ML20009F291

Annual Financial Rept 1980.Supporting Documentation Encl

ML20009F291
Person / Time
Site:	Seabrook
Issue date:	02/17/1981
From:	CENTRAL VERMONT PUBLIC SERVICE CORP.
To:
Shared Package
ML20009F275	List: ML20009F274 ML20009F277 ML20009F279 ML20009F280 ML20009F281 ML20009F282 ML20009F283 ML20009F285 ML20009F286 ML20009F287 ML20009F289 ML20009F291 ML20009F293
References
NUDOCS 8107300253
Download: ML20009F291 (150)

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j-. gs gg g'i., g g .I i I CENTRAL VEPf0iONT / Y PUBLIC SERVICE CORPORATION $r e s >77 1 it. e!c ( A Annual Meeting s. 1 T: .sf er Agent.snd Registrar f Please Note s $A, n ,,,a ht Y, + 1

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Letter to Shareholders I in contrast to the well publicized economic decline of the northeastern part of the Linited States during the 1970's, Vermont's economy remained strong and the rate of growth of its population during the decade was 25 percent greater than any other New England state with the exception of New Hampshire. The year 1980 was a very difficult year for New England utilities. Your Company's earnings per common share were $2.29, a decrease of 45 cents, or 16.4 percent below 1979 earnings. The combination of dramatic increases in purchased power costs, inflation, and the absence of a purchased power adjustment clause in our Vermont retail business contributed to our earnings decline in "'^0. Since power costs comprised 56 pe. cent of c ir total cost of service during 1980 and the Company could not recover the escalating power costs through an adjustment clause, we were aggressive in our rate case filings. We filed retail rate cases in Vermont in March (6.23 percent), in September (4.6 percent), followed in November by a comprehensive case requasting 22.8 percent, in New Hampshire, two retail cases were filed and ate orders received allowing recovery of virtually all the revenues requested. In addition, we filed a wholesale rate increase request with the Federal Energy Regulatory Commission (FERC) affecting our seven wholesale l7 customers. A settlement was arrived at with these smaller utilities i stipulating a rate increase of 11.3 percent. The Company has demonstrated its ability to predict and control its costs in virtually all areas except for purchased power. Therefore, the restoration of a purchased power adjustment clause into our Vermont I retail tariff is of prime importance to us and will be a major issue in our pending rate case. Common Dividend Increased Despite these difficult operating conditions, in order to compensate the equity owners, the common stock dividend was raised with the November 15,1980 pay lent to 48 cents a quarter from 46 cents. The indicated annual dividend is $1.92. It is the goal of our Company to increase the dividend when financially feasible, relating the " ridend to earnings, book value and, most importantly, to the prese.vation of the real income of the shareholder. Load Management The Company expects the cost of power to increase over the foreseeable future. New sources of electric energy will be very expensive. Our load management program attempts to moderate customer usage during hours of peak demand, particularly during our peak winter season. This should result in more intensive and efficient use of Company facilities. In this way, new or expanded facilities may be postponed or eliminated. An effective load management program reduces capital requirements thus benefiting both ratepayer and stockholder. i e 1 I

Nuclear Stations {l. 9 gy'pE ~ ~:7 in response to the Three Mile Island accident, each of y qp8 .x - c - &4; the nuclear stations in New England in which our ~' e w Company participates as an owner has been reviewing and w -gC upgrading personnel training, operating standards, and is " =

• installing new equipment for mon:toring and control of its plant.

Vermont Yankee's 1980 availability factor (percentage of time the plant is actually available to produce electricity) was 71.5 percent in 1980, despite an extended rebeling i and maintenance outage. The plant's cumulative availability factor is 76.6 percent. This is significantly above the { national averages for other nuclear facilities, as well as coal and oil. fired plants. The plant returned to full power output d in late December and is now providing 5 40 megawatts to New England utilities. Northeast Utilities, lead sponsor ln a proposed nuclear power station at Montague, Massachusetts, has announced cancellation of the planned, win 1150 megawatt plants. Our Company, which was a cint owner, had a small m a *n ownership percentage of the potential output. The L. Douglas Mereddh J. E. Gn/ fin Company believes that its investment will be recovered through future rates charged to customers. Outlook for 1981 Three important challenges face us in 1981. The first is to l strengthen our financial position. Because of the volatility of energy l prices, continuing inflation, plus regulatory lag in issuing decisions, we will continue to accelerate our efforts to more frequently and timely file for rate relief. Our second challenge, which is common to most electric utilities throughout the Linited States, is to develop a capital construction program which permits us to achieve our financial goals as outlined on page 7. To do this, we will aggressively explore every means to keep our capital expenditures at a minimum. The third challenge is to investigate with others the possibilities of I utilizing some of the hydroelectric potential existing in the Eastern Provinces of Canada. These three challenges are interrelated. Each is dependent upon the other. Your Company's job will be to maintair a balance which is in the best interests of our stockholders and customers. With changing positive attitudes which seem to be developing toward the energy business, we believe 1981 will be a good year for your Company and we will keep you informed of our progress through our quarterly reports. $. b ') ) - I JAMES E. GRIFFIN President and Chief Executise Officer )//MP A Ql A( l g ~ O L. DOUGLAS MEREDITH Chairrnan February 17.1981 2

DIVIDENDS PER [ RMS PG COMMON SHARE e@ q COMMON SHARE / \\ /' Wr/ s+ ? s y

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a sfjj 2 / l s* $ 5 i j/ 5 g O L / 1 7%s y p / $/ M / /h i } j y /q / ~ 1/ t/ h,. / / g A p c 4 ,y,e / +, s v'g fo _/ HIGHLIGHTS 1980 1979 Change Financial (dollars in thousands) Revenues S 90,735 $ 78.185 + 16.1 Net income S 8,902 S 9,767 - 8.9 Net income for Common Stock S 6,804 7.995 - 14.9 Construction Expenditures S 15,573 $ 13,065 + 19.2 Net Utility Plant S139,144 $ 124,930 + 11.4 Total Capitalization S I 69,433 $ 152,466 + 11.1 Average Shares of Common Stock Outstanding !972,066 2.921.527 + 1.7 Debt / Percent of Total Capitalization 44.77. 44.3 % + 0.9 Return on Common Equity (Average) 10.47. 12.8 % -18.7 Per Share of Common Stos.. Net income S 2.29 $ 2.74 - 16.4 Dividends Paid S 1.86 $ 1.69 + 10.1 Book Value (Year.End) $ 22.12 $ 21.84 + 1.3 Operating Retail Electric Sales (MWH) 1,746,246 1.677.739 + 4.1 , ~, System Peak Demand (KW) 364,800 372,500 - 2.1 System Load Factor 62.9 % 58.8 % + 7.0 4 Degree Days (Rutland, Vermont) 7,777 6,890 + 12.9 Customers 111,720 109.980 + 1.6 Employees 574 577 - 0.5 3

Year in Review THE 1980 lNCOME DOLLAR Where it Came From: Where it Went: otner incor e Remvested in Busmess fi R:. venues and Sales The pattern of sales growth during 1980 was uneven. g,, g Kilowatt. hour sales to retail customers increased by only 1.9 otnw Electnc Sa!n percent during the first nine months. However, sales increased by 10.3 percent during the last quarter, resulting in an annual o,p,,c,,1,on commeoai growth of 4.1 percent. Sales to our wholesale customers increased by 19.1 percent. Sales were influenced by some of the coldest weather of the century in the last quarter in common omeenos contrast to the prior year's unseasonably warm weather during the same period. enremst Even though the Company has discouraged the use of resistance and uncontrolled electric heat through rate design, electric use is sensitive to periods of intense cold weather. Degree days for 1980 were approximately 13 percent greater ~" than the previous year, and during the last quarter, degree sr.co. - st.no E m j s 1 days were 35 percent more than the corresponding 1979 I L period. As our customers attempt to cope with increasing re y ;l energy costs and inflation in general. many are experimenting J [ j with difierent methods of heating. For example, over 10 c percent of the Company's residentit.1 customers have se / i. 1 + purchased some form of pc rtable heating devices, such as [ j s,,, q b j quartz heaters, during the pad twelve months. Many of these, -) 8' devices are used to supplement oil heating. We estimate that j ] 25 percent of our customers ar' urrently burning wood as a i-' q i 8e V.T -4 primary heating source with a greater number supplementing M b ~ their oil or electric heat with wood. f i Economic activity in Vermont expanded in 1980 despite 27* s the national economic slowdown. (See the Economic j Development section.) As a result of the economic activity and population growth, the number of residential customers t ~ X 1 \\ increased in 1980 by 2 percent and their kilowatt. hour usage P rose by 4.2 percent. Commercial and industrial customers increased their usage by 3.5 percent and 4.5 percent, respectively. Taking into account the abnormally cold weather, in 1980 and allowing for national economic trends, slower Ji -i growth is forecast for 1981. The Company is engaged in a number of efforts to reviewI / i the prospects for the future demand of electricity. These f efforts are aimed at identifying and measuring the many 'x 1 factors that affect the demand for electric energy, including C l l r rapidly changing relative costs of energy sources, particularly {- O oil; the effect of customers' attempts to maintain living i_ 1 standards by making spending changes; and the effect of ~ y ~.~~ ^ " ~ ~ " ^ ^ ^ ~ ^ ~ ~ ~~ future gwwth in the Vermont economy. The Company is following the development of alternate energy sources by our customers. The Company's long range forecast predicts an annual growth in energy sales of 2.4 percent, and a growth in capacity requirements of 2.1 percent. If these predictions are - wages a Benents realized, the result will be a continuation of the trend over the past ten years of an improving load factor. Load factor is a - Other operatmo E gense measure of the use of the Company's facilities comparing peak use to total use. _g Errnings and Return to Investors Earnings per common share in 1980 amounted to $2.29 per share compared to $2.74 in 1979. With three rate requests pending in Vermont, we anticipate improved earnings in 1981. 4

As noted in the Letter to Shareholders, the goal of the Company is 'o regularly increase the dividend level in order to competitively compensate the equity owners of the Company. In line with this policy, the Company's dividend rate was

ncreased in the fourth qu arter from 46 cents per common share to 48 cents per share or $ 1.92 cn an annual basis.

The return on sommon equity for the past five years is shown on this page. During this time, the Company has maintained a return on equity aMve the industry average. Rate Case Activity The Company continuously monitors its rate of return in each regulatory jurisdiction - Vermont, New Hampshire anu the Federal Energy Regulatory Commission. Our policy is to file for rate relief as soon as practicable whenever results show an inadequate retum on common equity. Tne Company filed six rate requests during 1980, as shown on the chart on the succeeding page which summarizes rate activity during the last decade. Three of these rate filings were concluded successfully during the year with rates put into effect at the requested dates. The resale rate case filed with the Federal Energy AETURN ON.. Regulatory Commission and applicable to the Company's COMMON EQUITY wholesale customers resulted in a negotiated settlement and gPe tern irnplernentation oI a $786,000 increase without the usual / / seven month suspension period. The New Hamphire Public /,/,/ 0 Utilities Commission immediately allowed an increase in tne ! '~. / portion of the rate request appl; cable to the Company's ,/ wholly owned subsidiar>, Connecticut VWv Electric Company 7' f:, ',, / / .G Inc. Two add;tional increases related to Connecticut Valley ,/ p became effecove on June 1,1980 and January 1,1981. p/7' /1, p j f These resulted in additional annual revenues of $206.000. f p Three Verment reta;l requests remain outstanding. The k@ 6 E first two rate cases reflected increases in purchased power

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Mj j costs representing annual revenues of $7.8 million. The third - e 1 e r Vermont retail case filed in late November to become effective j/ y January 1,1981 is the largest single filing the Company has y p,/41 y" /- j made and addresses a broad spectrum of issues. a /,/;y e Among the many issues of importance in this case is a L.T 4 request for a return on common equity of 18.2 percent which M i l the C mPany maintains is required to attract equity capital JJ ] under current economic conditions. With regard to the quality a ,/ y$- of earnings, the Company has requested that a portion of its d p// joint ownership units be incluoed in the rate base in order to q., y 1,. reduce the ratio of Allowance for Funds Used During s / !M j/ Construction (AFUDC) to net income. The Company has also sj requested a shift to the normalized tax treatment of %). q accelerated depreciation to improve the Company's cash flow. [ h .// A restructured purchased power clause which will allow for the p p', timely collection of costs has been reintroduced to replace the g-,. j/ ^ fuel clause that was discontinued in 1978. The clause / [- 'i # proposes safeguards, including monthly reviews by a h~ - representative of the public, in order to allay any fears that I-the clause might be misused. , / g4 The Company has continued its leadership in rate design in the areas of seasonal pricing and time of day rates. (See Load Management Update.) 5

Regulatory Reorganization in Vermont During the 1980 Vermont legislative session, the Public Service Board was reorganized. The new structure separated q the regulatory function from the administrative function effective February 1,1981. The new Administrative Department, which is called the Department of Public Service, will serve as the public agency for planning the State's total energy requirements and includes Divisions of Public Advocacy Engineering, Economics and Consumer Affairs which will represent consumers in rate proceedings. The Public Service Board will continue to be responsible for setting rates for regulated services of all types. The Public Service Board is comprised of three members appointed by the Governor. The members of the Board and their terms of appointment are as follows: Chairman

• Rosalyn Hunneman, Educator: Guilford: Term Expires 1983 Samuel Bloomberg, Lawyer: Burlington: Term Expires 1985 Central Vermont Public Service Corperation
• The Chairmanship is presently vacant.

