SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Form 10-Q
___
|_x_| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended__March 31, 1994___
___
|___| TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________to________
Commission file number 1-8222
Central Vermont Public Service Corporation
(Exact name of registrant as specified in its charter)
Incorporated in Vermont 03-0111290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
77 Grove Street, Rutland, Vermont 05701
(Address of principal executive offices) (Zip Code)
802-773-2711
(Registrant's telephone number, including area code)
_____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of April 30, 1994 there
were outstanding 11,671,561 shares of Common Stock, $6 Par Value.
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31
1994 1993
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Operating Revenues $83,885 $85,319
Operating Expenses
Operation
Purchased power 37,693 35,811
Production and transmission 5,373 5,367
Other operation 9,024 9,046
Maintenance 2,401 2,250
Depreciation 4,066 3,736
Other taxes, principally property taxes 2,673 2,540
Taxes on income 8,288 9,722
Total operating expenses 69,518 68,472
Operating Income 14,367 16,847
Other Income and Deductions
Equity in earnings of affiliates 803 984
Allowance for equity funds during construction 20 19
Other income (expenses), net 28 (471)
Benefit for income taxes 12 6
Total other income and deductions, net 863 538
Total Operating and Other Income 15,230 17,385
Interest Expense
Interest on long-term debt 2,487 2,457
Other interest 161 136
Allowance for borrowed funds during construction (26) (36)
Total interest expense, net 2,622 2,557
Net Income 12,608 14,828
Retained Earnings at Beginning of Period 61,879 55,438
74,487 70,266
Cash Dividends Declared
Preferred stock 547 664
Common stock 4,111 50
Total dividends declared 4,658 714
Retained Earnings at end of Period $69,829 $69,552
_______ _______
Earnings Available for Common Stock $12,061 $14,164
Average shares of common stock outstanding 11,609,642 11,241,877
Earnings per Share of Common Stock $1.04 $1.26
Dividends per Share of Common Stock $.3550 $.3550
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
March 31 December 31
1994 1993
(Unaudited)
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Assets
Utility Plant, at original cost $425,771 $421,929
Less accumulated depreciation 116,404 112,299
309,367 309,630
Construction work in progress 7,994 8,388
Nuclear fuel, net 1,233 1,390
Net utility plant 318,594 319,408
Investments and Other Assets
Investments in affiliates, at equity 27,078 26,963
Non-utility investments 29,941 30,123
Non-utility property, less accumulated depreciation 3,621 3,203
Total investments and other assets 60,640 60,289
Current Assets
Cash 2,845 823
Temporary investments, at cost which
approximates market 10,124 1,162
Accounts receivable 21,059 18,614
Unbilled revenues 5,083 10,959
Materials and supplies, at average cost 4,607 4,641
Prepayments 2,780 3,098
Other current assets 4,548 4,821
Total current assets 51,046 44,118
Regulatory Assets and Other Deferred Charges 61,167 56,335
Total Assets $491,447 $480,150
________ ________
Capitalization and Liabilities
Capitalization
Common stock, $6 par value, authorized
19,000,000 shares; outstanding 11,657,070 shares
and 11,562,219 shares, respectively $ 69,942 $ 69,373
Other paid-in capital 43,833 42,584
Retained earnings 69,829 61,879
Total common stock equity 183,604 173,836
Preferred and preference stock 8,054 15,054
Preferred stock with sinking fund requirements 20,000 20,000
Long-term debt 122,414 122,419
Total capitalization 334,072 331,309
Long-term Lease Arrangements 21,281 21,553
Current Liabilities
Short-term debt 677 1,356
Current portion of long-term debt 525 4,850
Accounts payable 5,559 7,002
Accounts payable - affiliates 7,568 7,488
Accrued interest 2,708 564
Accrued income taxes 8,629 788
Dividends declared 507 664
Other current liabilities 24,276 23,913
Total current liabilities 50,449 46,625
Deferred Credits
Deferred income taxes 52,194 52,028
Deferred investment tax credits 8,687 8,785
Yankee Atomic purchased power contract 9,333 9,768
Environmental cleanup 4,900 4,900
Restructuring costs 4,442 -
Other deferred credits 6,089 5,182
