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 June 30, 1995
or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-8291
GREEN MOUNTAIN POWER CORPORATION
(Exact name of registrant as specified in its charter)
Vermont 03-0127430
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 Green Mountain Drive
South Burlington, VT 05402
Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (802) 864-5731
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class - Common Stock Outstanding June 30, 1995
$3.33 1/3 Par Value 4,746,452
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Comparative Balance Sheets
(Unaudited)
Part 1 - Item 1
<CAPTION>
June 30 December 31
----------------------------------- ----------------
1995 1994 1994
---------------- ---------------- ----------------
(In thousands) (In thousands)
<S> <C> <C> <C>
ASSETS
ELECTRIC UTILITY
Utility Plant
Utility plant, at original cost.................... $232,919 $221,782 $227,991
Less accumulated depreciation...................... 72,897 67,617 69,246
---------------- ---------------- ----------------
Net utility plant................................ 160,022 154,165 158,745
Property under capital lease....................... 10,278 11,029 10,278
Construction work in progress...................... 7,100 8,425 6,964
---------------- ---------------- ----------------
Total utility plant, net......................... 177,400 173,619 175,987
---------------- ---------------- ----------------
Other Investments
Associated companies, at equity (Note 2)........... 16,408 16,711 16,684
Other investments.................................. 4,146 3,835 4,067
---------------- ---------------- ----------------
Total other investments.......................... 20,554 20,546 20,751
---------------- ---------------- ----------------
Current Assets
Cash............................................... 187 413 2,113
Accounts receivable, customers and others,
less allowance for doubtful accounts............. 12,772 10,871 15,240
Accrued utility revenues (Note 1).................. 4,920 4,939 6,012
Fuel, materials and supplies, at average cost...... 3,493 2,860 3,314
Prepayments........................................ 181 558 1,796
Other.............................................. 207 237 323
---------------- ---------------- ----------------
Total current assets............................. 21,760 19,878 28,798
---------------- ---------------- ----------------
Deferred Charges
Demand side management programs................... 16,128 14,322 16,172
Environmental proceedings costs.................... 7,735 7,345 7,741
Purchased power costs.............................. 3,495 1,911 488
Other.............................................. 11,945 11,255 11,258
---------------- ---------------- ----------------
Total deferred charges........................... 39,303 34,833 35,659
---------------- ---------------- ----------------
NON-UTILITY
Cash and cash equivalents.......................... 900 631 579
Other current assets............................... 6,208 2,778 5,716
Property and equipment............................. 11,469 11,138 11,329
Intangible assets.................................. 2,837 3,247 3,022
Other assets....................................... 15,375 11,622 12,770
---------------- ---------------- ----------------
Total non-utility assets......................... 36,789 29,416 33,416
---------------- ---------------- ----------------
Total Assets........................................... $295,806 $278,292 $294,611
================ ================ ================
CAPITALIZATION AND LIABILITIES
ELECTRIC UTILITY
Capitalization
Common Stock Equity
Common stock,$3.33 1/3 par value,
authorized 10,000,000 shares (issued
4,762,308, 4,595,433 and 4,677,512)........... $15,874 $15,318 $15,592
Additional paid-in capital....................... 62,226 58,625 60,378
Retained earnings................................ 25,584 25,289 25,727
Treasury stock, at cost (15,856 shares).......... (378) (378) (378)
---------------- ---------------- ----------------
Total common stock equity...................... 103,306 98,854 101,319
Redeemable cumulative preferred stock.............. 9,135 9,385 9,135
Long-term debt, less current maturities............ 71,467 78,000 74,967
---------------- ---------------- ----------------
Total capitalization........................... 183,908 186,239 185,421
---------------- ---------------- ----------------
Capital Lease Obligation............................... 10,278 11,029 10,278
---------------- ---------------- ----------------
Current Liabilities
Current maturuties of long-term debt............... 3,500 1,800 4,833
Short-term debt.................................... 23,715 5,415 20,214
Accounts payable, trade, and accrued liabilities... 4,039 6,895 5,489
Accounts payable to associated companies........... 4,777 3,781 4,860
Dividends declared................................. 194 199 194
Customer deposits.................................. 739 1,127 964
Taxes accrued...................................... 320 1,476 1,442
Interest accrued................................... 1,824 1,257 1,953
Deferred revenues (Note 1)......................... 2,157 3,823 --
Other.............................................. 579 498 492
---------------- ---------------- ----------------
Total current liabilities...................... 41,844 26,271 40,441
---------------- ---------------- ----------------
Deferred Credits
Accumulated deferred income taxes.................. 23,626 19,854 22,082
Unamortized investment tax credits................. 5,267 5,542 5,390
Other.............................................. 21,421 21,701 21,962
---------------- ---------------- ----------------
Total deferred credits......................... 50,314 47,097 49,434
