SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission file number 1-8291
GREEN MOUNTAIN POWER CORPORATION
(Exact name of registrant as specified in its charter)
Vermont 03-0127430
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 Green Mountain Drive
South Burlington, VT 05402
Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (802) 864-5731
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class - Common Stock Outstanding March 31, 1996
$3.33 1/3 Par Value 4,881,356
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Comparative Balance Sheets
(Unaudited)
Part 1 - Item 1
<CAPTION>
March 31 December 31
----------------------------------- ----------------
1996 1995 1995
---------------- ---------------- ----------------
(In thousands) (In thousands)
ASSETS
ELECTRIC UTILITY
<S> <C> <C> <C>
Utility Plant
Utility plant, at original cost.................... $240,298 $229,765 $239,291
Less accumulated depreciation...................... 78,085 71,224 75,797
---------------- ---------------- ----------------
Net utility plant................................ 162,213 158,541 163,494
Property under capital lease....................... 9,778 10,278 9,778
Construction work in progress...................... 10,041 7,405 8,727
---------------- ---------------- ----------------
Total utility plant, net......................... 182,032 176,224 181,999
---------------- ---------------- ----------------
Other Investments
Associated companies, at equity (Note 2)........... 16,052 16,591 16,024
Other investments.................................. 4,516 4,029 4,224
---------------- ---------------- ----------------
Total other investments.......................... 20,568 20,620 20,248
---------------- ---------------- ----------------
Current Assets
Cash............................................... 616 656 84
Accounts receivable, customers and others,
less allowance for doubtful accounts............. 19,554 16,093 18,081
Accrued utility revenues (Note 1).................. 5,951 5,270 6,523
Fuel, materials and supplies, at average cost...... 3,188 3,239 3,312
Prepayments........................................ 1,843 1,562 1,890
Other.............................................. 227 274 326
---------------- ---------------- ----------------
Total current assets............................. 31,379 27,094 30,216
---------------- ---------------- ----------------
Deferred Charges
Demand side management programs.................... 18,119 15,865 18,367
Environmental proceedings costs.................... 7,887 7,842 7,893
Purchased power costs.............................. 5,833 1,914 8,433
Other.............................................. 8,726 11,598 8,258
---------------- ---------------- ----------------
Total deferred charges........................... 40,565 37,219 42,951
---------------- ---------------- ----------------
NON-UTILITY
Cash and cash equivalents.......................... 1,427 1,116 76
Other current assets............................... 2,519 5,339 4,055
Property and equipment............................. 11,397 11,542 11,478
Intangible assets.................................. 2,466 2,954 2,580
Equity investment in energy related businesses..... 13,308 9,374 10,999
Other assets....................................... 8,484 4,935 8,680
---------------- ---------------- ----------------
Total non-utility assets......................... 39,601 35,260 37,868
---------------- ---------------- ----------------
Total Assets........................................... $314,145 $296,417 $313,282
================ ================ ================
CAPITALIZATION AND LIABILITIES
ELECTRIC UTILITY
Capitalization
Common Stock Equity
Common stock,$3.33 1/3 par value,
authorized 10,000,000 shares (issued
4,897,212, 4,715,156 and 4,850,496)............ $16,324 $15,717 $16,168
Additional paid-in capital....................... 65,320 61,197 64,206
Retained earnings................................ 27,716 26,283 26,412
Treasury stock, at cost (15,856 shares).......... (378) (378) (378)
---------------- ---------------- ----------------
Total common stock equity...................... 108,982 102,819 106,408
Redeemable cumulative preferred stock.............. 8,930 9,135 8,930
Long-term debt, less current maturities............ 83,934 74,967 91,134
---------------- ---------------- ----------------
Total capitalization........................... 201,846 186,921 206,472
---------------- ---------------- ----------------
Capital lease obligation............................... 9,778 10,278 9,778
---------------- ---------------- ----------------
Current Liabilities
Current maturuties of long-term debt............... 3,500 3,500 7,833
Short-term debt.................................... 13,014 14,515 8,416
Accounts payable, trade, and accrued liabilities... 3,726 4,927 5,529
Accounts payable to associated companies........... 6,232 5,857 7,011
Dividends declared................................. 194 194 194
Customer deposits.................................. 746 917 816
Taxes accrued...................................... 3,588 2,590 571
Interest accrued................................... 1,844 1,755 1,847
Deferred revenues (Note 1)......................... 5,615 5,069 --
Other.............................................. 370 630 412
---------------- ---------------- ----------------
Total current liabilities...................... 38,829 39,954 32,629
---------------- ---------------- ----------------
Deferred Credits
Accumulated deferred income taxes.................. 24,651 22,879 25,292