Rate Increases (Dollars in Thousands) Requested Approved Filed Amount Percent Effective

• Amount Percent VERMONT c3444 8/390

$ 4,054 19.3 % 9/3 n 0 $2,554 11.8 % c'3502 6/15n1 4,500 18.2 % 7/15n2 3,138 12.7 % c3678 1/19n3 Variable (1) 7/1n3 Variable (1) c3744 (Interim) 8/24n3 6,203 18.9 % 12/In3 to 2/In4 4,100 12.5 % c3744 12/31/73 10.599 (2) 31.5 % 2/1n4 5.434 15.8 % 11/1R4 (3) 1,351-3.0 % '23991 6/3n 5 6,613 15.0 % 7/3/75 6,613 10.5 % 4230 9.882 18.7 % 6/1897 6,347 11.96 % 11/30n9 5,281 - 8.2 % 1/1/80 5,281 8.2 %. e4460 3/21/80 4,328 6.23 % C4496 9/4/80 3.450 4.6 % c4504 11/26/80 18.031 22.8 % NEW HAMPSHIRE IR.14,205 3/4n4 257 9.1 % 4/14n4 257 9.1 % DR.74 238 12/2494 877 28.3 % 4/lRS 877 28.3 % DR.76 95 7/In 6 927 22.5 % 9/1/76 927 22.5 % DR.76187 12/22n6 - 3e 6.8% 3/In 7 344 - 6.8% DR.78 72 5/8/78 272 5.0 % 9/2698 272 5.0 % DR.80 92 4/14/80 219 3.7 % 6/2/80 163 2.i 4 1/1/81 (3) 44 .7 % DR.80178 89/80 514 7.5 % 9/30/80 514 7.5% FEDERAL ENERGY REGULATORY COMMISSION (FERC) 6/2892} E.7685 11/29n t 751 32.9% 8 22R.(4) E.7798 11/in2 278 8.3 % 6/193 J E.9040 9/27n4 1,947 60.0 % 1/695 1,823 56.0 % ER76 533 3/In6 952 19.0 % 9/1n6 842 15.8% ER80-422 5/30/80 931 13.4 % 8/2/80 786 11.3 % (1) Purchase 1 Power and Fuel Adjustment Clause and Successive Clauses Terminated December 1978 (2) including Intenm Request (3) Update (4) FERC Dockets Consolidated

• Effective date reflects recoupment wherever applicable.

6

e 5 TIMES (X) FUNDED DEBT INTEREST EARNED enewai am swe morne w, Financing and Capital Requirements The Corrpany's 1980 construction expenditures /' g amounted to $ 15.6 million; $7.1 million was for in. state construction and S8.5 million was related to nuclear / investments and fuel. The Company's :nternally generated 6@ funds as a ; ercent of these expenditures was 66 percent. p,'/ / / The Company is reevaluating its financing objectives and ./ j p/ / goals as a result of the continuing inflationary trends and the p 3 difficulties in obtaining regulatory approval of various 6p,p. ky p programs which the Company feels are necessary. The gi purpose is to determine the level of capital expenditures which N: 0' the Company can support and at the same time achieve its 2 financial goals. The financial goals which the Company has set j/ j include the following:

1. Earn a rate of return on common equity attractive to

/ [j e s today's investors which requires an allowance far T'e-i/ greater than the currently allowed level of 14.5 / Il l ' i 7j percent; e p dj

2. Achieve interest coverage before income taxes and r

including Allowance for Funds Used During p/ F" [r Construction (AFUDC) of 3 to 3.5 times; // 1

3. Maintain a level of internally generated cash as a

/ "(j percent of the construction program of at least 40 i 3 j/I]O--. #, 8 percent, with an objective of increasing that amount f' by the mid 1980's;

4. Allow AFUDC as a percent of net income available to

/ common stock of no more than 35 to 40 percent;

5. Maintain lonn. term debt as a percentage of total capital of t etween 46 and 48 percent.

CAPITALIZATION RATIOS S Dividend Series of Preferred Stock, was the only new The issuance of $8 million of $100 Par Value,12.75% p / g permanent financing which the Company undertook :n 1980. An additional $0.847 million of common equity was aised p"

1. j #

g through the Dividend Reinvestment and Common Stock "4 / ,o i / Purchase Plan ($0.689 million) and the Company's p 8 participation in the Tax Reduction Act Stock Ownership Plan p '/ e ($0.158 million). The Company remained active in the ^ p oo commercial paper market and at the end of the year had 8$ 1/ outstanding commercial paper of $ 10.7 million, with short. term bank borrowings of $1.6 milhon.

1. #A

'/ 3 The capital structure at h ed of the year was close to p p'y 8 the Company's overall targets. Coverage ratios were [,: @3 y/[]s # maintained at a satisfactory level. The Company's 1981 c / financial plan is to first sell mortgage bonds and later in the ,o f year to issue additional common stock. y sq

1. j /

j The Company received preliminary approval from the / pj j p Vermont Industrial Development Authority (VIDA) to issue tax / y%] p u 4 Company to lower its borrowing cost when compared with d '[. d/ exempt evenue bonds. These bonds would enable the 1 6' p ' 7 conventior.al financing. VIDA has approved the use of these [h Q j 1/ 9 j / [ l] ?y funds in the development of the three low head hydro p facilities located within Vermont. In connection with these e /M d so projects, the Company also obtained a tax exempt ruling from the Internal Revenue Service supporting the issuance of tax N / 4 exempt bond financing. These approvals should give the L / Company access to lower cost money when these projects are -[. developed. / =l & [ m / ,f commono,,, Debt 7

i Power Sources r-Current Sources ^ The peak output was set in December when a maximum ~' ' ' demand level of 364,800 kilowatts was reached. This represents a decrease of 2.1 percent from the previous year. i With total energy use increasing by 5.1 percent, the annual load facte improved from 58.8 percent to 62.9 percent. l The Company relies to a considerable extent on nuclear and hydro pc cc in prosiding its base load sources of energy. During 1980, ncclear power provided 39 gercent of the 1 Company's enerny requirements, hydro 28 percent, coal 11 percent, and oi: 22 percent. In addition to t" Vcrmont Yankee nuclear plant, which provided 31 percm

he Company's 1980 energy requirements, other nuclear plants in which the Company has j

an owr.2rship interest provided an additional 8 percent The Company's own hydroelectric generation operated at far less than normal conditions due to lack of precipitation but did provide 7 percent of energy requirements. Hydro power from l the Power Authority of the State of New York (PASNY), for which the Company has a contract through June 1985, provided 19 percent of the Company's requirements. also less than the previous year. l The Company has a long term contract for 45 megawatts from the Merrimack coal plant in New Hampshire providing Sabrn Pou cr Plant I mde restor bwune i 11 percent of 1980 energy requirements. The balance of the TN ormong n~r u,# Im'ed Nre Company's output vas provided by various oil generating units including the Nyman plant in Maine in which the Company is a joint owner. SOURCES OF ENERGY Future Sources of Power y As a result of a number of factors, the Company is evaluating its future power commitments and possible alternatives. The Company's commitment to future sources has been heavily tied to nuclear power. (See Table.) In 19 30, / / l however, the Montague units were cancelled by the lead / sponsor, Northeast milities. Central Vermont had a 1.73 t / [d j# percent ownership in these units and has invested $0.8 j/ j million. The Millstone "3 unit and Seabrook #1 unit are br th f* g'p]2 over 35 percent completed and the Seabrook "I unit is / expected to be in sersice in 1984. The Pilgrim "2 unit, / however, is awaiting issuance of a construction permit. The S 4 Company believes that these units are needed, and that y g j nuclear power continues to be the lowest cost base load AJ s c# / - *i 1 power. In view of the Company's stated financial targets and c the current regulatory treatment of out-of state generation g I facilities under construction, disallowing construction work in

• j#

l progress (CWIP) from inclusion in rate base, the Company is 06 f p j i evaluating possible al'ernate sources to meet its modest p growth projections. / l / lk k j O A ~ } / i 1 / {f /,/ / a# 8

k i l' k O-Such citernatives include development of in state hydro & ~ facilities, participation in a coal plant, a woodburning plant, as {; well as cogeneration opportunities throughout the State. In kj-addition, it is continuing efforts in areas such as rate design ind load management in an effort to restructure demand atterns in order to balance energy demands and thereby reduce capital requirements, especially for generation. 8 During 1980,25 megawatts of power from flydro Quebec facilities located in Canada were transmitted ' ~y d'l 1 Central Vermont through a State of Vermont purchase. Although this power is not available on a firm basis during the 4 winter, the availability to date has be en excellent. Other US.. a g c. Canadian opportunities are being explored by the Company through the New England Power Pool. The Company is proceeding in the pianning and development stages of a number of smaller hydro projects, including Frog Hollow (1500 kilowatts) located on the Otter Creek in Middlebury: Bradford (930 kilowatts) on the Waits ~~~ River; and Barnet (2200 kilowatts) on the Passumpsic River. As noted previourly, the Company anticipates financing these projects with revenue bonds. These facilities are located in existing sites that were abandoned a number of years ago when the low price of substitute oil generation made these sites uneconomical. Sobrock Power PLmt %n construct:on crane hits matera's ento the reactor budhnq FUTURE POWER SOURCES _ _ _ Cost _in Thousands Projected Actual 1981 Unit Fuel Completion thru thru Name Source Date Megawatts 1980 Completion Total Bradford Hydro 1982 .9 99 $ 1.879 $ 1,978 Frog Hollow H ydro 1983 1.5 66 2.903 2,969 Barnet Hydro 1984 2.2 55 4.300 4.355 Seabrook "I 6 "2 Nuclear 1984,1986 36.6 20,954 36.344 57.298 Millstone =3 Nucle sr 1986 19.9 16.161 34.296 50.457 Pilgrim "2 Nucleer 1987 20.5 7,085 29.876 36.961 Other possible sources: Coal plant Coat Wood plant Wood chips 9 l

e N, y,:ii-o f Operations an\\

w d Expenses

~- pnmarily to the(uxtraordinary increase in production expense

1..

i'M The disapp nting 1980 earnings results were due 's if y. j ]', 'l predominantly fugl.related. These expenses increased by 39 a l. ~. } percent and,[withqut a fuel clause in its Vermont jurisdiction ,g g, 4 g ( .I and despite aggressive rate action. the Company was not able i;. to recover these co' s in a timelv fashion. In addition to x 1 .? i .t i r: L-A q e-...,4 s s P i . -A. ~. ;ml l{ s .; l + s .J "pp[ \\ p3 wx i y %l'g.g i;3' h ' );, ] ~ d ['3 y 1;;. g3 J !ly .+4 ,q ~ 'h [~7-. g4444,. N

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requesting rate relief, the Company moved decisively during 1980 to reduce expenses. In June, reductions in the 1980 operating budget of over $ 1.2 million were placed in effect. A more detailed budget variance analysis was introduced to provide timely explanations of differences between predicted and actual expenses. Management control. utilizing an automated general ledger system, resulted in an increase of only 3 percent in all operating expenses, other than purchased power and income taxes, while inflation was over 12 percent for the year. Moreover, the number of Company employees actual!y declined during the year. The Company is examining productivity and cost improvements in all areas of activity. Word processing has been utilized in severM departments to speed and simplify workflow. Detailed analyses of vehicle sizing, mileage driven and hventory levels have been accomp'ished. Specific recommendations have bee implemented reducing expenses while maintaining service le als. Division operations are consistently monitored to ensure that standards of performance are met. Many engineering tasks have been decentralized both to reduce costs and to provide rapid response to customer needs. The purchase of more efficient equipment will reduce electrical losses, thus reducing expenses. In 1981, the Company will emphasize productivity increases and expense reductions as methods to maintain service levels at minimum cost. Load Management Update Our customers experienced increasing prices for all forms of energy in 1980. Having relied on oil for 70 percent of their energy needs, our customers have been particularly hard hit by escalating oil prices. They have turned extensively to conservation, and to burning wood and coal in hopes of alleviating the erosion of disposable income. However, the demand and price for firewood continue to increase and coal suppliers have not been able to ke.ep up with the new demand for coal. These problems are of concern to the Company since new home construction often uses baseboard electric heat as a backup system for wood and coal stoves, and as support for solar systems as well. The price of oil has also caused the business community to look to electricity as a dependable alternative. As a result of these developments, the load management and pricing efforts of the Company have become even more important as a tool for managine future grc wth. The Company's load management projram is also important in achieving the goal of more balanced seasonal load re< uirements. The program added 3.000 customers in { 198P Particulady significant was the 60 percent increase in time.of. day cus'omers. Combination oil and electric heating systens are now in operation using both hot water and warm air heat distribution. lhe Company has implemented a program to expand its ripple control system by 2.000 customers. This will bring the number of the Company's load management customers under ripple control to 4,500 or about 4 percent of total customers. I1 L.

