NOTE 14 - LONG-TERM DEBT AND NOTES PAYABLE

Long-term debt and notes payable at December 31 consisted of the following (dollars in thousands):

	December 31, 2011		December 31, 2010
First Mortgage Bonds
5.00%, Series SS, due 2011	$	0	$	20,000
5.72%, Series TT, due 2019		55,000		55,000
6.90%, Series OO, due 2023		17,500		17,500
6.83%, Series UU, due 2028		60,000		60,000
8.91%, Series JJ, due 2031		15,000		15,000
5.89%, Series WW, due 2041		40,000		0
Industrial/Economic Development Bonds
Vermont Industrial Development Authority Bonds ("VIDA")
Variable, due 2013 (0.15% at December 31, 2011 and 0.35% at December 31, 2010)		5,800		5,800
Connecticut Development Authority Bonds ("CDA")
Variable, due 2015 (0.20 % at December 31, 2011 and 0.35% at December 31, 2010)		5,000		5,000
Vermont Economic Development Authority Bond ("VEDA") 5.00%, due 2020		30,000		30,000
Credit Facility
$40 million unsecured revolving credit facility
(1.5375% at December 31, 2011 and 0.95% at December 31, 2010)		12,278		13,695
Total long-term debt and notes payable		240,578		221,995
Less current amount of long-term debt, due within one year		0		(20,000	)
Less credit facility, due within one year		0		(13,695	)
Total long-term debt, less current portion	$	240,578	$	188,300

First Mortgage Bonds: Substantially all of our utility property and plant is subject to liens under our First Mortgage Bond indenture. There are no interim sinking fund payments due prior to maturity on any series of first mortgage bonds and all interest rates are fixed. The First Mortgage Bonds are callable at our option at any time upon payment of a make-whole premium, calculated as the excess of the present value of the remaining scheduled payments to bondholders, discounted at a rate that is 0.5 percent higher than the comparable U.S. Treasury Bond yield, over the early redemption amount.

On June 15, 2011, we issued $40 million of First Mortgage 5.89 percent Bonds, Series WW and $20 million of this amount was used to redeem the Series SS Bonds. The Series WW bonds were issued to one purchaser, in a private placement transaction, under a shelf facility that was put in place on February 4, 2011. The Series WW bond issuance was planned when we entered into a commitment with the purchaser on July 15, 2010 to issue $40 million of first mortgage bonds at 5.89 percent on June 15, 2011 in a private placement transaction. The remaining proceeds are being used for our capital expenditures and for other corporate purposes. The shelf facility allows us to issue up to an additional $60 million of first mortgage bonds directly to the purchaser through December 31, 2012. Neither party has any obligation to issue or purchase the additional $60 million first mortgage bonds available under the shelf facility.

Industrial/economic development bonds: The CDA and VIDA bonds are tax-exempt, floating rate, monthly demand revenue bonds. There are no interim sinking fund payments due prior to their maturity. The interest rates reset monthly. Both series are callable at par as follows: 1) at our option or the bondholders' option on each monthly interest payment date; or 2) at the option of the bondholders on any business day. There is a remarketing feature if the bonds are put for redemption. Historically, these bonds have been remarketed in the secondary bond market. These two series of bonds are both supported by letters of credit, discussed below.

On December 2, 2010, VEDA issued $30 million of tax-exempt Recovery Zone Facility Bonds, Central Vermont Public Service Corporation Issue, Series 2010 and loaned the proceeds to us under a Loan and Trust Agreement dated December 1, 2010. The bonds carry a fixed interest rate of 5 percent and will mature on December 15, 2020. The proceeds will be used to fund certain capital improvements to our production, transmission, distribution and general facilities. The VEDA bonds are secured by a $30 million issue of first mortgage bonds, Series VV, issued under our Indenture of Mortgage dated as of October 1, 1929, as amended and supplemented. As security, the terms of the Series VV first mortgage bonds mirror those of the VEDA bonds. VEDA has no obligation to pay interest and principal on the VEDA bonds except from proceeds provided by us. There are no interim sinking fund payments due prior to the maturity of the VEDA bonds, and they are not callable prior to maturity at our option. The bond proceeds are held in trust and we access these bond proceeds as reimbursement for capital expenditures made under certain production, transmission, distribution and general facility projects. The trust funds holding the bond proceeds are recorded as restricted cash on the Consolidated Balance Sheets.