Unamortized investment tax credits................. 5,015 5,313 5,107
Other.............................................. 22,058 21,297 21,642
---------------- ---------------- ----------------
Total deferred credits......................... 51,724 49,489 52,041
---------------- ---------------- ----------------
NON-UTILITY
Current liabilities................................ 1,223 790 1,124
Other liabilities.................................. 10,745 8,985 11,238
---------------- ---------------- ----------------
Total non-utility liabilities.................. 11,968 9,775 12,362
---------------- ---------------- ----------------
Total Capitalization and Liabilities................... $314,145 $296,417 $313,282
================ ================ ================
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
March 31
-----------------------------------------
1996 1995
----------------- -----------------
(In thousands, except amounts per share)
<S> <C> <C>
Operating Revenues (Note 1)..................................... $48,415 $40,023
----------------- -----------------
Operating Expenses
Power Supply
Vermont Yankee Nuclear Power Corporation (Note 2).......... 7,411 7,574
Company-owned generation................................... 846 815
Purchases from others...................................... 18,668 12,390
Other operating............................................... 4,907 4,565
Transmission.................................................. 2,691 2,349
Maintenance................................................... 1,122 1,171
Depreciation and amortization................................. 3,875 3,203
Taxes other than income....................................... 1,777 1,669
Income taxes.................................................. 2,045 1,805
----------------- -----------------
Total operating expenses................................... 43,342 35,541
----------------- -----------------
Operating income......................................... 5,073 4,482
----------------- -----------------
Other Income
Equity in earnings of affiliates and non-utility operations... 856 596
Allowance for equity funds used during construction........... 40 --
Other income and deductions, net.............................. 15 (13)
----------------- -----------------
Total other income.......................................... 911 583
----------------- -----------------
Income before interest charges............................ 5,984 5,065
----------------- -----------------
Interest Charges
Long-term debt................................................ 1,814 1,686
Other......................................................... 228 317
Allowance for borrowed funds used during construction........ (123) (165)
----------------- -----------------
Total interest charges...................................... 1,919 1,838
----------------- -----------------
Net Income...................................................... 4,065 3,227
Dividends on preferred stock.................................... 190 194
----------------- -----------------
Net Income Applicable to Common Stock........................... $3,875 $3,033
================= =================
Common Stock Data
Earnings per share............................................ $0.80 $0.65
Cash dividends declared per share............................. $0.53 $0.53
Weighted average shares outstanding........................... 4,860 4,680
Consolidated Comparative Statements of Retained Earnings
(Unaudited)
Balance - beginning of period................................... $26,412 $25,727
Net Income...................................................... 4,065 3,227
----------------- -----------------
30,477 28,954
----------------- -----------------
Cash Dividends - redeemable cumulative preferred stock.......... 190 194
- common stock................................... 2,571 2,477
----------------- -----------------
2,761 2,671
----------------- -----------------
Balance - end of period......................................... $27,716 $26,283
================= =================
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>
Three Months Ended
March 31
---------------------------------------
1996 1995
----------------- -----------------
(In thousands)
<S> <C> <C>
Operating Activities:
Net Income........................................................... $4,065 $3,227
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................... 3,875 3,203
Dividends from associated companies less equity income........... (29) 93
Allowance for funds used during construction..................... (164) (165)
Amortization of purchased power costs............................ 1,715 1,271
Deferred income taxes............................................ (515) 924
Deferred revenues (Note 1)....................................... 5,615 5,069
Amortization of gain on sale of property......................... (13) (13)
Deferred purchased power costs................................... (145) (2,697)
Amortization of investment tax credits........................... (92) (77)
Environmental proceedings costs.................................. (365) (333)
Changes in:
Accounts receivable............................................ (1,474) (854)
Accrued utility revenues....................................... 572 743
Fuel, materials, and supplies.................................. 124 74
Prepayments and other current assets........................... 1,683 659
Accounts payable............................................... (2,582) 436
Taxes accrued.................................................. 3,017 1,148