I The Company is working with customers in developir g their own generation facilities. Of particular importance is the 1 recent installation of a 230 kilowatt steam turbine at Middlebury College. This cogeneration facility generates I electricity when the college's steam plant is operating to produce steam for space heating requirements. This facility benefits both the college, by reducing its electric bill, and the Company, by lowering our system peak. The Company is i actively pursuing deselopment of other cogeneration projects, along with other customer. owned generation facilities. 1 l Load Management Programs 1 Program Customers i 12/31/79 12/31/80 Growth I Off Peak Water Heating 28.901 31.197 2,296 Time of Day Rate 909 1.452 543 Storage Heat 251 409 158 i Winter / Summer Pricing All customers i Economic Developments i i, Economic activity in Vermont and in Central Vermont's ) service area continued to expand during 1980 despite the i national economic slowdown. The principal strength of the Vermont economy is the i disersified nature of its businesses. This includes a healthy 1 mixture of manufacturing, agriculture and tourism. As a result of this diversity, no single business activity dominates the Company's service area economy. The largest industry j j segment represents less than 4.5% of Company kilowatt hour ] sales and the five largest industrial customers (comprising 11 j indisidual plants) account for less than 7% of sales. ] The centerfold of this report ii!ustrates the disersified - - --e n . {~' q j1! industries served by the Company. The chart reflects the .j E stability of the Companv's seven largest industrial customer ,'"*b i groups. Vermont's economy is influenced by a number of factors favorable to business development including: g

1. An adequate labor supply; j

2. A skilled labor force;

3. Good labor. management relations;

\\

4. A positive attitude towards business by the State and j

most of its communities: l

5. Natural resources:

i j

6. Proximity to major popula centers.

Vermont's unique tombination of a productive labor -w ~ ~ ~ ~ j force, natural resources and a desirable quality of life provides i an attractive environment for a number of industries. Two major Vermont industries - paper and machinery - reflect the State's resources. The paper industry is successful due in part to the presence and availability of significant amounts of forest land. The machine tool industry has been built upon the skills and productivity of the Vermont work force. P 12 l

Vermont's workers are noted for their dedication stability and efficiency. Other industries effectively utilize these Vermont ) resources. The rubber, plastic, electrical machinery, and transportation industries are based upon human resources. The lumber and food industries are dependent on Vermont's plentiful natural resources - timber, an abundant water supply, and open land. During the past few years many companies located in the Central Vermont service area have responded to the nation's energy problems. Some of them are directly involved in helping solve these problems, such as Vermont Castings Inc., which produces woodburning stoves, and Sto Energy Conservation, Inc., whir.h produces exterior insulation systems utilizing native marble, among other materials. PERCENT OF SYSTEM SALES ( SEVEN LARGEST INDUSTRY GROUPS 1975/1980 /' / /' / / / / / /' / / - ryi l /,,- /'/ ,/ /\\p> i / / /, / >/ / ,/ ,. A%+ 0; &q j / a f m c y? f., O I. / e. /- o h" g!/ 1 n / pn' f t-k!. i ? s-a p h) ~ / i l% a w / k'N -]; )/g h

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i r Customers constructing new facilities or expanding existing plants have incorporated energy efficient designs. Famolare. Inc., an Italian footwear manufacturer, installed a rolar trorr be wall which, when used in conjunction with oil heat, helps reduce oil consumption. Mary Meyer Manufactaring Company, a manufacturer of toys; Alderman's Chevrolet, Inc., automobile sales; and the Holson Company, a manufactcrer of photographic albums, all have installed underground heat storage systems. During peak hours, heat is released from Deneath the floors where it was stored during off. peak hours. Other customers have parFcipated in the energy surveys conducted by the Vermont industrial Energy Conservation Advisory Program. The objective of this study is to provide recommendations for the modification of existing facilities and techniques in order to minimize energy requirements. Company specialists continue to work with customers to provide expertise in solving energy problems. In this manner, the Company helps achieve its goals of a manageable growth a rate and of more efficient use of existing facilities in order to minimize future capital requirements. 0 ,?4 -e = ,3 4 M %lA r 5 ( g s .3 b.I ~ iTT l 1 T &, c a E}'y ., ' y 'm.. I p, ' e ;. a ~ ' !; h ' 4 g_~

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During 1980, a number of new industries commenced operations in the Company's service area. The largest 9 expansion was at General Electric Company's Rutland Aircraft Group plant. Among the new industries are Express Foods = Inc., a Vermont corporation owned by an English firm which ,m, i pr< cesses dairy waste into whey powder: Geiger of Austria, a i.y ~ G ma afacturer of ski and sports attire; and Oak Fothergill, a disision of Oak industries which produces electronic b--

• E C

l components. In addition. a number of companies expanded operations. Mal Tool Corporation, a division of Gulf and ~_ Western industries, opened three manufacturing facilities in O em.* q"[ 1980. Cone Blanchard Corporation, in Windsor, and Jones & W Lamson Company in Springfield, manufacturers of machine 91 ~ tools. enlarged their plants. The recreation industry. O. 5Lw particularly the ski areas. proceeded with another phase of C ~ long range expansion. - ~ The Company anticipates that during the 1980's, g a ' ' [ ~.. economic activity in Central Vermont's service area will b expand as companies recognize and take advantage of Vermont's natural and human resources. [ ~ 1 4- ' X ', .i " . f'. ( i ( Q ~ l~ - m y u -, D. h 1- -a .i.. 6 MOM

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• • ^

3 j f ; OAIRY PRODUCTS WOOD STOVES l-f \\ kl WOOO PRODUCTS f -Z " f.* -- AIRCRAFT ENGINE PARTS "f e. ' ; 'k RUTyND ~ 4') Q PADEP TALC MINING $*4 4* k" ". I NNG ECUtPVENT r-HEALTH PRODUCTS ' / RUBBER JET ENGINE P ARTS ' ~ p C L AR EMO NT, N.H. = = =.. m , i MACHINE { { lg - TOOLS SKliNG N u

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~' .~ O ENSE5 t-f CENT R AL VE RMONT PUBLIC y SE RVICE COR P. DIVISIOS S / O,,' O vsun NORIHf RN i o a,,-. J> O --- E L ECT Roc co_ gnc, 17

Selected Financial Data wars e thousancs except amounts wr share) 1980 1979 1978 1977 1976 For the year Operating revenues S 90,735 $ 78,185 $ 75,019 5 69.121 $ 63,554 Net income $ 8,902 $ 9,767 $ 10,368 $ 9,170 $ 7,478 Return on average common stock equity 10.5 % 12.9 % 14.7 % 13.3 % 11.7 % Net income per share of common stock $2.29 $2.74 $2.92 $2.47 $2.10 Cash dividends declared per share of common stock $1.86 $1.69 $1.44 $1.36 $1.34 Tota! funds from operations 5 17,874 $ 16,857 $ 14,029 $ 11.140 $ 12.533 Dividends declared $ 7,619 $ 6,705 $ 6,099 $ 6,006 $ 5,360 Construction and clant expenditures 5 15,573 $ 13.065 $ 13.961 $ 10,766 $ 9,107 Total funds from operations less dividends, as e percentage of construction and plant expen htures 65.9 % 77.7 % 56.8 % 47.7 % 78.8 % At end of year Construction work in progress S 48,572 $ 36,759 $ 28,583 $ 21,874 $ 14,254 Long-term obligations $ 87,730 $ 72,858 5 68.863 $ 64,734 5 67,920 Total capitalization $169,433 $152,466 $144,573 $135,523 $135,164 Total assets $211,195 $180,514 $166,557 $155,509 $144.938 Management's Discussion and Analysis of Financial Condition and Results of Operations Company's operating resu'ts for the years 1976 growth in capacity requirements of 2.1% over the next ten through 1980 reflect continuing inflationary pressure on years costs, a f!uctuating pattern of moderate growth and the ef-fect of several rate increases. Although significant reta;l rate Operating Expenses: Costs of purchased power, which increases in 1977 and 1980 have increased revenues. the represent more than 50% of our total operating expenses, Company's net income and return on common stock equity are classified as costs for capacity available to the Company have declined in 1979 and 1980 because of several factors and costs for energy received. These two components of our which are discussed below. purchased power costs for the last five years were as follows (dollars in thousands): Operating Revenues: In each of the last five years 1980 1979 1978 1977 1976 I operating revenues have increased over the preceding year. Capacty $22.873 $18.882 $17.563 $18.404 $19 372 These increases are attributable to the following factors Energy 24.791 15.988 14.743 10.979 10.624 (dollars in thousands): Total purchased poer K7.664 $34.870 $32.306 $29.383 $29 996 1980 1979 1978 1977 1976 -~ Growtn n retail KVM saes $ 3259 $1.012 $3.930 $ 667 $3.600 Until 1980, we have been able to hold capacity costs to a increased retaa rates 7,010 1.325 1.886 4.701 3.441 relatively constant level, however, our energy costs have in-t ev 2281 829 82 199 652 directly related to the escalating prices for oil, nuclear fuel Net ncrease over pror year $12.550 $3.166 $5.898 $5.567 _$7.693 and coal and more importantly to the proportion of the Com-pany's purchased energy that comes from each of these fuel Since 1975 the Company has experienced a modest growth sources, with oil being significantly more expensive than in KWH sales. Although our customers continue to conserve nuclear fuel. See Note 8 to Consolidated Financial State-energy, retail KWH sales have grown by 6.5%,1.0%,5.9%, ments for a summary of the Company's energy sources. The i 1.4% and 4.1% for the years 1976 through 1980, respec-units of energy ptrchased grew by 5.8%,2.8%,6 9%, tively. This represerts an average annual increase of 3.8% 1.5% and 6.4% for the years 1976 through 1980, respec-over the past five years. Year to year fluctuations in growth tively. Due to reduced rainfall, in 1980 only 7% of the Com-rates are affected by cold weather patterns since mar.y of pany's total output was generated from Companyowned our customers use electricity for heating. Management's hydro sources, the lowest amount of hydro generation in six-present long-range forecast indicates an average annual teen years. Because of this lower generation, more energy growth in energy sales of 2.4% and an average annual was required to be purchased. l 18 1

gCost of Money: The increase in interest expense on Company's service territory. These plans, in the ag-g

ong-term debt in 1979 and 1980 reflects the sale of gregate, represent a large undertaking relative to the

~ $10,000.000 of First Mortgage 9%% Bonds, Series Y Company's present size. ($8,000.000 in October,1978 and $2,000,000 in Funds generated from operations (net income ad-January,1979) and the issuance of $15.000.000 of First justed for non-cash charges and credits to income), Mortgage 10 5% Bonds. Series Z ($4,250,000 in less dividends declared, resulted in internally generated September,1979 and $10,750,000 in January,1980). funds of $7,173.000, $5.134,000, $7,930,000. Other interest expense declined in 1980 due to the $10.152,000 and $10,255,000 for the years 1976 repayment of short-term debt subsequent to the sale on through 1980, respectively. This represented 79%, July 2,1980 of $8,000.000 of 12.75% Series Preferred 48%,57%,78% and 66% of construction and plant Stock. This s_e ~ f preferred stock caused a rise in the expenditures in each of the years 1976 through 1980, preferred d:vidend reouiremenis in 1980 and contrib-respectively. uted to the reduction in net income per share of com-In order to provide feJs for the Company's continu-mon stock. ing construction progt im ano other business purposes, Interest expense on short-term borrowings during the additional funds must be obtained by issuing long-term past five years reflects short-term borrowings outstand-debt and equity secunties, as necessary. To accomplish ing and average short-term interest rates as shown these financings, the Company must receive adequate below (dollars in thousands): and timely rate increases Short-term borrowings, used 1930 1979 1978 1977 1976 to provide funds for the interim penod, are generally paid when long-term debt or equity securities are Maunum bonowngs issued. outstanong at any month-end $12.300 $13.500 $7.700 15.300 13.400 Aierage shor1-term Allowance for Funds During Construction: Allow-boutwngs s 3.795 5 6.603 $4 213 $ S01 53.389 ance for funds used during construction is the cost, Average short-term during the period of Construction, of funds used to ete<ect rates 15.43 % 12 97 % 8 88 % 7 83 % 7.30 % finance construction brojects. The allowance for equity funds and borrowed funds used during construction Also see Ncte 5 to Consolidated Financial Statements for ad-han continued to grow in recent years due to the con-ditional informatton on the Company's short-term borrowing tinuing increase in the Company's construction work in arrangements, avai!able lines of credit and commercial paper progress for future nuclear generating plants, particu-financing. larly the Seabrook. Millstone and Pilgrim units. Construction Program and Fir,ancing Requirements: Inflation and Changing Prices: Inflation continues to The Company is participating, as a joint owner, with have a significant impact on virtually every aspect of other electric utihties in the plann,ng and construction our business including operating expenses. construction of several nuclear ger.erating units. The Company is expenditures and cost of money. Management has obligated to provide funds in future years to finance compiled certain data prepared on the basis prescribed these pro!ects as described in Note 8 to Consolidated by the Financial Accounting Standards Board. This in-Financial 6tatements. These projccts constitute more formation is included as Note 11 to the Consolidated than half of the Company's construction program dur-Financial Statements. Although still experimental, and ing the next few years. The program also includes addi-providing only approximations, the methods used are tional funds for construction of other generation, trans-an a' tempt to deal with the effects of inflation on the mission, distribution and general facihties within the Company's operations. l l l 19 1

Consolidated Statement of Income and Retained Earnings Motiars m thousands except amounts per snare) G Year Ended December 31 1980 1979 1978 1977 1976 OPERATING REVENUES $90,735 $78,185 $75,019 $69,121 $63,554 OPERATING EXPENSES Operation Purchased power 47,664 34,870 32.306 29,383 29.996 Product:on and transmission 6,507 5,797 5.235 4,940 4,793 Other operation 11,937 10,965 10,891 10,163 8.849 Maintenance 4,380 4,200 3,654 3.281 2.986 Depreciation 3,664 3.466 3,148 3,048 3,015 Other taxes, principally property taxes 4,347 4,288 3,994 3,899 3,765 Taxes on income (Note 6) 2,712 4,250 4,861 4,457 1,236 Total operating expenses _ 81,211 67,836 64,089 59,171 54,642 OPERATING INCOME 9,524 10,349 10,930 9,950 8,912 I OTHER INCOME AND DEDUCTIONS Equity in earnings of companies not consolidated 2,219 2,327 2,314 2,268 2,370 Allowance for equity funds during construct:on 2,495 1,684 1,173 742 276 Other income, net 394 184 189 331 233 Taxes on income (Note 6) (329) (310) (299) (21,2) (123) ~ l TOTAL OPERATING AND OTHER INCOME 14,303 14.234 14.307 13.009 11,668 INTEREST EXPENSE Interest on long-term debt 6,376 5.066 4,284 4,150 4.103 Other interest 729 879 402 60 275 Allowance for borrowed funds during construct.on (1,704) (1,478) (747) (371) (188) l Net interest expense 5,401 4,467 3,939 3,839 4,190 NET INCOME 8,902 9,767 10,368 9,170 7,478 RETAINED EARNINGS, JANUARY 1 22,480 19,413 15.149 11,985 9,867 31,382 29,185 25,517 21.155 17.345 CASH DIVIDENDS DECIARED Preferred stock 2,098 1,772 1,954 2.136 1,744 Common stock 5.521 4.933 4,145 5.870 3,616 Total dividends 7,619 6,705 6.099 6,006 5,360 l RETalNED EARNINGS, DECEMBER 31 $23,7 ' $22,480 $19,418 $15,149 $11,986 ( Average shares of common stock outstanding 2,972,066 2,921,527 2,881,111 2.848,759 2,734,642 NET INCOME PER SHARE OF COMMON STOCK $2.29 $2.74 $2.92 $?.17 $2.10 ( DIVIDENDS PER SHARE OF COMMON STOCK $1.86 $1.69 $1.44 $1.36 $1.34 See BCCompInyog noreS 10 ConSOWJ3ted financial Statements. l l 20

