SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 27,1998
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
(Exact name of registrant as specified in its charter)
Vermont 1-8222 03-0111290
(State of other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
77 Grove Street, Rutland, Vermont 05701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 802-773-2711
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Vermont Retail Rate Settlement:
On June 12, 1998, Central Vermont Public Service Corporation
(Company) filed with the Vermont Public Service Board (PSB) for a
10.7% or $24.7 million on an annualized basis retail rate
increase to become effective March 1, 1999. On October 27, 1998
the Company reached an agreement with the Vermont Department of
Public Service (DPS) regarding this rate increase request.
The agreement, if approved by the PSB, provides for a
temporary rate increase in the Company's Vermont retail rates of
4.7% or $10.9 million on an annualized basis beginning with
service rendered January 1, 1999. The temporary rate increase is
subject to adjustment upon future resolution of the Hydro-Quebec
Contract issues presently before the Vermont Supreme Court (VSC).
The agreement incorporates a disallowance of approximately
$7.4 million for the Company's purchased power costs under the
Hydro-Quebec Contract while the VSC reviews the PSB denial of the
Company's claim that the PSB is precluded from again trying the
Company on certain Hydro-Quebec Contract issues. Upon approval
of the agreement by the PSB, the Company will accrue under
Statement of Financial Accounting Standards (SFAS) No. 5,
"Accounting for Contingencies," approximately $7.4 million on a
pre-tax basis for purchased power expense, representing the
Company's estimated loss on the Hydro-Quebec power contract for
the twelve months following December 31, 1998. The Company
anticipates the PSB's decision on the rate increase agreement
during the fourth quarter of 1998 and resolution of the Hydro-Quebec
Contract issues by the end of 1999. In addition, the
agreement reflects an elimination of $3.8 million in
non-Hydro-Quebec costs.
Historically, the Company has prepared its financial
statements in accordance with SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation," as amended. In order
for the Company to report under SFAS No. 71, the Company's rates
must be designed to recover its costs of providing service, and
the Company must be able to collect those rates from customers.
If rate recovery of these costs becomes unlikely or uncertain,
whether due to competition or regulatory action, these accounting
standards may no longer apply to the Company's regulated
operations. In the event the Company determines that it no
longer meets the criteria for applying SFAS No. 71, the
accounting impact would be an extraordinary non-cash charge to
operations of an amount that would be material. Based on a
current evaluation of the various factors and conditions that are
expected to impact future cost recovery, including the agreement
discussed above, management believes that its regulatory assets
are probable of future recovery in the State of Vermont for the
Company's retail business.
Change in Board of Directors:
In October 1998, Delano E. Lewis notified the Company that
he would be unable to continue as a member of the Company's Board
of Directors. Mr. Lewis, who also is leaving his position as
president and chief executive officer of National Public Radio,
is relocating to the Southwest and has found it necessary to
reduce the scope of his professional commitments. Janice L.
Scites, who is currently an Advisory Director of the Company, was
appointed by the Board of Directors to fill this vacancy.
Revolving Credit and Competitive Advance Facility:
The Company has a $50.0 million revolving credit facility
with a group of banks which matures on June 1, 1999. No
borrowings were outstanding at September 30, 1998 but borrowings
are expected to be $25.0 million as of June 1, 1999 as a result
of scheduled first mortgage bond maturities. In addition, the
Company must roll over an aggregate of $16.3 million of letters
of credit between May 1999 and December 1999. The Company's
ability to extend or replace the maturing $50.0 million revolving
credit facility and roll over the $16.3 million of maturing
letters of credit will be dependent in large part on a positive
outcome of the pending Hydro-Quebec matter at the VSC.
This document contains statements that are forward looking.
These statements are based on current expectations that are
subject to risks and uncertainties. Actual results will depend,
among other things, upon the actions of regulators as well as
litigation related thereto. The Company cannot predict the
outcome of any of these proceedings.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
BY James M. Pennington
James M. Pennington, Vice President and
Controller and Principal Accounting Officer
November 3, 1998