---------------- ---------------- ----------------
NON-UTILITY
Current liabilities................................ 606 -- 918
Other liabilities.................................. 8,856 7,656 8,119
---------------- ---------------- ----------------
Total non-utility liabilities.................. 9,462 7,656 9,037
---------------- ---------------- ----------------
Total Capitalization and Liabilities................... $295,806 $278,292 $294,611
================ ================ ================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Comparative Income Statements
(Unaudited)
Part 1 - Item 1
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------- -------------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
(In thousands, except amounts per share)
<S> <C> <C> <C> <C>
Operating Revenues (Note 1)................................... $37,127 $33,603 $77,150 $74,214
------------ ------------ ------------ ------------
Operating Expenses
Power Supply
Vermont Yankee Nuclear Power Corporation ................ 7,229 7,063 14,802 14,442
Company-owned generation................................. 1,216 658 2,031 1,837
Purchases from others.................................... 11,912 11,097 24,302 23,870
Other operating............................................. 4,709 4,681 9,273 9,450
Transmission................................................ 2,563 2,623 4,912 5,201
Maintenance................................................. 912 1,266 2,084 2,512
Depreciation and amortization............................... 3,206 2,244 6,409 4,549
Taxes other than income..................................... 1,565 1,521 3,235 3,247
Income taxes................................................ 1,045 578 2,850 2,341
------------ ------------ ------------ ------------
Total operating expenses................................. 34,357 31,731 69,898 67,449
------------ ------------ ------------ ------------
Operating Income....................................... 2,770 1,872 7,252 6,765
------------ ------------ ------------ ------------
Other Income
Equity in earnings of affiliates and non-utility operations. 944 944 1,540 1,692
Allowance for equity funds used during construction......... 27 122 27 210
Other income and deductions, net............................ 68 45 55 190
------------ ------------ ------------ ------------
Total other income........................................ 1,039 1,111 1,622 2,092
------------ ------------ ------------ ------------
Income before interest charges.......................... 3,809 2,983 8,874 8,857
------------ ------------ ------------ ------------
Interest Charges
Long-term debt.............................................. 1,657 1,739 3,343 3,481
Other....................................................... 333 163 650 393
Allowance for borrowed funds used during construction...... (173) (156) (338) (294)
------------ ------------ ------------ ------------
Total interest charges.................................... 1,817 1,746 3,655 3,580
------------ ------------ ------------ ------------
Net Income.................................................... 1,992 1,237 5,219 5,277
Dividends on preferred stock.................................. 194 199 388 398
------------ ------------ ------------ ------------
Net Income Applicable to Common Stock......................... $1,798 $1,038 $4,831 $4,879
============ ============ ============ ============
Common Stock Data
Earnings per share.......................................... $0.38 $0.23 $1.03 $1.07
Cash dividends declared per share........................... $0.53 $0.53 $1.06 $1.06
Weighted average shares outstanding......................... 4,721 4,564 4,701 4,550
Consolidated Comparative Statements of Retained Earnings
(Unaudited)
Balance - beginning of period................................. $26,283 $26,668 $25,727 $25,229
Net Income.................................................... 1,992 1,237 5,219 5,277
------------ ------------ ------------ ------------
28,275 27,905 30,946 30,506
------------ ------------ ------------ ------------
Cash Dividends - redeemable cumulative preferred stock........ 194 199 388 398
- common stock................................. 2,497 2,417 4,974 4,819
------------ ------------ ------------ ------------
2,691 2,616 5,362 5,217
------------ ------------ ------------ ------------
Balance - end of period....................................... $25,584 $25,289 $25,584 $25,289
============ ============ ============ ============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Part 1 - Item 1
<CAPTION>
Six Months Ended
June 30
---------------------------------------
1995 1994
----------------- -----------------
(In thousands)
<S> <C> <C>
Operating Activities:
Net Income........................................................... $5,219 $5,277
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................... 6,409 4,549
Dividends from associated companies less equity income........... 276 175
Allowance for funds used during construction..................... (365) (504)
Amortization of purchased power costs............................ 2,531 2,290
Deferred income taxes............................................ 1,764 (915)
Deferred revenues (Note 1)....................................... 2,158 3,823
Amortization of gain on sale of property......................... (26) (26)
Deferred purchased power costs................................... (5,538) (66)
Amortization of investment tax credits........................... (123) (130)
Environmental proceedings costs, net............................. (456) 7,960
Changes in:
Accounts receivable............................................ 2,468 3,942
Accrued utility revenues....................................... 1,092 1,199
