NOTE 19 – ACQUISITIONS

Vermont Marble Power Division: On June 10, 2011, the PSB issued an order approving our purchase of the Vermont Marble Power Division of Omya, Inc., pursuant to the purchase and sale agreement and issued a Certificate of Consent. On September 1, 2011, we closed on the transaction. Included in the sale are rights to serve approximately 875 customers, including the Omya industrial facility, which became our single-largest customer representing approximately 6 percent of expected future annual retail sales. The acquisition will create efficiencies that will reduce costs and benefit customers overall; and we acquired renewable hydro assets at competitive costs for our customers.

The agreement also includes a five-year, six-step phase-in of residential rate changes for existing Vermont Marble customers, which will be funded by Omya up to an amount estimated to be approximately $1.1 million.

We will be allowed recovery from customers of up to $27 million for the generating assets and $0.8 million for the transmission and distribution assets. The MOU also requires the creation of a so-called value sharing pool that provides for certain excess value we receive, if any, to be shared among our customers, Omya and our shareholders if energy market prices and hydro facility improvements create more value than anticipated for a period of 15 years following the closing date. This will provide us with an opportunity to recover up to $1.3 million not otherwise recovered in rates.

We plan to invest an estimated $20 million between 2012 and 2015 to upgrade the Vermont Marble facilities.

The actual revenues of Vermont Marble from the acquisition date through December 31, 2011 were approximately $6.3 million. If the Vermont Marble acquisition closed on January 1, 2010, the incremental revenues on a pro forma basis would be $16.5 million for the 12 months ended December 31, 2010 and $19 million for the 12 months ended December 31, 2011.

Our actual earnings related to the purchase of Vermont Marble from the acquisition date through December 31, 2011 were approximately $0.4 million. If the Vermont Marble acquisition closed on January 1, 2010, the incremental earnings on a pro forma basis would be $0.1 million for the 12 months ended December 31, 2010 and $1.3 million for the 12 months ended December 31, 2011. In 2011, we incurred $0.1 million of acquisition-related costs that were recorded in the Consolidated Statements of Income.

Our primary valuation technique to measure the fair value of the assets shown below at the acquisition date is based on the income approach. This is due to the regulatory treatment of utility-related assets.

The fair value allocations of the Vermont Marble acquisition are as follows (dollars in thousands):

Fair value of business combination:
Cash payments	$	29,743
Total	$	29,743

Identifiable assets acquired:
Utility plant, net of accumulated depreciation	$	27,620
Accounts receivable		151
Other deferred charges – regulatory		658
Other deferred charges and other assets		1,972
Total	$	30,401

Liabilities Assumed:
Power-related derivatives	$	658
Total	$	658

We are reporting the operations for this acquisition within the results of our CV-VT segment from the acquisition date.

Readsboro Electric Department: On October 27, 2010, we signed a purchase and sale agreement with Readsboro. The $0.4 million purchase price includes all of the assets of Readsboro including about 14 miles of distribution line and associated equipment, and the exclusive franchise Readsboro holds to serve its 310 customers. On February 24, 2011 we, along with the DPS and Readsboro, filed a stipulation with the PSB that resolves the issues outstanding in our acquisition of Readsboro. On July 8, 2011, the PSB issued an order approving the purchase and sale agreement, and issued a Certificate of Consent. The PSB order does not allow us to recover the acquisition premium of $0.1 million, which is the amount above the net book value of $0.3 million, which approximates fair value. We also assumed a nominal amount of liabilities. On August 1, 2011, we closed on the transaction.