<PAGE>
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 September 30, 1995
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 October 31, 1995
there were outstanding 11,590,748 shares of Common Stock, $6 Par Value.
<PAGE>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Form 10-Q
Table of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income and Retained Earnings
for the three and nine months ended September 30, 1995
and 1994 3
Consolidated Balance Sheet as of September 30, 1995 and
December 31, 1994 4
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6-9
Summarized income statement information for Vermont
Yankee Nuclear Power Corporation 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-17
PART II. OTHER INFORMATION 18-20
SIGNATURES 21
<PAGE>
<TABLE>
<CAPTION>
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 amount
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenues $60,314 $59,027 $210,023 $200,596
Operating Expenses
Operation
Purchased power 33,418 35,324 110,284 108,701
Production and transmission 5,540 4,985 15,898 15,889
Other operation 8,722 9,411 29,064 27,342
Maintenance 3,616 3,260 9,210 8,569
Depreciation 4,372 4,139 12,883 12,305
Other taxes, principally
property taxes 2,582 2,432 7,704 7,733
Taxes on income 142 (892) 7,816 5,769
_______ _______ ________ ________
Total operating expenses 58,392 58,659 192,859 186,308
_______ _______ ________ ________
Operating Income 1,922 368 17,164 14,288
_______ _______ ________ ________
Other Income and Deductions
Equity in earnings of
affiliates 888 827 2,508 2,427
Allowance for equity funds
during construction 42 29 195 72
Other income, net 1,753 626 2,585 464
Benefit (provision) for income
taxes (338) (159) (365) 161
_______ _______ ________ ________
Total other income and
deductions, net 2,345 1,323 4,923 3,124
_______ _______ ________ ________
Total Operating and Other Income 4,267 1,691 22,087 17,412
_______ _______ ________ ________
Interest Expense
Interest on long-term debt 2,375 2,379 7,165 7,233
Other interest 174 142 580 459
Allowance for borrowed funds
during construction (30) (39) (139) (94)
_______ _______ ________ ________
Total interest expense, net 2,519 2,482 7,606 7,598
_______ _______ ________ ________
Net Income (Loss) 1,748 (791) 14,481 9,814
Retained Earnings at
Beginning of Period 64,962 58,930 55,575 61,879
_______ _______ ________ ________
66,710 58,139 70,056 71,693
Cash Dividends Declared
Preferred stock 507 507 1,521 1,631
Common stock 2,327 7 4,659 12,437
_______ _______ ________ ________
Total dividends declared 2,834 514 6,180 14,068
_______ _______ ________ ________
Retained Earnings at End of
Period $63,876 $57,625 $ 63,876 $ 57,625
======= ======= ======== ========
Earnings (Losses) Available for
Common Stock $ 1,241 $(1,298) $ 12,960 $ 8,183
Average Shares of Common Stock
Outstanding 11,618,596 11,779,744 11,668,606 11,699,969
Earnings (Losses) per Share
of Common Stock $.11 $(.11) $1.11 $ .70
Dividends per Share of Common
Stock $.20 $ .355 $ .60 $1.065
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
September 30 December 31
1995 1994
<S> <C> <C>
Assets
Utility Plant, at original cost $448,907 $434,059
Less accumulated depreciation 135,309 125,800
________ ________
313,598 308,259
Construction work in progress 11,030 15,099
Nuclear fuel, net 1,290 1,197
Net utility plant 325,918 324,555
________ ________
Investments and Other Assets
Investments in affiliates, at equity 26,759 26,765
Non-utility investments 22,650 28,184
Non-utility property, less accumulated depreciation 2,831 2,989
________ ________
Total investments and other assets 52,240 57,938
________ ________
Current Assets
Cash 1,496 1,673
Temporary investments, at market value 13,165 5,886
Accounts receivable 13,428 20,523
Unbilled revenues 3,051 10,696
Materials and supplies, at average cost 3,861 4,182
Prepayments 1,721 3,544
Other current assets 4,784 4,806
________ ________
Total current assets 41,506 51,310
________ ________
Regulatory Assets and Other Deferred Charges 58,816 56,596
________ ________
Total Assets $478,480 $490,399
======== ========
Capitalization and Liabilities
Capitalization
Common stock, $6 par value, authorized
19,000,000 shares; outstanding 11,785,848 shares $ 70,715 $ 70,715
Other paid-in capital 45,246 45,229
Treasury stock (195,100 shares and 56,400 shares,
respectively, at cost) (2,627) (735)
Retained earnings 63,876 55,575
________ ________
Total common stock equity 177,210 170,784
Preferred and preference stock 8,054 8,054
Preferred stock with sinking fund requirements 20,000 20,000
Long-term debt 120,146 120,157
________ ________
Total capitalization 325,410 318,995
Long-term Lease Arrangements 19,656 20,467
________ ________
Current Liabilities
Short-term debt 4,305 11,511
Current portion of long-term debt - 4,230
Accounts payable 4,258 5,970
Accounts payable - affiliates 8,245 8,435
Accrued interest 2,662 671
Accrued income taxes 3,162 3,997
Dividends declared 507 2,853
Other current liabilities 23,336 26,002
________ ________
Total current liabilities 46,475 63,669
________ ________
Deferred Credits
Deferred income taxes 54,497 52,710
Deferred investment tax credits 8,101 8,394
Yankee Atomic purchased power contract 9,705 10,725
Environmental cleanup 5,050 5,050
Other deferred credits 9,586 10,389
________ ________
Total deferred credits 86,939 87,268
________ ________
Total Capitalization and Liabilities $478,480 $490,399
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30
1995 1994
<S> <C> <C>
Cash Flows Provided (Used) By
Operating Activities
Net income $14,481 $ 9,814
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 12,883 12,305
Deferred income taxes and investment tax credits 2,846 2,663
Allowance for equity funds during construction (195) (72)
Net deferral and amortization of nuclear refueling
replacement energy and maintenance costs (4,668) 4,431
Gain on sale of non-utility investment (1,517) -
Decrease in accounts receivable 14,618 15,652
Decrease in accounts payable (464) (2,431)
Decrease in accrued income taxes (835) (989)
Decrease in other working capital items 1,489 4,968
Other, net 3,303 149
_______ _______
Net cash provided by operating activities 41,941 46,490
_______ _______
Investing Activities
Increase in temporary investments (7,279) (3,726)
Construction and plant expenditures (15,867) (15,189)
Conservation and load management expenditures (3,322) (4,574)
Investments in affiliates 129 13
Proceeds from sale of non-utility investment 6,400 -
Non-utility investments (157) 354
Other investments, net (158) (382)
_______ _______
Net cash used in investing activities (20,254) (23,504)
_______ _______
Financing Activities
Sale of common stock - 3,988
Repurchase of common stock (1,892) -
Short-term debt, net (7,206) 1,449
Retirement of preferred stock - (7,000)
Retirement of long-term debt (4,241) (5,362)
Common and preferred dividends paid (8,525) (14,731)
_______ _______
Net cash used in financing activities (21,864) (21,656)
_______ _______
Net Increase (Decrease) in Cash (177) 1,330
Cash at Beginning of Period 1,673 823
_______ _______
Cash at end of Period $ 1,496 $ 2,153
======= =======
Supplemental Cash Flow Information
Cash paid during the period for:
Interest (net of amounts capitalized) $ 5,342 $ 5,219
Income taxes (net of refunds) $ 6,119 $ 4,671
</TABLE>
<PAGE>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
Note 1 - Accounting Policies
The Company's significant accounting policies are described in Note 1 of
Notes to Consolidated Financial Statements included in its 1994 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.
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of,
effective for fiscal years beginning after December 15, 1995. SFAS No. 121
establishes accounting standards for the impairment of long-lived assets and
requires that regulatory assets which are no longer probable of recovery
through future revenues be charged to earnings. The Company anticipates
adopting SFAS No. 121 beginning January 1, 1996, and based on the current
regulatory rate-making process, the Company does not expect the adoption of
SFAS No 121 will have a material impact on the Company's financial position or
results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, effective for fiscal years beginning after December 15, 1995.
SFAS No. 123 requires that financial statements include certain disclosures
related to stock-based employee compensation arrangements regardless of the
method used to account for them. The Company anticipates the adoption of SFAS
No. 123 beginning January 1, 1996 will not have a material impact on the
Company's financial position or results of operations.
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 is engaged in various operations and activities which subject
it to inspection and supervision by both state and Federal regulatory
authorities including the United States Environmental Protection Agency (EPA)
(hereinafter "environmental laws"). It is Company policy to comply with these
environmental laws to the extent currently applicable and effective against
it. The Company has implemented various procedures and internal controls to
assess and assure compliance. If non-compliance is discovered, corrective
action is taken. Based on these efforts and the oversight of those regulatory
agencies having juris-diction, the Company believes it conforms, in all
material respects, with these environmental laws.
Company operations occasionally result in unavoidable and inadvertent
spills or releases of regulated substances or materials, such as the rupture
of a pole mounted transformer, broken hydraulic line, or other similar
occurrences. When the Company learns of such spills and releases from
ongoing operations, they are cleaned up to meet Federal and state
requirements. Except as discussed in the following paragraphs, the Company is
not aware of any instances where it has caused, permitted or suffered a
release or spill on or about its properties or otherwise which will likely
result in any material environmental liabilities to the Company.
The Company is an amalgamation of more than 100 predecessor companies
engaged in various operations and activities prior to their being merged into
the Company. At least two of these companies were involved in the production
of gas from coal to sell and distribute to retail customers at three different
locations. These activities were discontinued by the Company in the late
1940's or early 1950's. In addition, these predecessor companies and the
Company itself may have historically engaged in other waste disposal
activities which, while legal and consistent with commercially accepted
practices at the time, may not meet modern standards and thus represent
potential liability. The Company continues to discover, investigate,
evaluate, monitor and, where appropriate, remediate contaminated sites related
to these historic activities. The Company's policy is to accrue a liability
for those sites where costs for remediation, monitoring and other future
activities are probable and can be reasonably estimated.
Based on these investigations and policies, coal tar deposits were
discovered at the Company's Cleveland Avenue property located in the city of
Rutland, a site where one of its predecessors operated a coal-gasification
facility. Due to the presence of these deposits and uncertainties as to
potential contamination migration off-site, the Company conducted studies to
determine the magnitude and extent of the coal tar releases. The Company
engaged a consultant to assist in evaluating clean-up methodologies and
provide cost estimates. Those studies indicated the cost to remediate the
site would be approximately $5 million. This was charged to expense in the
fourth quarter of 1992. Other site issues are still under evaluation.
Subsequently, a final risk assessment report was completed and submitted to
the state for review. Following state review, various remediation
alternatives will be investigated. The Company has selected a
consulting/engineering firm to develop and implement a remediation plan for
the site and collect additional data during 1996.
The Company was formally contacted by the EPA in January 1995 asking for
written consent to conduct a site evaluation of the Cleveland Avenue property.
The Company does not believe the EPA's evaluation changes its potential
liability so long as reasonable further progress is made in remediating the
site.
The Company is currently investigating its potential liability regarding
three former municipal landfills: the Bennington Landfill, the Parker
Landfill, and the Trafton-Hoisington Landfill. The Bennington Landfill is a
superfund site located in Bennington, Vermont. The Company was contacted in
the winter of 1994 by counsel for a group of potentially responsible parties
(PRP Group) who were performing an engineering evaluation and cost analysis
(EE/CA) for the site under a settlement agreement with the EPA. The PRP Group
threatened contribution litigation against the Company and others to recover
an equitable share of the approximate $3 million the PRP Group had expended
thus far on the EE/CA. Investigation by the Company thus far suggests that it
is unlikely that it contributed a meaningful amount of hazardous substances,
if any, to the site and thus would not be liable for a significant share of
liability for the EE/CA expenses or site clean up.
In July 1994, the EPA notified the Company that it had reviewed evidence
which, in its opinion, indicated that the Company may have contributed to the
environmental contamination at the Bennington site but that a full
determination of its potential liability for the site had not been made. EPA,
at that time, designated the Company a potentially interested party (PIP).
