1.1 Statement from CEO
Welcome to Green Mountain Power’s Sustainability Report. This report documents Green Mountain Power’s progress towards sustainability, reports on activities in 2006, but includes some developments in 2007. Green Mountain Power transmits, distributes, and sells electricity and utility construction services in the State of Vermont in a service territory with approximately one quarter of Vermont’s population. We serve 92,000 customers. The largest change at Green Mountain Power since last year’s sustainability report is the acquisition of Green Mountain Power by Gaz Métro. In 2006, our shareholders overwhelmingly approved a merger with Northern New England Energy Corporation, a wholly-owned subsidiary of Gaz Métro, a leading Quebec energy company with a long history of investment in Vermont. The merger was completed in April 2007, and we continue as a locally-managed company, led by our Vermont-based senior team, that is regulated by the state of Vermont.
At Green Mountain Power, we believe that we have a responsibility to contribute in meaningful ways to the economic health of Vermont, while doing our best to protect and enhance the environmental and social qualities of life in the communities we serve. In this way, pursuing sustainability is highly relevant to our overall business strategy and the way we run our Company. This report, which follows the 2006 Global Reporting Initiative (GRI) guidelines (the “G3” guidelines), describes our commitment to fiscal responsibility, environmental stewardship, and social responsibility. We attempt to highlight our progress, but also offer a transparent view of opportunities for improvement.
A major shift from last year’s report is our new report format. Instead of printing the entire sustainability report for distribution to stakeholders, we’ve elected to publish only Section 1. The remainder of the report, including data, graphs, and additional information will be available in an easily-accessible web-based format. We hope that this will make our sustainability report even more accessible to stakeholders, while also saving resources.
As a company that has provided electricity to Vermonters since 1893, Green Mountain Power’s values are closely intertwined with those of Vermont. We appreciate the opportunity to continue to report to you on Green Mountain Power’s progress and challenges in our quest to serve Vermonters in an environmentally, socially and economically responsible manner. Thank You!
SD 1.1
Please note that throughout this report we reference the GRI Standard Disclosures (SD) and Indicators that we have addressed. In some instances, the indicator is listed after the information that addresses it.
1.2 Introduction
Green Mountain Power is committed to sustainability in a variety of ways. Recently, we announced that we have become carbon neutral in our operations. We have a reputation of being a premier employer and providing our employees a great place to work. We believe that our financial position continues to be strong, particularly in light of the recent merger with Gaz Métro. Perhaps our largest sustainability challenge, however, relates to the power that we generate, purchase, transmit, and distribute to our customers.
In 2006, only 2.2% of our fuel mix was from fossil fuels – compared with a national average of 70%. Our power mix was dominated by hydro (50.4%) and nuclear (43%), and supplemented by wood (4.3%), oil/natural gas (2.2%), and wind 0.1%. When we built our Searsburg wind facility in 1997, it was the largest wind plant east of the Mississippi River. Now, we are working with a developer to expand Searsburg as part of an overall effort to continue our reliance on renewable and alternative energy sources. We know that nuclear power is a concern to some of our stakeholders, which is why we have included even more information in this year’s report on nuclear power.
Green Mountain Power has come a long way. We hope that our commitment to sustainability is reflected in this report through its accurate information, transparency, consideration of stakeholder concerns, and reliance on the GRI 2006 (G3) guidelines.
1.3 Focus on Materiality
Material issues are issues that can significantly impact one or more aspect of Green Mountain Power’s commitment to financial responsibility, environmental stewardship, and social responsibility. In this report, we identify our Top Ten Material Issues (link will be added in web-based version of report), which were chosen as a result of a rigorous and thoughtful selection process. From these ten, we’ve selected the Top Three which we (and our stakeholders) feel are the most crucial to the Company. SD 1.2
1.3.1 Top Three Material Issues
For each of our “Top Three” material issues, we describe the challenge, explain our approach, and comment on our progress towards mitigating the risks associated with these issues.
1.3.1.1 Climate Change Risk
There are so many reasons why climate change is the top material issue for Green Mountain Power. First of all, even though our power profile is dominated with sources that have a small carbon footprint, the question remains - how will Green Mountain Power retain its climate-friendly fuel mix when its contracts for Vermont Yankee and Hydro-Québec power expire in 2012 and 2015, respectively? Also, climate change has emerged as the primary issue of concern for the majority of our stakeholders, including external stakeholders who are interested in Green Mountain Power’s disclosure of its current Green House Gas (GHG) emissions, as well as our reduction goals. Vermonters, including our employees, are concerned about global warming and climate change. Other reasons why climate change has emerged as a material issue include the State of Vermont’s commitment to climate change through the Governor’s Climate Change Commission (established in 2005), and the fact that very soon the VT Regional Greenhouse Gas Initiative (RGGI) may apply to one or more of our facilities.
