-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Jan5i9u0hSeYWo1mmmhe3NiUH0Xnc9NepsoNSQ8KrDjQNnjRwaBmzLSeDPub8Oz5 HCevEFnpztOS0QAirF/IfA== 0000043704-94-000011.txt : 19940602 0000043704-94-000011.hdr.sgml : 19940602 ACCESSION NUMBER: 0000043704-94-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREEN MOUNTAIN POWER CORP CENTRAL INDEX KEY: 0000043704 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 030127430 STATE OF INCORPORATION: VT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08291 FILM NUMBER: 94527831 BUSINESS ADDRESS: STREET 1: 25 GREEN MOUNTAIN DR STREET 2: P.O.BOX 850 CITY: SOUTH BURLINGTON STATE: VT ZIP: 05402-0850 BUSINESS PHONE: 8028645731 MAIL ADDRESS: STREET 1: 25 GREEN MOUNTAIN DR STREET 2: P O BOX 850 CITY: SOUTH BURLINGTON STATE: VT ZIP: 05402-0850 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1994 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 1-8291 GREEN MOUNTAIN POWER CORPORATION (Exact name of registrant as specified in its charter) Vermont 03-0127430 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 25 Green Mountain Drive South Burlington, VT 05402 Address of principal executive offices (Zip Code) Registrant's telephone number, including area code (802) 864-5731 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class - Common Stock Outstanding March 31, 1994 $3.33 1/3 Par Value 4,551,012 GREEN MOUNTAIN POWER CORPORATION Consolidated Comparative Balance Sheets (Unaudited) Part 1 - - ------ A.1
March 31 December 31 ----------------------------------- ---------------- 1994 1993 1993 ---------------- ---------------- ---------------- (In thousands) (In thousands) ASSETS ELECTRIC UTILITY Utility Plant Utility plant, at original cost.................... $216,417 $201,600 $214,977 Less accumulated depreciation...................... 66,130 60,435 64,226 ---------------- ---------------- ---------------- Net utility plant................................ 150,287 141,165 150,751 Property under capital lease....................... 11,029 11,950 11,029 Construction work in progress...................... 10,157 11,847 9,631 ---------------- ---------------- ---------------- Total utility plant, net......................... 171,473 164,962 171,411 ---------------- ---------------- ---------------- Other Investments Associated companies, at equity (Note 2)........... 16,859 17,322 16,886 Non-utility property............................... 3,719 3,307 3,521 Other investments.................................. -- 2,079 2,121 ---------------- ---------------- ---------------- Total other investments.......................... 20,578 22,708 22,528 ---------------- ---------------- ---------------- Current Assets Cash............................................... 61 1,246 50 Temporary investments.............................. 900 -- -- Accounts receivable, customers and others, less allowance for doubtful accounts............. 15,454 18,504 14,814 Accrued utility revenues (Note 1).................. 5,619 5,290 6,138 Fuel, materials and supplies, at average cost...... 2,756 2,724 2,841 Prepayments........................................ 1,593 1,363 1,984 Current revenue due to income taxes................ 428 454 729 Other.............................................. 232 342 388 ---------------- ---------------- ---------------- Total current assets............................. 27,043 29,923 26,944 ---------------- ---------------- ---------------- Deferred Charges Future revenue due to income taxes................. 4,179 4,908 4,179 Unfunded future federal income taxes............... 4,498 4,731 4,590 Demand side management programs................... 13,407 7,058 12,809 Environmental proceedings costs.................... 6,152 2,710 5,356 Purchased power costs.............................. 3,027 407 4,134 Other.............................................. 12,406 9,022 11,277 ---------------- ---------------- ---------------- Total deferred charges........................... 43,669 28,836 42,345 ---------------- ---------------- ---------------- NON-UTILITY Cash and cash equivalents.......................... 123 136 177 Other current assets............................... 3,616 5,132 3,479 Property and equipment............................. 11,198 10,919 11,331 Intangible assets.................................. 3,365 3,895 3,484 Other assets....................................... 9,551 5,460 10,155 ---------------- ---------------- ---------------- Total non-utility assets......................... 27,853 25,542 28,626 ---------------- ---------------- ---------------- Total Assets........................................... $290,616 $271,971 $291,854 ================ ================ ================ CAPITALIZATION AND LIABILITIES ELECTRIC UTILITY Capitalization Common Stock Equity Common stock,$3.33 1/3 par value, authorized 10,000,000 shares (issued 4,566,868, 4,443,410, and 4,536,042).......... $15,222 $14,811 $15,120 Additional paid-in capital....................... 57,974 54,409 57,178 Retained earnings................................ 26,668 26,585 25,229 Treasury stock, at cost (15,856 shares).......... (378) (378) (378) ---------------- ---------------- ---------------- Total common stock equity...................... 99,486 95,427 97,149 Redeemable cumulative preferred stock.............. 9,385 9,575 9,385 Long-term debt, less current maturities............ 79,800 67,644 79,800 ---------------- ---------------- ---------------- Total capitalization........................... 188,671 172,646 186,334 ---------------- ---------------- ---------------- Capital lease obligation............................... 