) 48,810  22,234  10,400  $200,434	$59,842  108,893  (15,671) 67,577  22,234  10,400  $253,275

The assumptions, used to determine net periodic postretirement benefit costs are as follows:

	Postretirement Benefits 2005	Postretirement Benefits 2004
Weighted average assumptions:    Discount rate    Expected return on plan assets    Rate of compensation increase	5.5% 7.5% 4.5%	6.0% 7.5% 4.5%

In 2000, the Company downsized its financial accounting staff, resulting in a one-time termination benefit charge. These costs, which were determined by the Company's actuary, Towers Perrin, to be $342,000 for pension benefits and $52,000 for postretirement benefits are reflected net in the above accrued pension and postretirement benefit costs. These costs have been deferred based on a regulatory precedent and are being amortized over a five-year period.

Other Postretirement Benefits: VELCO also provides health care and other benefits to retired employees who meet certain age and years of service eligibility requirements. Under certain circumstances, eligible retirees are required to make contributions for postretirement benefits. The Company contributed in $188,423 in 2005, $124,690 in 2004 and $241,985 in 2003 toward these benefits. The Company anticipates contributing $190,000 for these benefits in 2006.

Defined Contribution Plan: The Company sponsors a defined contribution plan to which eligible employees may contribute part of their salaries and wages within prescribed limits. Employees are eligible to participate in this plan during their first year of employment, if the employee has attained age 18. Vesting begins after 1,000 hours of service. Employees are fully vested in the Company's contribution in five years. Additional matching contributions may be made on the employees' behalf based on the results of operations. The Company contributed $248,070 in 2005, $250,388 in 2004 and $239,258 in 2003.

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Deferred Compensation: The principal amounts of deferred compensation result from plans for the Company's management and Board of Directors. The plans and the agreement generally provide for annual retirement benefits beginning at age 65 for management and at age 70 for the Board of Directors. The Company is funding the cost of the plans through life insurance contracts. The cost of these plans, net of the increase in cash surrender value and insurance proceeds, if any, has been charged to operating expense in the accompanying statements of income.

NOTE 8. Investment in Affiliated Company

Investment in affiliated company is accounted for under the equity method and represents VELCO's 100% ownership of the common stock of Vermont Electric Transmission Company, Inc. ("VETCO"). The Company reviewed the guidance of FASB Interpretation No. 46, Consolidation of Variable Interest Entities, as revised in December 2003 ("FIN 46R"), which addresses the consolidation of variable interest entities ("VIE") by business enterprises that are the primary beneficiaries. A VIE is an entity that does not have sufficient equity investment risk to permit it to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the enterprise with the majority of the risks or rewards associated with the VIE. As part of VELCO's assessment of FIN 46R, VELCO reviewed the substance of VETCO to determine if it is still appropriate that the entity is not consolidated with VE LCO's operations. VETCO continues to operate under support agreements in connection with the construction of the transmission line with substantially all of the New England electric utilities. These agreements require the utilities to reimburse VETCO for all of the operating and capital costs of the line on an unconditional and absolute basis. Additionally, these support agreements provide for an advisory committee made up of participants to review VETCO's operations and make recommendations on major decisions. VETCO is obligated to follow these recommendations to the extent reasonably practical. These provisions effectively restrict VELCO's control over VETCO's operations. Based on these facts, VELCO has determined that it does not have a controlling financial interest in VETCO, as VELCO is not exposed to the risks and rewards of VETCO. In addition, the support agreements effectively restrict VELCO's control, therefore VELCO has not consolidated its financial information with that of VETCO and, instead, is accounting for its investment using the equity method.

VELCO owns 100% of the common stock in VETCO. VELCO's initial capital contribution was $9,999,000. VETCO pays VELCO a quarterly dividend that represents a return on investment at a rate based on market rates. In addition, a return of investment calculated to maintain equity at approximately 20% of VETCO's total capitalization is paid to VELCO quarterly. Through December 31, 2005, VETCO has returned to VELCO $9,800,000 of the original capital contribution. The carrying amount of the investment is $382,980 and $630,589 at December 31, 2005 and 2004, respectively.