Also in July 1994, the EPA notified the PRP Group, the Company and other PIPs
that it was proposing a response action at the site with an estimated total
present worth cost of approximately $9.5 million.
During November 1994, the Company was notified that EPA had information
indicating that the Company was a PRP with regard to the Bennington site. The
EPA letter also requested that the Company participate with other PRPs in the
response action described above and further made a demand against the Company
and other PRPs for reimbursement of approximately $.85 million in costs EPA
had incurred in responding to conditions at the site.
The PRP Group has formed a larger group of PRPs to undertake the remedial
response, pay EPA response expenses and obtain reimbursement for the $3
million it spent on the EE/CA. Representatives of the Company contacted the
EPA and the PRP Group and evaluated the merits of participation with the
larger group. In March 1995, the Company entered into an agreement to become
a part of the larger PRP Group for the Bennington site and will also continue
to work with EPA seeking a "de minimis" settlement. On October 6, 1995, the
EPA temporarily acknowledged the PRP Group's offer of approximately 70% of the
remedial costs as a "good faith offer," and expressed its expectation that the
Group would "significantly enhance" the offer within 30 days. Negotiations
are therefore continuing including individual and joint attempts to achieve a
"de minimus" status.
While further investigation continues, the Company will defend any
contribution action brought by PRPs and the EPA, but will continue to explore
settlement options which appear to be in the overall best interest of the
Company.
The Parker Landfill is a superfund site located in Lyndonville, Vermont.
In 1989, the Company received an information request from the EPA seeking to
determine if the Company sent any hazardous substances to the site. An inves-
tigation conducted at the time concluded general trash was occasionally sent
to the site but the Company had not sent hazardous substances to the site. In
May of 1994, the Company received a second request seeking additional
information regarding disposal practices. A renewed investigation by the
Company again concluded no significant amounts of hazardous substances were
sent to the site. Last summer, EPA also announced its proposed preferred
remedy for this site with an estimated total present net worth cost of $28.2
million. Thus far, the Company is considered a PIP, not a PRP, for the site.
The Company has complied with the information request and will monitor EPA
activities at the site.
The Trafton-Hoisington Landfill was a municipal and industrial landfill
in the Town of Windsor, Vermont. The site is presently a state lead site
although placement on the National Priorities List remains a possibility. The
state of Vermont has reached an agreement with a small group of PRPs to
conduct a site investigation. The Company was contacted by these PRPs seeking
contribution toward the cost of the site investigation. The Company conducted
an investigation and concluded no significant amounts of hazardous substances
were sent to the site. The Company has advised the PRPs it will not
voluntarily contribute under these circumstances.
At this time, the Company does not believe these landfill sites represent
the potential for a material adverse effect on its financial condition or
results of operations but will continue to monitor activities at the sites.
In August 1995, the Company received an Information Request from the EPA
pursuant to a Superfund investigation of two sites in the states of Kansas and
Missouri (Sites). These Sites received materials containing PCBs from other
companies, including the Company, during the mid 1980s. The Company has
complied with the information request and will monitor EPA activities at the
Sites. At this time, there has been no estimation of the cost for the
remediation, therefore, the Company cannot predict whether the Sites represent
the potential for a material adverse effect on its financial condition or
results of operations.
The Company is not subject to any pending or threatened litigation with
respect to any other sites where remediation expenses could be material, nor
has the EPA or other state or Federal agency sought contribution from the
Company for the study or remediation of any such sites. The Company has
established a process for determining whether insurance proceeds are available
to offset the costs associated with these sites.
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 September 30, 1995
and December 31, 1994, 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).
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 both
reflected net of sales of $6.0 million at September 30, 1995 and $4.2 million
and $7.8 million, respectively, at December 31, 1994.
Accounts receivable are also reflected net of an allowance for
uncollectible accounts of $1.3 million at September 30, 1995 and $1.0 million
at December 31, 1994.
Note 4 - Maine Yankee Plant
The Company owns 2% of the common stock of Maine Yankee Atomic Power
Company (MY) and is entitled to approximately 2% of the power output of the
880-megawatt nuclear generating plant (Plant) located in Wiscasset, Maine.
During the refueling-and-maintenance shutdown that commenced in early
February 1995, MY detected an increased rate of degradation of the Plant's
steam generator tubes well above its expectations and began evaluating several
courses of action.
On May 22, 1995, MY announced its plan to repair the tubes in the plant's
three steam generators by sleeving all 17,000 steam generator tubes. Sleeving
involves inserting a tube of slightly smaller diameter into the existing tubes
to cover the area above and below the crack; the sleeve is welded in place and
acts as a new tube. Sleeving is a proven safe and technically sound option
commonly used in plants throughtout the United States and in other places in
the world. MY estimates it will cost approximately $40 million to resleeve
all the steam generator tubes. The sleeving process is completed and as of
October 1995, the weld-heat treatment phase was 36% completed. The sleeving
project continues to be on schedule and the Plant is expected to return to
service at its full 880-megawatt rating by the end of 1995.
The Company owns 2% of the common stock of MY, and estimates its share of
the cost to repair the steam generator tubes will be about $.8 million.
In 1994, MY provided about 3% of the Company's power requirements. The
Company estimates the additional costs for replacement power while MY is not
operating could exceed $1 million.
Costs incurred through September 1995 for replacement power and steam
generator repairs amounting to approximately $.9 million have been included in
the Company's 1995 financial results.
<PAGE>
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 Nine Months Ended
September 30 September 30
1995 1994 1995 1994
Operating revenues $38,350 $39,176 $136,768 $115,438
Operating expenses 34,768 35,592 125,498 104,688
_______ _______ ________ ________
Operating income 3,582 3,584 11,270 10,750
Other income, net 655 426 1,704 1,005
_______ _______ ________ ________
Total operating and other income 4,237 4,010 12,974 11,755
Interest expense 2,590 2,368 7,853 6,835
_______ _______ ________ ________
Net income $ 1,647 $ 1,642 $ 5,121 $ 4,920
======= ======= ======== ========
Average shares of common stock
outstanding 392,481 392,481 392,481 392,481
Earnings per share of common stock $4.20 $4.19 $13.05 $12.54
<PAGE>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1995
Earnings Overview
Earnings available for common stock and earnings per share of common
stock for the three months ended September 30, 1995, were $1.2 million and
$.11 compared to a loss of $(1.3) million and $(.11) for the corresponding
period last year. Due to the Company's winter sales peak and higher winter
rates, the Company usually experiences losses in the second and third quarter
when sales are lower and rates are reduced.
For the nine months ended September 30, 1995, earnings available for
common stock were $13.0 million compared to $8.2 million in 1994. Earnings
per share of common stock for these respective periods were $1.11 and $.70.
The improved earnings result from an $.08 gain from the sale by
Catamount Energy Corporation, a wholly owned non-utility subsidiary of the
Company, of approximately half of its limited partnership interest in the
Appomattox Cogeneration Limited Partnership; the 5.07% retail rate increase
effective November 1, 1994; and lower administrative costs as a result of the
Company's cost containment efforts.
The Company filed for a 14.6% or $31.0 million general rate increase on
October 17, 1995 to become effective July 1, 1996, to offset the increasing
cost of providing service as more fully discussed below.
RESULTS OF OPERATIONS
Operating Revenues and MWH Sales
A summary of MWH sales and operating revenues for the three and nine
months ended September 30, 1995 and 1994 (and the related percentage changes
from 1994) is set forth below:
<TABLE>
<CAPTION>
Three Months Ended September 30
Percentage Percentage
MWH Increase Revenues (000's) Increase
1995 1994 (Decrease) 1995 1994 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Residential 213,381 211,369 1.0 $20,987 $19,752 6.3
Commercial 225,015 219,686 2.4 20,442 19,096 7.0
Industrial 92,726 88,827 4.4 6,137 5,648 8.7
Other retail 1,900 1,885 0.8 464 439 5.7
_______ _______ _______ _______
Total retail sales 533,022 521,767 2.2 48,030 44,935 6.9
_______ _______ _______ _______
Resale sales:
Firm 346 4,116 (91.6) 11 189 (94.2)
Entitlement 184,247 191,250 (3.7) 7,993 8,334 (4.1)
Other 143,713 200,745 (28.4) 3,281 4,415 (25.7)
_______ _______ _______ _______
Total resale sales 328,306 396,111 (17.1) 11,285 12,938 (12.8)
_______ _______ _______ _______
Other revenues - - - 999 1,154 (13.4)
_______ _______ _______ _______
Total sales 861,328 917,878 (6.2) $60,314 $59,027 2.2
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30
Percentage Percentage
MWH Increase Revenues (000's) Increase
1995 1994 (Decrease) 1995 1994 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Residential 700,687 720,149 (2.7) $ 74,376 $ 72,757 2.2
Commercial 649,506 639,449 1.6 66,465 62,612 6.2
Industrial 295,381 287,974 2.6 22,437 21,248 5.6
Other retail 5,624 5,674 (0.9) 1,363 1,306 4.4
_________ _________ ________ ________
Total retail sales 1,651,198 1,653,246 (0.1) 164,641 157,923 4.3
_________ _________ ________ ________
Resale sales:
Firm 4,388 13,274 (66.9) 203 450 (54.9)
Entitlement 735,471 597,176 23.2 31,862 26,224 21.5
Other 437,124 569,362 (23.2) 10,187 12,550 (18.8)
_________ _________ ________ ________
Total resale sales 1,176,983 1,179,812 (0.2) 42,252 39,224 7.7
_________ _________ ________ ________
Other revenues - - - 3,130 3,449 (9.2)
_________ _________ ________ ________
Total sales 2,828,181 2,833,058 (0.2) $210,023 $200,596 4.7
========= ========= ======== ========
</TABLE>
Retail MWH sales for the three months ended September 30, 1995 increased
2.2% compared to last year. However, retail revenues increased $3.1 million
or 6.9% over last year due to a $2.2 million increase in price resulting from
the 5.07% retail rate increase and $.9 million associated with the 2.2%
increase in retail MWH sales. For the quarter, residential MWH sales showed a
minimal increase over last year while commercial and industrial MWH sales
increased 2.4% and 4.4%, respectively.
For the nine months ended September 30, 1995, retail MWH sales were about
the same as last year while retail revenues increased $6.7 million or 4.3%
compared to last year. The revenue increase results from a $7.2 million
increase in price due to the 5.07% retail rate increase offset by a
$.5 million decrease associated with the minimal decrease in retail MWH sales.
For the nine months ended September 30, 1995, residential MWH sales decreased
2.7% and commercial and industrial MWH sales increased 1.6% and 2.6%,
respectively.
Third quarter variances reflect several new business expansions and
increased electrical demand from the unusually warm summer weather as well as
the 5.07% retail rate increase. However, year-to-date variances also reflect
the continuing sluggish economy in Vermont and the mild weather experienced
during the first quarter of 1995.
In anticipation of a more competitive environment and to align costs with
revenues by rate class, on May 24, 1995, the Company filed with the Vermont
Public Service Board (PSB) a request for a retail rate redesign to be
effective January 1, 1996. The rate redesign, if approved by the PSB, would
decrease the revenue per kilowatt hour for the commercial and industrial
sectors by approximately 4% and would increase the revenue per kilowatt hour
for the residential sector by about 5%. The rate redesign, if approved by the
PSB, will also reduce the gap between peak and off-peak rates.
Due to current market conditions, some of the Company's firm resale
customers chose not to extend their contracts based on compensatory rates.
However, two of those customers are currently purchasing power from the
Company based on market rates.
Entitlement MWH sales decreased 7,003 MWH or 3.7% for the third quarter
of 1995 compared to the same period in 1994. This decrease resulted from a
reduced sellback of Hydro-Quebec power. For the nine months ended
September 30, 1995, Entitlement MWH sales increased 138,295 MWH or 23.2%
compared to the same period last year. This increase is due primarily to the
sale of Hydro-Quebec power to Boston Edison Company during the second quarter
of 1995. However, this increase was partially offset by decreased MWH sales
to Commonwealth Electric under a swap arrangement which terminated on
October 31, 1995, and to UNITIL due to the scheduled refueling and maintenance
shutdown of Vermont Yankee that began on March 17, 1995.