11,029 11,950 11,029 ---------------- ---------------- ---------------- Current Liabilities Current maturuties of long-term debt............... 1,800 2,486 1,800 Short-term debt.................................... 13,215 6,213 19,015 Accounts payable, trade, and accrued liabilities... 5,361 5,522 8,373 Accounts payable to associated companies........... 3,792 4,679 4,302 Dividends declared................................. 199 203 199 Customer deposits.................................. 1,215 1,124 1,197 Taxes accrued...................................... 1,697 3,470 397 Interest accrued................................... 1,819 1,562 2,070 Deferred revenues (Note 1)......................... 8,177 8,123 -- Current revenue reduction due to income taxes...... 132 140 225 Unfunded future federal income taxes............... 428 454 729 Other.............................................. 625 564 572 ---------------- ---------------- ---------------- Total current liabilities...................... 38,460 34,540 38,879 ---------------- ---------------- ---------------- Deferred Credits Accumulated deferred income taxes.................. 20,844 16,056 20,683 Unamortized investment tax credits................. 5,570 5,848 5,672 Future revenue reduction due to income taxes....... 4,366 4,590 4,366 Unfunded future federal income taxes............... 4,179 4,908 4,179 Other.............................................. 11,384 11,994 13,541 ---------------- ---------------- ---------------- Total deferred credits......................... 46,343 43,396 48,441 ---------------- ---------------- ---------------- NON-UTILITY Current liabilities................................ 391 615 666 Other liabilities.................................. 5,722 8,824 6,505 ---------------- ---------------- ---------------- Total non-utility liabilities.................. 6,113 9,439 7,171 ---------------- ---------------- ---------------- Total Capitalization and Liabilities................... $290,616 $271,971 $291,854 ================ ================ ================ The accompanying notes are an integral part of the consolidated financial statements.
GREEN MOUNTAIN POWER CORPORATION Consolidated Comparative Income Statements (Unaudited) Part 1 - - ------ A.2
Three Months Ended March 31 ----------------------------------------- 1994 1993 ----------------- ----------------- (In thousands, except amounts per share) Operating Revenues (Note 1)..................................... $40,611 $40,751 ----------------- ----------------- Operating Expenses Power Supply Vermont Yankee Nuclear Power Corporation (Note 2).......... 7,379 7,472 Company-owned generation................................... 1,179 749 Purchases from others...................................... 12,773 12,468 Other operating............................................... 4,769 4,503 Transmission.................................................. 2,579 2,816 Maintenance................................................... 1,245 1,016 Depreciation and amortization................................. 2,305 2,143 Taxes other than income....................................... 1,726 1,636 Income taxes.................................................. 1,764 2,788 ----------------- ----------------- Total operating expenses................................... 35,719 35,591 ----------------- ----------------- Operating income......................................... 4,892 5,160 ----------------- ----------------- Other Income Equity in earnings of affiliates and non-utility operations... 748 860 Allowance for equity funds used during construction........... 89 52 Other income and deductions, net.............................. 145 (42) ----------------- ----------------- Total other income.......................................... 982 870 ----------------- ----------------- Income before interest charges............................ 5,874 6,030 ----------------- ----------------- Interest Charges Long-term debt................................................ 1,742 1,628 Other......................................................... 230 149 Allowance for borrowed funds used during construction........ (138) (49) ----------------- ----------------- Total interest charges...................................... 1,834 1,728 ----------------- ----------------- Net Income...................................................... 4,040 4,302 Dividends on preferred stock.................................... 199 203 ----------------- ----------------- Net Income Applicable to Common Stock........................... $3,841 $4,099 ================= ================= Common Stock Data Earnings per share............................................ $0.85 $0.93 Cash dividends declared per share............................. $0.53 $0.525 Weighted average shares outstanding........................... 4,537 4,415 Consolidated Comparative Statements of Retained Earnings (Unaudited) Balance - beginning of period................................... $25,229 $24,801 Net Income...................................................... 4,040 4,302 ----------------- ----------------- 29,269 29,103 ----------------- ----------------- Cash Dividends - redeemable cumulative preferred stock.......... 199 203 - common stock................................... 2,402 2,315 ----------------- ----------------- 2,601 2,518 ----------------- ----------------- Balance - end of period......................................... $26,668 $26,585 ================= ================= The accompanying notes are an integral part of the consolidated financial statements.