Interest accrued............................................... (3) (198)
Other current liabilities...................................... (13) (37)
Other............................................................ 349 (1,071)
----------------- -----------------
Net cash provided by operating activities.......................... 15,620 11,402
----------------- -----------------
Investing Activities:
Construction expenditures.......................................... (2,275) (2,646)
Conservation expenditures.......................................... (891) (932)
Investment in nonutility property.................................. (2,145) 14
----------------- -----------------
Net cash used in investing activities............................ (5,311) (3,564)
----------------- -----------------
Financing Activities:
Issuance of common stock........................................... 1,270 944
Short-term debt, net............................................... 4,599 (5,699)
Reduction in long-term debt........................................ (11,533) (1,333)
Cash dividends..................................................... (2,762) (2,670)
----------------- -----------------
Net cash used in financing activities............................ (8,426) (8,758)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents............... 1,883 (920)
Cash and Cash equivalents at beginning of period................... 160 2,692
----------------- -----------------
Cash and Cash Equivalents at End of Period............................. $2,043 $1,772
================= =================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the quarter for:
Interest (net of amounts capitalized)........................... $1,987 $2,167
Income taxes.................................................... 2 8
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
GREEN MOUNTAIN POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
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 March 31, 1996 and 1995, the
Company had recorded deferred revenues of $5.6 million and $5.1 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 subsidiares is as follows:
Three Months Ended
March 31
------------------
1996 1995
---- ----
(In thousands)
Revenue . . . . . . . . . . . . . . . $3,925 $3,004
Expenses . . . . . . . . . . . . . . 3,557 2,883
------ ------
Net Income . . . . . . . . . . . . . $ 368 $ 121
====== ======
2. INVESTMENT IN ASSOCIATED COMPANIES
The Company accounts for its investment in the companies listed below
using the equity method. Summarized financial information is as
follows:
Three Months Ended
March 31
---------------------
1996 1995
---- ----
(In thousands)
Vermont Yankee Nuclear Power Corporation
Gross Revenue . . . . . . . . . . . . . . . . . $39,756 $51,375
Net Income Applicable to Common Stock . . . . . 1,598 1,758
Company's Equity in Net Income . . . . . . . . 280 281
Vermont Electric Power Company, Inc.
Gross Revenue . . . . . . . . . . . . . . . . . $12,289 $12,661
Net Income Before Dividends . . . . . . . . . . 298 333
Company's Equity in Net Income
(Includes preferred equity) . . . . . . . . . 82 99
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 in response to claimed
releases of allegedly hazardous substances at what since has become
known as the Pine Street Barge Canal Site (Site) in Burlington, Vermont.
A manufactured-gas facility was owned and operated on part of the Site
by several separate enterprises, including the Company, from the late
19th century to 1967. The EPA's notice 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 response costs, including interest thereon,
incurred and to be incurred at the Site.
On December 5, 1988, the EPA brought suit against the Company, New
England Electric System (NEES), and Vermont Gas Systems, Inc. (VGS) 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 a portion of the Site, and
seeking a declaratory judgment concerning liability of the defendants
for all subsequent response costs associated with that area, known as
the Maltex Pond Area. The complaint alleged that the removal costs were
at least $741,000. The EPA also sought interest on this amount from the
date the funds were expended and costs of litigation, including
attorneys' fees. The Company entered certain cross-claims and third-
party claims. Fourth-party defendants also were joined. In July 1990,
the Company and 13 other settling defendants signed a proposed Consent
Decree settling the removal action litigation, paying collectively
$945,000. Individual contributions were confidential. On December 26,
1990, upon the unopposed motion of the United States, the Consent Decree
was entered by the Court.
During 1989, the EPA began a Remedial Investigation (RI) and Feasibility
Study (FS) relating to the Site. In late 1990 and in 1991, the EPA
conducted a second phase of RI work and studied the treatability of
soils and groundwater at the Site.
On November 6, 1992, the EPA released its final RI/FS reports and
announced a proposed remedy with an estimated total present value of
$47.0 million. This amount included 30 years' estimated operation and
maintenance costs, with a net present value of $26.4 million. The EPA's
proposed remedy called for construction of a large above-grade
Containment/Disposal Facility (CDF) that also would have consisted of
subsurface vertical barriers and a low permeability cap, with collection
trenches and a hydraulic control system to capture groundwater for
eventual treatment. The proposed remedy also included a long-term
monitoring program and construction of new wetlands.