The decrease in other resale sales of 57,032 MWH or 28.4% and 132,238 MWH
or 23.2% for the three and nine months ended September 30, 1995, respectively,
resulted primarily from lower sales to NEPOOL. Related resale revenues for
these repective periods decreased $1.1 million or 25.7% and $2.4 million or
18.8%. For the quarter, the $1.1 million decrease resulted from a
$1.2 million decrease related to the 28.4% decrease in MWH sales offset by a
favorable price variance of $.1 million. For the nine month period ended
1995, revenues decreased $2.9 million due to a 23.2% decrease in MWH sales
offset by a favorable price variance of $.5 million.
The variances in other revenues for the three and nine months ended
September 30, 1995 are mostly due to true-up adjustments related to C&LM
programs.
Net Purchased Power and Production Fuel Costs
The components of net purchased power and production fuel costs for the
three and nine months ended September 30, 1995 and 1994 are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30
1995 1994
Units Amount Units Amount
<S> <C> <C> <C> <C>
Purchased:
Capacity (MW) 554 $20,190 561 $20,522
Energy (MWH) 843,853 13,228 891,895 14,802
Production fuel (MWH) 71,713 735 79,829 421
_______ _______
Total purch. power and prod. fuel costs 34,153 35,745
Less entitlement and other sales (MWH) 327,960 11,274 391,995 12,749
_______ _______
Net purch. power and prod. fuel costs $22,879 $22,996
======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30
1995 1994
Units Amount Units Amount
<S> <C> <C> <C> <C>
Purchased:
Capacity (MW) 606 $ 62,532 575 $ 61,609
Energy (MWH) 2,757,613 47,752 2,705,114 47,092
Production fuel (MWH) 244,595 1,834 290,742 1,500
________ ________
Total purch. power and prod. fuel costs 112,118 110,201
Less entitlement and other sales (MWH) 1,172,595 42,049 1,166,538 38,774
________ ________
Net purch. power and prod. fuel costs $ 70,069 $ 71,427
======== ========
</TABLE>
The Company's total purchased power and production fuel costs decreased
approximately $1.6 million or 4.5% for the three month period ended
September 30, 1995. The decrease is due to a $1.1 million reduction in the
amount of capacity and energy purchased and from favorable price variances for
both capacity and energy totaling $.8 million. These decreases are offset by
a $.3 million increase in production fuel costs.
The decrease in purchased power and production fuel costs is offset by a
decrease in entitlement and other resale sales totaling $1.5 million,
resulting in an overall decrease of .5% in net power costs for the quarter.
The decrease of $1.5 million in entitlement and other resale sales is
described in the Operating Revenues and MWH Sales discussion above.
Total purchased power and production fuel costs for the nine months of
1995 increased $1.9 million compared to the same period last year. The
increase is primarily due to increases in the amount of energy and capacity
purchased totaling $4.2 million offset by a favorable price variance of
$2.7 million. Production fuel costs increased for the period resulting from
a $.6 million in price offset by a $.2 million decrease in the amount of
production fuel purchased.
Revenue from entitlement and other resale sales increased $3.3 million
for the nine month period ending September 30, 1995, decreasing the overall
net power costs $1.4 million or 1.9% from last year. The increase in
entitlement and other resale sales is described in the Operating Revenues and
MWH Sales discussion above.
The Company has equity ownership interests in four nuclear generating
companies: Vermont Yankee, Maine Yankee, Connecticut Yankee and Yankee Atomic.
The Company also owns 20 hydroelectric generating units and two gas-fired and
one diesel peaking units. In addition, the Company maintains joint-ownership
interests in Joseph C. McNeil, a 53 MW wood, gas and oil-fired unit; Wyman #4,
a 619 MW oil-fired unit; and Millstone #3, an 1149 MW nuclear unit.
Production and Transmission
Production and transmission expenses increased for the third quarter of
1995 due primarily to fuel expenses related to an increase in MWH generated by
the Company's thermal units.
Maintenance
Due to a major summer storm during July 1995, maintenance expenses for
the three and nine months ended September 30, 1995, increased $.4 million and
$.6 million, respectively.
Income Taxes
Federal and state income taxes fluctuate with the level of pre-tax
earnings. The increase in total income tax expense for the three and nine
months ended September 30, 1995 results primarily from an increase in pre-tax
earnings for the respective periods.
Allowance For Funds Used During Construction
The increase in allowance for equity and borrowed funds used during
construction for the three and nine months of 1995 is due to increased capital
expenditures and higher rates used for capitalization of these funds.
Other Income, Net
For the three and nine months ended September 30, 1995, other income, net
increased $1.1 million and $2.1 million, respectively. These increases result
primarily from the $1.5 million pre-tax gain on the sale of a partial interest
in the Appomattox project offset by a $.4 million write-off of the Company's
investment in Green Technologies, Inc. to reflect management's estimate of the
value of the investment. For the nine month 1995 period, this write-off was
offset by higher non-regulated subsidiaries' earnings. Also, contributing to
the nine months increase was a $.4 million write-off, in the first quarter of
1994, of a portion of the Company's investment in the Seabrook project from
some of the Company's firm resale customers.
Other Interest Expense
Due to an increase in short-term debt outstanding during the period,
other interest expense increased for the third quarter compared to the same
period last year. The increase for the nine month period is comprised of
higher interest rates and increased short-term debt levels.
Cash Dividends Declared
Preferred
In January 1994, the Company redeemed 280,000 shares of preferred stock
9% dividend series at premium of $.25 per share. This redemption resulted in
a decrease in preferred dividends declared for the nine months ended
September 30, 1995 compared to the same period last year.
Common
In June 1994, the Company's Board of Directors (Board) declared a
quarterly common dividend of approximately $4.2 million payable August 15,
1994 and in December 1994, the Board declared a quarterly common dividend of
approximately $2.3 million payable February 15, 1995. The December
declaration reflected the 44% reduction in dividends paid per share. These
advanced declarations, combined with the 44% reduction, account for the
variances in common dividends declared for the three and nine months ended
September 30, 1995 compared to the same periods of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Competition
As described in Note 1 of Notes to Consolidated Financial Statements
included in the Company's 1994 Annual Report on Form 10-K, management believes
the Company meets the requirement of SFAS No. 71, "Accounting for the Effects
of Certain Types of Regulation," but continues to evaluate significant changes
in the regulatory and competitive environment to ensure and assess the
Company's overall consistency with the criteria of SFAS No. 71. In the event
the Company determines it no longer meets the criteria for following SFAS
No. 71, the accounting impact would be an extraordinary non-cash charge to
operations of an amount that could be material. Although these conditions do
not currently exist, the Company anticipates future competition will place
pressure on both unit sales and the price the Company can charge. As a
result, increased competitive pressure in the electric utility industry may
restrict the Company's ability to establish prices to recover embedded costs
and may lead to a significant change in the manner rates are set by regulators
from cost-based regulation to a different form of regulation that approximates
market conditions. Singly or together these events may give rise to the
discontinuance of SFAS No. 71 and, in addition, could diminish the Company's
ability to recover its embedded costs of providing service.
In March 1995, the FASB issued SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of,
effective for fiscal years beginning after December 15, 1995. SFAS No. 121
establishes accounting standards for the impairment of long-lived assets and
requires that regulatory assets which are no longer probable of recovery
through future revenues be charged to earnings. The Company anticipates
adopting SFAS No. 121 beginning January 1, 1996, and based on the current
regulatory rate-making process, the Company does not expect the adoption of
SFAS No. 121 will have a material impact on the Company's financial position
or results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, effective for fiscal years beginning after December 15, 1995.
SFAS No. 123 requires that financial statements include certain disclosures
related to stock-based employee compensation arrangements regardless of the
method used to account for them. The Company anticipates the adaption of SFAS
No. 123 beginning January 1, 1996, will not have a material impact on the
Company's financial position or results of operations.
Utility Restructuring
The electric utility industry is in a period of transition from a
traditional rate-regulated environment based on cost recovery to an
environment with both competition and modified regulation. In many states,
including Vermont and New Hampshire where the Company does business, new
mechanisms are being explored to bring greater competition, customer choice
and market discipline to the industry while retaining the public benefits
associated with the current franchise system.
In Vermont, the PSB by Order dated October 17, 1995, opened an
investigation requiring all 22 electric utilities in Vermont to file
restructuring plans by May 1, 1996, allowing open competition for retail
consumers. The goal as set forth in the Order is to achieve restructuring by
December 31, 1997.
In New Hampshire, the New Hampshire Public Utilities Commission (NHPUC),
directed by the New Hampshire legislature, has begun the process of
establishing a Pilot Program (Pilot) to determine the implications of retail
competition in the electric utility industry. The Pilot is for a three year
period beginning May 1, 1996 and will be open to all electric utilities and to
all classes of customers in New Hampshire, although only a small percentage of
customers will be selected to participate. Connecticut Valley Electric
Company Inc. (Conn Valley), the Company's wholly owned New Hampshire
subsidiary, will be able to compete as a full or partial service provider to
retain its customers and to acquire additional load currently served by other
New Hampshire utilities.
Construction
The Company's liquidity is primarily affected by the level of cash
generated from operations and the funding requirements of its ongoing
construction and C&LM programs. Cash flows from operating activities after
dividends paid, provided 100% of the Company's construction and C&LM
expenditures of $19.2 million and $19.8 million for the nine months ended
September 30, 1995 and 1994, 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 approximately $37.3 million at
September 30, 1995. Short-term borrowings generally are reduced when long-
term debt or equity securities are issued.
The Company's capital structure ratios as of September 30, 1995,
consisted of 54% common equity, 9% preferred stock and 37% long-term debt.
The Company has no long-term debt or preferred stock subject to mandatory
sinking fund requirements or maturing within the next twelve-month period.
The credit ratings of the Company's securities as of September 30, 1995, as
reaffirmed by Standard & Poor's Corp. in mid-1994 and Duff & Phelps Corp. in
October 1995 are BBB and BBB+, respectively, for First Mortgage Bonds and BBB-
for Preferred Stock.
On November 8, 1994, the Company's Board of Directors (Board) announced a
new dividend policy that targeted future dividends at 60% of earnings. In
light of the new policy, the annual dividend of $1.42 was reduced 44% to $.80
effective with the first quarter dividend paid in February 1995. The dividend
payment level will be reviewed regularly in light of capital needs, projected
earnings' levels and other relevant factors. Also, the Board authorized the
purchase of up to 2 million shares of its outstanding common stock in open
market transactions. As of September 30, 1995, the Company had purchased
195,100 shares at an average price of $13.42 per share. These transactions
are recorded as treasury stock, at cost, in the Company's Consolidated Balance
Sheet.
No shares of common stock were purchased by the Company subsequent to
September 30, 1995.
Non-Utility
Catamount Energy Corporation, a wholly owned 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 through September 30, 1995 required fees totaling 2.442% of
credit available. Effective October 1, 1995, this Irrevocable Standby Letter
of Credit was reduced to $1.2 million and requires fees of 1.5%.
SmartEnergy Services, Inc., also a wholly owned 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.
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 1994 were
$6.2 million and are expected to be approximately $5.8 million in 1995.
On April 12, 1995, the Company and the Vermont Department of Public
Service jointly filed a Stipulation resolving issues related to the role of
fuel switching as a C&LM resource, promotion of electricity, and C&LM spending
levels for 1995 and 1996. This Stipulation resolves the outstanding material
issues related to C&LM until the end of 1996. It also establishes a process
to remove the return on equity penalty related to "the Company's failed
efforts to acquire all cost-effective energy efficiency resources" imposed by
the PSB in the Company's last rate case. Although not yet approved by the
PSB, the parties have started implementing the Stipulation as outlined in its
terms.