There is additional risk as climate change predicts to change weather patterns drastically resulting in more extreme weather patterns and more storms – both of which increase our peak power requirements and our storm response demands. So not only are we making decisions to reduce environmental impact, but we are also bracing our operations for the impact that weather (due to climate change) may have on utility use and maintenance.
We are tackling our climate change risk on so many levels. We recently announced that we have become carbon neutral in our operations. This was achieved through increased building efficiencies, the deployment of alternative-fueled vehicles, and offsets purchased through NativeEnergy, a local Vermont company. In 2007, we signed the Climate Call to Action, which calls on the U.S. government to begin tackling climate change through GHG reductions, legislation, and research. SD 4.12 (Climate Call to Action) and EC2.
We also offer our customers a variety of options and programs to help reduce their carbon footprints, support green energy, and be more energy efficient (see Section 5 for more information on these programs).
1.3.1.2 Power and Other Contracts
Because we purchase a large percentage of our power from facilities that we do not own or operate, these sources of power are material to our commitment to environmental sustainability. Over the course of the next decade, clean and low-cost contracts that we have with Vermont Yankee and Hydro-Québec will expire. These two contracts currently provide two-thirds of Vermont’s energy supply. We are in the process of negotiating new power contracts to replace them, and we’re also determining alternative courses of action. Additionally, because we purchase power from hydro plants, a nuclear plant, and other facilities, there are environmental and other risks associated with these facilities that are harder to identify and mitigate without ownership or operational control. To address this, we have included more information in this year’s report about the potential footprint of different types of power. We are also formalizing our supply chain practices to ensure that our contracts prioritize sustainability as much as possible.
1.3.1.3 Merger with Gaz Métro
On June 22, 2006, Green Mountain Power announced that it was being acquired by Northern New England Energy Corporation (NNEEC), a wholly-owned subsidiary of Gaz Métro, a major distributor of natural gas in Quebec and the northeastern United States with a long history of investment in Vermont.
The proposal was approved by shareholders and state and federal regulators and the merger was finalized in April 2007. Green Mountain Power will continue as a locally-run company, regulated principally by the state of Vermont.
Prior to completing the acquisition agreement, Green Mountain Power hired KLD Research and Analytics, Inc., a Boston-based firm that performs research and analysis for socially responsible investors, to help us assess Gaz Métro’s profile with respect to corporate responsibility. KLD found no areas of concern.
The recent merger emerged as one of the top three material issues in the short-term because it has fundamentally changed the ownership and financial structure of the company. We have essentially traded 5,500 shareholders for one. Also, our stakeholders, including employees and customers, may be affected by the merger in various ways.
Employee Feedback
We convened stakeholder discussions with a wide variety of employees in 2007 to listen to their feedback on the Gaz Métro merger. Some employees are content with the merger, thought it was seamless, and trust that any changes to their work environment or benefits will be adequately addressed by Green Mountain Power. Other employees have a “wait and see” attitude and wonder if Gaz Métro will acquire any other utilities in Vermont. Some employees liked owning shares in Green Mountain Power directly through stock grants and indirectly through stock options. Overall, employees did not think that the merger had much of an impact on their everyday work environment.
Customer Reaction
We also performed a survey in 2006 to measure customers’ expectations of how this acquisition will impact customer satisfaction. Half of our customers expect that reliability of electric power and customer service (50 percent and 51 percent respectively) will not change. Some customers (44%), however, do expect electric bills over the next few months to increase. Thirty three percent believe the bills will stay the same. Slightly more than half of the customers (52 percent) responded that the acquisition will make no change in communication between Green Mountain Power and its customers. Overall, 37 percent responded that the acquisition would make no difference for the customers, while 22 percent believe that it is bad for customers, and 11 percent believe it is good. Noteworthy is the finding that 30 percent remain uncertain.
Effects on Our Sustainability Programs
We are confident that this acquisition will support our sustainability efforts. In fact, we believe the corporate cultures of the two companies are very similar. In addition to being a leader in the energy field, Gaz Métro aims to be recognized as an upright, socially responsible and environmentally caring enterprise. This is consistent with Green Mountain Power’s environmental values. Also, both companies embrace a culture of compliance, transparency and cooperation with regulators.