Total deferred credits 85,645 80,663
Total Capitalization and Liabilities $491,447 $480,150
________ ________
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31
1994 1993
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Cash Flows Provided (Used) By
Operating Activities
Net income $12,608 $14,828
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 4,066 3,736
Deferred income taxes and investment tax credits 185 1,627
Allowance for equity funds during construction (20) (19)
Net deferral and amortization of nuclear refueling
replacement energy and maintenance costs 1,452 1,049
Amortization of property losses 486 1,130
Amortization of nuclear fuel 156 188
Decrease in accounts receivable 3,356 2,232
Decrease in accounts payable (999) (3,588)
Increase in accrued income taxes 7,841 5,455
Decrease in other working capital items 3,003 3,749
Other, net (970) (1,632)
Net cash provided by operating activities 31,164 28,755
Investing Activities
Increase in temporary investments (8,962) (8,433)
Construction and plant expenditures (3,913) (5,331)
Conservation and load management expenditures (1,254) (1,109)
Investments in affiliates (39) -
Non-utility investments 182 (3,345)
Other investments, net (151) (92)
Net cash used in investing activities (14,137) (18,310)
Financing Activities
Sale of common stock 1,818 2,155
Short-term debt, net (679) (2,100)
Retirement of preferred stock (7,000) -
Retirement of long-term debt (4,330) (6,666)
Common and preferred dividends paid (4,814) (3,975)
Other - (43)
Net cash used in financing activities (15,005) (10,629)
Net Increase (Decrease) in Cash 2,022 (184)
Cash at Beginning of Period 823 2,714
Cash at end of Period $ 2,845 $ 2,530
_______ _______
Supplemental Cash Flow Information
Cash paid during the year for:
Interest (net of amounts capitalized) $ 392 $ 1,126
Income taxes (net of refunds) $ 572 $ 2,957
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994
Note 1 - Accounting Policies
The Company's significant accounting policies are described in Note 1 of
Notes to Consolidated Financial Statements included in its 1993 Annual Report
on Form 10-K filed with the Securities and Exchange Commission. For interim
reporting purposes, the Company follows these same basic accounting policies
but considers each interim period as an integral part of an annual period.
Effective January 1, 1994, the Company adopted SFAS No. 112, Employer's
Accounting for Postemployment Benefits. See Note 4.
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods.
Note 2 - Environmental
The Company believes it operates in compliance in all material respects
with all laws, regulations, orders and decrees respecting environmental control
to the extent currently applicable to and effective against it. Furthermore,
it is the Company's policy to comply, in all material respects, with such laws,
regulations, orders and decrees, including any variances granted thereunder.
The Company's operations and activities are subject to inspection and
supervision by both state and Federal regulatory authorities including the
United States Environmental Protection Agency (EPA). The Company is not
subject to any material fines for violation of any environmental laws or other
matters which are the subject of regulatory inspection or oversight, nor is the
Company a responsible party in any pending or threatened proceeding instituted
by the EPA under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (Superfund).
The Company is engaged in processes and activities to continually assess
and assure its compliance with environmental laws, regulations, orders and
decrees. Based on the results of these processes and activities to date, the
Company is not aware of any instances where it has caused or permitted a
release of a hazardous substance through its operations on or about the
properties owned, operated and otherwise used by the Company which will likely
result in any material environmental liabilities to the Company. To the extent
that the Company has knowledge of releases of small quantities of fuel oil or
other substances which have resulted from its operations, the Company believes
that these releases can be remedied without material adverse effect on its
financial condition or the results of its operation.