Consolidated Balance Sheet uMurs e thousancs) k December 31 1980 1979 ASSETS UTILITY PLANT, at original cost $124,275 $119,440 ' ass accumulated depreciation 33,703 31.2f ', 90,572 88,1'i, Construction work in progress 48,572 36.756 Net utility plant 139,144 124.930 INVESTMENTS !N AFFILIATES, at equity (Note 2) 24,592 24,643 NONUTILITY PRCPERTY, less accumulated depreciation 3,723 3,286 CURRENT ASSETS Cash 640 1.482 Accounts receivable, less allowance for t neollectible accounts 11,069 7,064 Refundable income taxes 6,048 746 Unbilled revenue 7,050 6,413 Mtterials and supplies, at average cost 2,035 1,943 Prepayments 1,530 1,052 Other current assets 910 733 Total current assets 29,282 19.433 DEFERRED POWER COSTS (Note 10) 8,405 2,375 OTHER DEFERRED CHARGES 6,049 5,847 $211,195 $180.514 I CAPITALIZATION AND LIABILITIES CAPITALIZATION Common stock, $6 par value, authorized 5,000,000 shares; ou' standing 3,004.176 shares and 2,946,324 snares, respectively (Note 3) $ 18,025 $ 17,678 Other paid-in capital (Note 3) "' 679 24,192 Retained earnings . s,763 22.460 Total common stock equity 66,467 64,350 Preferred and preference stock (Note 3) 15,236 15.258 Preferred stock with sinking fund requirements (Note 3) 11,970 5,310 Long-term debt (Note 4) 75,760 67,548 Total capitalization 169,433 152,466 CURRENT LIABILITIES Notes payable-banks 1,600 13,500 Commercial paper 10,700 Accounts payable 4,008 1,581 Accounts payable-affiliates 8,767 4,048 y Accrued interest 1,082 1,108 l Accrued income taxes 602 210 Other current liabilities 1,495 _ 1.447 Total current liabilities 28,254 21,894 DEFERRED INCOME TAXES 9,326 3,102' f DEFERRED INVESTM7NT TAX CREDITS 3,740 2,528 l DEFERRED CREDITS AND MISCELLANEOUS RESERVES 442 524 l COMMITMENTS AND CONTINGENCIES (Note 8) $211,105 $180.514 = See accom;mnyng notes to consohdated hnancel st 'tements. 21

Consolidated Statement of Changes in Financial Position

Jestars e inOusands) l Year Ended December 31 1980 1979 1978 1977 1976 SOURCF OF FUNDS Funds fi;m operations Net ir come

$ 8,902 $ 9.767 $10,368 $ 9.170 $ 7.478 Principal non-cash charges (cred:ts) to income Depreciation 3,664 3,466 3,148 3.048 3.015 Deferred income taxes and investment tax credas 7,436 3,137 (1,439) 2,G30 1,111 A!!owance for equity funds dunng construction (2,495) (1,684) (1,173) (742) (276) Dividends received more than equity incorre 141 50 369 401 291 Other 226 2.121 2,756 (2.817) 914 Total funds from operations 17,874 16.857 14,029 11.140 12.533 Funds from outside sources Long-term debt 10,750 6,250 8,000 300 Preferred stock 8,000 7,000 Common stock 647 724 535 429 6,475 Change in short-term debt (1,200) 6,900 1 a00 5.300 (9.300) Total funds from outside sources 18,397 13,874 9,835 6,029 4.175 Total funds provided $36,271, $30.731 $23,864 $17,169 $16,708 i USE OF FUNDS Construction and p! ant expenditures $15,573 $13.065 $13,96' $10,766 $ 9,107 Dividends declared 7,619 6,705 6,099 6,006 5,360 Investments in affikates 90 172 (240) (50) (314) Retirement of long-term debt 2,538 915 2,531 2,146 866 Retirement of preferred stock 1,340 1,340 1,341 1,340 670 Net increase (decrease) in other working capital items 2,289 5,849 (622) (4,441) 73 Net increase (decrease) in deferred power costs 6.030 227 (97) (270) (184) Other, net 792 2.458 892 1,672 1,130 Total funds used $36,271 $30,731 $23 864 $17,169 $16,708 CHANGES IN OTHER WORKING CAPITAL ITEMS Accounts receivable $ 4,005 $ 230 $ 643 $ (494) $ (1,128) Refundable income taxes 5,302 746 Unbeled revenue 637 290 1,691 (13) 169 Cash and other current assets (95) 654 (:,004) (43) 1,481 Accounts payable (7,146) (801) 343 (807) (211) Accrued income taxes (392) 4.718 (2,424) (2,241) (207) Other current liabihties (22) 12 129 (843) (31) Net increase (decrease) in other working capital items $ 2,289 $ 5.849 $ (622) $(4 g ) $ 73_ O

kf 3CCompanyn) DCles to COnSoldf3 fed h03nCidl $f3femenf$

22

Notes to Consolidated Financial Statements I Note 1 - Summary of significant accounting policies: Deferred Charges: Certain costs are deferred and amortized Consolidation: The consolidated financial statements in accordance with rate-making policies of regulatory include the accounts of the Company and its whollyovned authorities. See Note 10. subsidiary, Connecticut Valley Electric Company Inc. The Company follows the equity method of accounting for Note 2-investments in affiliates: The Company accounts ns investments in affiliates. See Note 2. for investments in the following companies by the equ:ty method (dollars in thousEnds)- December 31 Regulation: The Company is subject to regulation by the Vermont Public Service Board (PSB), the Federal Energy Ownership 1980 1979 Regulatory Commission (FERC) and, to a lesser extent, the Nuclear generating companies: public utilities commissions in other New England states Vermont Yankee Nuclear Power Corp. 31 3 % $18.270 518.332 where the Company does business, with respect to rates Maine Yankee Atomic Power Co. 2.0% 1,336 1,337 Connectcut Yankee Atome Po er Co. 20% 1,137 1.029 charged for service, accounting and other matters. The Y nkee At mic Electrc Co. 35% 716 716 Company's accounting policies genera!!y reflect the rate-making and regulatory policies of these authorities. 21.459 21.414 Other affiliated companies: Revenue s: Estimated unbilled reverues are recorded at the Vermont Electre Power Company. Inc. 58 4 % 3,110 3.110 end of accounting periods. Through 1978 the Company's Cv Reatty. inc. 1000 % 23 119 tariffs included fuel adjustment clauses under which fuei and $24.592 $24fA3 the energ/ portion of purchased power costs were billed to customers. As of January 1,1979 the fuel adjustment clause Each sponsor of the nuclear generating companies is applicable to the majonty of retail customers was terminated. obligated to pay an amount equal to its ent!!1ement percent-Maintenance: Maintenance and repairs are charged to age of fuel, operating expenses, and cost of capital and is maintenance expense and include reolacements of less than entitled to a similar share of the power output of the plants. retirement units. Replacements of retirement units and See Note 8 for the percentages of total power output re-Detterments are charged to utility plant, and the book cost of ceived from these companies. Units retired plus the cost of removal thereof, less salvage. Summarized financial information for Vermont Yankee are charged to accumulated provision for depreciation. Nuclear Power Corporation is as follows (dollars in thousands): December 31 Depreciation: The Company ues the straight-line method of f 1980 1979 depreciation. Total depreciation expense was between Eaminns 3.32% and 3.49% of the cost of depreciable utility plant F gp,,,gg, $78.340 $65.982 the years 1976 through 1980. Net income appicable to common stock s 5.8m s 5.811 income Taxes: The tax effect of timing differences between Cornpanys e@ in net mne $ 1,815 $ 1.819 pre-tax income in the financial statements and income investment subject to tax are accounted for in accordance with the rate-making policies of the PSB. See Note 6. Beginning in 1978. T tai assets. pnnce W ut;hty piant $222,352 52 7.664 investmer' tax credits realized are deferred and amortize 1 to preferred stock 17,220 18.325 income over the lives of the related properties. Prior to 1978, Lor 9 term debt 76.757 81279 the Company fcilowed the flow-through method of Other habsties and deferred credits 70,002 59.380 accounting for investment tax credits when realized-Net assets 5 58,373 5 58.680 Allowance for Funds During Construction: Allowance for, Company's equity in net assets s 18.270 5 18.332 funds used during construction (AFDC) is the cost, dunng the pen 6d of constructhn, of funds used

• i finance Vermont Electric Power Company, hic. (Velco) owns and construction projects. The Company capitalizes AFDC as a operates a transmission system in Vermont over which bulk part of the cost of major utility plant projects except to the power is delivered to all electric utilities in the state. Velco extent that costs applicable to such cons:Tuction work in entered into a Power Transmission Contract with the State of progress have been included in rate base in connection with Vermont and under its terms bills all costs, including amor-rate-making proceedings. The AFDC rates used by the tization of its debt and a fixed return on equity, to the State Company were 8.41 %, 9.32%,10.27%,11.13% and and others using the system. This contract has enabled 11.15% for the years 1976 through 1980.

Velco to finance its facilities primarily through the sale of 23

first mortgage bonds. Velco operates pursuant to the terms The second preferred stock is currently convertible into of the State contract and an Operating Agreement with the common stock at $18.44 per share. As of December 31 Company and two other major distribution companies in Ver-1980, 9,891 shares of common stock were reserved for con-mont. Although the Company owns 58.4% of Velco's version. la 1980,440 shares of secad preferred stock were outstanding common stock, the Operating Agreement effec-converted into 1,190 shares of common stock, which in-tively restricts the Company's control and therefore Velco's creased other paid-in capital $15,000. financial statements have not been conso' lated. Summa-The 13.50% series preferred stock is redeemable at par rized financial inicmwibi lor Velco is as follows (dollars in

hrough a mandatory sinking fund in the amount of $670,000 thousands):

December 31 per annum and, at its option, the Company may redeem at 1980 1973 par an additional norFCumulative $670,000 per annum. Eamings Commencing in 1986 the 12.75% series preferred stcck is redeemable at par through a mandatory sinking fund in the Transmesm revenues $10.445 $10.425 amount of $1.600,000 per annum and, at its option, the Com-operat:ng expenses _ 6.289 6.016 pany may redeem at par an additional non-cumulative operat ng ocome 4,%.o 4.409 $1,600,000 per annum. otner w e 671 282 In 1980 other paid-in capital increased $507.000 for the Total operatng and other ocome 4.827 4.691 exCese of the proceees over tne par vaiue on tne saies of Net nterest expense 4.425 4.289 56.' 1 ares of common stock, increased $78,000 due to Net ocome $ 402 $ 402 the o, artizatio.1 of capital stock expense related to the Company's equity n net income $ 229 $ 234 13.50% series preferred stock and was reduced by $113,000 for expenses in connection with the sales of common and inve"rr.ent preferred stock. Net utw punt $47,909 $46.917 Cuirent assets 17,725 10.324 Note 4 - Long term debt: A summary of long-term debt otrer assets 629 2.49? follows (dollars in thousands): December 31 Total assets 66,263 59.732 1380 1979 Less First Mortgage Bonds First mortgage bonds 42.995 44.641 5 % Seres L due 1987 $ 886 $ 891 Current hab<iites 17,945 9.768 5',% Seres M. due 1995 4.580 4.605 Net assets 5 5.323 $ 5.323 6\\% Seres N. due 1996 4,6% 4,675 7%% Seres O, due 1992 1,870 1,880 Company.s equity in net assets $ 3,.10 $ 3.110 84% Seres P. due 1999 3,WO 3.000 Note 3 - Capital stock and other paid-in capital: 10 % Seres O. due 1999 2,000 2.000 Cumulative preferred are oreferme stock outstanding was 8t% Seres R. due 2001 3,000 3.000 as follows (do!!ars in thowands): December 31 8%% Seres S. due 2003 5.000 5,000 1980 1979 114% Seres T. due 1990 5,625 6.000 3\\% Seres U. due 1980 1.517 Preferred stock. $100 par vak.;e. 4 'A % %hN M28 14% aumow 20.000 shares 3',% Seres W. due 1982 784 791 5 Seres. 37.856 shares $ 3,786 5 3.786 9 ;% Seres Y. due 2003 10.000 10.000 4 C5% Seres,10.000 shares 1,000 1.000 10\\% Seres Z. due 2004 15.000 4.250 4 75% Seres.17.682 shares 1,76 3 1,768 5 375% Seres 15.000 shves 1,5W t '00 Debentures 12 75% Seres. 8v.000 shares 3.000 4'.%. due 19e/ 3.240 3.330 13 %% Seres. 39.700 sh"" 7 %.due 1993 8,4'10 8.600 (1979 - 53.100 shares) 3,970 5.310 1o\\%. due 1%S 3,080 3.150 Preferred stock. $25 par va!ue, authorwJ 1.000 000 shares Other, due 1985 74 258 res. 280,WO sha'es 7,000 7.000 Total long term debt $75,760 $67.548 Second preferred stock. $50 par value, author 2ed 7.993 shares outstanding Based on issues outstanding at December 31,1980, the 5 44% Convertbe Seres A. 3.648 shares aggregate amount Of long-term debt maturities and s!nking (197 % -4.088 shares) 182 204 fund requirernents (exclusive of the amount that may be Prvart-nce stock $1 par value. sattsfied by property additions) are approximately $2.264,000, autnomd 1.000.000 snares $1,605,000. $828,000, $4.391,000 and $1,942,000 for the outstarong - none years 1981 through 1985, respectively. Substantially all prop-Tota! cumuutive preferred erty and plant is subject to liens under the First Mortgage a vj pre'erence stock $27.206 $20.%8 Bonds. 24