Diversification
Catamount Energy Corporation (Catamount) was formed for the purpose of
investing in non-regulated energy-related projects. Currently, Catamount,
through its wholly owned subsidiaries, has interests in four operating
independent power projects located in Rumford, Maine; East Ryegate, Vermont;
Hopewell, Virginia; and Williams Lake, British Columbia, Canada. Catamount
and its subsidiaries contributed $1.2 million and $2.0 million to the
Company's earnings for the three and nine months ended September 30, 1995,
respectively, compared to earnings of $.4 million and $.5 million for the
three and nine months ended September 30, 1994, respectively.
On July 21, 1995, Catamount sold approximately half of its limited
partnership's interest in the Appomattox Cogeneration Limited Partnership.
The sale generated capital to fund investments in several other independent
power projects and added approximately $.08 to earnings per common share
during the third quarter of 1995. Upon closing, Catamount's ownership
percentage in Appomattox Cogeneration Limited Partnership was reduced to
25.25%.
SmartEnergy Services, Inc. (SmartEnergy) was formed for the purpose of
effectively providing reliable, energy-efficient products and services,
including the rental of electric water heaters. During the third quarter of
1995, SmartEnergy wrote-off its remaining investment of approximately $424,000
in Green Technologies, Inc. to reflect management's estimate in the value of
the investment. SmartEnergy incurred after-tax losses of approximately
$210,000 and $269,000, including a $253,000 after-tax write-off related to the
investment in Green Technologies, Inc., for the three and nine months ended
September 30, 1995, compared to losses of $7,000 and $31,000 for the three and
nine months ended September 30, 1994.
Rates and Regulation
The Company recognizes 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 a 14.6% or $31.0 million
general rate increase on October 17, 1995 to become effective July 1, 1996, to
offset the increasing cost of providing service. Approximately $29.0 million
or 93.5% of the rate increase request is to recover increased purchased power
costs. As part of the rate filing, the Company proposed a special "Lifeline"
program for low-income customers which, if approved, would serve to limit some
of the impacts of the rate case and rate design on residential low-income
customers.
At the Company's 1995 Annual Meeting, shareholders approved two
amendments to the Company's Articles of Incorporation subject to obtaining the
necessary regulatory approval. One of the amendments was a so-called Fair
Price provision. The other amendment served to limit The Board of Directors'
(Directors) liability in certain circumstances. Because under Vermont law the
Company cannot amend its Articles of Incorporation without the PSB's
permission, the Company filed a petition seeking the necessary regulatory
approval. The Department of Public Service vigorously opposed both
amendments, significantly decreasing the likelihood of obtaining PSB approval.
The case was further complicated by the participation of Mr. Bradford White, a
plaintiff in the lawsuit discussed under Legal Proceedings. In light of the
limited prospect of obtaining regulatory approval, as well as the ongoing
costs associated with the proceeding, the Company decided to withdraw the
petition with prejudice. Accordingly, on October 17, 1995, the Company filed
a notice of withdrawal. The PSB is expected to act on the Company's request
in the near future.
<PAGE>
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 effect on the
business or financial condition of the Company.
On December 30, 1994, the Company and its Board were named as
defendants in a complaint filed in the United States District Court for the
District of Vermont by three shareholders. The complaint alleges, among other
things, (i) that F. Ray Keyser, Jr., Chairman of the Company's Board, violated
Section 8 of the Clayton Act, 15 U.S.C. Subchapter 19, which precludes certain
interlocking directorships, (ii) that Mr. Keyser violated his fiduciary duties
to the Company's stockholders by acquiring and operating a series of
businesses in competition with the Company without offering those business
opportunities to the Company, (iii) that the remaining individual defendants
violated their fiduciary duties to the Company's stockholders by failing to
analyze, or to cause management to analyze, diversification into propane and
fossil fuels, and by failing to make the Company an effective competitor of
alternative fuel companies, and (iv) that the Company violated the applicable
provision of the Vermont General Corporation Law by failing to provide a list
of the Company's stockholders. The complaint seeks an unspecified amount of
damages (including treble damages against Mr. Keyser), attorney's fees and
costs, a list of the Company's stockholders, and a court order to enjoin the
defendants from alleged continuing violations of the law. Each of the
individual defendants and the Company itself deny the allegations against them
and intend to vigorously defend the complaint.
In response to a shareholder letter received in November 1994, the
Company's Board formed a Special Investigation Committee (the Committee),
comprised of three outside directors, to investigate the shareholder's
allegations concerning management's judgment in deciding, in August 1991, to
commit, as part of a consortium of Vermont utilities, to a long-term purchase
of a large amount of hydro-electric power from Hydro-Quebec. The shareholder
also alleged that the Company misled the PSB, prior to the Company's decision
to commit to the purchase, concerning the status of negotiations relating to
the purchase. The Committee hired outside counsel to aid in the investigation
and to render legal advice to it and the Board. At the conclusion of its
investigation, the Committee recommended to the outside members of the full
Board that pursuit of any legal claims implicated by the shareholder's letter
would not be in the best interests of the Company and its shareholders and
that the Company should take no further action with respect to the
shareholder's letter. At the Board's regularly scheduled meeting in September
1995, the outside directors of the Board voted unanimously to adopt the
Committee's recommendations.
Items 2 and 4.
None.
Item 5. Other Information.
(a) On March 1, 1995, the Company filed a comprehensive, open access
transmission tariff (Tariff) with the Federal Energy Regulatory Commission
(FERC). The Tariff is designed to provide firm and non-firm network
transmission service, as well as firm point to point service over the
transmission systems of the Company and its wholly owned subsidiary,
Connecticut Valley. In addition, the Tariff would permit customers to make
use of the Company's contract rights to the transmission facilities of the
Vermont Electric Power Company, Inc. and New England Power Company. The Tariff
would provide transmission service that is comparable to that provided to
native load customers. Charges for such service would be based upon the
Company's cost of service for transmission.
The Company prepared and filed the Tariff in anticipation of
developing business opportunities in the area of electric transmission
service. In addition, recent FERC orders led the Company to believe that all
electric utilities owning transmission facilities would be required to prepare
and file such a tariff in the near future. FERC issued a Notice Of Proposed
Rulemaking (NOPR) dated March 29, 1995, requiring such utilities to make
available comparable transmission service. The Company's tariff complies with
many requirements proposed by the FERC in its NOPR.
Nine parties intervened in the Company's filing. On April 28, 1995,
the FERC issued a deficiency letter asking for more information in a number of
areas. The Company filed a timely response to the deficiency letter on
June 14, 1995. Three parties filed protests in response to the Company
filing, and one additional party filed a request for late intervention. The
FERC accepted the Tariff for filing on August 14, 1995, suspended it and set
it for hearing. The August 14 Order allowed the Tariff to become effective
August 15, 1995, subject to refund and subject to the outcome of the Open
Access NOPR proceeding.
(b) As ordered by the NHPUC in Connecticut Valley's 1994
Conservation and Load Management Percentage Adjustment docket, the Company
entered into negotiations with the NHPUC Staff to redesign the RS-2 wholesale
rate under which Connecticut Valley purchases power from the Company. The
redesign features marginal cost based energy and capacity charges for all
energy and capacity purchases above or below a base level. Such negotiations
concluded at the end of 1994. A summary report was filed with the NHPUC on
February 13, 1995. The NHPUC issued an order dated June 28, 1995 approving
the principles underlying the redesign. The Company is preparing a filing of
the redesign with the FERC. Connecticut Valley's costs of wholesale power
will be lower than they otherwise would be only if Connecticut Valley's growth
rate exceeds that of the Company's Vermont retail operations.
(c) On October 2, 1995, the Company's President and Chief Executive
Officer Thomas C. Webb announced that he will retire effective December 29,
1995.
Also on October 2, 1995, the Company's Board promoted Robert H.
Young, Executive Vice President and Chief Operating Officer, to succeed
Thomas C. Webb upon his retirement and appointed Francis J. Boyle to fill the
positions of Vice President-Finance and Administration and Chief Financial
Officer. Mr. Young will also assume the position on the Company's Board
vacated by Mr. Webb.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
EXHIBIT INDEX
Exhibit
3-1. By-laws, as amended August 7, 1995.
10. Material Contract.
10.16.27 Thirty-second Amendment dated September 1, 1995
to New England Power Pool Agreement dated as
of September 1, 1971.
27. Financial Data Schedule.
(b) There were no reports on Form 8-K for the quarter ended
September 30, 1995.
<PAGE>
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.
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
(Registrant)
By Francis J. Boyle
_______________________________________
Francis J. Boyle, Vice President,
Finance and Administration and
Principal Financial Officer
By James M. Pennington
_______________________________________
James M. Pennington, Controller and
Principal Accounting Officer
Dated: November 13, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This Financial Data Schedule contains summary financial information extracted
from the Consolidated Financial Statements included herein and is qualified in
its entirety by reference to such financial statements (dollars in thousands,
except per share amounts).
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 325,918
<OTHER-PROPERTY-AND-INVEST> 52,240
<TOTAL-CURRENT-ASSETS> 41,506
<TOTAL-DEFERRED-CHARGES> 58,816
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 478,480
<COMMON> 68,088
<CAPITAL-SURPLUS-PAID-IN> 45,246
<RETAINED-EARNINGS> 63,876
<TOTAL-COMMON-STOCKHOLDERS-EQ> 177,210
20,000
8,054
<LONG-TERM-DEBT-NET> 120,146
<SHORT-TERM-NOTES> 4,305
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 19,656
<LEASES-CURRENT> 1,094
<OTHER-ITEMS-CAPITAL-AND-LIAB> 128,015
<TOT-CAPITALIZATION-AND-LIAB> 478,480
<GROSS-OPERATING-REVENUE> 210,023
<INCOME-TAX-EXPENSE> 7,816
<OTHER-OPERATING-EXPENSES> 185,043
<TOTAL-OPERATING-EXPENSES> 192,859
<OPERATING-INCOME-LOSS> 17,164
<OTHER-INCOME-NET> 4,923
<INCOME-BEFORE-INTEREST-EXPEN> 22,087
<TOTAL-INTEREST-EXPENSE> 7,606
<NET-INCOME> 14,481
1,521
<EARNINGS-AVAILABLE-FOR-COMM> 12,960
<COMMON-STOCK-DIVIDENDS> 4,659
<TOTAL-INTEREST-ON-BONDS> 8,142
<CASH-FLOW-OPERATIONS> 41,941
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 0
</TABLE>
BY-LAWS OF CENTRAL VERMONT PUBLIC SERVICE CORPORATION
ARTICLE I.
Articles of Agreement; Offices
Section 1. These By-Laws shall be subject to the Articles
of Association, and all references in these By-Laws to the
Articles of Association shall be construed to mean the
Articles of Association of the Corporation as from time to
time amended.
Section 2. The Corporation shall maintain its principal
office in Rutland, Vermont, and may maintain offices at such
other places as the Board of Directors may, from time to
time, appoint.
ARTICLE II.
Seal
The corporate seal shall be circular in form and shall have
inscribed thereon the name of the Corporation and the words
and figures: "Seal Vermont 1929".
ARTICLE III.
Capital Stock and Transfers
Section 1. The amount and classes of capital stock that may
be issued by the Corporation, and the designations,
preferences, rights, privileges, voting powers,
restrictions, and qualifications of each class thereof,
shall be as set forth in the Articles of Association, as the
same shall at any time be duly recorded in the office of the
Secretary of State of Vermont in original or amended form.
Section 2. Each holder of fully paid stock shall be
entitled to a certificate or certificates of stock as
provided by law and in a form approved by the Board of
Directors. (As amended May 2, 1972)
Section 3. Shares of stock may be transferred by the owner
by a proper endorsement upon the back of the certificate or
by a separate instrument of assignment, and the assignee,
upon producing, and surrendering the former certificate so
transferred or the certificate accompanied by such
instrument, shall be entitled to a new certificate if no
liens upon the stock against the former owner have attached.