The Company is an amalgamation of more than 100 predecessor companies
which were engaged in various operations and activities prior to their being
incorporated into the Company. At least three of these companies were involved
in the production of gas from coal for sale and distribution to customers at
retail. These activities were halted by the Company in the late 1940's or
early 1950's. The Company is continually investigating, assessing and
monitoring the status of potential contaminated sites related to these and
other operations of the Company and its predecessors. The Company's policy is
to record a liability for remediation, monitoring and other related costs when
it determines that such a liability is probable and estimable. Coal tar
deposits have been discovered at the Company's Cleveland Avenue property
located in the City of Rutland, a site at which one of its predecessors
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operated a coal-gasification facility. Due to the presence of these deposits
and the uncertainties as to potential contamination and migration off-site, the
Company conducted studies to determine the magnitude and extent of the coal tar
releases. Based on the results of this initial work, the Company engaged a
consultant to assist in evaluating clean-up methodologies and estimate the cost
to clean up the site. These studies presently indicate that the cost to
remediate this site will be approximately $5 million. This amount was charged
to expense in the fourth quarter of 1992. The Company has yet to determine
whether insurance proceeds are available to offset this expense.
The Company has been contacted by the owners and potentially responsible
parties (together the PRPs) of two former municipal landfills, the Trafton
Hoisington Landfill and the Bennington Landfill, located in Vermont concerning
the Company's alleged prior use of those facilities for the disposal of waste
materials. The PRPs allege that the Company may be liable for costs in
connection with the response, investigation and clean-up of these facilities
pursuant to the applicable state and Federal law. At this time, the Company
has no information which would indicate that it is liable in connection with
the remediation efforts ongoing at either site. Further investigation of the
Company's potential liability for these facilities is presently being
conducted.
The Company is not subject to any pending or threatened litigation with
respect to any other sites nor has the EPA or other state or Federal agency
sought contribution from the Company for their study or remediation.
Note 3 - Accounts Receivable
In 1988 the Company entered into an agreement to sell up to $20 million of
certain accounts receivable and unbilled revenues. At March 31, 1994 and
December 31, 1993, a total of $12 million of accounts receivable and unbilled
revenues were sold under an accounts receivable facility. A portion of the fee
for using the facility is based on London Inter Bank Offered Rate (LIBOR). In
order to stabilize this portion of its obligation, the Company executed a SWAP
transaction which sets the LIBOR based fee at 3.985% for the period
September 29, 1992 to September 29, 1994.
Accounts receivable and unbilled revenues that have been sold were
transferred with limited recourse. A pool of assets, varying between 3% to 5%
of the accounts receivable and unbilled revenues sold, were set aside for this
recourse liability. Accounts receivable and unbilled revenues are reflected
net of sales of $6.8 million and $5.2 million, respectively, at March 31, 1994
and $4.7 million and $7.3 million, respectively, at December 31, 1993.
Accounts receivable are also reflected net of an allowance for
uncollectible accounts of $1.2 million at March 31, 1994 and $1.1 million at
December 31, 1993.
Note 4 - Postemployment Benefits
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, Employer's Accounting for Postemployment
Benefits. The accumulated postemployment benefit obligation of approximately
$1.1 million, consisting of long-term disability benefits is reflected in the
accompanying balance sheet both as a regulatory asset and deferred
postemployment benefit obligation (current and non-current). The post-
employment benefit cost to be charged to expense in 1994 is estimated to be
$165,000. The Company anticipates that the SFAS No. 112 treatment of
postemployment benefits will be allowed for rate-making purposes, therefore, no
material effect on financial position or on results of operation is expected in
connection with the adoption.