INote 5 - Short term borrowings: The Company uses bank power costs ($877.000 in 1976 and $2,946.000 in 1980), un-loans and in Januarv,1980, began issuing commercial paper billed revenue ($255.000 in 1977 and $2,035.000 in 1980), to finance temporanly its construc' ion program and for other retroactive revenue ($1,915,000 in 1977 which reversed in corporate purposes. As of December 31,1980 the Company 1978), municipal property taxes ($219.000 in 1976), and had annual bank lines of credit, which are normally t mewed, equity in ur" emitted earninqs of companies not consolidated expinng at vanous times in 1981, to support its bar" ioans ($217,000 in 1976) and commercial paper, with varying compensating balance requirements. These range generally from maintenance of The pnncipel reasons for the differences between the total average compensating balances equal to 7%% to 10% of ncome tax expense and the amount calculated by applying cred t lines available plus 7%% to 10 % of outstand:ng bor-the Federal income tax rate to income before tax are as follows (dollars in thoustnds)- he lowing summanzes comparable information for 1980 and 1979 relative to bank lines of credit, outstandtng short-term debt and interest rates (dollars in thousands): Year Ended December 31 1980 1979 1978 1977 1976 income before income tax $11,943 $14.327 $15.528 $13.909 $8,837 Federal statutory rate 46 % 46 % 48 % 48 % 48 % 1980 1979 Computed " expected" tax Unused lines of credt at yearend $14.300 $ 1.600 expense $ 5.494 $ 6.590 $ 7.453 $ 6.676 $4.242 Average interest rate at yearend increases (reductions) in Notes payable - banks 21 50 % 15 22 % taxes resulting from Commercel paper 20 03 % Dividend received credit (901) (934) (954) (925) (%7) Total short-term borromngs 20 22 % 15 22 % Additional depreciation Average interest rate for the year for tax purposes (597) (530) (514) (401) (425) Notes payable - banks 15.80 % 12 97 % Allowance for equity funds Commercal paper 15.26 ? during construction (1,148) (774) (563) (356) (132) Total short-term borrowings 15 49 % 12.97 % Other capitalized costs (40) (41) (387) (213) (122) Average amount outstanding during year Change in unbill3d revenue (8) (103) 6 (81) Notes payaoie - banks 5 1.577 $ 6.603 state income taxes net of P Commercel paper $ 2218 Federal tax benet:t 235 391 365 369 202 Total short-term borromngs S 3.795 $ 6.603 investment tax credits (81) (55) (30) (418) (1,357) Manrrum amount outstanding at any montt>end Other 79 (79) (107) 1 (1) Notes payable - banks $ 3,800 $13.500 Total income tues S 3,o41 $ 4.560 $ 5.160 $ 4.739 $1359 Commercal paper $10,700 Total shor1-term borrowings $12,300 $13.500 Note 6 - Income taxes: The components of income tax Note 7 - Pension plan: The Company has a non-expense are as follows (dollars in thousands): contnbiory trusteed pension plan ;overing all regular 'oyees and follows the consMnt practice of currently i Year Ended December 31 funang a!! costs accrued Total pension costs amounted to URO 1979 1978 1977 1976 $895,000, $985.000, $1.046.000, $908.000 and $1,038,000 Taxes on operating income: for the years 1976 through 1980, includ:ng amortization of Federal - current $44,302) $ 435 $5.345 $1.904 $ 13 the unfunde' actuanal liability Over a thirty-year period begin-Federal - deferred 5.387 1231 (137) 1.882 867 ning January

• 1976. A comparison of accumulated plan bene and plari net assets is prennted below (dollars in l

ta u rent 9 442 1 State - de'eirW 830 198 (308) 229 185 2.712 4.250 4 861 4 457 1.236 g 3 Taxes on other income: g jgp Federal - current 230 203 242 269 41 I Federal - deferred (3) 1 (21) (27, 50 Actuaral present value of l Investment cred:t adi 65 71 40 accumuiated plan benef ts l State - current 38 35 41 44 23 Vested $5.886 $4.743 ( State - deferred (1) (3) (4) 9 Nonvested 631 476 $6.517 $5.219 329 310 299 282 123 Total income taxes $3.041 L4.560 $5.160 $4.739 $1.359 Net assets available for benef:ts $5.876 $4.485 Major items which resulted in deferred income tax ex-The assumed rate of retum used in determining the ac-nse were allowance for borrowed funds during construc-tuarial present value of accumulated plan benefits was 6.5% ,on ($1,236,000 in 1979 and $848,000 in 1980), deferred for 1979 and 1980. 25 i

1 Note 8 - Commitments and contingencies: The Com-past operations as a distobutton company, the Company pany purchases 67,525 KW of hydroelectnc power anticipates that they will have a more signit cant impact generated t'y the Power Authonty of the State of New York upon the capital costs and construction schedules of the (Pasny), under long-term contracts which expire June 30. new generating facilities in which the Company is par-1985 and also purchases power from a coabfired generating ticipating. p! ant located in Merrimack, New Hampsnire under a life of Minimum rental commitments of the Company under the un,t contract. The percentages of the Company's total non-cancellabic leases as of December 31,1980 are not power output from all sources were as foMows: matenal Total rental expense entering into the determi-nation of net income, con sting principally of vehicle Year Ended December 31 and equipment renta's, was approximately $1,031,000, source of Energy 1980 1979 1978 1977 1976 $1 119,000, $1,229,000, $1,370,000 and $1,571,000, Naceear gewanng ccmpanes 39 % 41 % 38 % 42 % 41 % respectively, for the years 1976 through 1980. Pavy - co 19 22 22 25 27 vemmat - cm: 11 11 8 11 2 Note 9 - Retail rate increases: During 1980, tha ComrewW t'yd'o 7 9 8 9 12 Cornpany apphed to the PSB for retail rate increaus vwecamoes 24 17 24 13 18 to be effective on Aoni 23,1980 (approximately 100% 100 % 100 % 100 % 100 % $4.300,000 on an annual basis which the Company began bilhng subject to refund on October 23,1980) ad M2 & M M aMoM amod d apM The Company's ownersh@ mterest and its share of mW on n m bas mne of M amounts invested at year-end in the jointly-owned was bWed during 1980). Each of the apphcations is l generating facihtles in which it is participating are as based on increased costs of purchased power incurred by follows (do!!ars in thourands). the Company Hearings before the PS3 have been held Demer 31 regarding only the rates to be effect:ve Apnl 23,1930 Ownership 1980 1979 but no decision has been rendered by the PSB. Based on Pia ~, semce previous PSB decisions, and as a!! owed by Vermont law, w,mana4 1 77690 % 5 3 20e 53M the Company anticipates that rates eventually approved will be effective retroactive to April 23,1980 and Oc-une ccnste on saamco o ana 2 5939c% 520.954 s14 947 tober 6,1980, respective ly. l v. s re na 3 73u30% 16.161 12 425 In connection with past rate proceedings, it has been th_ Pyr. 2 1 78300 % 7.085 5 946 Company's practice to retroactively record finally approved V ontag ue s1 and #2 1 73000o 805 720 revenues and to restate previously issued financial 534 033 statements upon rece pt of final PSB orders in connection 545,005 with the above rate proceedings, the Company has elected Wyman #4, an oil-fired generating plant. commenced to change its method of accounting for revenue increases commercial coeration in December,1978 Tne which are pend;ng PSB approvat According!y, based on Company's share of operating expenses is included in management's judgement, the f;nancial statements for 1980 the correspondrng operating accocnts on the Statement include an accrual of revenues which tre expected to be of income. al: owed by the PSB for the periods subsequent to Apol 23, In December,1980 the lead sponsor of the Montague 1980. The change was made because management believes

1. 1 and #2 generatmg units announcea that it was that tho amount of the revenue increases that will be cancehng construction plans. Management beheves that ultimate!y approved can be reasonably estimated and these costs w:ll be recovered, in acccrdance with pres.

because the change provides a more timely matchMg of ent PSB oractice, through future rates charged to revenues and expenses. The effect of the Change in method customers of accounting was to increase operating revenues by For the other four nuclear units to be constructed, the approximately $2,538.000 and net income by approximately Company is obhgated to provide funds in future years $1,275.000 (5.43 per share) for 1980. This change, made estimated to total $101.000,000 (including AFDC and dunng the third quarter of 1980, resulted in restatement of present :omm:tments for nuclear fuel) to be required ap-tne second quarter of 1980 The change increased second pronmately as fol:ows. 1981, 517,000,000; 1982, quarter net income by $335,000 ($ 11 per share) Operating $20,000,000,1983, $19,000,000; 1984, $22,000,000; revenues bWed subject to refund amount to $534,000 for 1985. $13,000.000, and 1986-1987, $10,000,000 1980. The Company is subject, hke other electric utihties, to in addition to the two pend:ng rate increase requests dis-evolving standards administered by Federal, state and cussed above, the Company has also apphed to the PSB for e local authorities relating to the quality of the environ-an additivnal retail rate increase to be effective January 1, ment These mns ards affect the siting of generating 1981 (approximately $18,031,000 on an annual basis). This facihties, air and water quahty, nuclear plant hcensing increase has been suspended by the PSB for six months and safety and otner environmental factors While these and the Company anticipates that it will begin bWing this standards have had some impact upon the Company's increase, subject to refund, o. e1,1981. 26

ote 10- Deferred power costs: A summary of deferred ten-year period commencing January 1,1974 as approved power costs principally related to the Vermont Yankee plant by the FERC and PSB. follows (do!!ars in thousands)- Decernber 31 A portion of the cost of replacement energy purchased during an unscheduled shutdown of Vermont Yankee in 39gg 3979 November and December,1980 has been deferred schmuw re'ueurs shutdowns s2,661 $1.025 ($3,833.000). The PSB has not approved this deferral for UnscheduW shutdown n 1973 1.012 1.350 Unscnsued snutdown in 1980 3.833 rate-making purposes. The ultimate recovery of these costs Mactenance costs 8% is dependent upon PSB approval. The Company believes that the PSB will permit recovery Totat deferred power costs 58.405 $2.375 of these costs in future rate orders. This opinion is based During regular Vermont Yankee refuehng shutdowns the upon (1) prev;ous PSB orders that permitted recovery of increased costs attnbutab" to replacement energy pur-other unusual costs and (2) approval from the PSB staff to chased from NEPOOL are, caferred and amortized to ex-amortize these costs to expense, for accounting purposes, pense over the estimated period until the next regularly over a five-year period beginning January 1,1981 scheduled refueling shutdown. Costs associated with Vermont Yankee's seismic studies Costs associated with Vermont Yankee shutdowns re-and anchor bolt repairs and Yankee Atomic's te bine repair quired to replace original fuel rods and install off-gas hold;ng were deferred in 1980, based upon a proposal by the pubhc in equ:pment during 1973 were deferred. These costs, which a rate hearing before the PSB. These costs which totaled totaled $3.374,000, are being amortized to e.vpense over a $1.037.000 are being amortized over a five-year period. Note 11 - Unaudited information conceming the effects of inflation: The following information is supplied for the pur-pose of providing certain information at>3ut the effects of changing prices. It should be viewed as an estimate cf the approx-imate effect of changing pnces, rather than as a precise measure. A statement of income adjusted for changing prices follows (dollars in thousands): Year Ended December 31,1980 Conventional Adjusted for Adjusted Historical General for Changes in Cost Inflation Specific Prices Operating revenues $90,735 $ 90.735 $ 90,735 Operating expenses Operation and maintenance 70,488 70,488 70,488 Depreciation 3,664 8.211 9,518 Other taxes, pr:ncipally property taxes 4,347 4,347 4.347 Taxes on income 2.712 2.712 2.712 Total operating expenses 81,211 85,758 87.065 Operating income 9,524 4.977 3.670 Other income and deductions, net 4,779 4,779 4,779 Interest expense, net (5,401) (5,401) (5,401) Net income (excluding reduction to net recoverable cost) $ 8,902 $ 4.355* $ 3.048* Gain from decline in purchasing power of net amounts owed 5 10,289 $ 10,289 Reduction to net recoverable ecst (10,884) (9.577) $ (595) 712 increase in specific prices (current cost) of property, plant and equipment held during the year * * $ 19,392 Effect of increase in general price level (29.469) Excess of increase in general price level over increase in specific prices $ 10.077

• Inciuding the reduction io net reccuerable cost. net income would have been a loss of $6.529

" Ar December *31.1980. the current cost of ut:hty plant net of accumulated depreciation was estmated to be appronnatety $266.124 as Compared with the net utihty plant fecoverable through d9preciaton of $139.144 27