Our first mortgage bond and industrial/economic development bond financing documents do not contain cross-default provisions to affiliates outside of the consolidated entity. Certain of our debt financing documents contain cross-default provisions to our wholly owned subsidiaries, East Barnet and C.V. Realty, Inc. These cross-default provisions generally relate to an inability to pay debt or debt acceleration, inappropriate affiliate transactions, a breach of warranty or performance of an obligation, or the levy of significant judgments, attachments against our property or insolvency. Currently, we are not in default under any of our debt financing documents. Scheduled maturities for the next five years are $0 in 2012, $5.8 million in 2013, $0 in 2014, $5 million in 2015 and $0 in 2016.

Letters of credit: We have two outstanding unsecured letters of credit, issued by one bank, that support the CDA and VIDA revenue bonds. These letters of credit total $11.1 million in support of the two revenue bond issues totaling $10.8 million, discussed above. We pay an annual fee of 2.4 percent on the letters of credit. These letters of credit expire on November 30, 2012. The letters of credit contain cross-default provisions to our wholly owned subsidiaries. These cross-default provisions generally relate to an inability to pay debt or debt acceleration, the levy of significant judgments or insolvency. At December 31, 2011, there were no amounts drawn under these letters of credit.

Credit Facility: We have a three-year, $40 million unsecured revolving credit facility with a lending institution pursuant to a Credit Agreement dated October 25, 2011 that expires on October 24, 2014. This facility replaced a three-year, $40 million unsecured revolving credit facility that matured on November 2, 2011. The Credit Agreement contains financial and non-financial covenants. The purpose of the facility is to provide liquidity for general corporate purposes, including working capital and power contract performance assurance requirements, in the form of funds borrowed and letters of credit.

Financing terms and costs include an annual commitment fee of 0.15 percent on the unused balance, plus interest on the outstanding balance of amounts borrowed at various interest options and a commission of 1.35 percent on the average daily amount of letters of credit outstanding. The facility does not contain a Material Adverse Effect clause. The credit facility also contains cross-default provisions to any of our subsidiaries. These cross-default provisions generally relate to an inability to pay debt or debt acceleration, the levy of significant judgments or voluntary or involuntary liquidation, reorganization or bankruptcy. At December 31, 2011, there were $12.3 million in loans and $3.5 million in letters of credit outstanding under this credit facility. At December 31, 2010, there were $13.7 million in loans and $5.5 million in letters of credit outstanding under the previous credit facility.

We also have a three-year, $15 million unsecured revolving credit facility with a different lending institution pursuant to a Credit Agreement dated December 22, 2010 that expires in December 2013. This facility replaced a 364-day $15 million unsecured revolving credit facility that matured on December 29, 2010. The purpose of and our obligation under this credit agreement is the same as described above. Financing terms and costs include an annual commitment fee of 0.5 percent on the unused balance and a fee of 2.0 percent on the average daily amount of letters of credit outstanding. Various interest rate options exist for amounts borrowed under this facility. This facility also does not contain a Material Adverse Effect clause. This facility was not used in 2011 or 2010 for borrowings or letters of credit.

Covenants: Our long-term debt indentures, letters of credit, credit facilities, articles of association and material agreements contain financial covenants. The most restrictive financial covenants include maximum debt to total capitalization of 65 percent, and minimum interest coverage of two times first mortgage bond interest. A significant reduction in future earnings or a significant reduction to common equity could restrict the payment of common and preferred dividends or could cause us to violate our maintenance covenants. If we were to default on a covenant, the lenders could take such actions as terminate their obligations, declare all amounts outstanding or due immediately payable, or take possession of or foreclose on mortgaged property.

Dividend and Optional Stock Redemption Restrictions: Our revolving credit facilities described above restricts optional redemptions of capital stock and other restricted payments as defined. The First Mortgage Bond indenture and our Articles of Association also contain certain restrictions on the payment of cash dividends on and optional redemptions of all capital stock. Under the most restrictive of these provisions, $79.9 million of retained earnings was not subject to such restriction at December 31, 2011. The Articles also restrict the payment of common dividends or purchase of any common shares if the common equity level falls below 25 percent of total capital, applicable only as long as Preferred Stock is outstanding. Our Articles of Association also contain a covenant that requires us to maintain a minimum common equity level of about $3.3 million as long as any Preferred Stock is outstanding.