GREEN MOUNTAIN POWER CORPORATION Consolidated Statements of Cash Flows (Unaudited) Part 1 - - ------ A.3
Three Months Ended March 31 --------------------------------------- 1994 1993 ----------------- ----------------- (In thousands) Operating Activities: Net Income........................................................... $4,040 $4,302 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................................... 2,305 2,143 Dividends from associated companies less equity income........... 26 (183) Allowance for funds used during construction..................... (227) (101) Amortization of purchased power costs............................ 1,161 1,073 Deferred income taxes............................................ 161 553 Deferred revenues (Note 1)....................................... 8,177 8,122 Amortization of gain on sale of property......................... (13) (13) Deferred purchased power costs................................... (54) (36) Amortization of investment tax credits........................... (102) (108) Environmental proceedings costs.................................. (825) 238 Changes in: Temporary investments.......................................... (900) -- Accounts receivable............................................ (641) (1,306) Accrued utility revenues....................................... 519 310 Fuel, materials, and supplies.................................. 85 170 Prepayments and other current assets........................... 411 2,188 Accounts payable............................................... (3,524) (4,076) Taxes accrued.................................................. 1,299 2,655 Interest accrued............................................... (251) 394 Other current liabilities...................................... (202) (2,873) Other............................................................ (1,197) (1,801) ----------------- ----------------- Net cash provided by operating activities.......................... 10,248 11,651 ----------------- ----------------- Investing Activities: Construction expenditures.......................................... (2,024) (2,492) Conservation expenditures.......................................... (857) (888) Investment in nonutility property.................................. 93 108 Special fund for postretirement benefits........................... -- (559) ----------------- ----------------- Net cash used in investing activities............................ (2,788) (3,831) ----------------- ----------------- Financing Activities: Issuance of common stock........................................... 898 999 Short-term debt, net............................................... (5,801) (5,401) Cash dividends..................................................... (2,601) (2,516) ----------------- ----------------- Net cash used in financing activities............................ (7,504) (6,918) ----------------- ----------------- Net increase (decrease) in cash and cash equivalents............... (44) 902 Cash and Cash equivalents at beginning of period................... 227 480 ----------------- ----------------- Cash and Cash Equivalents at End of Period............................. $183 $1,382 ================= ================= Supplemental Disclosure of Cash Flow Information: Cash paid during the quarter for: Interest (net of amounts capitalized)........................... $2,193 $1,350 Income taxes.................................................... -- 282 The accompanying notes are an integral part of the consolidated financial statements.