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Note 5 - Voluntary Retirement and Severance Programs
In the first quarter of 1994, the Company offered a Voluntary Retirement
Program (VRP) which was accepted by 42 employees. The estimated benefit
obligation as of March 31, 1994 is about $4.4 million. This amount consists of
pension benefits and postretirement medical benefits of $2.2 million and
$2.2 million, respectively. Additionally, the Company offered a Voluntary
Severance Program (VSP) to certain employees. Eligible employees had until
April 22, 1994 to apply. This program was accepted by 32 employees. The
Company also announced a layoff of 20 employees on May 9, 1994. The VRP, VSP
and layoff combined with attrition since mid-1993, yields a total work force
reduction of approximately 14%. The Company is currently evaluating the 1994
benefit obligation for the VSP and for employees affected by the layoff and
will record these obligations in the second quarter of 1994. For rate-making
purposes, the Company received an Accounting Order from the PSB dated March 11,
1994, requiring the Company to defer all of these program costs and amortize
them over a five-year period beginning June 1, 1994 through May 31, 1999. The
timing and recoverability of these costs will be determined in the Company's
current rate proceedings.
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Summarized income statement information for Vermont Yankee Nuclear Power
Corporation follows (dollars in thousands, except per share amounts):
Three Months Ended
March 31
1994 1993
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Operating revenues $39,169 $39,649
Operating expenses 35,526 35,582
Operating income 3,643 4,067
Other income, net 238 218
Total operating and other income 3,881 4,285
Interest expense 2,198 2,148
Net income $ 1,683 $ 2,137
_______ _______
Average shares of common stock outstanding 392,481 392,481
Earnings per share of common stock $4.29 $5.44
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1994
Earnings Overview
Earnings per share of common stock for the three months ended March 31,
1994 were $1.04 compared to $1.26 for the corresponding period last year.
Earnings available for common stock for these respective periods were
$12,061,000 and $14,164,000.
The decline in earnings for the first quarter is due to several factors
described in results of operations below.
On March 28, 1994, the Vermont Public Service Board (PSB) held a hearing
and subsequently approved the Vermont Department of Public Service's motion,
filed on March 21, 1994, to consolidate two open dockets: 1) a PSB ordered
investigation into the Company's cost of service and resulting rates opened in
November 1993 and 2) the Company's request for an 8.9% general rate increase
filed February 15, 1994. Hearings are scheduled to take place during the third
quarter of 1994 and any resulting change in rates will take effect November 1,
1994.
RESULTS OF OPERATIONS
Operating Revenues and MWH Sales
A summary of MWH sales and operating revenues for the three months ended
March 31, 1994 and 1993 (and the related percentage changes from 1993) is set
forth below:
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Three Months Ended March 31
Percentage Percentage
MWH Increase Revenues (000's) Increase
1994 1993 (Decrease) 1994 1993 (Decrease)
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Residential 295,960 292,015 1.4 $33,470 $33,973 (1.5)
Commercial 216,712 220,144 (1.6) 25,473 26,079 (2.3)
Industrial 110,230 110,185 - 9,477 9,674 (2.0)
Other retail 1,916 1,846 3.8 434 419 3.6
Total retail sales 624,818 624,190 .1 68,854 70,145 (1.8)
Less: DPS sales - 14,091 (100.0) - 953 (100.0)
Total Company retail sales 624,818 610,099 2.4 68,854 69,192 (.5)
Resale sales:
Firm 5,152 22,909 (77.5) 211 951 (77.8)
Entitlement 248,652 269,254 (7.7) 10,474 10,921 (4.1)
Other 127,271 42,348 200.5 3,038 968 213.8
Total resale sales 381,075 334,511 13.9 13,723 12,840 6.9
Other revenues - - - 1,308 3,287 (60.2)
Total sales 1,005,893 944,610 6.5 $83,885 $85,319 (1.7)
_________ _______ _______ _______
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Retail MWH sales for the three month period ended March 31, 1994 were flat
compared to last year's first quarter. The Company's annual forecast indicates
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a moderate increase in MWH sales for 1994. Retail revenues have decreased
$1.3 million or 1.8% for the first quarter compared to the same period last
year. Overall, retail MWH sales and revenues reflect the State's continued
sluggish economy and the effectiveness of Conservation and Load Management
programs.