Fuel, materials and supplies................................... (180) (19)
Prepayments and other current assets........................... 1,237 2,290
Accounts payable............................................... (1,533) (2,000)
Taxes accrued.................................................. (1,122) 1,078
Interest accrued............................................... (129) (813)
Other current liabilities...................................... (450) (821)
Other............................................................ (2,861) 504
----------------- -----------------
Net cash provided by operating activities.......................... 10,371 27,793
----------------- -----------------
Investing Activities:
Construction expenditures.......................................... (5,950) (6,194)
Conservation expenditures.......................................... (1,534) (1,971)
Investment in non-utility property................................. 72 162
----------------- -----------------
Net cash used in investing activities............................ (7,412) (8,003)
----------------- -----------------
Financing Activities:
Issuance of common stock........................................... 2,130 1,645
Short-term debt, net............................................... 3,500 (13,601)
Cash dividends..................................................... (5,361) (5,217)
Reduction in long-term debt........................................ (4,833) (1,800)
----------------- -----------------
Net cash used in financing activities............................ (4,564) (18,973)
----------------- -----------------
Net (decrease) increase in cash and cash equivalents............... (1,605) 817
Cash and cash equivalents at beginning of period................... 2,692 227
----------------- -----------------
Cash and Cash Equivalents at End of Period............................. $1,087 $1,044
================= =================
Supplemental Disclosure of Cash Flow Information:
Cash paid year-to-date:
Interest (net of amounts capitalized)........................... $4,053 $4,626
Income taxes.................................................... 2,040 1,880
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
GREEN MOUNTAIN POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
Part 1 -- ITEM 1
1. SIGNIFICANT ACCOUNTING POLICIES
Pursuant to an order of the Vermont Public Service Board (VPSB), the
Company's rate structure is seasonally differentiated, with higher rates
billed during the four winter months and lower rates billed during the
remaining eight months of the year. In order to match revenues with
related costs more accurately on an interim basis, the Company recognizes
revenue in a manner that seeks to eliminate the impact of such seasonally
differentiated rates. At June 30, 1995 and 1994, the Company had recorded
deferred revenues of $2.1 million and $3.8 million, respectively, in
accordance with this policy. These deferred revenues are recognized in
subsequent interim periods.
Included in equity in earnings of affiliates and non-utility operations in
the Other Income section of the Consolidated Comparative Income Statements
are the results of operations of the Company's rental water heater
program, which is not regulated by the VPSB, and four of the Company's
wholly-owned subsidiaries, Green Mountain Propane Gas Company, Mountain
Energy, Inc., GMP Real Estate Corporation, and Lease-Elec, Inc. (also
unregulated). Summarized financial information for the rental water
heater program and such wholly-owned subsidiaries is as follows:
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
(In Thousands) (In Thousands)
Revenue . . . . . . . . . $2,621 $2,787 $5,625 $6,621
Expenses . . . . . . . . . 2,201 2,360 5,084 5,958
------ ------ ------ ------
Net Income . . . . . . . $ 420 $ 427 $ 541 $ 663
====== ====== ====== ======
2. INVESTMENT IN ASSOCIATED COMPANIES
The Company accounts for its investment in the companies listed below
using the equity method. Summarized financial information is as follows:
Three Months Ended Six Months Ended
June 30 June 30
------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
(In Thousands)
Vermont Yankee Nuclear Power Corporation
Gross Revenue . . . . . $47,043 $37,093 $98,418 $76,262
Net Income Applicable
to Common Stock . . . 1,716 1,595 3,474 3,278
Company's Equity in
Net Income . . . . . 307 280 588 587
Three Months Ended Six Months Ended
June 30 June 30
-------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
(In Thousands)
Vermont Electric Power Company, Inc.
Gross Revenue . . . . . $12,171 $10,782 $24,832 $23,046
Net Income
Before Dividends . . 315 370 648 684
Company's Equity in
Net Income (Includes
preferred equity) . . 93 114 192 199
3. ENVIRONMENTAL MATTERS
In 1982, the United States Environmental Protection Agency (EPA) notified
the Company that the EPA, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), was considering
spending public funds to investigate and take corrective action involving
claimed releases of allegedly hazardous substances at a site identified as
the Pine Street Marsh in Burlington, Vermont. On part of this site was
located a manufactured-gas facility owned and operated by a number of
separate enterprises, including the Company, from the late 19th century to
1967. In its notice, the EPA stated that the Company may be a
"potentially responsible party" (PRP) under CERCLA from which
reimbursement of costs of investigation and of corrective action may be
sought. On February 23, 1988, the Company received a Special Notice
letter from the EPA stating that the letter constituted a formal demand
for reimbursement of costs, including interest thereon, that were incurred
and were expected to be incurred in response to the environmental problems
at the site.