The Company and other PRPs submitted extensive comments to the EPA
opposing the proposed remedy and in response to an earlier request from
the EPA, a detailed analysis of an alternative remedy anticipated to
cost approximately $20 million. In 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. The EPA then established a coordinating council, with
representatives of PRPs, environmental groups, and government agencies,
and presided over by a neutral facilitator. The council has reached
consensus on additional studies appropriate for the Site and is
beginning to address remedy selection.
In July 1994, the Company, NEES, and VGS, entered into an Administrative
Order by Consent with the EPA, pursuant to which these PRPs conducted
certain additional studies agreed to by the coordinating council. A
second phase, including tasks carried over from the first phase,
additional field studies and preparation of an addendum feasibility
study was begun in 1995 by the Company and NEES under a second Order.
The EPA did not require reimbursement for its past RI/FS study costs as
a condition to allowing the PRPs to conduct these additional studies.
The EPA has previously announced that ultimately it will seek to hold
the Company and other PRPs liable for such costs, which have been
estimated to be at least $4.5 million. The Company has sufficient
reserves on its balance sheet to cover such costs.
On December 1, 1994, (i) 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
and (ii) 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. In March 1996, the Company and
NEES entered into a confidential agreement compromising contribution and
cost recovery claims of each party concerning the Site.
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. Further discovery has been stayed by the court until
the revised RI/FS reports are finalized, the Company's liability is
finally determined or January 1, 1997, which ever comes first. In 1994,
the United States District Judge granted the Company's Motion for
Summary Judgment with respect to defense costs against one defendant and
denied it against another defendant. The Company has reached
confidential settlements with two of the defendant insurers. One
settling defendant provided the Company with comprehensive general
liability insurance between 1976 and 1982, and with environmental
impairment liability insurance from 1981 to 1984. The other 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 concerning the Site, 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, 1993 and 1994, the Company has sought
and received recovery for ongoing expenses associated with the Site.
Specifically, the Company proposed rate recognition of its unrecovered
expenditures between January 1991 and June 30, 1994 (totaling of
approximately $7.3 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 Site related
costs, the Company and the Vermont Department of Public Service (the
Department) reached agreements in these cases that the full amount of
Site costs reflected in those rate cases should be recovered in rates.
The Company's rates approved by the VPSB on April 2, 1992, on May 13,
1994 and on June 5, 1995 reflected the Site related expenditures
referred to above.
In a rate case filed on September 15, 1995, the Company sought recovery
in rates of approximately $1.3 million in expenses associated with the
Site. This amount represented the Company's unrecovered expenditures
between July 1994 and June 1995 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 Site 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 Site costs reflected in the
Company's 1995 rate case should be recovered in rates. This agreement
is currently pending before the VPSB.
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.
4. 1995 Retail Rate Case
On September 15, 1995, the Company filed a request with the VPSB to
increase retail rates by 12.7 percent. The increase is needed to cover
higher power supply costs, to support additional investment in plant and
equipment, to fund expenses associated with the Site, and to cover
higher costs of capital.
The Company and the Department reached a settlement agreement providing
for a 5.25 percent retail rate increase effective June 1, 1996, and a
target return on equity for utility operations of 11.25 percent. The
settlement was based on a newly negotiated agreement with Hydro-Quebec
that will result in a reduction of the Company's power supply costs
below that which was anticipated, allowing the Company to reduce the
amount of its rate request. The rate settlement must be reviewed and
approved by the VPSB before it can take effect. The VPSB has until May
31, 1996 to make its decision.
5. 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 was 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 in the proceeding 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.
6. SFAS 121
Statement of Financial Accounting Standards (SFAS) 121, Accounting for
the Impairment of Long Lived Assets, which was implemented by the
Company on January 1, 1996, requires that any assets, including
regulatory assets, which are no longer probable of recovery through
future revenues, be revalued based upon future cash flows. SFAS 121
requires that a rate-regulated enterprise recognize an impairment loss
for the amount of costs excluded from recovery. Based upon the regulatory
environment within which the Company currently operates, the Company does
not expect that SFAS 121 will have a material impact on the Company's
financial position or results of operations.