GREEN MOUNTAIN POWER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1994 Part 1 - - ------ A.4 1. SIGNIFICANT ACCOUNTING POLICIES Pursuant to an order of the Vermont Public Service Board (VPSB), the Company's rate structure is seasonally differentiated, with higher rates billed during the four winter months and lower rates billed during the remaining eight months of the year. In order to match revenues with related costs more accurately on an interim basis, the Company recognizes revenue in a manner that seeks to eliminate the impact of such seasonally differentiated rates. At March 31, 1994 and 1993, the Company had recorded deferred revenues of $6.6 million and $6.9 million, respectively, in accordance with this policy. These deferred revenues are recognized in subsequent interim periods. Included in equity in earnings of affiliates and non-utility operations in the Other Income section of the Consolidated Comparative Income Statements are the results of operations of the Company's rental water heater program, which is not regulated by the VPSB, and four of the Company's wholly-owned subsidiaries, Green Mountain Propane Gas Company, Mountain Energy, Inc., GMP Real Estate Corporation, and Lease- Elec, Inc. (also unregulated). Summarized financial information is as follows: Three Months Ended March 31 ------------------ 1994 1993 ---- ---- (In Thousands) Revenue . . . . . . . . . . . . . $3,823 $4,192 Expenses. . . . . . . . . . . . . 3,588 3,967 ----- ----- Net Income. . . . . . . . . . . . $ 235 $ 225 ===== ===== 2. INVESTMENT IN ASSOCIATED COMPANIES The Company accounts for its investment in the companies listed below using the equity method. Summarized financial information is as follows: Three Months Ended March 31 ------------------ (In thousands) 1994 1993 ---- ---- Vermont Yankee Nuclear Power Corporation Gross Revenue. . . . . . . . . . . . . . $39,169 $39,649 Net Income Applicable to Common Stock. . 1,683 2,137 Company's Equity in Net Income . . . . . 307 379 Vermont Electric Power Company, Inc. Gross Revenue. . . . . . . . . . . . . . $12,264 $12,280 Net Income Before Dividends. . . . . . . 314 353 Company's Equity in Net Income (Includes preferred equity). . . . . . 85 101 3. ENVIRONMENTAL MATTERS In 1982, the United States Environmental Protection Agency (EPA) notified the Company that the EPA, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), was considering spending public funds to investigate and take corrective action involving claimed releases of allegedly hazardous substances at a site identified as the Pine Street Marsh in Burlington, Vermont. On part of this site was located a manufactured-gas facility owned and operated by a number of separate enterprises, including the Company, from the late 19th century to 1967. In its notice, the EPA stated that the Company may be a "potentially responsible party" (PRP) under CERCLA from which reimbursement of costs of investigation and of corrective action may be sought. On February 23, 1988, the Company received a Special Notice letter from the EPA stating that the letter constituted a formal demand for reimbursement of costs, including interest thereon, that were incurred and were expected to be incurred in response to the environmental problems at the site. On December 5, 1988, the EPA brought suit against the Company, New England Electric System, and Vermont Gas Systems, Inc. in the United States District Court for the District of Vermont seeking reimbursement for costs it incurred in conducting activities in 1985 to remove allegedly hazardous substances from the site, and requested a declaratory judgment that the Company and the other defendants are liable for all costs that have been incurred since the removal and that continue to be incurred in responding to claims of releases or threatened releases from the Maltex Pond Area -- the portion of the site where the removal action occurred. The complaint specifically alleged that the EPA expended at least $741,000 during the 1985 removal action and sought interest on this amount from the date the funds were expended and costs of litigation, including attorneys' fees. The Company entered a cross-claim against New England Electric System and third-party claims against UGI Corporation, Southern Union Corporation, the State of Vermont, and an individual property owner at the site for recovery of its response costs and for contribution. Fourth-party defendants subsequently were joined. In July 1990, the Company and other parties signed a proposed Consent Decree settling the removal action litigation. All 14 settling defendants contributed to the aggregate settlement amount of $945,000. Individual contributions were treated as confidential under the proposed Consent Decree. On December 26, 1990, upon the unopposed motion of the United States, the Consent Decree was entered by the Court. During the summer and fall of 1989, the EPA conducted the initial phase of the Remedial Investigation (RI) and commenced the Feasibility Study (FS) relating to the site. In the fall of 1990 and in 1991, the EPA