The delivery of a properly executed stock certificate to a
bona fide purchaser or pledgee for value to sell, assign and
transfer the same, signed by the owner of the certificate,
shall be a sufficient delivery to transfer the title against
all persons except the Company; but no such transfer shall
affect the right of the Company to treat the stockholder of
record as the stockholder in fact until the old certificate
is surrendered and a new certificate is issued to the person
entitled thereto. Except as hereinafter provided, or as may
be required by law or by the order of a court in appropriate
proceedings, shares of stock shall be transferred on the
books of the Company only upon the proper assignment and
surrender of the certificates issued therefor. If an
outstanding certificate of stock shall be lost, destroyed or
stolen, the holder thereof may have a replacement
certificate issued upon such terms as the Directors may
prescribe. (As amended May 2, 1972)
Section 4. If default shall be made in the prompt payment
when due of any sum payable to the Company upon any
subscription for stock of the Company, and if such default
shall continue for a period of twenty days, then all right
under the subscription in and to the stock subscribed for
shall, upon the expiration of such period, cease and
determine and become and be forfeited to the Company;
provided that if at the expiration of such twenty day period
such right shall belong to the estate of a decedent, it may
be forfeited only by resolution of the Board of Directors
declaring forfeiture. (As amended May 2, 1972)
ARTICLE IV.
Meetings of Stockholders
Section 1. All meetings of the stockholders shall be held
in Vermont, either at the principal office of the Company or
at such other place as shall be designated in the call
therefor. The annual meeting shall be held on the first
Tuesday of May in each year, if not a legal holiday, and if
a legal holiday, then on the next succeeding business day,
at the time designated in the call, for the election of
Directors, and the transaction of such other business as may
come before it. (As amended April 2, 1946)
Section 2. Special meetings of the stockholders may be
called by the Board of Directors, the President or the
Secretary upon written request of stockholders holding not
less than one-tenth of all the shares entitled to vote at
the meeting. In case an annual meeting shall be omitted
through inadvertence or otherwise, the business of such
meeting may be transacted at a special meeting duly called
for the purpose. (As amended May 2, 1972)
Section 3. Written or printed notice stating the place, day
and hour of the meeting and, in case of a special meeting,
the purpose or purposes for which the meeting is called,
shall be delivered not less than 10 nor more than 60 days
before the date of the meeting, either personally or by
mail, by or at the direction of the President or the
Secretary, to each registered holder entitled to vote at
such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed
to the registered holder at the address as it appears on the
stock transfer books of the Company, with postage on it
prepaid. (As amended August 7, 1995)
Section 4. Unless otherwise provided in the Articles of
Association, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders. If a quorum is present, the
affirmative vote of the majority of the shares represented
at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a
greater number or voting by classes is required by law, by
these By-Laws or by the Articles of Association. A majority
vote of whatever stock shall be represented, even if less
than a quorum, shall be sufficient (a) to adjourn from time
to time until a quorum is present or (b) to adjourn sine
die. (As amended May 2, 1972)
Section 5. At all stockholders' meetings, holders of record
of stock then having voting power shall be entitled to one
vote for each share of stock held by them, respectively,
upon any question or at any election, and such vote may, in
all cases, be given by proxy, duly authorized in writing.
But no proxy dated more than eleven months before the
meeting, which shall be named therein, shall be accepted;
and no proxy shall be valid after the final adjournment of
such meeting. (As amended August 7, 1995)
Article V.
Directors
Section 1. The property and business of the Corporation
shall be managed by a Board of Directors, each of whom must
be a stockholder. The Directors shall be elected by ballot
by majority vote of the stockholders present in person or
represented by proxy at the election and entitled to vote on
the question, except as otherwise provided in the Articles
of Association or in these By-Laws. (As amended October 16,
1944; May 7, 1963 and February 17, 1987)
No person shall be eligible for election or re-election as a
Director after his/her seventieth birthday, provided that
any Director whose term of office extends beyond his/her
seventieth birthday shall be entitled to serve the remainder
of the full term of the class of Directors to which he/she
was elected. (As amended June 13, 1983 and November 2,
1987)
A majority of the Directors shall at all times be persons
who are not employees of the Corporation. The provisions of
this paragraph shall not apply to the election of Directors
by the holders of preferred stock when, in accordance with
the Articles of Association, they shall be entitled to elect
the smallest number of Directors necessary to constitute a
majority of the full Board of Directors. (As amended April
6, 1953 and August 7, 1995)
Section 2. Subject to the provisions of Section 5 below,
the Board of Directors shall consist of not less than 9 nor
more than 21 persons, the exact number to be fixed from time
to time by resolution of the Board of Directors. Such exact
number may be increased or decreased by the affirmative vote
of the holders of at least 80 percent of the combined voting
power of the then-outstanding shares of common stock and of
any other class of stock then being expressly entitled to
vote with the common stock on the question. The Directors
shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal
in number as possible. Upon their initial election, the
members of the first class shall hold office for a term
expiring at the next annual meeting of stockholders after
their election, the members of the second class shall hold
office for a term expiring at the second annual meeting of
stockholders after their election, and the members of the
third class shall hold office for a term expiring at the
third annual meeting of stockholders after their election.
(As amended February 17, 1987)
Section 3. Subject to the provisions of Section 5 below,
any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal
from office or other cause may be filled only by a majority
vote of the Directors then in office, though less than a
quorum of the Board of Directors. Any Director elected in
accordance with this provision shall hold office for the
remainder of the full term of the class of Directors in
which the vacancy occurred and until such Director's
successor shall have been elected and qualified. No
decrease in the number of authorized Directors constituting
the entire Board of Directors shall shorten the term of any
incumbent Director. (As amended February 17, 1987)
Section 4. Except as otherwise provided in paragraph (e) of
subdivision 6 of the Articles of Association, a Director may
be removed from office only for cause and only by the
affirmative vote of the holders of at least 80 percent of
the combined voting power of the then-outstanding shares of
common stock and of any other class of stock then being
expressly entitled to vote with the common stock on the
question. (As amended February 17, 1987)
Section 5. Nothing contained in Sections 2 through 4 of
this Article V shall be deemed to alter, amend or repeal the
provisions of paragraph (b) of subdivision 6, paragraph (b)
of subdivision 10F, or paragraph (a) of subdivision 20F, of
the Articles of Association each of which confers, under the
circumstances described therein, on the holders of the
classes of stock referred to therein, the right to vote in
the election of Directors. During any period in which such
rights may be exercised, the provision or provisions confer-
ring such rights shall prevail over any provision of these
By-Laws inconsistent therewith. (As amended February 17,
1987)
Section 6. Notwithstanding any other provision of these By-Laws, of the
Articles of Association or of law, the
affirmative vote of the holders of at least 80 percent of
the combined voting power of the then-outstanding shares of
common stock and of any other class of stock then being
expressly entitled to vote with the common stock in the
election of Directors shall be required to alter, amend or
repeal Sections 2, 3, 4, 5 or 6 of this Article V. (As
amended February 17, 1987)
Section 7. The Board of Directors may hold its meetings and
may have one or more offices, and may keep the books of the
Corporation (except such records and books as by laws of
Vermont are required to be kept within the State) within or
outside of Vermont, at such places as it may from time to
time determine. In addition to the powers and authorities
by these By-Laws expressly conferred upon them, the Board of
Directors may exercise all such powers of the Corporation,
and do all such lawful acts and things as are not by law, by
the Articles of Association or by these By-Laws required to
be exercised or done by the incorporators or stockholders.
ARTICLE VI.
Meetings of the Board
Section 1. Regular meetings of the Board of Directors shall
be held at such place and time as may be designated from
time to time by the Board; and such meetings, and a regular
meeting immediately following and at the same place as each
annual meeting of the stockholders, may be held without
notice. Special meetings of the Board of Directors may be
called by the President, or by any two Directors, upon two
days' notice to each Director, either personally or by mail
or by telegram; and they may be held at any time without
call or formal notice, provided all the Directors are
present or waive notice thereof in writing. (As amended May
1, 1962)
Section 2. A majority of the number of Directors fixed in
accordance with the By-Laws shall constitute a quorum for
the transaction of business, unless a greater number is
required by the Articles of Association. The act of the
majority of the Directors present at a meeting at which a
quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by
the Articles of Association. (As amended May 2, 1972)
Section 3. Directors who are not also officers or regular
employees of the Company may receive compensation for their
services as such or as a member of any committee of the
Board of Directors, as well as fixed sums and expenses for
attendance at Directors' or committee meetings, in such
amounts as may be provided from time to time by the Board of
Directors, provided that nothing herein contained shall be
construed to preclude any Director from serving the Company
in any other capacity and receiving compensation therefor.
(As amended May 5, 1981)
Section 4. Directors and members of the Executive Committee
and any other committee designated by the Board of Directors
may participate in a meeting of such Board or committee by
means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting
in such a manner shall constitute presence in person at such
meeting. (As amended May 3, 1977)
ARTICLE VII.
Officers
Section 1. In each year there shall be elected by the Board
of Directors, and if practicable, at its first meeting after
the annual election of Directors, a President, one or more
Vice Presidents, a Secretary, a Treasurer, and a Controller;
and the Board may provide for and elect a Chairperson, one
or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers and prescribe such
duties for them as in its judgment may, from time to time,
be required to conduct the business of the Company. One of
said Vice Presidents may be designated Executive Vice
President. Any two or more offices may be held by the same
person, except the offices of President and Secretary. All
officers shall hold their respective offices for the term of
one year, and until their successors, willing to serve,
shall have been elected and, in the case of the Secretary,
qualified, unless sooner removed; but they, and any of them,
may be removed from their respective offices at the pleasure
of the Board. Vacancies arising in any office from any
cause shall be filled by the Board of Directors; and the
persons chosen to fill vacancies shall serve for the balance
of the unexpired term and until their successors shall have
been elected. (As amended May 1, 1962; May 7, 1963; May 5,
1964; May 2, 1972 and November 2, 1987)
Section 2. A Chairperson elected pursuant to Section 1 of
this Article VII shall advise with and make his/her counsel
available to the other officers of the Company and shall
have such other powers and duties as may at any time be
prescribed by these By-Laws and by the Board of Directors.
He/She shall, when present, preside at all meetings of the
stockholders and of the Board of Directors and of the
Executive Committee. (As amended May 5, 1964)
The President shall be the Chief Executive Officer of the
Company and, subject to the direction of the Board of
Directors and of the Chairperson (if one is elected), shall
supervise the administration of the business and affairs of
the Company and shall have such other powers and duties as
may at any time be prescribed by these By-Laws and by the
Board of Directors. In the absence of the Chairperson (or
if no such Chairperson is elected), the President shall,
when present, preside at meetings of the stockholders and of
the Board of Directors and of the Executive Committee. (As
amended May 5, 1964 and November 2, 1987)
The Chairperson and the President shall be members of the
Executive Committee (if such Executive Committee is
designated by the Board of Directors) and each of them, in
his/her discretion, may attend any meeting of any committee
of the Board, whether or not he/she is a member of such
committee. (As amended May 5, 1964)
Section 3. The President shall, subject to the control of
the Board of Directors, have charge of the business and
affairs of the Company, including the power to appoint and
to remove and to discharge any and all agents and employees
of the Company not elected or appointed directly by the
Board of Directors, and such other powers and duties as may
at any time be prescribed by these By-Laws and by the Board
of Directors. (As amended May 5, 1964)
Section 4. The Vice President or Vice Presidents, if there
shall be more than one, shall have such powers and duties as
may from time to time be prescribed by the Board of
Directors or by the President, but any powers and duties
prescribed by the President shall not be inconsistent with
any theretofore prescribed by the Board of Directors. In
case the President, from absence or any other cause, shall
be unable at any time to attend to the duties of the office
of President requiring attention, or in case of his/her
death, resignation or removal from office, the powers and
duties of the President shall, except as the Board of
Directors may otherwise provide, temporarily devolve upon
the Executive Vice President if one shall have been
designated and is able to serve, or in case of the latter's
inability, upon the Vice President designated by the Board
of Directors and able to serve and shall be exercised by
such Vice President as acting President during such
inability of the President, or until the vacancy in the
office of President shall be filled. In case of the
absence, disability, death, resignation or removal from
office of both the President and such Vice President, the
Board of Directors shall elect one of its members to
exercise the powers and duties of the President during such
absence or disability, or until the vacancy in one of said
offices shall be filled. (As amended May 1, 1951 and May 1,
1962)
Section 5. The Secretary shall reside in the State of
Vermont and shall have the duties prescribed by law and such
other duties as the By-Laws or the Board of Directors may
prescribe. (As amended May 2, 1972)
Section 6. The Treasurer shall have charge of, and be
responsible for the custody and, jointly with the
Controller, the receipt and disbursement of the funds of the
Corporation, and shall deposit its funds in the name of the
Company, in such banks, trust companies, or safe deposit
vaults as the Board of Directors may direct. The Treasurer
shall have the custody of such books and papers as in the
practical business operations of the Company shall naturally
belong in the office or custody of the Treasurer, or as
shall be placed in his/her custody by the Board of
Directors, by the Executive Committee, or by the President.