7. RECLASSIFICATION
Certain line items on the prior year's financial statements 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
MARCH 31, 1996
Part 1 - Item 2
RESULTS OF OPERATIONS
Earnings Summary
Earnings per share of common stock in the first quarter of 1996 were
$0.80, compared to $0.65 per share in the first quarter of 1995. The
increase in earnings in 1996 was primarily due to an increase in
operating revenues resulting from a 9.25 percent retail rate increase
that went into effect in June 1995, an increase in sales of electricity
caused by colder (but normal) winter weather and modest growth in the
business sector.
Operating Revenues and MWh Sales
Operating revenues, megawatthour (MWh) sales and average number of
customers are summarized as follows:
Three Months Ended
March 31
-------------------
1996 1995
---- ----
Operating Revenues (In thousands)
Retail . . . . . . . . . . . . . . . . . . $ 41,102 $ 35,566
Sales for Resale . . . . . . . . . . . . . 6,470 3,364
Other . . . . . . . . . . . . . . . . . . 843 1,093
-------- --------
Total Operating Revenues . . . . . . . . $ 48,415 $ 40,023
======== ========
MWh Sales
Retail . . . . . . . . . . . . . . . . . . 485,091 460,337
Sales for Resale . . . . . . . . . . . . . 239,287 91,383
------- -------
Total MWh Sales . . . . . . . . . . . . . 724,378 551,720
======= =======
Average Number of Customers
Residential . . . . . . . . . . . . . . . 70,112 69,466
Commercial & Industrial . . . . . . . . . 11,799 11,669
Other . . . . . . . . . . . . . . . . . . 74 76
------ ------
Total Customers . . . . . . . . . . . . . 81,985 81,211
====== ======
Total operating revenues in the first quarter of 1996 increased 21.0
percent over the same period in 1995. Retail revenues increased 15.6
percent in the first quarter of 1996 over the same period in 1995
primarily due to a 9.25 percent retail rate increase that went into
effect in June 1995, and a 5.38 percent increase in electricity sales
resulting from an increase in sales of electricity caused by colder (but
normal) winter weather and modest growth in the business sector.
Wholesale revenues increased 92.4 percent in the first quarter of 1996
over the same period in 1995 primarily due to regional market conditions
that allowed the Company to buy electricity and resell it to other
utilities at prices slightly higher than the purchase price.
Operating Expenses
Power supply expenses increased 29.6 percent in the first quarter of
1996 over the same period in 1995 as the Company purchased additional
power to meet retail and wholesale customer needs.
Other operating expenses increased 7.5 percent in the first quarter of
1996 over the same period in 1995 primarily due to costs associated with
the Company's customer research and market analysis efforts.
Transmission expenses rose 14.6 percent in the first quarter of 1996
over the same period in 1995 primarily due to the need for additional
transmission services related to the increased wholesale transactions
mentioned above.
Maintenance expenses decreased 4.2 percent in the first quarter of 1996
compared to the same period in 1995 primarily due to cost containment
measures implemented by the Company.
Depreciation and amortization expenses increased 21.0 percent in the
first quarter of 1996 over the same period in 1995 primarily due to the
amortization of expenditures related to energy conservation programs and
the Pine Street Barge Canal environmental matter and insurance
litigation. (See Note 3 of Notes to Consolidated Financial Statements.)
Taxes other than income taxes increased 6.4 percent in the first quarter
of 1996 over the same period in 1995 primarily due to an increase in the
gross revenue tax.
Income Taxes
Income taxes increased 13.2 percent in the first quarter of 1996 over
the same period in 1995 primarily due to an increase in taxable income.
Other Income
Other income increased 56.3 percent in the first quarter of 1996 over
the same period in 1995 primarily due a $148,000 increase in earnings
reported by Mountain Energy, Inc., the Company's wholly-owned subsidiary
that invests in electric energy generation and efficiency projects, and
a $47,000 increase in earnings reported by Green Mountain Propane Gas
Company, the Company's wholly-owned propane subsidiary.
Interest Charges
Interest charges increased 4.4 percent in the first quarter of 1996 over
the same period in 1995 primarily due to an increase in long-term debt
outstanding during the period. These charges were partially offset by a
reduction in interest charges related to a decrease in short-term debt
outstanding during the period.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1996, construction and conservation
expenditures totaled $3.2 million. Such expenditures in 1996 are
expected to be approximately $29.5 million, principally for expansion
and improvements of the Company's transmission and distribution plant,
for conservation measures and for the construction of a 6 megawatt wind
turbine generating plant located in southern Vermont.