conducted a second phase of RI work and studied the treatability of soils and groundwater at the site. In the fall of 1991, the EPA responded favorably to a request from the Company and other PRPs to participate in informal discussions on the EPA's ongoing investigation and evaluation of the site, and invited the Company and other interested parties to share technical information and resources with the EPA that might assist it in evaluating remedial options. Thereafter, the Company and other PRPs held several meetings with the EPA to discuss technical issues and received copies of the EPA's Supplemental Remedial Investigation Final Report, and its Baseline Risk Assessment Final Report. On November 6, 1992, the EPA released its final RI/FS and announced a proposed remedy with an estimated total cost of approximately $49.5 million, including 30 years' operation and maintenance costs, with a net present value of approximately $26.4 million. The EPA's preferred remedy called for construction of a Containment/Disposal Facility (CDF) over a portion of the site. The CDF would have consisted of subsurface vertical barriers and a low permeability cap, with collection trenches and hydraulic control system to capture groundwater and prevent its migration outside of the CDF. Collected groundwater would have been treated and discharged or stored and disposed of off-site. The proposed remedy also would have required construction of new wetlands to replace those that would be destroyed by construction of the CDF and a long-term monitoring program. On May 15, 1993, the PRP group in which the Company participated submitted extensive comments to the EPA opposing the proposed remedy. In response to an earlier request from the EPA, the PRP group also submitted a detailed analysis of an alternative remedy anticipated to cost approximately $20 million. In early June, in response to overwhelming negative comment, the EPA withdrew its proposed remedy and announced that it would work with all interested parties in developing a new proposal. Since then, the EPA has established a coordinating council, with representatives of PRPs, environmental groups, and government agencies, and presided over by a neutral mediator. The council is charged with determining what additional studies may be appropriate for the site and may also eventually address additional response activities. The Company is represented on the council. In early 1994, the Company and other PRPs met with the EPA to commence negotiations on an Administration Order by Consent pursuant to which the PRPs would conduct additional studies agreed to by the coordinating council. Although negotiations are not yet complete, it is likely that the EPA will consent to allowing the PRPs to conduct additional studies at the site and that the EPA will not require reimbursement for its past RI/FS study costs as a condition to allowing the PRPs to conduct these additional studies. The EPA has previously advised the Company that ultimately it will seek to hold the Company and the PRPs liable for such costs. In September 1993, the Company, New England Electric System and Vermont Gas Systems, Inc. entered into confidential negotiations with most other PRPs concerning allocation of unresolved liabilities concerning the site. Those negotiations are continuing. In December 1991, the Company brought suit against several previous insurers seeking recovery of unrecovered past costs and indemnity against future liabilities associated with environmental problems at the site. The parties to this action are engaged in discovery and motions practice. The Company has reached a confidential settlement with one of the defendants that provided the Company with second layer excess liability coverage for a seven month period in 1976. The Company has also reached a confidential agreement in principle with another insurance company defendant that provided the Company with comprehensive general liability insurance between 1976 and 1982, and with environmental impairment liability insurance from 1981 to 1984. These policies were in place in 1982 when the EPA first notified the Company that it might be a potentially responsible party at the Pine Street Marsh site. The Company is unable to predict at this time the magnitude of any liability resulting from potential claims for the costs of the RI/FS or the performance of any remedial action, or the likely disposition or magnitude of claims the Company may have against others, including its insurers, except to the extent described above. In its 1991 rate case, the Company, for the first time, sought recovery for expenses associated with the Pine Street Marsh site. Specifically, the Company proposed rate recognition of its estimated, unrecovered 1991 expenditures (approximately $400,000) for technical consultants and legal assistance in connection with the EPA's enforcement actions at the site and insurance litigation. While reserving the right to argue in the future about the appropriateness of rate recovery for Pine Street Marsh related costs, the Company and the Vermont