The Treasurer shall also have charge of the safekeeping of
all stocks, bonds, mortgages, and other securities belonging
to the Company, but such stocks, bonds, mortgages, and other
securities shall be deposited for safekeeping in a safe
deposit vault to be approved by the Board of Directors or
the Executive Committee, in a box or boxes, access to which
shall be had as may be provided by resolution of the Board
of Directors or by the Executive Committee. The Treasurer
shall have such other powers and duties as are commonly
incident to the office of Treasurer, or as may be
prescribed. The Treasurer may be required to give bond to
the Company for the faithful discharge of duties in such
form and to such amount and with such sureties as shall be
determined by the Board of Directors. (As amended November
2, 1987)
Section 7. The Controller shall have charge of, and be
responsible for the collection, and jointly with the
Treasurer, the receipt and disbursement of the funds of the
Corporation. The Controller shall maintain adequate records
of all assets, liabilities, and transactions of the Company;
shall see that adequate audits thereof are currently and
regularly made and, in conjunction with other officers and
department heads, shall initiate and enforce methods and
procedures whereby the business of the Company shall be
conducted with maximum safety, efficiency and economy. The
Controller shall have the custody of such books, receipted
vouchers, and other books and papers as in the practical
business operations of the Company shall naturally belong in
the office or the custody of the Controller, or as shall be
placed in his/her custody by the Board of Directors, by the
Executive Committee, or by the President. The Controller
shall have such other powers and duties as are commonly
incidental to the office of Controller, or as may be
prescribed. The Controller may be required to give bond to
the Company for the faithful discharge of duties in such
form and to such amount and with such sureties as shall be
determined by the Board of Directors. (As amended November
2, 1987)
Section 8. Assistant Secretaries or Treasurers, when
elected, shall assist the Secretary or Treasurer, as the
case may be, in the performance of the respective duties
assigned to such principal officers; and the powers and
duties of any such principal officer, shall, except as
otherwise ordered by the Board of Directors, temporarily
devolve upon his/her assistant in case of the absence,
disability, death, resignation or removal from office of
such principal officer. They shall perform such other
duties as may be assigned to them from time to time. (As
amended May 7, 1963)
ARTICLE VIII.
Executive Committee
Section 1. The Board of Directors may, by resolution passed
by a majority of the Board, designate from their number an
Executive Committee of such number, not less than three, as
the Board may fix from time to time. The Executive
Committee may make its own rules of procedure and shall meet
where and as provided by such rules, or by resolution of the
Board of Directors. A majority of the members of the
Committee shall constitute a quorum for the transaction of
business. During the intervals between the meetings of the
Board of Directors, the Executive Committee shall have all
the powers of the Board in management of the business and
affairs of the Company except as may otherwise be provided
by law, including power to authorize the seal of the Company
to be affixed to all papers which may require it, and, by
majority vote of all its members, exercise any and all such
powers in such manner as such Committee shall deem best for
the interest of the Company, in all cases in which specific
directions shall not have been given by the Board of
Directors, and in which the vote of a quorum of the full
Board of Directors is not required by law, the Articles of
Association, or by these By-Laws. (As amended May 2, 1972)
Section 2. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board
of Directors when required. The Board of Directors shall
have power to rescind any vote or resolution of the
Executive Committee, but no such recision shall have
retroactive effect.
ARTICLE IX.
Inspection of Books
All records, accounts, and papers of the Corporation shall
be open to the inspection of every stockholder at reasonable
times and for legitimate purposes; and, subject to such
rights of inspection as may be afforded the stockholders by
law, the Directors may make such reasonable regulations
relative to such inspection, and take such action to prevent
an inspection of corporate books or papers for illegitimate
purposes as may be consistent with law.
ARTICLE X. (As amended May 3, 1988)
Vote Required to Approve Business Combination
The vote of the stockholders of the Corporation required to
approve any Business Combination shall be as set forth in
this Article X. The term "Business Combination" shall have
the meaning ascribed to it in Paragraph 10.1(B) of this
Article X. Each other capitalized term shall have the
meaning ascribed to it in Paragraph 10.3 of this Article X.
10.1 (A) In addition to any affirmative vote required by
law or these By-Laws and except as otherwise expressly
provided in Paragraph 10.2 of this Article X:
(1) any merger or consolidation of the Corporation or any
Subsidiary with (i) any Interested Stockholder or (ii) any
other person (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate of an Interested Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of assets of the
Corporation or any Subsidiary having an aggregate Fair
Market Value of $5,000,000 or more; or
(3) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions)
of any securities of the Corporation or any Subsidiary to
any Interested Stockholder or an Affiliate of any Interested
Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate Fair
Market Value of $5,000,000 or more, other than the issuance
of securities upon the conversion of convertible securities
of the Corporation or any Subsidiary which were not acquired
by such Interested Stockholder (or such Affiliate) from the
Corporation or a Subsidiary; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Stockholder or any Affiliate of
any Interested Stockholder; or
(5) any transaction involving the Corporation or any
Subsidiary (whether or not with or into or otherwise
involving an Interested Stockholder), and including, without
limitation, any reclassification of securities (including
any reverse stock split), or recapitalization or
reorganization of the Corporation, or of its Subsidiaries or
any self tender offer for or repurchase of securities of the
Corporation by the Corporation or any Subsidiary or any
other transaction (whether or not with or into or otherwise
involving an Interested Stockholder), which in any such case
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class
of equity securities or securities convertible into equity
securities of the Corporation or any Subsidiary which is
directly or indirectly beneficially owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote of the holders of at
least 80 percent of the combined voting power of the then
outstanding shares of the Voting Stock (for the purposes of
this Article X, each share of the Voting Stock shall have
the number of votes granted to it pursuant to the Company's
Articles of Association), which vote shall include the
affirmative vote of at least two-thirds (2/3) of the
combined voting power of the outstanding shares of Voting
Stock held by stockholders other than the Interested
Stockholder. Such affirmative vote shall be required
notwithstanding any provision of law, any other provision of
these By-Laws or the Articles of Association, any agreement
with any national securities exchange or otherwise which
might permit a lesser vote or no vote and in addition to any
affirmative vote required of the holders of any class or
series of Voting Stock pursuant to law.
(B) The term "Business Combination" as used in this Article
X shall mean any transaction that is referred to in any one
or more clauses (1) through (5) of Paragraph 10.1(A) of this
Article X.
10.2 The provisions of Paragraph 10.1(A) of this Article X
shall not be applicable to any particular Business
Combination, and such Business Combination shall require
only such affirmative vote as is required by law, any other
provision of these By-Laws, by the Articles of Association,
or any agreement with any national securities exchange, if,
in the case of a Business Combination that does not involve
any cash or other consideration being received by the
stockholders of the Corporation, solely in their respective
capacities as stockholders of the Corporation, as specified
in paragraph 10.2(A) is met, or, in the case of any other
Business Combination, the condition specified in the
following paragraph 10.2(A) or the conditions specified in
the following paragraph 10.2(B) are met:
(A) such Business Combination shall have been approved by a
majority of the Disinterested Directors; or
(B) each of the conditions specified in the following
clauses (1) through (4) shall have been met:
(1) The aggregate amount of the cash and the Fair Market
Value as of the Consummation Date of any consideration other
than cash to be received per share by holders of Voting
Stock in such Business Combination shall be at least equal
to the highest of the following (it being intended that the
requirements of this clause (B) (1) shall be required to be
met with respect to all shares of Voting Stock outstanding
whether or not the Interested Stockholder has acquired any
shares of the Voting Stock):
(i) if applicable, the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid in order to acquire any shares of Voting
Stock beneficially owned by the Interested Stockholder which
were acquired beneficially by such Interested Stockholder
within the two-year period immediately prior to the
Announcement Date or in the transaction in which it became
an Interested Stockholder, whichever is higher; or
(ii) the Fair Market Value per share of Voting Stock on the
Announcement Date or on the Determination Date, whichever is
higher; or
(iii) an amount which bears the same or greater percentage
relationship to the Fair Market Value of the Voting Stock on
the Announcement Date as the highest per share price
determined in clause (B)(l)(i) above bears to the Fair
Market Value of the Voting Stock on the date of the
commencement of the acquisition of the Voting Stock by such
Interested Stockholder; and
(2) the consideration to be received by holders of a
particular class or series of outstanding Voting Stock shall
be in cash or in the same form as was previously paid in
order to acquire beneficially shares of such class or series
of Voting Stock that are beneficially owned by the
Interested Stockholder and, if the Interested Stockholder
beneficially owns shares of any class or series of Voting
Stock that were acquired with varying forms of
consideration, the form of consideration to be received by
each holder of such class or series of Voting Stock shall
be, at the option of such holder, either cash or the form
used by the Interested Stockholder to acquire beneficially
the largest number of shares of such class or series of
Voting Stock beneficially acquired by it prior to the
Announcement Date; and
(3) after such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination:
(i) such Interested Stockholder shall not have become the
beneficial owner of any additional shares of Voting Stock of
the Corporation, except as part of the transaction in which
it became an Interested Stockholder or upon conversion of
convertible securities acquired by it prior to becoming an
Interested Stockholder or as a result of a pro rata stock
dividend or stock split; and
(ii) such Interested Stockholder shall not have received
the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance or tax credits or
other tax advantages provided by the Corporation or any
Subsidiary, whether in anticipation of or in connection with
such Business Combination or otherwise; and
(iii) such Interested Stockholder shall not have caused any
material change in the Corporation's business or capital
structure, including, without limitation, the issuance of
shares of capital stock of the Corporation to any third
party; and
(iv) there shall have been no reduction in the annual rate
of dividends paid on Voting Stock (except as necessary to
reflect any subdivision of the Voting Stock), except as
approved by a majority of the Disinterested Directors and an
increase in such annual rate of dividends (as necessary to
prevent any such reduction) in the event of any reclassi-
fication (including any reverse stock split),
recapitalization, reorganization, self tender offer or any
similar transaction which has the effect of reducing the
number of outstanding shares of the Voting Stock, unless the
failure so to increase such annual rate was approved by a
majority of the Disinterested Directors; and
(4) a proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules and regulations),
whether or not the Corporation is then subject to such
requirements, shall be mailed by and at the expense of the
Interested Stockholder at least thirty days prior to the
earlier of the Consummation Date or the vote of stockholders
relative thereto of such Business Combination to the
stockholders of the Corporation (whether or not such proxy
or information statement is required to be mailed pursuant
to such Act or subsequent provisions), and shall contain at
the front thereof in a prominent place (i) any
recommendations as to the advisability (or inadvisability)
of the Business Combination which the Disinterested
Directors, if any, may choose to state, and (ii) the opinion
of a reputable national investment banking firm as to the
fairness (or not) of such Business Combination from the
point of view of the remaining stockholders of the
Corporation (such investment banking firm to be engaged
solely on behalf of the remaining stockholders, to be paid a
reasonable fee for their services by the Corporation upon
receipt of such opinion, to be unaffiliated with such
Interested Stockholder, and, if there are at the time any
Disinterested Directors, to be selected by a majority of the
Disinterested Directors).
10.3 For the purposes of this Article X.
(A) A "person" shall include, without limitation, any
individual, firm, corporation, group (as such term is used
in Regulation 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on
December 31, 1987) or other entity.