The Company's retail MWH sales increased 2.4% and related revenues
decreased .5% due to the 250 KWH Department of Public Service (DPS) block which
effective September 1, 1993 is being supplied by the Company. While this
250 KWH block provides for increased KWH sales for the Company, the
non-seasonal uniform rate of 8.811 cents per KWH is less than the Company's
peak rates for residential customers, causing the reduction in revenue. This
revenue reduction will be offset by increased revenues during the Company's
off-peak rate season (April-November).
From February 1, 1993, through August 31, 1993, the Vermont Public Service
Board approved, on an interim basis, a 150 KWH/month joint block supplied by
both the Company and the DPS, whereby the DPS provided residential customers
with the first 25 KWH and the Company provided the remaining 125 KWH. The
125 KWH were sold at the non-seasonal uniform rate of 9.009 cents per KWH.
Due to current market conditions, some of the Company's firm resale
customers chose not to extend their contracts beyond October 1993. However,
one of those customers opted to purchase power from the Company based on market
rates.
Entitlement MWH sales decreased by 20,602 MWH or 7.7% and the
corresponding revenues decreased $.4 million or 4.1%. This decrease is
attributable to the reduced sell-back of the Hydro-Quebec Schedules A, C-1, and
C-2 power.
The 84,923 MWH increase ($2.1 million) in other resale sales resulted from
increased sales to NEPOOL and other utilities in New England.
The first quarter of 1993 included approximately $1.9 million of revenues
deferred from 1991 to 1993 resulting in a decrease of 60.2% in other revenues
for the first quarter of 1994.
Net Purchased Power and Production Costs
The components of net purchased power and production fuel costs for the
three months ended March 31, are as follows (dollars in thousands):
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1994 1993
Units Amount Units Amount
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Purchased:
Capacity (MW) 577 $20,571 560 $20,600
Energy (MWH) 972,468 17,122 911,100 15,211
Production fuel (MWH) 95,677 566 85,543 636
Total purchased power and
production costs 38,259 36,447
Entitlement and other resale sales (MWH) 375,923 13,512 311,602 11,889
Net purchased power and
production fuel costs $24,747 $24,558
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The Company's net purchased power and production fuel costs for the first
three months of 1994 have remained relatively equal compared to the same period
last year. The increase of $1.9 million in energy costs is offset by a
decrease in capacity and production fuel costs of $99,000 and an increase of
$1.6 million in Entitlement and other resale sales.
The $1.9 million increase in energy costs is due to a 6.7% or 61,369 MWH
increase in the amount of MWH purchased totaling $1.0 million and a 5.5%
increase in the average cost per KWH purchased totaling $.9 million.
The Company has equity ownership interests in four nuclear generating
companies: Vermont Yankee, Maine Yankee, Connecticut Yankee and Yankee Atomic.
The Company also owns 18 hydroelectric generating units, two gas-fired and one
diesel peaking units, and leases and operates two hydroelectric generating
stations from wholly owned subsidiaries. In addition, the Company maintains
joint-ownership interests in Joseph C. McNeil, Wyman #4 and Millstone #3.
The purchased power and production costs described above are partially
offset for ratemaking purposes by revenues from sales to NEPOOL, Hydro-Quebec
and other utilities in New England. Such sales amounted to $13.5 million for
375,923 MWH and $11.9 million for 311,602 MWH, for the three months ended
March 31, 1994 and 1993, respectively.
Depreciation
The increase in depreciation expense is due to property additions and the
installation of new Computer Systems in the second half of 1993.
Income Taxes
Federal and state income taxes fluctuate with the level of pre-tax
earnings. Pre-tax earnings decreased 14.9% for the first quarter of 1994
compared with the same period in 1993.