Department of Public Service (Department) reached agreement that the full amount of Pine Street Marsh costs reflected in the Company's 1991 rate case should be recovered in rates. The Company's rates approved by the Vermont Public Service Board (VPSB) on April 2, 1992, reflected the 1991 Pine Street Marsh related expenditures referred to above. In its rate increase request filed on October 1, 1993, the Company proposed rate recognition for its expenditures between January 1, 1992 and July 31, 1993 (approximately $4.2 million) for technical consultants and legal assistance in connection with the EPA's enforcement actions at the site and insurance litigation. The Department and the Company have reached the same agreement regarding recovery of these costs in rates that they reached with respect to the Company's 1991 Pine Street Marsh related expenditures. A comprehensive settlement of the Company's 1993 rate case, including the agreement regarding Pine Street Marsh costs, is currently pending before the VPSB. As of March 31, 1994, the Company had reserved approximately $680,000 for costs attributable to the site, other than those costs that are the subject of the agreements between the Department and the Company mentioned above. Management expects to seek and receive ratemaking treatment for other costs incurred beyond the amounts that have been reserved. As of March 31, 1994, such other costs are approximately $5,736,000, which includes the $4.2 million in costs that are the subject of the rate case settlement agreement referred to above. 4. 1993 RETAIL RATE CASE On October 1, 1993, the Company filed a request with the VPSB to increase retail rates by 8.6 percent. The increase is needed primarily to cover the cost of buying power from independent power producers, the cost of energy conservation programs, the cost of plant additions made in the past two years, and costs incurred in 1992 and 1993 associated with the Company's response to the EPA's RI/FS and proposed remedy at the Pine Street Marsh site and with the Company's litigation against its previous insurers seeking recovery of past costs incurred and indemnity against future liabilities in connection with the site. On January 28, 1994, the Company and the other parties in the proceeding reached a settlement agreement providing for a 2.9 percent retail rate increase effective June 15, 1994, and a target return on equity for utility operations of 10.5 percent. The settlement agreement also provided for the Company's recovery in rates of $4.2 million in costs associated with the Pine Street Marsh site, as described herein above. The agreement must be reviewed and approved by the VPSB before it can take effect. 5. 1991 RETAIL RATE CASE On July 19, 1991, the Company filed a request with the VPSB to increase retail rates by 9.96 percent to cover power supply cost increases expected in 1992, the costs of upgrading and maintaining the Company's generation, transmission and distribution facilities; expenditures associated with the Company's conservation programs; and higher employee pension and health care costs. In orders dated April 2, 1992 and May 21, 1992, the VPSB approved an increase of 5.6 percent, or approximately $6.6 million, effective April 2, 1992. The Department appealed the VPSB orders challenging, among other rulings, the VPSB's acceptance of the Company's method of treating accumulated depreciation and certain Vermont Yankee-related power costs. The Company filed a cross-appeal contending, among other things, that the VPSB had erred in reducing ratebase relating to certain demand-side management (DSM) program cost projections that had been made in the Company's prior rate case. On April 22, 1994 the Vermont Supreme Court affirmed in part and reversed in part the VPSB orders. The Court overturned the VPSB's decision disallowing certain DSM costs. The impact of this portion of the Court's ruling resulted in the Company's other income since April 1992 being increased by $162,000. On the other hand, the Court overturned the VPSB decision in the Company's favor on an issue involving the method of treating accumulated depreciation, and on the inclusion of one item of Vermont Yankee's capital projections in power costs. The impact of this portion of the Court's ruling resulted in the Company's revenues since April 1992 being reduced by $990,000. The Company filed a motion for re-argument with the Vermont Supreme Court on May 6, 1994, contending that the Court had erred in overturning the VPSB's decision with respect to accumulated depreciation. - - --------------------------------------------------- The Consolidated Financial Statements are unaudited and, in the opinion of the Company, reflect the adjustments necessary to a fair statement of the results of the interim periods. All such adjustments, except as specifically noted in the Consolidated Financial Statements, are of a normal, recurring nature. - - --------------------------------------------------- GREEN MOUNTAIN POWER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MARCH 31, 1994 Part 1 - - ------ A.5 