(B) "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary or any employee
benefit plan of the Corporation or any Subsidiary) who or
which:
(1) is the beneficial owner, directly or indirectly of more
than 10 percent of the combined voting power of the then
outstanding shares of Voting Stock; or
(2) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly,
of 10 percent or more of the combined voting power of the
then outstanding shares of Voting Stock; or
(3) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were
at any time within the two-year period immediately prior to
the date in question beneficially owned by an Interested
Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of
transactions not involving a public offering within the
meaning of the Securities Act of 1933.
(C) A person shall be a "beneficial owner" of any Voting
Stock if:
(1) such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly, Voting Stock; or
(2) such person or any of its Affiliates or Associates has
(a) the right to acquire (whether of not such right is
exercisable immediately) pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding of
the Voting Stock; or
(3) the Voting Stock is beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(D) For the purposes of determining whether a person is an
Interested Stockholder pursuant to Paragraph 10.3 (B) of
this Article X, the number of shares of Voting Stock deemed
to be outstanding shall include shares deemed owned by such
Interested Stockholder through application of Paragraph 10.3
(C) of this Article X but shall not include any other shares
of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(E) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1987.
(F) "Subsidiary" shall mean any corporation more than 50
percent of whose outstanding equity securities having
ordinary voting power in the election of directors is owned,
directly or indirectly, by the Corporation or by a
Subsidiary or by the Corporation and one or more
Subsidiaries; provided, however, that for the purposes of
the definition of Interested Stockholder set forth in
Paragraph 10.3 (B) of this Article X, the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of Voting Stock is owned, directly or indirectly, by
the Corporation.
(G) "Disinterested Director" shall mean any member of the
Board of Directors of the Corporation who is unaffiliated
with, and not a nominee of, the Interested Stockholder and
was a member of the Board prior to the time that the
Interested Stockholder became an Interested Stockholder, and
any successor of a Disinterested Director who is
unaffiliated with, and not a nominee of, the Interested
Stockholder and who is recommended to succeed a
Disinterested Director by a majority of Disinterested
Directors then on the Board of Directors.
(H) "Fair Market Value" shall mean: (1) in the case of
stock, the highest closing sale price during the 30-day
period commencing on the 40th day preceding the date in
question of a share of such stock on the Composite Tape for
New York Stock Exchange-Listed Stocks, or, if such stock is
not quoted on the New York Stock Exchange-Composite Tape, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sale price or bid quotation
with respect to a share of such stock during the 30-day
period commencing on the 40th day preceding the date in
question on the National Association of Securities Dealers,
Inc. Automated Quotations system or any system then in use,
or if no such quotations are available, the fair market
value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in
good faith; and (2) in the case of property other than cash
or stock the fair market value of such property on the date
in question as determined by a majority of the Disinterested
Directors in good faith.
(I) In the event of any Business Combination in which the
Corporation survives, the phrase "any consideration other
than cash to be received" as used in Paragraphs 10.2 (B)(1)
and (2) of this Article X shall include the shares of Voting
Stock retained by the holders of such shares.
(J) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Combination.
(K) "Determination Date" shall mean the date on which the
Interested Stockholders became an Interested Stockholder.
(L) "Consummation Date" shall mean the date of the
consummation of the Business Combination.
(M) The term "Voting Stock" shall mean all outstanding
shares of capital stock of all classes and series of the
Corporation at the time entitled to vote in the election of
directors of the Corporation, in each case voting together
as a single class.
10.4 A majority of the Disinterested Directors shall have
the power and duty to determine, on the basis of information
known to them after reasonable inquiry, all facts necessary
to determine compliance with this Article X including,
without limitation:
(A) whether a person is an Interested Stockholder;
(B) the number of shares of Voting Stock beneficially owned
by any person;
(C) whether a person is an Affiliate or Associate of
another person;
(D) whether the requirements of Paragraph 2(B) of this
Article X have been met with respect to any Business
Combination;
(E) whether the assets which are the subject of any
Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination
has an aggregate Fair Market Value of $5,000,000 or more;
and
(F) such other matters with respect to which a
determination is required under this Article X.
The good faith determination of a majority of the
Disinterested Directors on such matters shall be conclusive
and binding for all purposes of this Article X.
10.5 Nothing contained in this Article X shall be construed
to relieve any Interested Stockholder from any fiduciary
obligation imposed by law.
10.6 Notwithstanding any other provisions of these By-Laws,
the Articles of Association or of law, the affirmative vote
of the holders of at least 80 percent of the combined voting
power of all of the then outstanding shares of Voting Stock
shall be required to alter, amend or repeal this Article X
or any provision hereof; provided, however, that if there is
an Interested Stockholder on the record date for the meeting
at which such action is submitted to the stockholders for
their consideration, such 80 percent vote must include the
affirmative vote of at least two-thirds (2/3) of the
combined voting power of all of the outstanding shares of
Voting Stock held by stockholders other than the Interested
Stockholder.
ARTICLE XI. (As amended May 3, 1994)
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Section 1. Permissive Indemnification. To the extent
legally permissible, the Company may indemnify any of its
Directors, officers and employees who, as a result of such
position, was or is a party or is threatened to be made a
party to any contemplated, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal against
expenses, actually and reasonably incurred by him or her in
connection with such action, suit or proceeding. The term
Expenses, as used in this Article, includes reasonable
attorney's fees, damages, judgments, fines, amounts paid in
settlement and costs including the costs of investigation
and defense. Such indemnification against Expenses shall be
payable only if (a) the Director, officer or employee acted
in good faith, (b) the Director reasonably believed: (A) in
the case of conduct in the Director's official capacity with
the Company, that the Director's conduct was in its best
interests; and (B) in all other cases, that the Director's
conduct was at least not opposed to its best interests; and
(c) with respect to any proceeding brought by a governmental
entity, the Director had no reasonable cause to believe his
or her conduct was unlawful, and the Director is not finally
found to have engaged in a reckless or intentional unlawful
act. Notwithstanding the foregoing and except as otherwise
provided by law, the Company may not indemnify any Director,
officer, or employee for any Expenses in any action by or in
right of the Company in which such individual is adjudged
liable to the Company.
Any indemnification under this section (unless ordered by a
court) shall be made by the Company only upon a
determination that indemnification of the Director, officer
or employee is proper because he or she has acted in good
faith in conformance with the applicable standard of conduct
as set forth herein. Such determination shall be made (a)
by the Board of Directors by a majority vote of a quorum
consisting of Directors who are not parties to such action,
suit or proceeding or (b) if such a quorum is not
obtainable, by majority vote of a committee duly designated
by the Board of Directors (in which designation Directors
who are parties to the action, suit or proceeding may
participate), consisting solely of two or more Directors not
at the time parties to the action, suit or proceeding; (c)
by written opinion of special legal counsel: (A) selected
by the Board of Directors or its committee in the manner
prescribed in clause (a) or (b); or (B) if a quorum of the
Board of Directors cannot be obtained under clause (a) and a
committee cannot be designated under clause (b), selected by
majority vote of the full Board of Directors (in which
selection Directors who are parties to the action, suit or
proceeding may participate); or (d) by the shareholders, but
shares owned by or voted under the control of Directors who
are at the time parties to the action, suit or proceeding
may not be voted on the determination.
Authorization of indemnification and evaluation as to
reasonableness of Expenses shall be made in the same manner
provided above as the determination that indemnification is
permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and
evaluation as to reasonableness of Expenses shall be made by
those entitled under clause (c) above to select such
counsel.
The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea no
nolo contendere or its equivalent, shall not of itself
create a presumption that the person did not act in good
faith in conformance with the applicable standard of conduct
as set forth above.
Section 2. Mandatory Indemnification. To the extent that a
Director, officer or employee of the Company has been wholly
successful on the merits or otherwise in defense of any
action, suit, proceeding, claim, issue, or matter referred
to in Section 1 of this Article, he or she shall be
indemnified to the extent legally permissible against
Expenses reasonably incurred by him or her in connection
therewith.
Section 3. Right To Rely On Corporate Information. In
discharging his or her duty, any Director, when acting in
good faith in conformance with the applicable standard of
conduct as set forth above, may rely upon information,
opinions, reports, or statements, including financial
statements and other financial data, if prepared or
presented by: (a) one or more officers or employees of the
Company whom the Director reasonably believes to be reliable
and competent in the matters presented; (b) legal counsel,
public accountants, or other persons as to matters the
Director reasonably believes are within the person's
professional or expert competence; or (c) a committee of the
Board of Directors of which the Director is not a member if
the Director reasonably believes the committee merits
confidence.
Section 4. Advance Payment of Expenses. Expenses incurred
by a Director, officer or employee in connection with any of
the matters with respect to which indemnification may be
sought pursuant hereto may be paid from time to time by the
Company in advance of the final disposition of any such
matter if the following conditions are met: (a) the
Director furnishes the Company written affirmation of his or
her good faith belief that he or she has met the standard of
conduct described in Section 1 of this Article; (b) the
Director furnishes the Company a written undertaking,
executed personally or on the Director's behalf, to repay
the advance if it is ultimately determined that the Director
did not meet the standard of conduct; and (c) a
determination is made that the facts then known to those
making the determination would not preclude indemnification
under this subchapter.
Determinations and authorizations of payments under this
Section 4 shall be made in the manner specified in Section 1
of this Article.
The Board of Directors may authorize counsel (which may be
either Company counsel or outside counsel) to represent such
individual in any action, suit or proceeding, whether or not
the Company is a party to such action, suit or proceeding.
Section 5. Procedure For Indemnification. Subject to
compliance with any applicable procedures in Sections 1 or
4, as the case may be, any indemnification of a Director,
officer or employee of the Company or advance of Expenses to
such an individual under the terms of this Article shall be
made promptly. If the Company unreasonably denies a written
request for indemnity or the advance payment of Expenses,
either in whole or in part, or if payment in full pursuant
to such request is not made promptly, the right to
indemnification or advances as granted by this Article shall
be enforceable by such individual in any court of competent
jurisdiction. Such individual's costs and expenses
including reasonable attorney's fees incurred in connection
with successfully establishing his or her right to
indemnification in any such action shall also be indemnified
by the Company.
Section 6. Non-Exclusivity of Indemnification Rights. The
right of indemnification hereby provided shall not be deemed
exclusive of or otherwise affect any other rights to which
any individual seeking indemnification may be entitled by
law, or under any agreement, vote of stockholders or
otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to
be a Director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
Section 7. Other Organizations. The indemnification
provisions of this Article shall extend to any Director,
officer or employee who serves at the Company's request as
director, officer or trustee of another organization,
including, without limitation, an employee benefit plan, in
which the Company has or had an interest as a stockholder,
creditor, sponsor or otherwise. The right to rely on
corporate information conferred in Section 3 of this Article
shall also extend to the records, books of accounts and
reports of any such other organization of which the
individual serves as director, officer or trustee.
Section 8. Survival. The foregoing indemnification
provisions shall be deemed to be a contract between the
Company and each individual who serves in any capacity as a
Director, officer or employee of the Company at any time
while these provisions are in effect. Except as may
otherwise be required as a result of changes in the law
governing indemnification of officers, directors and
employees of Vermont corporations, any repeal or
modification of the foregoing provisions shall not affect
any right or obligation then existing and such "contract
rights" may not be modified retroactively without the
consent of such Director, officer or employee.
ARTICLE XII. (As amended May 3, 1988)
Miscellaneous
Section 1. The funds of the Company shall be deposited to
its credit in such banks or trust companies as the Board of
Directors may, from time to time, designate, and shall be
drawn out only for the purposes of the Company and only upon
checks or drafts signed in such manner as shall be
authorized by the Board of Directors in accordance with the
power vested in them by these By-Laws.
Section 2. No debts shall be contracted, except for current
expenses, unless authorized by the Board of Directors or the
Executive Committee.
Section 3. All dividends shall be payable at such time as
may be fixed by the Board of Directors. Before payment of
any dividend or making any distribution of profits, there
shall be set aside, out of the surplus or net profits of the
Corporation such sum or sums as the Board of Directors, from
time to time, in their absolute discretion, think proper as
a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the Board of
Directors think conducive to the interest of the
Corporation.