N ?.e 11 - Continued: A five-year companson of selected supplementary financial data adjusted for the effects of chanfTg pnces stated in average 1980 do!!ars follows (dallars in thousands except amounts per share): Year Ended December 31 1980 1979 1978 1977 1976 Operating revenues $90,735 $88,758 $94,753 $93,989 $91,995 Historical cost information adjusted for general int'ation Net income (excluding reduction to net recoverable cost) $ 4,355 $ 6,989 Net income per share of common stock (excluding reduction to net recoverable cost) $.76 $1.70 Net assets at year-end at net recoverable cost $78,035 $85,460 Current cost information Net income (excluding reduction to net recoverable cost) $ 3,048 $ 5,287 Net income per share of common stock (excluding reduction to net recoverable cost) $.32 $1.12 Excess of increase in general price level over increase in specific prices $10,077 $11.250 Net assets at year-end at net recoverable cost $78,035 $85,460 General information Gain from decline in purchasing power of net amaunts owed $10,289 $10,890 Cash dividends declared per common share $1.86 $1.92 $1.82 $1.85 $1.94 Market price per common share at year-end $14.38 $17.88 $18.16 $20.40 $22.26 Average consumer price index 246.8 217.4 195.4 181.5 170.5 Dollar amounts adjusted for general inflation (constant depreciation rate to tne restated depreciable plant base at dollar) represent historical costs of ut:lity plant stated in the beg:nning of the year terms of dottars of equal purchasing power, as measured by The effects of inflation are net recognized for income tax the Consumer Price Index for All Urban Consumers (CPI-U)- or rate-making purposes Under the rate-making presenbed Current cost amounts reflect the changes in necific prices by the regulatory commissions to which the Company is sub-of utikty plant from the date the plant was acquired to the ject, only the historical cost of property, plant and equipment present, and differ from constant doha: amounts to the ex-is recoverable in revenues as depreciation Therefore, the tent that specific prices have increased more or less rapidly excess of the cost of plant stated in terms of constar,t l than prices in general-dollars or current cost over the historical cost of plant is not The current cost of property, plant and equipment, com-presently recoverable in rates as depreciation and is prising plant in service, expenmental electnc plant, plant reflected as a reduction to net recoverable cost. While the held for future use and construction work in progress, rate-making process gives no recognition to the current cost represents the estimated cost of replacing existing plant of replacing property, plant and equipment, based on past assets and was determined by indexing the surviving plant practices, the Company believes it will be allowed to earn on by the Handy Whitman Index of Public Utikty Construction the increased cosi of its net investment when replacement Costs. The resulting adjusted data for property, plant and of facilities actually occurs. equipment are not.ndicative of the current value of existing During a period of inflation, holders of monetary assets property, plant and equipment nor of the Company's fmure suffer a loss of general purchasing power while holders of capital requirements. The actual replacement of existing monetary habihties experience a gain. The gain from the property, plant and equipment will take place over many dechne in purchasing power of net amounts owed is primar. ( years and not necessanly in the same manner as the ily attnbutable to the substantial amount of debt which has presently existing assets. been used to finance property, plant and equipment. Since Accumulated provis:ons for depreciation under both the depreciation of the utilny plant is hmited to the recovery methods described above were determined by calculating of histoncal costs, the Company does not have the oppor-the ratio of histoncal accumulated depreciation to historical tunity to realize gain on debt and is limited to 'ecovery only depreciable property by year of acquisition and applying the of the embedded cost of debt capital. Therefore to have the resultant ratio to est; mated constant dollar and current cost Statement of locome adjusted for Changing Pres properly l of property, plant and equipment. The current year's provi-reflect the economics of rate regulation, the gain from the sion for depreciation on the constant dollar and current cost dechne in purchasing power of net amounts owed should be amounts was determined by applying the Company's offset by the reduct:on of net property, plant and equipment. 28

Note 12 - Unaudited quarterly financial information: The following quarterly financial information is unaudited and in the opinion cf management includes all adsstments (consisting only of normal recurring accruals) necessary to a k fair statement of results of operations for such periods. Variations between quarters reflect the seasonal nature of the Company's business (dollars in thousands except amounts per share). Quarter Ended March June September December 1980 Operat;ng revenues $24.050 $19.525 * $20.508 $26,652 Operating income $ 2,330 $ 2,077* $ 2,178 $ 2.939 Net income $ 2.046 $ 1.800* $ 2.253 $ 2803 Net income per share of common stock 5 55 $.47 * $.55 $ 72 1979 Operating revent.es $21,044 $17,455 $18,444 $21,242 Operating income $ 3,080 $ 2,294 $ 1,863 $ 3,112 Net income $ 2.954 $ 2,192 $ 1,708 $ 2,913 Net income per share of common stock $ 85 $.61 $.43 $.85

• Restated - see Note 9 Report of Independent Certified Public Accountants The Stockholders and Board of Directors Central Vermont Public Service Corporation:

l We have examined the consolidated balance sheet of Central Vermont Public Service Corporation and subsidiary as of December 31,1980 and 1979 and the related consolidated statements of income and retained earnings and changes in fir,ancial position for each of the five years in the period ended December 31,1980. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the aforementioned financial statements present fairly the consolidated financial position cf Central Vermont Public Service Corporation and subsidiary at December 31, 1980 and 1979, and the results of their operations and the changes in their financial position for each of the five years in the period ended December 31,1980, in conformity with generally accepted accounting principles which, except for the change, with which we concur, in the method of accounting for revenues as described in Note 9 to the financial statements, have been applied on a consistent basis. O Boston, Massachusetts PEAT, MARWICK, MITCHELL & CO. February 20,1981 29

Historical Statistics ( 1980 1979 1978 1977 1976 COMMON STOCK DATA: Earnings per average common share 2.29 $ 2.74 2.92 $ 2.47 2.10 Dividends paid per share 1.86 $ 1.69 $ 1.44 1.36 1.34 Book value per share (year end) $ 22.12 $ 21.84 $ 20.84 5 19.38 $ 18.32 ^ MARKET PRICE (BID) RANGE PER SHARE High 16% 18 1EN 16% 15% Low 12*. 14% 14 145 11% Year end 14% 15% 14% 15 15% Price earnings ratio 6.3 L7 4.9 6.1 7.3 Market price as a percent of book vclue (year end) 65 % 72 % 69 % 77 % 84 % Dividend payout ratio 81.2 % 61.7 % 49.3 % 55.1 % 63.8 % Common sharehoiders 14,491 14,666 14,921 15,308 15,533 Average number of common shares outstanding 2,972,066 2.921,527 2,881,111 2,848,759 2,734,642 Total common shares outstandin) 3,004,176 2,946,324 2,898,983 2,862.993 2,834,422 Return on average common equity 10.4 % 12.8 % 14.5 % 13.1 % 12.0 % CAPITALIZATION DATA (000's): Common stock equity $ 66,467 $ 64,350 $ 60,425 $ 55,486 $ 51,921 Non redeemable preferred 15,236 15,258 15.285 15,303 15.323 Redeemable preferred 11,970 5,310 6.650 7,990 9,330 Long-term debt 75,760 67,548 62,213 56,744 58,590 Total capitalization $169,433 $152,466 $144,573 $135,523 $135,164 CAPITAlf2ATION RATIOS Common stock equity 39.2 % 42.2 % 41.8 % 40.9 % 38.4 % Non-redeemable preferred 9.0 % 10.0 % 10.6 % 11.3 % 11.3 % Redeemable preferred 7.1 % 3.5 % 4.6 % 5.9 % 6.9 % Long-term debt 44.7 % 41.3 % 43.0 % 41.9 % 43.4 % FINANCIAL DATA: Times interest earned-Before income taxes 2.7x 3.4 x 4.3x 4.3x 3.0x After income taxes 2.3x 2.6x 3.2x 3.2x 2.7x Times interest earned and preferred dividend earned: After income taxes 1.7x 2.0x 2.3x 2.1 x 1.9x Embedded cost of long-term debt (year end) 8.39 % 7.95 % 7,75 % 7.39 % 7.00 % Embedded cost of preferred stock (year end) 9.71 % 8.73 % 9.08 % 9.40 % 9.63 % 30

k 1980 1979 1978 1977 1976 OPERATING DATA. EL ECTRK' REVW uES iOUO's) Revdental 5 40.6b ? $ 3t; 4f,/ $ 35b48 $ 33189 $ 30 760 l Corrmeroa and nduvoai 36 449 30 859 29427 26 498 M 848 ~ B79 L764 Oth. Hectrc at<es 5947 3 629 '052 Otne 7.682 7 235 6 992 6 555 6 180 TOTAL 90.735 $ 78.185 $ 75 n "4 69 1/1 $ 63 554 ELECTA!L SALES MWH RWder ts 754 241 724 041 716 9'S 698 301 701 244 Domme rm and :nd ;s" a! R,852 / a 848 646 e30 225 59 222 '42.549 m 166.329 lad 389 27 118 % ? 133 589 4"w e trr Otnm 106 757 105 052 107 292 104 04' 102 2'1 TOTAL 1.912 575 ' a.26 ' J8 ' '75 560 ' 680 if 1 679.653 lUSTOMERS rem et ve m C.e S ict!'tl 3! 96 910 M E*36 95 C'6 93' N 91 CN 1amstrq. 10,624 10 562 10 485 'O 285 'O 094 Commerc a 4 Othm evc t r a a attec 14 11 'S 12 Ome' 2.172 ? 44 c JEe 2 474 2 4'15 97' 105 W ' U4 ?29 TOTAL 111 720 ' H98U Aw.ge KWH Jse p+" re'udent d-stomm 7.70' ' 54' '6 4 'E<~ 7 712 A v0'Et ge 'evenue ce reydontia; Customer 3 415 26 3 379;+ $ 379 'O 39 27 $ 338 30 A cace everve ce KWH 'cen'es R % Car tJ S 39 5 04 4 97 4 48 4 39 cmme r ma-6 31 59' 5 85 6 25 E 21 indus'r a; 3 58 407 c% J 7' ' 70 SCURCES OF ENERGY B'i PERUNT AGE a +. as as

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( Shareholder Information Common Stock At the end of 1980, there were 14.500 holders of the Company's common stock. Vermont residents accounted for 12.7 percent of this total. Residents of Connecticut represented the largest group of shareholders with 20.5 percent. Individuals or families represented 97 percent of the h 'N and a number of foreign countries. The average holding is Ng shareho'ders. Shareholders reside in all states of the union l approximately 200 shares for all accounts. .-. {w - p m' ^n Preferred Stock There were 2,800 owners of the Company's preferred .j_ stock. Dividend Reinvestment and Common Stock Purchase Plan in 1976, the Company establit d a Dividend Reinvestment and Common Stock Purchase Plan. The Plan has grown and currently over 10 percent of shareholders participate. Since the Plan's inception $2.5 million of common equity NEW EoUITY RAlsED FRoM has been raised through the operation of the Plan. DIVIDEND REINVESTMENT If you are not participating, you may wish to consider the AND COMMON STOCK PURCHASE PLAN 8 benefits of joining. The Plan affords the opportunity for owners of our common stock and preferred stock to reinvest cash dividends and/or additional cash contributions in amounts from $25 to $5,000 per aparter to purchase additional shares { j j{j of commen stock without paying any brokerage or service charge. To receive a prospectus containing details of the Plan, please comolete and mail the card attached to this annual j j report 37 i Market Information 1 The common stock of the Company is traded in the Over-p j p the-Counter market and the prices reported on this page are j/ from NASDAO (The National Association of Securities Dealers Automated Quotation System) The Company symbol is CPUB. Other Information j/ j j The Company weicomes at any time inquiries as to any / matter of interest to its financial ecmmunity, stockholders or / employees. / l Common Stock Prices and Dividends ~ g Dividends 1979 High Low Per Share fj/ 1st Quarter 16% 14% $.41 { 2nd Quarter 15% 14% .41 r 3rd Quarter 18 15% .41 ]j 4th Quarter 16% 15% .46 1980 /. 1st Quarter 16', 1 22; 5.46 g8 [ ',.. 2nd Quarter 15% 13 .46 d' 3rd Quarter 15'; 13% 46 4th Quarter 15'; 13% .48 /..% (p 32

l I f Board of Directors Robert P. Bliss, Jr., /1973/ President. Bob Bliss. Ltd.. St. Albans. Vermont (Insurance Industry Consultants) (4) Allen O. Eaton /1960/ Partner. Messrs. Ropes & Gray (Lawyers). Boston. Massachusetts (1) (3) James E. Griffin, /1972/ President and Chief Executise Officer. Central Vermont Public Service Corporation (1) Luther F. Hackett, /1979/ President. Hackett. Valine 6 MacDonald. Inc.. Burlington. Vermont (Insurance) C.) Robert T. Holden. /1959/ Preside it and Treasurer. Fairdale Farms. Inc.. Bennington. Vermont (Dairy Products) (1) t Frances C. Hutner /19801 Economics Corsultant. Princeton. New Jersey and Acting Associate Professor, Rider College. Lawrencesille. New Jersey (2) F. Ray Keyser, Jr., /1980! Chairman. Keyser. Crowley. Banse & Ken!an. Inc.. (Lawyers) Rutland. Vermont (4) L. Douglas Meredith, /1953/ Chairman. Former President of the Company. South Burhngton. Vermont (1) Gordon P. Mills, /1980! President. EHV Weidmann Industries. Inc.. St. Johnsbury. Vermont (Manufacturer of Electric Transformer Insulation)(2) Preston Leete Smith, /1977/ Resident and Chief Executise Officer. ) Sherbume Corporation. Killington. Vermont (Ski Business) (1) (3) Holmes H. Whitmore, /1963/ Retired. Past President, Jones & lamson. Disision of Waterbury Farrel. a Textron Compar.y. Springfield vermont (Manufacturer of Machine Tools) (3) Fred W. Yeadon, Jr., /1974/ President and Chief Executise Officer. First Vermont Bank and Trust Company. Brattleboro. Vermont (1) (3) (4) (1) Member of Executise Committee (2) Member of Audit Committee (3) Member of Compensation Committee (4) Member of Nominating Committee Officers and Executive Staff L. Douglas Meredith Chairman James E. Griffin President and Chief Executive Officer Richard W. Mallary Executive Vice Pres; dent Robert E. Schill Vice President -Finance and Corporate Planning Donald L. Rushford Vice Presidert and General Counsel Thomas J. Hurcomb Vice President - External Affairs Theodore W. Millspaugh Treasurer Alice L. Del Bianco Secretary Warren L. Stevens Assistant Treasurer Doris E. Kogers Assistant Treasurer Virginia S. Papineau Assistant Secretary John A. Ritsher Assistant Secretary Clifford E. Giffin General Manager - Division Administration Darrow R. McLeod General Manager - Engineering and Power Operations Patrick J. Garahan General Manager - Administrative Services 4 F w