On December 5, 1988, the EPA brought suit against the Company, New England
Electric System, and Vermont Gas Systems, Inc. in the United States
District Court for the District of Vermont seeking reimbursement for costs
it incurred in conducting activities in 1985 to remove allegedly hazardous
substances from the site, and requested a declaratory judgment that the
Company and the other defendants are liable for all costs that have been
incurred since the removal and that continue to be incurred in responding
to claims of releases or threatened releases from the Maltex Pond Area --
the portion of the site where the removal action occurred. The complaint
specifically alleged that the EPA expended at least $741,000 during the
1985 removal action and sought interest on this amount from the date the
funds were expended and costs of litigation, including attorneys' fees.
The Company entered a cross-claim against New England Electric System and
third-party claims against UGI Corporation, Southern Union Corporation,
the State of Vermont, and an individual property owner at the site for
recovery of its response costs and for contribution. Fourth-party
defendants subsequently were joined.
In July 1990, the Company and other parties signed a proposed Consent
Decree settling the removal action litigation. All 14 settling defendants
contributed to the aggregate settlement amount of $945,000. Individual
contributions were treated as confidential under the proposed Consent
Decree. On December 26, 1990, upon the unopposed motion of the United
States, the Consent Decree was entered by the Court.
During the summer and fall of 1989, the EPA conducted the initial phase of
the Remedial Investigation (RI) and commenced the Feasibility Study (FS)
relating to the site. In the fall of 1990 and in 1991, the EPA conducted
a second phase of RI work and studied the treatability of soils and
groundwater at the site. In the fall of 1991, the EPA responded favorably
to a request from the Company and other PRPs to participate in informal
discussions on the EPA's ongoing investigation and evaluation of the site,
and invited the Company and other interested parties to share technical
information and resources with the EPA that might assist it in evaluating
remedial options.
On November 6, 1992, the EPA released its final RI/FS and announced a
proposed remedy with an estimated total cost of approximately
$49.5 million, including 30 years' operation and maintenance costs, with a
net present value of approximately $26.4 million. The EPA's preferred
remedy called for construction of a Containment/Disposal Facility (CDF)
over a portion of the site. The CDF would have consisted of subsurface
vertical barriers and a low permeability cap, with collection trenches and
hydraulic control system to capture groundwater and prevent its migration
outside of the CDF. Collected groundwater would have been treated and
discharged or stored and disposed of off-site. The proposed remedy also
would have required construction of new wetlands to replace those that
would be destroyed by construction of the CDF and a long-term monitoring
program.
In May 1993, the PRP group in which the Company participated submitted
extensive comments to the EPA opposing the proposed remedy. In response
to an earlier request from the EPA, the PRP group also submitted a
detailed analysis of an alternative remedy anticipated to cost
approximately $20 million. In early June 1993, in response to
overwhelming negative comment, the EPA withdrew its proposed remedy and
announced that it would work with all interested parties in developing a
new proposal. Since then, the EPA has established a coordinating council,
with representatives of PRPs, environmental groups, and government
agencies, and presided over by a neutral facilitator. The council is
charged with determining what additional studies may be appropriate for
the site and also is planning to eventually address additional response
activities.
In July 1994, the Company, New England Electric System (NEES), and Vermont
Gas Systems, Inc. (VGS), entered into an Administrative Order by Consent
with the EPA, pursuant to which these PRPs are conducting certain
additional studies that have been agreed to by the coordinating council.
These studies constitute the first phase of action the council has decided
on to fill data gaps at the site. A second phase, including tasks carried
over from the first phase, additional field studies and preparation of an
addendum feasibility study is expected to be performed during 1995 by the
same parties under a second Order. The EPA has not required reimbursement
for its past RI/FS study costs as a condition to allowing the PRPs to
conduct these additional studies. The EPA has previously advised the
Company that ultimately it will seek to hold the Company and the PRPs
liable for such costs.
On December 1, 1994, the Company, NEES and VGS entered into a confidential
agreement with the State, the City of Burlington and nearly all other
landowner PRPs under which the liability of those landowner PRPs for
future Superfund response costs would be limited and specified. On
December 1, 1994, the Company entered into a confidential agreement with
VGS compromising contribution and cost recovery claims of each party and
contractual indemnity claims of the Company arising from the 1964 sale of
the manufactured gas plant to VGS, and also entered into a confidential
agreement with NEES for funding of work under the Order.
In December 1991, the Company brought suit against several previous
insurers seeking recovery of unrecovered past costs and indemnity against
future liabilities associated with environmental problems at the site.