Equity in Earnings of Affiliates
Equity in earnings of affiliates decreased 18.4% for the three months
ended March 31, 1994, as compared with the same period in 1993. This decrease
is attributable to a lower rate of return allowed by the Federal Energy
Regulatory Commission to some of the Company's nuclear generating affiliates.
Other Income (Expenses), Net
For the three months ended March 31, 1994, other income (expenses), net
increased $500,000. In the first quarter of 1993 and 1994, the Company
wrote-off $1.1 million and $439,000, respectively, representing the
non-recoverability portion of the Company's investment in the Seabrook project
from some of the Company's firm resale customers.
Cash Dividends Declared
Preferred
In January 1994, the Company redeemed at premium 280,000 shares of
preferred stock 9% dividend series. This redemption resulted in a decrease in
preferred dividends declared for the first quarter of 1994 compared to the same
period last year.
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Common
In November 1992, the Company's Board of Directors declared a quarterly
common dividend of approximately $4.0 million payable February 12, 1993. This
advanced declaration accounts for the increase in common dividends declared for
the first three months of 1994 compared to 1993.
LIQUIDITY AND CAPITAL RESOURCES
Construction
The Company's liquidity is primarily affected by the level of cash
generated from operations and the funding requirements of its ongoing
construction program. Cash flows from operating activities after dividends
paid, provided 100% of the Company's construction and Conservation and Load
Management expenditures of $5.2 million and $6.4 million for the three months
ended March 31, 1994 and 1993, respectively.
Financing and Capitalization
Utility
The level of short-term borrowings fluctuates based on seasonal corporate
needs, the timing of long-term financings and market conditions. Short-term
borrowings are supported by committed lines of credit and uncommitted loan
facilities with several banks totaling $44 million.
In January 1994, the Company redeemed $7 million of the 9.00% Series
Preferred Stock, $25 Par Value, and plans to reissue approximately $7 million
of Preferred Stock in 1994.
The Company's capital structure has remained consistent with the Company's
long-range financial objectives: a debt ratio of 45% or lower and an equity
ratio higher than 45%. At March 31, 1994, the Company's capitalization
including the current portion of long-term debt, consisted of 55% common
equity, 8% preferred stock and 37% long-term debt. The credit ratings of the
Company's securities as of March 31, 1994, as reaffirmed by Standard & Poor's
Corp. and Duff & Phelps Corp. in mid-1993 are BBB+ and A-, respectively, for
First Mortgage Bonds and BBB for Preferred Stock.
Non-Utility
Catamount Energy Corporation, a subsidiary of the Company, maintains an
Irrevocable Standby Letter of Credit with a bank to borrow up to an aggregate
amount of $2.3 million to replace its share of cash in the Appomattox
Cogeneration Limited Partnership's Project Debt Service Reserve Fund. This
Letter of Credit is for a one year term with annual extensions available and
requires fees totaling 2.375% of credit available.
SmartEnergy Services, Inc., also a subsidiary of the Company, maintains a
$1.0 million revolving line of credit with a bank to provide working capital
and financing assistance for investment purposes.
Financial obligations of the non-utility wholly owned subsidiaries are
non-recourse to the Company.
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Conservation and Load Management (C&LM) Programs
The primary purpose of these programs is to offset the need for long-term
power supply and delivery resources that are more expensive to purchase or
develop than customer-efficiency programs. Expenditures in 1993 were
$9.5 million and are planned to be approximately $5.4 million in 1994. The
amount of expenditures is adjusted annually, based on the cost-effectiveness of
programs compared to other options.
The PSB has approved all of the Company's C&LM programs delivered in
Vermont, which include direct utility investments in customer premises to
increase customer participation. In addition, the PSB has approved a
Monitoring and Evaluation Plan utilized to evaluate the continued
cost-effectiveness of the C&LM programs.