Economic Impacts from Merger
Immediately after the acquisition announcement, both S&P and Moody’s credit rating agencies upgraded the outlook on Green Mountain Power. In August, 2007, Moody's Investors Service upgraded the senior secured debt ratings of Green Mountain Power Corporation, reflecting the rating agency's conclusion that the recent purchase of Green Mountain Power by Gaz Métro will yield financial benefits. Standard & Poor’s upgraded Green Mountain Power’s senior secured debt ratings in September.
In its press release, Moody's said, "The rating action reflects our views that Green Mountain Power should be able to benefit both financially and operationally from its recent change in ownership..."
We are gratified to see that the financial community agrees with our analysis that the acquisition of Green Mountain Power by Gaz Métro will benefit our customers and the entire state of Vermont because Gas Metro’s size and financial horsepower can enhance our financial position when we negotiate new power contracts.
The Moody's decision, which was released August 7, 2007, also stated, "Operationally, we believe Green Mountain Power stands to benefit from improved negotiating leverage as part of a larger creditworthy family when it seeks to replace expiring power supply contracts over the long term."
1.4 Sustainability Highlights and Recent Awards
The following are a few highlights from 2006 through the early part of 2007, as well as a few recent awards.
1.4.1 Environmental
- In 2007, we announced that we have become carbon neutral in our operations; this was achieved through increased building efficiencies, alternative-fueled vehicles, and offsets purchased through NativeEnergy, a local Vermont company.
-
In January 2007, Vermont Governor Jim Douglas honored Green Mountain Power with the state’s highest environmental award for our work in environmental reporting and in treating petroleum contaminated soil naturally at our land farm in Berlin.
-
We have continued to increase biodiesel use since 2005. As of 2007, all of the vehicles that fuel up at our service centers run on biodiesel. We also instituted an anti-idling policy in 2006 to discourage idling and further reduce emissions.
-
We purchased two Neighborhood Electric Vehicles, which are eight times more efficient than a standard combustion engine vehicle. They travel at a maximum of 25 mph and provide efficient transportation for employees to use for meetings, errands or lunch. The use of these vehicles and new carpool parking places encourage employees to carpool, bike or walk to work.
-
We have begun composting food and organic waste in our offices, including non-recyclable paper products such as paper towels and pizza boxes.
-
We continuously develop new programs to assist customers in reducing their carbon footprint. The most recent program, Choose2bGreen, allows customers to purchase renewable energy. CoolHome and CoolDriver, offered in partnership with NativeEnergy, also allow customers to offset their own carbon footprints.
1.4.2 Social
- Customer satisfaction with our services once again increased in 2006, with 95 percent of those customers who contacted us in the fourth quarter of the year saying they are satisfied with our response, up from 94 percent in the fourth quarter of 2005. That compares with 79 percent satisfaction in a national survey conducted by RKS.
-
In February 2006, Vermont Businesses for Social Responsibility (VBSR) named Green Mountain Power “Large Company Leader of the Year.” The VBSR board said it was impressed by the issuance of our corporate responsibility report.
-
In 2006, we started Next Generation University a corporate “university” that goes beyond mere training. We believe that our customers and shareholders will benefit from a highly skilled, motivated, healthy workforce enrolled in “Green Mountain Power U”.
-
In May 2006 and May 2007, Green Mountain Power received the Vermont Governor’s Council on Physical Fitness and Sports “Bronze Worksite Wellness Program Recognition Award.”
-
In 2006, we met Company-wide requirements of the Safety and Health Achievement Recognition Program (SHARP), a nationally recognized program implemented by states under Federal OSHA.
-
United Way of Chittenden County gave Green Mountain Power the “Keep it Simple, Make it Fun” award in 2006, acknowledging the creative spirit of our United Way employee campaign.
-
GMP was recently recognized as one of the “Best Places to Work in Vermont” by VT Business Magazine.
SD 1.1.5 and SD 2.10
1.5 Key Performance Metrics
There are several key performance metrics that we rely on to assess our progress towards our sustainability goals. Because sustainability is intertwined with our brand and our overall business strategy, these metrics are central to our operations. Together, the performance metrics can be used as a tool to measure how Green Mountain Power’s progress compares with our vision, environmental
commitment, and core values. Note how we have selected the key performance metrics based on our vision statement elements.
Table 1.1
Click Here to View Figure 1-1: Performance and Targets
Some of the ways that we are committed to our vision statement are best described in qualitative terms and no metrics are involved.
Green Mountain Power intends to be an environmental leader in the utility sector through on-going improvements in key sustainability goal measurements. Throughout this report we address targets, goals, obstacles, challenges and overall business strategy.