Discovery in the case is largely complete, with the exception of expert
discovery which was stayed by the magistrate pending the resolution of
Summary Judgment Motions filed by the Company. In August 1994, the
Magistrate granted the Company's Motion for Summary Judgment with respect
to defense costs against one defendant and denied it against another
defendant. The United States District Judge affirmed those orders on
September 30, 1994.
The Company has reached confidential settlements with two of the
defendants in its insurance litigation. One of these defendants provided
the Company with comprehensive general liability insurance between 1976
and 1982, and with environmental impairment liability insurance from 1981
to 1984. These policies were in place in 1982 when the EPA first notified
the Company that it might be a potentially responsible party at the Pine
Street Marsh site. The other defendant provided the Company with second
layer excess liability coverage for a seven-month period in 1976.
The Company has deferred amounts received from third parties pending
resolution of the Company's ultimate liability with respect to the site
and rate recognition of that liability. The Company is unable to predict
at this time the magnitude of any liability resulting from potential
claims for the costs of the RI/FS or the performance of any remedial
action, or the likely disposition or magnitude of claims the Company may
have against others, including its insurers, except to the extent
described above.
Through rate cases filed in 1991 and 1993, the Company has sought and
received recovery for ongoing expenses associated with the Pine Street
Marsh site. Specifically, the Company proposed rate recognition of its
unrecovered expenditures between January 1991 and July 31, 1993 (in the
total of approximately $4.6 million) for technical consultants and legal
assistance in connection with the EPA's enforcement actions at the site
and insurance litigation. While reserving the right to argue in the
future about the appropriateness of rate recovery for Pine Street Marsh
related costs, the Company and the Vermont Department of Public Service
(the Department) reached agreements in both cases that the full amount of
Pine Street Marsh costs reflected in those rate cases should be recovered
in rates. The Company's rates approved by the VPSB on April 2, 1992 and
on May 13, 1994 reflected the Pine Street Marsh related expenditures
referred to above.
In a rate case filed on September 26, 1994, the Company sought recovery in
rates of approximately $2.7 million in expenses associated with the Pine
Street site. This amount represented the Company's unrecovered
expenditures between August 1993 and June 1994 for technical consultants
and legal assistance in connection with EPA's enforcement action at the
site and insurance litigation. While reserving the right to argue in the
future about the appropriateness of rate recovery for Pine Street related
costs (and whether recovery or non-recovery of past costs and any
insurance proceeds is relevant to such issue), the parties to the case
have reached agreement that the full amount of Pine Street costs reflected
in the Company's 1994 rate case should be recovered in rates. This
agreement was approved by the VPSB in an order issued June 9, 1995.
Management expects to seek and (assuming treatment consistent with the
previous regulatory treatment set forth above) receive ratemaking
treatment for unreimbursed costs incurred beyond the amounts for which
ratemaking treatment has been received. As of June 30, 1995, such amounts
are approximately $1,316,000.
4. 1994 RETAIL RATE CASE
On September 26, 1994, the Company filed a request with the VPSB to
increase retail rates by 13.9 percent. The increase is needed primarily
to cover the rising cost of existing power sources, the cost of new power
sources the Company has secured to replace power supply that will be lost
in the near future, and the cost of energy efficiency programs the Company
has implemented for its customers. The Company, the Department and the
other parties reached a settlement agreement providing for a 9.25 percent
retail rate increase effective June 15, 1995, and a target return on
equity for utility operations of 11.25 percent. The agreement was
approved by the VPSB on June 9, 1995.
5. 1993 RETAIL RATE CASE
On October 1, 1993, the Company filed a request with the VPSB to increase
retail rates by 8.6 percent. The increase was needed primarily to cover
the cost of buying power from independent power producers, the cost of
energy conservation programs, the cost of plant additions made in the past
two years, and costs incurred in 1992 and 1993 associated with the
Company's response to the EPA's RI/FS and proposed remedy at the Pine
Street Marsh site and with the Company's litigation against its previous
insurers seeking recovery of past costs incurred and indemnity against
future liabilities in connection with the site. On January 28, 1994, the
Company and the other parties in the proceeding reached a settlement
agreement providing for a 2.9 percent retail rate increase effective June
15, 1994, and a target return on equity for utility operations of
10.5 percent. The settlement agreement also provided for the Company's
recovery in rates of $4.2 million in costs associated with the Pine Street
Marsh site, as described herein above. The agreement was approved by the
VPSB on May 13, 1994.