In late 1993, the Company filed a Petition to Amend and slow the pace of
some of its C&LM programs in light of the excess capacity in the region which
made some of the C&LM programs less effective in the near-term. The revised
programs focus on improving efficiencies based on lessons learned in the past
several years. In addition, the programs focus on incorporating efficiencies
for new construction and remodeling programs that are more expensive to defer.
In the Petition, the Company stated it planned to implement the program
amendments with or without PSB approval starting in 1994. By letter dated
January 20, 1994, the PSB indicated it would not be opening proceedings
concerning the Petition at this time. However, many of the issues raised in
the Petition are before the PSB, along with deferred C&LM expenditures and
related lost revenues from 1991 to the present, in the PSB's investigation of
the Company's rates which is consolidated with the Company's request for an
8.9% general rate increase filed on February 15, 1994.
In addition, in Vermont, the Company is involved in several cases related
to C&LM activities including the role of fuel switching as a C&LM measure, the
level of externalities for electricity and the role of fuel choice in new
construction.
In an order dated February 28, 1994, the New Hampshire Public Utilities
Commission (NHPUC) approved the 1994 C&LM programs and projected related
expenditures and lost revenues of the Company's wholly owned New Hampshire
subsidiary, Connecticut Valley Electric Company Inc. These expenditures and
lost revenues are recovered along with shareholder incentives for 1993 program
activity through a C&LM percentage adjustment clause effective March 1, 1994.
The NHPUC also authorized a pilot program for direct billing of certain C&LM
costs to certain commercial and industrial customers.
Diversification
In January 1994, Catamount Energy Corporation (CEC) purchased an
additional 4.185% limited partnership interest in Rumford Cogeneration
Company. Currently, CEC has four wholly owned subsidiaries with four
operating projects in place. CEC and its subsidiaries contributed $311,000
to the Company's earnings for the three months ended March 31, 1994.
SmartEnergy Services, Inc.'s (SES) purpose is to cost effectively provide
reliable, energy efficient products and services, including the rental of
electric water heaters. In 1993, SES purchased a 5% interest in Green
Technologies, Inc. of Bolder, Colorado. Green Technologies manufactures
various energy-saving products, including the GreenPlug electricity saver. SES
has signed an agreement to market the GreenPlug and other energy-saving
products to utilities in the United States and Canada.
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Rates
The Company recognizes that adequate and timely rate relief is necessary
if the Company is to maintain its financial strength, particularly since
Vermont regulatory rules do not allow for changes in purchased power and fuel
costs to be passed on to consumers through rate adjustment clauses. The
Company's practice of reviewing costs periodically will continue and rate
increases will be requested when warranted. The Company filed for an 8.9%
general rate increase on February 15, 1994 to become effective November 1,
1994. See Earnings Overview for additional information regarding this matter.
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On March 20, 1992, Sunnyside Cogeneration Associates filed suit
in the United States District Court for the District of Vermont
against the Company, CV Energy Resources, Inc. (CVER) and a subsidiary
of CVER alleging damages in excess of five million dollars resulting
from the parties inability to come to agreement on the terms of CVER's
proposed investment in the plaintiff's waste coal generation facility
under construction in Sunnyside, Utah. The Company has filed an
answer denying the allegations and does not expect the resolution of
the case to have a material affect on the business or financial
condition of the Company.
Items 2 through 5.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) There were no reports on Form 8-K for the quarter ended March 31,
1994.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
By James M. Pennington
James M. Pennington, Controller
(Authorized Officer and
Chief Accounting Officer)
Dated May 12, 1994
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CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Form 10-Q
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Statement of Income and Retained Earnings for
the three months ended March 31, 1993 and 1992 3
Consolidated Balance Sheet as of March 31, 1993 and
December 31, 1992 4
Consolidated Statement of Cash Flows for the three months
ended March 31, 1993 and 1992 5
Notes to Consolidated Financial Statements 6-8
Summarized income statement information for Vermont Yankee
Nuclear Power Corporation 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-15
PART II. OTHER INFORMATION 16
SIGNATURE 17
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