| 3.1 - Green Mountain Power History 3.2 - Green Mountain Power's Vision 3.3 - Financials 3.4 - Indirect Economic Impacts - Reliable, Affordable Power |
Reporting Entity Name: Green Mountain Power
Headquarters: Colchester, Vermont, U.S.A
Owner: Northern New England Energy Corporation (a
wholly-owned subsidiary of Gaz Métro)
Number of Employees: 192
SD 2.8
Green Mountain Power transmit, 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 and 92,000 customers. 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. As of April 2007, the merger has been completed, but we continue as a locally-run company that is regulated by the state of Vermont.
Figure 3-1 compares our power generation over the past three years.
Figure 3-1: MWH Generation 2004-2006
SD 2.8
Today, 84% of Green Mountain Power’s electric distribution system is above ground. Figure 3-2 shows the different elements of our transmission and distribution system.
Figure 3-2: Green Mountain Power’s Transmission & Distribution (T&D) System
3.1 Green Mountain Power History
Green Mountain Power Corporation traces its origins to 1893, when the Vergennes Electric Company was organized to provide street lighting for the community of Vergennes, Vermont. Our 114-year history as an electric utility also began when private entrepreneurs dammed some of Vermont’s waterways to create power to run mills, streetcars, and, eventually, the state’s economy in western and central Vermont.
Today, Green Mountain Power is headquartered in Colchester, Vermont, and serves approximately 92,000 customers in nine counties and 122 different communities. We sell electricity and energy services and products to approximately 25% of Vermont’s retail electricity customers and we sell wholesale electric power in New England and provide operations services to other utilities in Vermont.
Over the past three years, the number of customers in our major customer classifications has been as follows:
Table 3-1
Click Here to View Table 3-1: Our Customers
All of our customers are within the State of Vermont. SD 2.7
Figure 3-3 (below) shows our service area, and Figure 3-4 shows our retail sales and line transmissions for 2004-2006.
Figure 3-3: Green Mountain Power Service Area
Figure 3-4: Retail Sales and Lease Transmissions, in MWH
3.2 Green Mountain Power’s Vision
Green Mountain Power is committed to:
- Be the most efficient electric utility in the United States with a long-term focus on distribution and distribution services.
- Deliver superior energy services to our customers.
- Be environmentally responsible.
- Be a premier employer that leverages technology and invests in highly trained people.
Our core corporate values include delivering safe, fast, and effective service; environmental responsibility; and profitability.
SD 4.8
3.2.1 Organizational Changes at Green Mountain Power in 2006
In addition to the Gaz Métro merger, which is described in detail in other areas of this report, there have been a few minor organizational changes. In March 2006, Green Mountain Power’s Vice President and Chief Financial Officer, Robert Griffin, assumed a new position of Vice President, Power Supply and Risk Management. This position was created to help the Company respond appropriately to the volatile wholesale power supply market and the challenges associated with exploring long-term power contracts over the course of the next several years. Additionally, Dawn Bugbee, a certified public accountant who previously served as Chief Financial Officer at the Northwestern Medical Center in St. Albans, Vermont , became the Company’s new Vice President and Chief Financial Officer.
SD 2.9
3.3 Financials
Green Mountain Power filed an Annual Report (Form 10-K) on March 13, 2007. This report is available on Green Mountain Power’s website at: www.greenmountainpower.biz.
In 2006, Green Mountain Power’s consolidated earnings were $1.89 per share of common stock, diluted, compared with 2005 consolidated earnings of $2.12 per share of common stock, diluted.
Earnings per share decreased primarily as a result of $1.6 million in merger related transaction costs incurred during 2006. Northern New England Energy Corporation, an affiliate of Gaz Metro Limited Partnership, agreed in 2006 to acquire the Company at $35 per share.
If we had not incurred these transaction costs in 2006, the Company’s earnings per share would have been approximately $2.19.
Retail and other operating revenues for 2006 decreased by $3.7 million compared with 2005, reflecting the pretax earnings cap effect of approximately $5.7 million, which is recorded as a reduction to revenue, and milder summer and winter weather. These impacts were partially offset by an increase of $3.7 million in sales of utility services to other municipalities and utilities and approximately $2 million revenue generated from 0.9 percent rate increase that took effect in January 2006, along with a slight increase in the number of customers.