6. 1991 RETAIL RATE CASE
On July 19, 1991, the Company filed a request with the VPSB to increase
retail rates by 9.96 percent to cover power supply cost increases expected
in 1992, the costs of upgrading and maintaining the Company's generation,
transmission and distribution facilities; expenditures associated with the
Company's conservation programs; and higher employee pension and health
care costs. In orders dated April 2, 1992 and May 21, 1992, the VPSB
approved an increase of 5.6 percent, or approximately $6.6 million,
effective April 2, 1992.
The Department appealed the VPSB orders challenging, among other rulings,
the VPSB's acceptance of the Company's method of treating accumulated
depreciation and certain Vermont Yankee-related power costs. The Company
filed a cross-appeal contending, among other things, that the VPSB had
erred in reducing ratebase relating to certain demand-side management
(DSM) program cost projections that had been made in the Company's prior
rate case.
On April 22, 1994 the Vermont Supreme Court affirmed in part and reversed
in part the VPSB orders. The Court overturned the VPSB's decision
disallowing certain DSM costs. The impact of this portion of the Court's
ruling resulted in the Company's other income since April 1992 being
increased by $162,000. On the other hand, the Court overturned the VPSB
decision in the Company's favor on an issue involving the method of
treating accumulated depreciation, and on the inclusion of one item of
Vermont Yankee's capital projections in power costs. The overall impact
of the Court's ruling resulted in a reduction of $840,000 in the Company's
revenues.
7. RECLASSIFICATION
Certain line items on the prior year balance sheet have been reclassified
for consistent presentation with the current year.
The Consolidated Financial Statements are unaudited and, in
the opinion of the Company, reflect the adjustments
necessary to a fair statement of the results of the interim
periods. All such adjustments, except as specifically
noted in the Consolidated Financial Statements, are of a
normal, recurring nature.
GREEN MOUNTAIN POWER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1995
Part 1 -- ITEM 2
RESULTS OF OPERATIONS
EARNINGS SUMMARY
Earnings per share of common stock in the second quarter of 1995 were
$0.38 compared to $0.23 in the second quarter of 1994. The increase in
earnings was primarily due to an increase in operating revenues resulting
from a 2.9 percent retail rate increase that went into effect June 15,
1994, an increase in electricity consumption by the Company's industrial
customers, and unusually warm weather during the month of June.
For the six months ended June 30, 1995 and 1994, earnings were $1.03 and
$1.07, respectively.
OPERATING REVENUES AND MWH SALES
Operating revenues, megawatthour (MWh) sales and average number of
customers are summarized as follows:
Three Months Ended Six Months Ended
June 30 June 30
-------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
Operating Revenues
(In thousands)
Retail . . . . . . $ 31,729 $ 30,241 $ 67,294 $ 66,133
Sales for Resale . 4,654 2,661 8,018 6,270
Other . . . . . . 744 701 1,838 1,811
--------- --------- --------- ---------
Total Operating
Revenues . . . . $ 37,127 $ 33,603 $ 77,150 $ 74,214
========= ========= ========= =========
MWh Sales
Retail . . . . . . 398,606 388,882 858,943 866,051
Sales for Resale . 162,383 66,537 253,766 166,098
------- ------- --------- ---------
Total MWh Sales . 560,989 455,419 1,112,709 1,032,149
======= ======= ========= =========
Average Number of Customers
Residential . . . 69,540 68,620 69,503 68,599
Commercial &
Industrial . . . 11,722 11,630 11,696 11,624
Other . . . . . . . 78 74 77 74
------ ------ ------ ------
Total Customers . . 81,340 80,324 81,276 80,297
====== ====== ====== ======
Total operating revenues in the second quarter of 1995 increased
10.5 percent over the same period in 1994. Retail revenues increased
4.9 percent in the second quarter of 1995 over the same period in 1994
primarily due to a 2.9 percent retail rate increase that went into effect
June 15, 1994, an increase in electricity consumption by the Company's
industrial customers, and unusually warm weather during the month of June.
Wholesale revenues increased 74.9 percent in the second quarter of 1995
over the same period in 1994 primarily due to regional market conditions
that allowed the Company to buy significant amounts of electricity and to
resell that electricity to other utilities at prices slightly higher than
the purchase price.
For the six months ended June 30, 1995, total operating revenues increased
4.0 percent over the same period in 1994. Retail revenues increased
1.8 percent over the same period in 1994 primarily due to a 2.9 percent
retail rate increase that went into effect June 15, 1994, and an increase
in electricity consumption by the Company's industrial customers.
Wholesale revenues increased 27.9 percent over the same period in 1994
primarily due to the Company's purchases and sales in the wholesale market
described above.
OPERATING EXPENSES
Power supply expenses increased 8.2 percent in the second quarter of 1995
over the same period in 1994 as the Company produced and purchased
additional power to serve customer needs. Power supply expenses increased
2.5 percent for the six months ended June 30, 1995 over the same period in
1994 for the reason described above.