In January 1996, a portion of the proceeds from the sale of $24 million
of the Company's first mortgage bonds in December 1995 was used to
refund $7.2 million of the Company's 10.7 percent first mortgage bonds.
The Company anticipates issuing approximately $13 million of common
stock and approximately $13 million of first mortgage bonds in July and
November 1996, respectively. The proceeds will be used to retire short-
term debt and for other corporate purposes.
Other
Green Mountain Resources, Inc., a wholly-owned subsidiary established in
April 1996, is a part owner of Green Mountain Energy Partners L.L.C.
(GMEP), which is participating in the "New Hampshire Pilot Project," an
experiment in retail wheeling to be conducted in New Hampshire beginning
May 28, 1996. The pilot involves 17,000 commercial and residential
electric customers, opening up 50 megawatts of retail customer load to
competition. Customers wishing to participate in the pilot signed up
with the New Hampshire Public Utilities Commission, which held a lottery
to select the actual participants. GMEP and other project participants,
both in New England and elsewhere, are competing for customers who elect
to buy electricity under the pilot. GMEP's participation in the pilot
will not have a material impact on the Company's financial position or
results of operations in 1996.
GREEN MOUNTAIN POWER CORPORATION
March 31, 1996
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
See Notes 3, 4 and 5 of Notes to Consolidated Financial
Statements
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
NONE
ITEM 5. Other Information
NONE
ITEM 6. (a) EXHIBITS
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: May 14, 1996 /s/ C. L. Dutton
C. L. Dutton, Vice President, Chief
Financial Officer and Treasurer
Date: May 14, 1996 /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,
Period Ended March 31, 1996 ---------------------------------------------
Three Months Twelve Months 1995 1994 1993 1992 1991
-------------------------------------- ---------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net earnings $3,815 $11,873 $11,242 $11,052 $10,764 $12,296 $10,260
Income taxes 2,199 6,680 6,310 5,917 5,922 6,451 5,795
Fixed charges 2,503 9,807 9,777 9,777 9,370 9,332 9,303
-------------------------------------- ---------------------------------------------
Total earnings $8,517 $28,361 $27,329 $26,746 $26,056 $28,079 $25,358
====================================== =============================================
Fixed Charges:
Interest $2,084 $8,152 $8,047 $8,043 $7,590 $7,518 $7,517
Amortization of debt premium and discount 42 122 140 138 102 85 48
Interest portion of rental payments 377 1,533 1,590 1,596 1,678 1,729 1,738
-------------------------------------- ---------------------------------------------
Total fixed charges $2,503 $9,807 $9,777 $9,777 $9,370 $9,332 $9,303
====================================== =============================================
Ratio of earnings to fixed charges 3.40 2.89 2.80 2.74 2.78 3.01 2.73
====================================== =============================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1996 and the related
consolidated statements of income and cash flows for the three months
ended March 31, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 182,032
<OTHER-PROPERTY-AND-INVEST> 20,568
<TOTAL-CURRENT-ASSETS> 31,379
<TOTAL-DEFERRED-CHARGES> 40,565
<OTHER-ASSETS> 39,601
<TOTAL-ASSETS> 314,145
<COMMON> 16,324
<CAPITAL-SURPLUS-PAID-IN> 64,942
<RETAINED-EARNINGS> 27,716
<TOTAL-COMMON-STOCKHOLDERS-EQ> 108,982
8,120
810
<LONG-TERM-DEBT-NET> 83,934
<SHORT-TERM-NOTES> 13,014
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,500
0
<CAPITAL-LEASE-OBLIGATIONS> 9,778
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 86,007
<TOT-CAPITALIZATION-AND-LIAB> 314,145
<GROSS-OPERATING-REVENUE> 48,415
<INCOME-TAX-EXPENSE> 2,045
<OTHER-OPERATING-EXPENSES> 41,297
<TOTAL-OPERATING-EXPENSES> 43,342
<OPERATING-INCOME-LOSS> 5,073
<OTHER-INCOME-NET> 911
<INCOME-BEFORE-INTEREST-EXPEN> 5,984
<TOTAL-INTEREST-EXPENSE> 1,919
<NET-INCOME> 4,065
190
<EARNINGS-AVAILABLE-FOR-COMM> 3,875
<COMMON-STOCK-DIVIDENDS> 2,571
<TOTAL-INTEREST-ON-BONDS> 1,814
<CASH-FLOW-OPERATIONS> 15,620
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