In December 2006, the Company received approval from the Vermont Public Service Board for a rate increase of 9.09 percent effective January 1, 2007, with an allowed rate of return of 10.25%. The Company also received approval to implement an Alternative Regulation Plan. The principal component of the Plan includes a power supply adjustment mechanism that will allow the Company to adjust rates on a quarterly basis to recover ninety percent of power supply cost variances from amounts included in rates to the extent the variances exceed $300,000. “Our alternative regulations plan creates opportunities and incentives for the Company to become more efficient and to improve customer services,” said CEO Chris Dutton. “In addition, it provides a host of other benefits, such as decoupling earnings from increased electricity sales, streamlining cost recovery, sharing efficiency savings with customers, increasing credit quality, and reducing regulatory and borrowing costs borne by customers.” Green Mountain Power is the first electric utility in the state to file a plan under this statute, which established a public policy goal of separating the financial success of a utility from increased electricity sales, thereby removing potential barriers to energy conservation.
Table 3-2 highlights some our financial data for 2006, as well as 2005 and 2004. Earnings per share and dividends paid are presented in Figure 3-5.
Table 3-2
Click Here to View Table 3-2: Financial Data
Figure 3-5: Earnings per Share and Dividends Paid
3.3.1 Corporate Governance
Institutional Shareholder Services (“ISS”) rates the quality of public companies’ corporate governance. As of September 25, 2006, Green Mountain Power’s corporate governance quotient was better than 90.5% of S&P 600 companies and 65% of Utilities companies.
The membership of our Board of Directors has changed slightly with the purchase by Gaz Métro, but they still meet quarterly with our senior management team on a formal basis, and speak more often informally. The Corporate Scorecard sent to the Board each quarter includes evaluation of environmental and socially responsible efforts. Senior management reports to the Board on operational issues, which would include sustainability issues. Mary Powell, as Senior Vice President and Chief Operating Officer, has responsibility for sustainability issues. The Board of Directors committees include Audit, Compensation, and Governance.
Every employee is evaluated on environmental performance in his or her individual scorecard. That performance is reviewed by each staff person's manager. LA13, SD 1.2.6, 4.1, 4.4-4.10.
3.3.2 Membership in Organizations
Green Mountain Power belongs to the following groups and organizations:
· Vergennes Partnership, Inc
· Addison County Chamber of Commerce
· Vermont Chamber of Commerce
· Vermont Utilities for Electrical Education
· Addison Economic Development
· Renewable Energy Vermont
· Greater Burlington Industrial Corp.
· Associated Industries of Vermont
· American Wind Energy Association
· Green Mountain Economic Development
· Great Falls Regional Chamber of Commerce
· Central Vermont Chamber of Commerce
· Vermont Business Roundtable
· Energy Council of the Northeast
· Edison Electric Institute
· Vermont Historical Society
· Vermont Biofuels Association
SD 4.13
3.4 Indirect Economic Impacts — Reliable, Affordable Power
The economic health of Green Mountain Power’s service area is affected by the services we provide. First, the cost of electricity is a major factor for the success of businesses in Vermont that must compete with businesses located elsewhere in the U.S. and the world. Electric rates in New England are among the highest in the country, but Green Mountain Power’s overall rates rank lowest among New England’s 16 large investor-owned utilities. Green Mountain Power’s industrial rates are the lowest in the group, its commercial rates are second lowest, and its residential rates are third lowest. The reliability of Green Mountain Power’s service also has positive indirect economic impacts. If reliability were not as strong as it is, it could affect businesses’ decisions to locate or remain in Vermont.
In 2006, Green Mountain Power’s overall electric rates, as measured by revenue per kilowatt-hour, were the lowest among the large investor-owned utilities in New England, according to a report released by the Edison Electric Institute. Green Mountain Power’s rates are nearly 10 percent lower than Granite State Electric, the utility with the second lowest rates overall. According to CEO Chris Dutton, “Other utilities across New England have experienced large rate increases because of rising fossil fuel costs. Our exposure to the volatility of the fossil fuel market has been minimal…”
In December 2006, the Company received approval from the Vermont Public Service Board for a rate increase of 9.09 percent effective January 1, 2007, with an allowed rate of return of 10.25%. The rate increase was driven by rising wholesale power and transmission costs. Green Mountain Power anticipated this rate increase and is confident that, despite the increase, rates are likely to remain the lowest overall. EC9
3.4.1 Reliability and Retail Sales Stats
Green Mountain Power has committed to our customers, our regulators and ourselves to continuously improve on reducing the frequency and duration of outages. Our results for 2006 with respect to System Average Interruption Frequency Index (SAIFI) and Customer Average Interruption Duration Index (CAIDI) are shown in Figure 3-7. Also, Table 3-3 compares our Service Quality Performance Index over the past two years.
Finally, Green Mountain Power’s rates have a direct economic effect on our residential customers, in that the size of their electricity bill affects the amount of disposable income they have to spend in the local market. Figure 3-7 shows how Green Mountain Power’s residential rates compare with the other large investor-owned utilities in New England.
Click Here to View Table 3-3: Quality Performance Index
Figure 3-7: Average Residential Rates of New England Large Investor-owned Utilities