Summarized financial information related to VETCO follows:

	Balance Sheet
	2005	2004
Net utility plant in service Other assets    Total Assets Secured notes payable Other liabilities Stockholders' investment    Total liabilities and stockholders' investment	$3,778,083    1,661,334  $5,439,417  $280,000  4,776,437      382,980  $5,439,417	$4,349,220    1,840,132  $6,189,352  $1,120,000  4,438,763      630,589  $6,189,352

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	Statement of Income
	2005	2004	2003
Operating revenues Operating expenses Other income    Net income	$4,750,852  (4,538,938)   90,477  $302,391	$4,305,730  (4,015,092)   27,629  $318,267	$4,740,178 (4,333,343)   (34,867) $371,968

Other Related Party Activity: VELCO has contracted with VETCO to provide VETCO with management and support services. In connection therewith, VELCO has charged VETCO $1,179,011 in 2005, $1,005,185 in 2004 and $888,100 in 2003 which primarily represents payroll services and insurance costs. These amounts are reflected as expenses in VETCO's operating results and as a decrease in expenses in VELCO's accompanying statements of income.

NOTE 9. Other Related Party Transactions
Central Vermont Public Service ("CVPS") personnel provide VELCO with certain operational, maintenance, construction and administrative services. In addition, payments were made by VELCO to CVPS for materials and supplies and insurance. These services are provided at cost and amounted to approximately $436,505 in 2005, $411,063 in 2004 and $414,000 in 2003.

NOTE 10. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value disclosures for VELCO's financial instruments:

• The carrying amounts of cash, bond sinking fund deposits, bond interest deposits and short-term debt approximate fair value due to the short-term maturity of these instruments.
• The fair value of long-term debt is estimated based on currently quoted market prices for similar types of issues. At December 31, 2005, its carrying amount approximates fair value.

NOTE 11. Business and Credit Concentrations
Significant Capital Projects: VELCO is in the process of performing construction projects to enhance services to its customers. These projects have been the Company's prime focus during 2005. Costs capitalized in 2005 amounted to approximately $36,606,000 which related to the following projects, estimated to be completed from 2005 - 2007: Lamoille County 115 kV Line ($839,000), Northern Loop Project ($16,049,000) and Northwest Reliability Project ($19,718,000). VELCO has budgeted $157,600,000 for 2006 related to these projects.

Significant Customers: In 2005, two customers, CVPS and Green Mountain Power ("GMP") individually represent 10% or more of the total accounts receivable balance at the end of the year. These customers' percentage of the total accounts receivable balance is as follows for the years ended December 31, 2005 and 2004:

	2005	2004
CVPS GMP	33.2% 27.1% 60.3%	32.5% 28.5% 61.0%

NOTE 12. Consideration of Variable Interest Entity
For the March 31, 2004 effective date of FIN 46R, VELCO evaluated, among other entities, the companies that supply power to VELCO through its purchase power agreements. VELCO determined that it is possible that some of these companies may be considered VIEs. These companies have power plants that have daily capacity output. For the years ended December 31, 2005 and 2004, VELCO purchased a total of 11,412 megawatt-hours ("MWH") and 10,721 MWH, respectively, under these agreements. These purchases approximate 100% of the total MWH

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purchased by VELCO for the years ended December 31, 2005 and 2004 and amounted to $446,344 and $465,201, respectively. In order to determine if these counterparties are VIEs and if VELCO is the primary beneficiary of these counterparties, VELCO concluded that it needed more information from the entities. VELCO attempted to obtain the information required and requested, in writing, these entities provide the Company with the necessary information. However, each of the entities has indicated that they will not provide the requested information as they are not contractually obligated to provide such confidential information. Since VELCO was unable to obtain the necessary information and as allowed under a scope exception in FIN 46R, the accompanying financial statements do not reflect the consolidation of any entities with which VELCO has a purchase power agreement.

NOTE 13. Self Insurance
The Company is self-insured for employee health benefits. Under the terms of the self insurance Plan, all full-time, regular employees were eligible for participation and as such, the Company is responsible for the administration of the Plan and any resultant liability incurred. The Company maintains a stop-loss insurance agreement with the insurance company to limit its losses on individual and aggregate claims. As of December 31, 2005, VELCO has provided a reserve of $47,378 for claims incurred but not reported.

NOTE 14. Asset Retirement Obligations
In March 2005, the FASB issued FASB Interpretation No. 47 ("FIN 47") Accounting for Conditional Asset Retirement Obligations, which clarifies that a liability (at fair value) must be recognized for an asset retirement obligation when it has been incurred if the amount can be reasonably estimated, even if settlement of the liability is conditional on a future event. FIN 47 is effective for fiscal years ending after December 15, 2005.

VELCO has substantively reviewed the regulations, laws, and contractual obligations to which it is party to identify situations where there are legal obligations to perform asset retirement activities. This review has identified a limited number of leases and railroad crossing agreements which obligate VELCO to perform asset retirement activities upon termination. In considering how to determine the fair value of these obligations, VELCO has determined that because of the limited number and limited size of the asset retirement obligations, the fair value of the obligations would not have a material impact on its financial position, results of operation and cash flows.

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