Section 4. The first fiscal year of the Corporation shall
be the period commencing September 1, 1929 and ending
December 31, 1930, and thereafter each calendar year,
commencing with the year 1931, shall be the fiscal year of
the Corporation.
ARTICLE XIII
AMENDMENT
Except as set forth in subdivision 21 of the Company's
Articles of Association and in Articles V and X of these By-Laws, these
By-Laws may be altered, amended or repealed at
any annual or special meeting of the stockholders called for
the purpose, of which the notice shall specify the subject
matter of the proposed alteration, amendment or repeal or
the sections to be affected thereby, by vote of the
stockholders, or if there shall be two or more classes or
series of stock entitled to vote on the question, by vote of
each such class or series. These By-Laws may also be
altered, amended or repealed by vote of the majority of the
number of Directors fixed in accordance with the By-Laws at
a meeting called for that purpose of which the notice shall
specify the subject matter of the proposed alteration,
amendment or repeal or the sections to be affected thereby,
except that the Directors shall not take any action which
provides for indemnification of Directors or affects the
powers of Directors or officers to contract with the
Company, nor any action to amend this Article XIII, Sections
2, 3, 4, 5 or 6 of Article V, or Article X, and except that
the Directors shall not take any action unless permitted by
law. Except as set forth in subdivision 21 of the Company's
Articles of Association and in Articles V and X of these By-Laws,
any By-Law so altered, amended or repealed by the
Directors may be further altered or amended or reinstated by
the stockholder in the above manner. (As amended May 6,
1986 and May 3, 1988)
THIRTY-SECOND AGREEMENT AMENDING NEW ENGLAND POWER POOL
AGREEMENT
THIS THIRTY-SECOND AGREEMENT, dated as of the 1st day of
September, 1995, is entered into by the signatory
Participants for the amendment by them of the New England
Power Pool Agreement dated as of September 1, 1971 (the
"NEPOOL Agreement"), as previously amended by twenty-nine
(29) amendments, the most recent of which was dated as of
May 1, 1993; as previously proposed to be amended by a
thirtieth amendment dated as of June 1, 1993 which has been
withdrawn; and as proposed to be amended by a pending
thirty-first amendment dated as of July 1, 1995.
WHEREAS, the NEPOOL Review Committee has been reconstituted,
in response to a general invitation issued in early 1995 by
the NEPOOL Participants, to include representatives of
independent power producers ("IPPs"), power marketers, power
brokers, utility regulators, environmental groups and
others, and the Committee is currently discussing a
restructuring of NEPOOL in light of the emerging changes in
the electric utility industry;
WHEREAS, the NEPOOL Review Committee's January 1995 Phase
One Report concluded as part of the NEPOOL restructuring
that "NEPOOL membership should be open to a broad spectrum
of entities";
WHEREAS, IPPs are permitted to become Participants under
current NEPOOL provisions and the Participants are willing,
consistent with the NEPOOL Review Committee's Phase One
Report, to amend the NEPOOL Agreement also to permit power
marketers and power brokers to become Participants;.
WHEREAS, as an interim step in the restructuring of NEPOOL
the Participants are willing to amend the NEPOOL Agreement
to permit power marketers and power brokers to become
Participants now, even before the completion of the
restructuring of NEPOOL, to facilitate their participation
in bulk power transactions in New England and more directly
in the day-to-day activities of NEPOOL;
WHEREAS, certain New England utilities that have chosen so
far not to become Participants have expressed their interest
in amending language to the NEPOOL Agreement in order to
make membership in NEPOOL more desirable to them;
WHEREAS, the amendments proposed herein do not change the
voting and governance provisions of the NEPOOL Agreement;
WHEREAS, representatives of certain of the IPPs and power
marketers have expressed in NEPOOL Review Committee
discussions (1) the belief that any amendments to the NEPOOL
Agreement designed to effect the restructuring of NEPOOL
should be preceded by an amendment to the NEPOOL voting and
governance structure so that IPPs and power marketers can
participate fully and have a separate vote on all
restructuring matters placed before the NEPOOL Executive
Committee, (2) the concern that the interests of IPPs and
power marketers may not be adequately addressed in the
restructuring discussions in the NEPOOL Executive Committee
during the interim period when the terms of NEPOOL
restructuring are being discussed, and (3) the position that
the issue of whether and, if so, how to amend the definition
of the term "Entity" under Section 15.14 of the NEPOOL
Agreement to include end-users should be addressed and
resolved during the NEPOOL restructuring process;
WHEREAS, during NEPOOL Review Committee discussions, various
NEPOOL Participants have expressed (1) their belief that the
NEPOOL voting and governance structure (a) should be fair,
(b) should take into account the interests of all members
and reflect votes that are appropriately weighted in
relationship to each member's responsibilities and
obligations (i.e. transmission, generation and/or load), and
(c) should minimize the opportunities for gridlock, (2)
their desire to involve substantively the IPPs, power
marketers, power brokers, Federal and state regulators, and
any other interested entities in the restructuring effort,
but not to impede the operations of NEPOOL during the
restructuring process, and (3) the desire first to assure
the opportunity for broader membership by all entities
transacting business in the wholesale bulk power market in
New England before addressing whether and, if so, how to
involve end users in the Pool;
WHEREAS, in order to address the IPPs' and power marketers'
beliefs, concerns, positions, desires, and interests, the
Participants have invited IPPs, power marketers, and power
brokers that elect to become Participants after this Thirty-second Agreement
is effective to select a common
representative to receive notice of all meetings of the
NEPOOL Executive Committee, NEPOOL Operations Committee, and
NEPOOL Policy Planning Committee and to attend those
meetings and act as their common spokesperson at such
meetings;
WHEREAS, those IPPs and power marketers involved in the
NEPOOL Review Committee effort which are listed in
Attachment 1 to this Thirty-Second Agreement have provided
the Participants assurances that these IPPs and power
marketers support or do not oppose acceptance of this
Thirty-Second Agreement by the Federal Energy Regulatory
Commission (the "Commission");
WHEREAS, in reliance on and subject to the assurances of the
IPPs and power marketers described in the preceding
paragraph, the Participants, IPPs and power marketers
participating in the NEPOOL Review Committee effort have
agreed that governance and voting issues relative to IPPs
and power marketers are among the priority issues identified
in the NEPOOL Review Committee's Phase One Report and that
they will continue to use their best efforts to resolve
these issues expeditiously through the NEPOOL Review
Committee; and
WHEREAS, Participants, IPPs and power marketers have also
agreed that the issue of whether and, if so, how to amend
the NEPOOL Agreement to permit membership by those not
eligible for NEPOOL membership after this Thirty-Second
Agreement becomes effective should be addressed before
completion of the NEPOOL restructuring process;
NOW THEREFORE, the signatory Participants hereby agree as
follows:
SECTION 1
AMENDMENTS TO NEPOOL AGREEMENT
1. The definition of "Entity" in Section 15.14 of the NEPOOL
Agreement, as heretofore amended, is amended to read as
follows:
Entity is any person or organization engaged in the electric
utility business (the generation and/or transmission and/or
distribution of electricity for consumption by the public,
or the purchase, as principal or broker, of electric energy
and/or capacity for resale at wholesale), whether the United
States of America or Canada or a state or province or a
political subdivision thereof or a duly established agency
of any of them, a private corporation, a partnership, an
individual, an electric cooperative or any other person or
organization recognized in law as capable of owning property
and contracting with respect thereto. No person or
organization shall be deemed to be an Entity if the
generation, transmission, or distribution of electricity by
such person or organization is primarily conducted to
provide electricity for consumption by such person or
organization or an affiliated person or organization.
2. Section 5.15 of the NEPOOL Agreement, as heretofore
amended, is amended to re-letter paragraph (h) as paragraph
(i) and by inserting the following new paragraph (h) after
present paragraph (g):
(h) The Management Committee shall have the authority, at
the time that it acts on an Entity's application pursuant to
Section 1.2 to become a Participant, to waive, conditionally
or unconditionally, compliance by such Entity with one or
more of the obligations imposed by this Agreement if the
Committee determines that such compliance would be
unnecessary or inappropriate for such Entity and the waiver
for such Entity will not impose an additional burden on
other Participants.
3. Section 5.16 of the NEPOOL Agreement, as heretofore
amended, is hereby amended to read as follows:
Each member of the Management Committee or that member's
designee shall be entitled to attend any meeting of the
Executive Committee, Operations Committee, and Policy
planning Committee and shall have a reasonable opportunity
to express views on any matter to be acted upon at the
meeting.
SECTION II
PARTICIPATION ON NEPOOL COMMITTEES
The Participants that are the signatories to this Thirty-second Agreement
agree that they will cause their
representatives to take action in the NEPOOL Executive
Committee, the NEPOOL Operations Committee and the NEPOOL
Policy Planning Committee to authorize the IPPs, power
marketers and power brokers that become Participants
(collectively, such IPPs, power marketers, and power brokers
are hereinafter referred to as "non-utility Participants")
to designate as a group after this Thirty-Second Agreement
becomes effective, a non-voting representative for each of
the NEPOOL Executive Committee, NEPOOL Operations Committee,
and NEPOOL Policy Planning Committee. The right to designate
such representatives to the NEPOOL Executive Committee,
NEPOOL Operations Committee, and NEPOOL Policy Planning
Committee shall be in addition to, and not in lieu of, such
non-utility Participants' rights under the existing
provisions of the NEPOOL Agreement to be represented by
members on the NEPOOL Operations Committee and NEPOOL Policy
Planning Committee. If the nonutility Participants designate
a representative for the NEPOOL Executive Committee, NEPOOL
Operations Committee or NEPOOL Policy Planning Committee,
that representative shall be treated as if he or she were a
member of that Committee for purposes of notice of and
participation in Committee meetings, but shall not be
entitled to vote, and shall not be deemed a member of the
Committee for purposes of determining the number of votes
required for Committee action.
SECTION III
EFFECTIVENESS OF THE THIRTY-SECOND AGREEMENT
This Thirty-Second Agreement, and the amendments provided
for above, shall become effective on November 15, 1995, or
on such other date as the Federal Energy Regulatory
Commission shall provide that such amendments shall become
effective.
SECTION IV
USAGE OF DEFINED TERMS
The usage in this Thirty-Second Agreement of terms which are
defined in the NEPOOL Agreement shall be deemed to be in
accordance with the definitions thereof in the NEPOOL
Agreement.
SECTION V
COUNTERPARTS
This Thirty-Second Agreement may be executed in any number
of counterparts and each executed counterpart shall have the
same force and effect as an original instrument and as if
all the parties to all the counterparts had signed the same
instrument. Any signature page of this Thirty-Second
Agreement may be detached from any counterpart of this
Thirty-Second Agreement without impairing the legal effect
of any signatures thereof, and may be attached to another
counterpart of this Thirty-Second Agreement identical in
form thereto but having attached to it one or more signature
pages.
IN WITNESS WHEREOF, each of the signatories has caused a
counterpart signature page to be executed by its duly
authorized representative, as of the 1st day of September,
1995.
COUNTERPART SIGNATURE PAGE
TO THIRTY-SECOND AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF SEPTEMBER 1, 1995
The NEPOOL Agreement, being dated as of September 1, 1971,
and being previously amended by twenty-nine (29) amendments
the most recent of which was dated as of May 1, 1995, and as
proposed to be amended by a pending amendment dated as of
July 1, 1995
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
(Participant)
By: /s/ Robert de R. Stein
Name: Robert de R. Stein Title: Senior Vice President
Energy Resources & External Markets Address: 77 Grove
Street, Rutland, VT 05701-3400
APPENDIX 1
The following independent power producers and power
marketers who are participating in the work of the NEPOOL
Review Committee have provided the Participants assurances
that they support or do not oppose acceptance of the
foregoing Agreement by the Federal Energy Regulatory
Commission:
Enron Power Marketing, Inc.
Coastal Electric Services Corp.
North American Energy Conservation, Inc.
KCS Power Marketing, Inc.
Electric Clearing House, Inc.