Transmission expenses decreased 2.3 percent in the second quarter of 1995
compared to the same period in 1994 primarily due to cost reduction
measures implemented by VELCO. Transmission expenses decreased
5.6 percent for the six months ended June 30, 1995 compared to the same
period in 1994 for the same reason.
Other operating expenses were virtually unchanged in the second quarter of
1995 compared to the same period in 1994. Other operating expenses
decreased 1.9 percent for the six months ended June 30, 1995 compared to
the same period in 1994 primarily due to cost containment measures
implemented by the Company.
Maintenance expenses decreased 28.0 percent in the second quarter of 1995
compared to the same period in 1994 primarily due to cost containment
measures implemented by the Company. Maintenance expenses decreased
17.1 percent for the six months ended June 30, 1995 compared to the same
period in 1994 for the same reason.
Depreciation and amortization expenses increased 42.9 percent in the
second quarter of 1995 over the same period in 1994 primarily due to the
amortization of expenditures related to energy conservation programs and
the Pine Street Marsh environmental matter and insurance litigation. (See
Note 3 of Notes to Consolidated Financial Statements.) Depreciation and
amortization expenses increased 40.9 percent for the six months ended June
30, 1995 over the same period in 1994 for the same reasons.
Taxes other than income taxes increased 2.9 percent in the second quarter
of 1995 over the same period in 1994, primarily due to an increase in
gross revenue taxes. Taxes other than income taxes were virtually
unchanged for the six months ended June 30, 1995 compared to the same
period in 1994.
INCOME TAXES
Income taxes were higher in the second quarter of 1995 compared to the
same period in 1994 primarily due to an increase in taxable income.
Income taxes were higher for the six months ended June 30, 1995 compared
to the same period in 1994 for the same reason.
OTHER INCOME
Other income decreased 6.5 percent in the second quarter of 1995 compared
to the same period in 1994 primarily due to a decrease in the allowance
for equity funds used during construction resulting from lower
construction work in progress balances. Other income decreased
22.5 percent for the six months ended June 30, 1995, compared to the same
period in 1994 primarily due to a $340,000 decrease in earnings
experienced by Green Mountain Propane Gas Company, the Company's wholly-
owned propane subsidiary, and a decrease in the allowance for equity funds
used during construction resulting from lower construction work in
progress balances. Additionally, other income for the six months ended
June 30, 1994 benefited from a one-time increase of $162,000 resulting
from a Vermont Supreme Court ruling overturning a VPSB decision
disallowing certain DSM costs. (See Note 6 of Notes to Consolidated
Financial Statements.)
INTEREST CHARGES
Interest charges increased 4.1 percent in the second quarter of 1995 over
the same period in 1994 primarily due to an increase in short-term debt
outstanding during the period. Interest charges increased 2.1 percent for
the six months ended June 30, 1995 over the same period in 1994 for the
same reason.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1995, construction and conservation
expenditures totaled $7.5 million. Such expenditures in 1995 are expected
to be approximately $23.5 million, principally for expansion and
improvements of the Company's transmission and distribution plant and for
conservation measures.
The Company anticipates issuing approximately $10 million to $15 million
of common stock and $10 million to $15 million of first mortgage bonds in
1995. The proceeds will be used to finance capital projects and to retire
short-term debt.
GREEN MOUNTAIN POWER CORPORATION
June 30, 1995
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
See Notes 3, 4, 5 and 6 of Notes to Consolidated Financial
Statements
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Annual Shareholder's Meeting held May 18, 1995,
shareholders adopted an amendment to Company's By-laws providing
for the division of the Board of Directors into three classes
wherein the terms of office would result in the election of one-
third of the Directors each year. Shareholders elected the
nominees listed below as Directors of the Company and they
adopted the Compensation Program for Officers and Key Management
Personnel. The voting results and a brief description of each
of these matters are set forth below.
Amendment to By-Laws
An amendment to the By-laws providing for the division of the
Board of Directors into three classes, as nearly equal in number
as possible and providing that Directors serve for three years,
with one class being elected each year, was approved with
56.9 percent of the outstanding shares voting in favor of the
proposal and 19.6 percent voting against or abstaining.