RESULTS OF OPERATIONS Earnings Summary Earnings per share of common stock in the first quarter of 1994 were $0.85, compared to $0.93 per share in the first quarter of 1993. The decreased earnings in 1994 resulted primarily from an April 1994 ruling by the Vermont Supreme Court, which reversed a portion of the VPSB's April 1992 order raising the Company's rates by 5.6 percent. The Supreme Court ruling caused a reduction of approximately $990,000 in revenues collected from customers during the past two years. (See Note 5 of Notes to Consolidated Financial Statements.) Operating Revenues and MWh Sales Operating revenues, megawatthour (MWh) sales and average number of customers are summarized as follows: Three Months Ended March 31 ------------------- 1994 1993 ---- ---- Operating Revenues (In thousands) Retail*. . . . . . . . . . . . $35,892 $36,267 Sales for Resale . . . . . . . 3,609 3,804 Other. . . . . . . . . . . . . 1,110 680 -------- -------- Total Operating Revenues . . $ 40,611 $ 40,751 ======== ======== MWh Sales Retail*. . . . . . . . . . . . 477,169 466,890 Sales for Resale . . . . . . . 99,561 83,074 ------- ------- Total MWh Sales. . . . . . . 576,730 549,964 ======= ======= Average Number of Customers Residential. . . . . . . . . . 68,579 67,791 Commercial & Industrial. . . . 11,617 11,413 Other. . . . . . . . . . . . . 73 73 ------ ------ Total Customers. . . . . . 80,269 79,277 ====== ====== *Includes lease transmissions. Total operating revenues in the first quarter of 1994 were essentially unchanged compared to the same period in 1993. Retail revenues decreased 1.0 percent in the first quarter of 1994 compared to the same period in 1993 primarily due to the Vermont Supreme Court decision discussed above, resulting in a reduction in revenues of approximately $990,000. This decrease in retail revenues was partially offset by a 3.8 percent increase in sales to small commercial and industrial customers (reflecting increased economic activity in this sector in 1994) and a 3.9 percent increase in sales to residential customers (reflecting colder than normal winter weather in 1994). Wholesale revenues decreased 5.1 percent in the first quarter of 1994 primarily due to the greater availability of low-cost energy in New England, which drove down wholesale electricity prices. Operating Expenses Power supply expenses increased 3.1 percent in the first quarter of 1994 over the same period in 1993, primarily due to a 19.8 percent increase in purchases from independent power producers mandated by federal legislation. During the first quarter of 1994, two of such independent power producers that went into service in 1993 experienced a full period of operations. Transmission expenses decreased 8.4 percent in the first quarter of 1994 compared to the same period in 1993, primarily due to the restructuring of a series of transmission contracts. Maintenance expenses increased 22.7 percent in the first quarter of 1994 compared to the same period in 1993, due primarily to a scheduled increase in plant maintenance. Depreciation and amortization expenses increased 7.5 percent in the first quarter of 1994 compared to the same period in 1993, due to an increase in utility plant additions. Income Taxes Income taxes decreased 36.7 percent in the first quarter of 1994 compared to the same period in 1993, due primarily to a reduction in book pre-tax income and a reversal of the tax reserve established to cover potential audit assessments (reflecting the Company's judgment that the likelihood of adverse tax audits had diminished). Interest Charges Interest charges increased 6.1 percent in the first quarter of 1994 over the same period in 1993, primarily due to interest charges related to the sale of $20 million of the Company's first mortgage bonds in November 1993. LIQUIDITY AND CAPITAL RESOURCES For the three months ended March 31, 1994, construction and conservation expenditures totaled $2.9 million. Such expenditures in 1994 are expected to be approximately $20.0 million, principally for expansion and improvements of the Company's transmission and distribution plant and for conservation measures. The Company anticipates issuing additional shares of common stock in late 1994. The Company has not determined the date or the amount of the stock issuance. GREEN MOUNTAIN POWER CORPORATION March 31, 1994 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings See Notes 3, 4 and 5 of Notes to Consolidated Financial Statements ITEM 2. Changes in Securities NONE ITEM 3. Defaults Upon Senior Securities NONE ITEM 4. Submission of Matters to a Vote of Security Holders NONE ITEM 5. Other Information NONE ITEM 6 (a) EXHIBITS NONE (b) REPORTS ON FORM 8-K Form 8-K was not required to be filed during the current quarter GREEN MOUNTAIN POWER CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GREEN MOUNTAIN POWER CORPORATION (Registrant) Date: May 13, 1994 /s/ E. M. Norse E. M. Norse, Vice President, Chief Financial Officer and Treasurer Date: May 13, 1994 /s/ G. J. Purcell G. J. Purcell, Controller -----END PRIVACY-ENHANCED MESSAGE-----