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I CONpon"CD COPY [ ) SECURITIES AND EXCHANGE COMMISSION L,_,1 Washington, D.C. 20549 FORM 10-K %g I Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission File No: December 31, 1980 CENTRAL VERMONT PUBLIC SERVICE CORPORATION (Exact name of registrant as specified in i,ts charter) Vermont 03-0111290 (State of incorporation) (IRS Employer Identification No.) 77 Grove Street, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) s Registrant's telephone number: 802-773-2711 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: (Title of class) Common Stock, $6.00 par value Preferred Stock, $100 Par Value 4.15% Dividend Series 4.65% Dividend Series 4.75% Dividend Series 5.375% Dividend Series 12.75% Dividend Series 13 1/2% Dividend Series Preferred Stock, $25 Par Value 9.00% Dividend Series t Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or g 15(d) of the Securities Exchange Act of 1934 during the (Cover page 1 of 2 pages)

preceding 12 months and (2) has been subject to such filing requirements for the past 90 days: Yes x No s / State the aggregate market value of the voting stock '~' held by non affiliates of the registrant: $42,236,082, based upon average bid and asked prices of Common Stock, $6 Psr Value, as of February 27, 1981. Indicate the number of shares outstanding of each of the - ur registrant's classes of common stock: As of February 27, s ggp x 1981, there were outstanding 3,016,863 shares of Common Stock, $6 Par Value. DOCUMENTS INCORPORATED BY REFERENCE The following documents, or indicated portions thereof, have been incorporated herein by reference: (1) Specifically identified information on pages 18 through 29, inclusive, and page 32 of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1980 is incorporated by reference as Part II hereof. 4 (2) Specifically identified information on pages 2, 3 and 4 of the registrant's definitive proxy material for its annual i meeting of stockholders to be held on May 5, 1981. L.y (Cover page 2 of 2 pages) iO /

PART I (Rj) Item 1. Business. Central Vermont Public Service Corporation (the " Company") is the largest electric utility in Vermont l l engaged in the purchase, production, transmission, distribution and sale of electricity. Its wholly owned subsidiary, Connecticut Valley Electric Company Inc. g-(" Connecticut Valley"), distributes and sells electricity in parts of New Hampshire bordering the Connecticut River. The Company also owns 58.4% of the common stock of Vermont Electric Power Company, Inc. ("Velco"), which owns the high voltage transmission system in Vermont, and 31.3% of the common stock of Vermont Yankee Nuclear Power Corporation (" Vermont Yankee"), a nuclear generating company. The Company and Connecticut Valley (the " Companies") serve a large portion of Vermont (about 103,000 customers) and portions of New Hampshire bordering the Connecticut River (about 9,000 customers). The Companies serve 174 of the 245 towns in Vermont as well as 12 towns in New Hampshire. Over 60% of the Vermont population and about 3% of the population of New Hampshire reside in this service area. The Company supplies electricity at wholesale to two g rural cooperatives, two small private utilities and four r municipal utilities. The Companies' sales, both among their various revenue classes and within each class, are derived from a diversified customer mix. The Companies' sales to commercial and industrial customers accounted for about 51% of retail KWH sales for the year ended December 31, 1980. Sales to the five largest of such customers receiving electric service constituted about 7% of the Companies' retail KWH sales for the year. The Company and its subsidiaries employ approximately 574 persons, of which approximately 230 are represented by unions. POWER SOURCES The Company owns and operates 22 generating units with an effective capability of 85,000 KW and in addition purchases power from other sources including four nuclear generating companies in which it has investments. In addition, the Company owns an 11,000 KW undivided interest c' M in the W. F. Wyman Unit #4, located in Maine. The maximum one-hour system demand experienced by the Companies and their wholesale customers prior to 1981 was approximately 372,480 KW on february 12, 1979. Energy generated by operating an.d proposed units in which the Company has an m d \\ /.

interest together with energy purchased pursuant to firm / ~ power contracts are anticipated to be sufficient to meet the Company's projected customer demand for energy through 1985. (_j The Company's long-term compound growth rate is forecasted to be approximately 2.4% of KWH sales. Any significant further delay in the commencement of commercial operation of pranned nuclear units or failure to obtain extension of the Power Authority of the State of New York ("PASNY") agreements which expire in 1985 could require the Company to develop other power sources at a cost which is unknown but 94f' which could be significantly increased. Because the generation and transmission systems of the Company and the other major New England utilities are operated through the New England Power Pool ("NEPOOL") as if they were a single system, the ability of the Company to meet its load is related to the ability of all the New England utilities to meet all of the New England load. Existing Nuclear Units. The Company is a stockholder, together with other New England electric utilities, in four nuclear generating companies which have plants currently in commercial operation: Net Company's Company Capability Entitlement Vermont Yankee. 528 MW 35.0%--184.8 MW(1) Maine Yankee.. 830 MW 2.0%-- 16.6 MW(2) Connecticut Yankee..... 580 MW 2.0%-- 11.6 MW Yankee Rowe..... 176 MW 3.5%-- 6.2 MW (1) 24.8 MW of the Company's entitlement has been sold by the Company turough Velco to other Vermont utlities. (2) 1.7 MW of the Company's entitlement has been sold by the Company to certain municipal utilities in Massachusetts. The Company is entitled to its entitlement percentage of the power output of each of these companies. The Company is l similarly obligated to pay such percentage of the operating l expenses, including depreciation, and a return on invested 1 3 capital whether or not the plant is operating. The Company is obligated to provide its entitlement percentage of the hg ". capital requirements of Vermont Yankee and Maine Yankee and Y has a similar, but limited, obligation to Connecticut i C Yankee. The Federal Price-Anderson Act provides, among other things, that the maximum liability for damages resulting from a nuclear incident would be $560 million, to be provided by private insurance and governmental sources. Under amendments to that Act, owners of operating nuclear facilities may be assessed a retrospective premium of up to g $5 million for each reactor owned in the event of any one nuclear incident occurring at any reactor in the United States, with a maximum assessment of $10 million per year per reactor owned. The Company's interests in the above nuclear power units are such that it could become liable for a maximum assessment of $4,250,000 for any year. Y.- Events at Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("TMI") have prompted a rigorous reexamination of safety related equipment and operating procedures in all nuclear facilities. New regulatory requirements involving both physical and proceoural changes have been and are being promulgated, with which all nuclear facilities will have to comply. Until the scope of these improvements, as they apply to particular reactors, and the time schedules for compliance have been defined, neither the cost of any modifications and their effect, if any, on'the operations of particular units in which the Company has an interest, nor the impact, if any, upon the construction schedules and costs of units under construction in which the Company has an interest, can be determined. Vermont Yankee. As a result of problems encountered in n' the original nuclear reactor fuel, Vermont Yankee limited f+k( the power output of its plant throughout most of the first 4 two years of its operation. Since 1976, plant performance (3 has been as indicated it. the following table: Availability Capacity 4 Factor (l) Factor (2) 1976................... 77.1% 72.2% 1977................... 85.1% 78.6% 1978................... 75.9% 72.0% 1979... 82.1% 76.6% 1980..... 71.5% 66.0% (1) " Availability Factor" means the hours that the plant is capable of producing electricity divided by the total hours in the period. i 1 (2) " Capacity Factor" means the total net electrical generation divided by the product Elb of the u.aximum dependable electrical capacity .%p, multiplied by the total hours in the period. The Vermont Yankee plant now normally operates in a closed-cycle mode, which cools condensing water exclusively with cooling towers, from May 16 through October 14 each O. g --y 4 ,-,y--,,e.- ,--,,,p,-g,- -3,y,

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year. From October 15 through May 15 of the following year, Vermont Yankee normally operates in an open-cycle mode, 7-discharging about 300 cubic feet per second of warmed water into the Connecticut River. This discharge is permitted ( during winter months under Vermont Yankee's National Pollution Discharge Elimination System (NPDES) permit, which wds renewed for a four-year term on January 19, 1981. The NPDES permit contains operational criteria designed to insure protection of the general environment and Connecticut River biota. CM' 9 The Atomic Energy Commission ("AEC"), now the Nuclear Regulatory Commission ("NRC"), granted a full-term (forty-year), full power operating license for the Vermont Yankee plant in 1973. Certain intervenors, challenging the sufficiency of the NRC's environmental review of portions of the fuel cycle in the Vermont Yankee proceeding, appealed the decision to the Court of Appeals for the District of Columbia Circuit in Natural Resources Defense Council v. NRC, where their appeal was consolidated with another appeal from the NRC's generic rulemaking proceeding on the same subject. In July, 1976 that Court decided the appeals by setting aside and remanding to the NRC for further proceedings certain aspects of the rulemaking which dealt with fuel reprocessing and waste disposal and by remanding the Vermont Yankee decision to await the outcome of the rulemaking. That decision was appealed to the United States Supreme Court which, by decision dated April 3,

1978, reversed the Court of Appeals and remanded the matter to the Court of Appeals for further proceedings.

The matter is still pending before the Court of Appeals. The Company is unable to predict the outcome of the proceeding. Meanwhile, the NRC has promulgated a new final rule (superseding the prior rules) on the effects of fuel reprocessing and waste disposal which quantifies the environmental impact of those portions of the fuel cycle for use in the general environmental evaluation of plant licenses. A petition for review of this final rule is also pending before the United States Court of Appeals for the District of Columbia. It is Vermont Yankee's opinion that the new rule will not adversely affect Vermont Yankee's operating license and that the above-described court proceedings will not otherwise adversely affect its ability to operate. By decision dated January 27, 1978, the NRC Atomic Safety and Licensing Appeal Board affirmed an earlier licensing board decision authorizing a license amendment to permit expansion of the fuel rack capacity for storage of 7, spent fuel at the Vermont Yankee plant. On appeal by one ,q ir.tervenor the United States Court of Appeals for the District of Columbia Circuit rejected certain contentions by the petitioners as to procedural issues but remanded the matter to the NRC for further consideration in light of the new generic fuel cycle rulc promulgated by the NRC as a '"

result of the litigation referred to above. The court specifical.ly did not stay the challenged license amendment Os which remains in effect. The remanded matter is pending before the NRC. Vermont Yankee is one of the Company's two major sources of power. The effect on the Company's earnings of a prolonged shutdown of the Vermont Yankee plant could be materially adverse and would be dependent upon various factors such as the timing and the length of the shutdown, C Y action by the Vermont Public S;rvice Board on any request to reflect the higher cost of replacement power in rates, and any contractual arrangements for the disposition of energy associated with the Company's entitlement. e W. F. Wyman Unit. The W. F. Wyman Unit #4, an oil-fired plant located in Maine, came on line in late 1978 as a source of base load power. The Company is a joint-owner of this unit, holding an 11 MW share. Planned Generation Facilities. The Company presently expects to participate as a part owner with other New England utilities in several major electric generating stations on a tenancy-in-common basis. The Company's actual expenditures (including allowance for funds used during construction and present commitments for u nuclear fuel expenditures) through December 31, 1980 and O estimated expenditures for total construction costs of these facilities are set forth in Table I (on page 5A). Significant regulatory and other problems may be involved in the construction and operation of the nuclear units. Licenses, permits arid approvals for such construction and operation are required from various governmental agencies, including the Environmental Protection Agency (" EPA") and the NRC. Substantial investments must be made prior to obtaining such licenses, permits and approvals, and there is no assurance that they will be obtained or, if obtained, that they will not be modified or revoked. In each of these jointly financed projects there is the additional risk that another i participant may be unable to finance its share of the construction or operating costs of such project which could have ar. adverse impact upon its construction schedule. In addition, various groups have filed law suits, introduced legislation and participated in administrativo proceedings claiming t. hat the construction and operation of nuclear 9b units present risks to public health and safety and to the environment. The Company's share of the Seabrook units represents a significant portion of its total projected generation expenditures during the next five years and the output from _ - _ _ - - - _ _ _

o O O* / g Table I_ s en=nany's share Expenditures Total Estimated Estimated Estimated Date of Total through Construction Construction Energy Commercial Capacity Capacity December 31,1980(2) Cost (2) Cost Unit Source Operation (1) __jMW) (MW) (thousands) (thousands) Per KW(2) Seabrook #1 & #2.. Nuclear 1984;1986 2,300 36 $20,954 $57,298 $1,592 16,161 50.h57 2,523 Millstone #3...... Nuclear 1986 1,150 20 7,085 36,961 1,848 Pilgrim #2........ Nuclear 1987 1,150 20 E The completion dates of certain of these units have been deferred from time to time and additional deferrals Deferrals have the efd' .t of in-(1) may occur due to licensing delays, economic conditions and other factors. .: reas ing, the costs of a unit. Estimated Including allowance for funds used during construction and present commitments for nuclear fdel. construction expenditures are based upon information furnished by the utility responsible for the construc-(2) These utilities have advised the Company that they are continually reviewing their l Each of these budgets has increased and may increase further as a result of deferrals l tion of each unit. tion such construction budgets. and delays, increases in financing costs, fuel and related costs, other problems affecting consttuc l See " Construction as strikes and inflation as well as other events and conditions not presently foreseen. l i Program".