Total Votes For: 2,662,148
Total Votes Against: 852,197
Abstentions: 63,976
Broker Non-Votes: 529,642
Election of Directors
Shareholders elected the nominees for Director as follows:
Total Votes Total Votes
Nominee FOR WITHHELD
Class I (term expires 1996)
William H. Bruett 3,901,882 206,081
Richard I. Fricke 3,887,714 220,249
Martin L. Johnson 3,894,877 213,086
Thomas P. Salmon 3,894,135 213,828
Class II (term expires 1997)
Robert E. Boardman 3,898,763 209,220
Merrill O. Burns 3,904,755 203,208
Douglas G. Hyde 3,903,322 204,641
Ruth W. Page 3,879,689 228,274
Class III (term expires 1998)
Nordahl L. Brue 3,902,884 205,079
Lorraine E. Chickering 3,887,479 220,484
John V. Cleary 3,899,851 208,112
Euclid A. Irving 3,888,256 219,707
Compensation Program for Officers and Key Management Personnel
The Compensation Program for Officers and Certain Key
Management Personnel (the Program) was adopted by the Board of
Directors to ensure that total compensation, composed of base
and variable compensation components, is competitive in the
marketplace and promotes the Company's strategic objectives.
The Program and the establishment of a reserve of 50,000 shares
of the Common Stock of Company for issuance to participants in
the Program under specific criteria described in the Program,
was approved with 74.4 percent of the outstanding shares voting
in favor of the proposal and 13.5 percent voting against or
abstaining.
Total Votes For: 3,477,675
Total Votes Against: 418,666
Abstentions: 211,622
ITEM 5. Other Information
NONE
ITEM 6. (a) EXHIBITS
12 Computation of Ratio of Earnings to
Fixed Charges
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
Form 8-K was not required to be filed
during the current quarter
GREEN MOUNTAIN POWER CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GREEN MOUNTAIN POWER CORPORATION
(Registrant)
Date: August 11, 1995 /s/ C. L. Dutton
C. L. Dutton, Vice President, Chief
Financial Officer and Treasurer
Date: August 11, 1995 /s/ G. J. Purcell
G. J. Purcell, Controller
<TABLE>
Exhibit 12
Green Mountain Power Corporation
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
Year Ended December 31,
Three Months Twelve Months ---------------------------------------------
Ended June 30, 1995 1994 1993 1992 1991 1990
-------------------------------------- ---------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net earnings 2,143 11,123 11,052 10,764 12,296 10,260 9,090
Income taxes 1,264 6,378 5,917 5,922 6,451 5,795 4,691
Fixed charges 2,520 9,922 9,777 9,370 9,332 9,303 9,373
-------------------------------------- ---------------------------------------------
Total earnings 5,927 27,423 26,746 26,056 28,079 25,358 23,154
====================================== =============================================
Fixed Charges:
Interest 2,092 8,200 8,043 7,590 7,518 7,517 7,600
Amortization of debt premium and discount 35 147 138 102 85 48 44
Interest portion of rental payments 393 1,575 1,596 1,678 1,729 1,738 1,729
-------------------------------------- ---------------------------------------------
Total fixed charges 2,520 9,922 9,777 9,370 9,332 9,303 9,373
====================================== =============================================
Ratio of earnings to fixed charges 2.35 2.76 2.74 2.78 3.01 2.73 2.47
====================================== =============================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of June 30, 1995 and the related Statements
of Income and Cash Flows for the six months ended June 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 177,400
<OTHER-PROPERTY-AND-INVEST> 20,554
<TOTAL-CURRENT-ASSETS> 21,760
<TOTAL-DEFERRED-CHARGES> 39,303
<OTHER-ASSETS> 36,789
<TOTAL-ASSETS> 295,806
<COMMON> 15,874
<CAPITAL-SURPLUS-PAID-IN> 61,848
<RETAINED-EARNINGS> 25,584
<TOTAL-COMMON-STOCKHOLDERS-EQ> 103,306
8,280
855
<LONG-TERM-DEBT-NET> 71,467
<SHORT-TERM-NOTES> 23,715
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,500
0
<CAPITAL-LEASE-OBLIGATIONS> 10,278
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 74,405
<TOT-CAPITALIZATION-AND-LIAB> 295,806
<GROSS-OPERATING-REVENUE> 77,150
<INCOME-TAX-EXPENSE> 2,850
<OTHER-OPERATING-EXPENSES> 67,048
<TOTAL-OPERATING-EXPENSES> 69,898
<OPERATING-INCOME-LOSS> 7,252
<OTHER-INCOME-NET> 1,622
<INCOME-BEFORE-INTEREST-EXPEN> 8,874
<TOTAL-INTEREST-EXPENSE> 3,655
<NET-INCOME> 5,219
388
<EARNINGS-AVAILABLE-FOR-COMM> 4,831
<COMMON-STOCK-DIVIDENDS> 4,974
<TOTAL-INTEREST-ON-BONDS> 3,343
<CASH-FLOW-OPERATIONS> 10,371
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