l l those units is significant to the Company's ability to meet its projected demand beginning in 1984. Construction /~ permits for the Seabrook units were originally issued on (j) July 7, 1976 and construction commenced shortly thereafter but was subsequently suspended in 1977 and 1978 for periods of seven months and three weeks, respectively, as a result of administrative and court proceedings described below. The Initial Decision authorizing the construction permits was affirmed by an NRC Appeal Board (one member dissenting) and by the NRC, and on August 22, 1978 the United States Court of Appeals for the First Circuit dismissed four appeals therefrom. A timely petition for review of the seismic issue raised by the dissenting Appeal Board opinion resulted in a remand of that issue by the NRC to the NRC Appeal Board for a limited further hearing on aspects of that issue which is tentatively scheduled to commence on April 6, 1981. The Company is unable to predict the outcome of that proceeding. In March, 1979, Public Service Company of New Hampshire ("PSCo"), the lead participant, announced its intention to reduce its ownership interest in the Seabrook project. PSCo obtained commitments from nine other utilities to increase their ownership interests by about 15% by gradual payments over an Adjustment Period, with a corresponding decrease in PSCo's interest. All but three accepting utilities received their required approvals and commenced their Adjustment Period on January 31, 1981. The other three are awaiting j'~} various required approvals before their Adjustment Periods ( can commence. In March, 1980, in view of capital market conditions and the lack of approvals of its ownership reduction, PSCo reduced the level of construction activity at the Seabrook Project; such reduction is expected to continue until all Adjustment Periods have commenced. The Company is unable to predict what impact, if any, that reduction in the interest of the financial condition of PSCo or the reduction in construction activity may have upon the construction schedule for the Seabrook project. Power Contracts. Under agreements between the State of Vermont (the " State") and PASNY, the State purchases 100,000 KW of St. Lawrence power and 50,000 KW of Niagara Project Power through June 30, 1985. The Company in turn has contracts with the State for the purchase at cost of a 45,790 KW share of the St. Lawrence Power and a 21,735 KW share of the Niagara Project Power. Both contracts with the State are subject to extension for the periods, if any, for which the contracts between the State and PASNY are extended. During the twelve months ended December 31, 1980, the Company N.

purchased 388,783,200 KWH of such power for which it paid $3,347,997. Under an agreement between the Company and Velco, the Company is purchasing at Velco's cost 46,577 KW of unit power purchased by Velco from Public Service Company of New Hampshire's Merrimack Unit #2 for a thirty-year period which commenced May 1, 1968. For the twelve months ended December 31, 19EO, the Company purchased from Velco 214,715,300 KWH of this power for which it paid Velco $5,217,418. In addition to the contracts described above, the Company directly or through Velco has contracts or commitments for unit and system power from various sources. It also has by its contractual participation in NEPOOL througn Velco access to sources of power from other utilities in New England and throughout the Northeast region. NEPOOL. The NEPOOL Agreement, to which the major investor-owned utilities in New England, including the Company and Velco, and certain municipal and cooperative utilities are parties, provides for joint planning, operation of generating and transmission facilities, including central dispatch of the region's facilities, and imposes generating capacity reserve } obligations and use of major transmission lines and payment ,1 for such ase. Based upon the power sources described above, the Company expects to be able to satisfy its reserve obligation through 1985. Because of the NEPOOL requirement that the most efficient generating facilities in the region be dispatched.first, the Company's operating revenues and costs are affected to some extent by the operations of other NEPOOL participants. Fuel Supply. The Company's sources of power for the twelve months ended December 31, 1980 included 39% nuclear, 28% hydro, 11% coal and 7% oil, with the remainder coming from various NEPOOL sources, mostly oil. l l Nuclear. The cycle of productior. snd utilization of nuclear fuel for nuclear generating units consists of (1) the mining and milling of uranium ore, (2) the conversion of the resulting concentrate to uranium hexafluoride, (3) the enrichment of the uranium hexafluoride, (4) the fabrication of fuel assemblies, (5) the utilization of the nuclear fuel and (6) the storage, reprocessing or disposal of spent fuel. mU.

-,~,- Vermont Yankee has commitments for nuclear fuel purchases through 1985 approximating $95,709,000. ~ Expenditures for such commitments will be approximately O.. $ 19, 2 69,000, $19,082,000, $19,362,000, $19,129,000 and $18,867,000 in the yars 1981 through 1985, respectively. Vermont Yankee has contracted for uranium concentrate to ~ meet substantially all its power production requirements through 1984 and has two additional long-term contracts for uranium by-product extraction on facilities for 20 and 12 years, respectively, each of which is expected to provide up to about 20% of its uranium requirements during these periods. Under one of these contracts Vermont Yankee is committed to make minimum payments, aggregating $G,250,000 plus interest, over an approximately 9-year period which commenced in September, 1980 regardless of the amount of uranium that is actually produced; the facility from which uranium is to be supplied under that contract has not yet achieved its design production capability, although some amounts have been produced since September, 1980. Vermont Yankee has an enrichment contract with the United States Department of Energy through 2001 and has contracted for fuel fabrication requirements through 1984 and conversion services through 1983. Vermont Yankee has no contractual arrangements for disposal or reprocessing of spent fuel and there are no commercial reprocessing facilities presently operating in the United States. Vermont Yankee is expanding its temporary storage capacity C', so that spent fuel removed from the reactor through 1987 can be stored while maintaining the ability to discharge a full core should that be necessary for operational reasons. l Commencing in October, 1977, Vermont Yankee began accruing for estimated costs of disposing of spent nuclear fuel through an addition to its energy component charge. The nuclear fuel component of the average cost to the Company of energy generated at the Vermont Yankee plant has l been 3.60, 3.49, 4.04, 4.30 and 6.32 mills per KWH for the l years 1976 through 1980. The Company has been advised by the companies operating or planning other nuclear generating stations in which the Company has or expects to have an interest that they have contracted for certain segments of the nuclear fuel production cycle through various dates, Contracts for the remainder of the fuel cycle will be required but their availability, prices and terms cannot be predicted. l Coal. The Merrimack Unit #2 obtains its coal from West Virginia sources under a contract which expires on March 31. 1983, providing for one five-year exterision by mutual consent of the parties. The specifications for the coal to O

\\ be supplied under the contract meet existing air pollution control requirements. \\s,j Oil. The Company has no long-term contracts for fuel for its two small oil-burning generating stations, used almost entirely for standby purposes, and two gas turbine (oil-burning) generating stations. It relies upon local supplies for the modest amounts required. CONSTRUCTION PROGRAM The Companies are engaged in a construction program to renew existing facilities and to provide for future growth in demand for electrical energy. Through this program, the 4 Company is presently undertaking a long-term program to increase the portion of its energy requirements supplied by generating units in which it has an ownership interest. The amount which the Companies will spend for construction is regt.arly under review and is subject to changes influenced by business and economic conditions and other factors such as the rate of load growth, escalation of labor, material and equipment costs, rate of construction progress, environmental quality control, nuclear and other governmental regulation, service reliability, system efficiencies and other operating considerations. The Companies' projected expenditures for the five years 1981-1985, exclusive of allowance for funds during construction, are estimated at $123,207,000, itemized as follows: 1981 1981-1985 Generation... $10,661,800 $ 74,424,000 Nuclear fuel........ 1,474,000 5,387,000 Transmission........ 1,096,600 11,245,000 Distribution.... 4,642,600 30,840,000 Other....... 3G3,000 1,311,000 Total.......... $18,258,000 $123,207,000 The foregoing table includes the Company's investments to be made in jointly owned generating units. RATE MATTERS Retail Rate Increases. During the past five years the Vermont Public Service Board ("PSB") has granted permanent rate increases as shown below: ("My (/ ' p. ,.v.5 -"~w"-+ --+a m e'e- -e- ~t 'Y =

Date of Effective Date Amount of Application Date of PSB Order of Rate Increase Rate Increase (1J \\-. May 18, 1977 December 8, 1978 June 20, 1977 $6,347,000 November 30, 1979 (2) January 1, 1980 5,281,000 March 21,-1980 February 26, 1981 March 21, 1980 2,324,000 (1) Based upon KWH sales in respective twelve- ~ month test periods ended December 31, 1974, May 31, 1977 and September 30, 1979. (2) Entire increase was allowed to become effective without PSB order. On November 26, 1980 the Company filed a rate request with the PSB for $18,031,000 annually, or 22.8%, applicable to Vermont retail customers, based on an August, 1980 test period. The petition covered all cost of service items, including a request for a 13.1% overall rate of return, an 18.2% return on equity, tax normalization of accelerated depreciation and a portion of construction work in progress in the rate base. On September 4, 1980 the Company made application with the PSB for additional rate relief of $3,450,000 annually, ("T or 4.6%, applicable to Vermont retail customers, based on a \\s,) 1980 pro forma test period. The request related solely to power costs. On March 21, 1980, the Company filed a rate request with the PSB for $4,328,000 annually, or 6.23%, applicable to Vermont retail customers, based on a September, 1979 test period. The requested increase was related solely to purchased power costs. In an order dated February 26, 1981, the Company was allowed to increase retail rates by $2,324,000 or 3.35% on an annual basis. Although the allowed rate increase was less than expected, the difference between revenue recorded during 1980 based on management's judgment about future PSB actions (See Note 9 to Notes to Consolidated Financial Statements) and the revenues which should have been received is not material. On November 30, 1979 the C:ompany filed a rate increase request with the PSB for $5,291,000 annually, or 8.2%, applicable to Vermont retail Uustomers, also based on a September, 1979 test period. The rate petition included an overall rate of return of 10.8% and a return on equity of 14.5%. The increase was allowed to become effective on January 1, 1980 without suspension or hearing. (N) The actual rate of return earned by the Company depends upon operating and other conditions. The Company's earned rate of return on average common equity for 1980 was 10.5%. The PSB, by order dated December 8, 1978 in the Company's previous rate case, allowed a retail increase of $6.3 million or 11.96%. The PSB approved the Company's request for a return on equity of 14.5% and an overall return of 10.6%. The Company was also' allowed, in accordance with prior practice, to recoup over a future period the difference between the prior rates and the ' approved rates during the suspension period of June 20, 1977 through December 19, 1977. The amount of recoupment to be collected includes a return on the outstanding balance. The Board in its order disallowed the continuance of the purchased energy and fuel adjustment clause. However, the Company is legally entitled to reasonable rates and can file for rate adjustments as necessary. The Company still has operative fuel clauses applicable to approximately 15% of kilowatthour sales. The rate order did allow 25 percent of the requested construction work in progress as a rate base item,lincluding all of its in-state construction and one out-of-state generating facility which has since become operational. Among the crit. ; a for allowing construction work in progress.in rate base which the Board outlined are (1) imminence of service of the facilities, and O (2) demonstrated financial hardship. Wholesale and Connecticut Valley Rates Increases. In the past five years, the Company has been granted two increases in wholesale rates by the Federal Energy Regulatory Com.t.ission ("FERC"). The most recent increase became effective August 2, 1980 as a re ult of a settlement agreement which increased revenues by $786,000 per annum, or 11.9%, on a 1980 test year basis. The Ne Hampshire Public Utilities Commission has allowed Connecticut Valley five retail rate increases since 1975, two of which were solely to recover increased costs of purchased power. Rate preceedings allowed retail rates to be increased by $163,000 effective June 2, 1980, or 2.7% annually, and then by an additional $44,000 effective January 1, 1981. COMPETITION The Company's business is generally free from direct competition by other electrical utilities, municipalities or other agencies..

In Vermont a municipality may construct or acquire and operate electrical generation and distribution facilities. ( If property is taken by eminent domain the municipality must pay just compensation as well as severance damages determined by the PSB. The municipality has the authority to finance the cost of acquiring the municipal public utility plant by pledging the net earnings derived from the operations of the municipal public utility. In October, 1977 the voters of the Town of Springfield voted to proceed with the construction of hydroelectric ~ generating facilities on the Black River in and outside the Town and to acquire the Company's distribution properties in the Town. Springfield has been granted a preliminary permit by FERC to study the proposed hydroelectric facilities and has filed a license application. Springfield could proceed with the acquisition of the Company's distribution properties in Springfield without developing the proposed hydroelectric facilities. Hearings with respect to cendemnation of the distribution propertie,s have been completed before the PSB but no decision has been rendered. Any decision in those proceedingt is likuly to be appealed by one of the parties. The Company's revenues in 1980 from customers in Springfield were approximately $3,434,000. No other municipality served by the Company is, sc far as is known to the Company, taking steps to establish a municipal electric distribution system. O In 1977, a municipal power association, of which a number of municipalities in the Company's service area are members, was organized with the stated purpose of plannin9 and coordinating the power requirements of its members. Legislation was enacted in 1979 by the Vermont Legislature which empowers that association to finance the acquisition or construction of generating facilities, the output of "hich would be available to its members and others. In addition, preliminary action has been taken by a number of municipalities to study the possible construction by them of small hydroelectric generating facilities, and the Company has indicated its willingness to cooperate with such municipalities in studying such possible projects. In March, 1977, a number of municipalities in the valley of the West River voted to study the possible construction by them of generating facilities at a United States flood contr'ol dam constructed and operated by the Corps of Engineers; the Company had previously applied to FERC for a preliminary permit to study such a proposed facility. FERC awarded this group a permit on February 13, 1980. 9,

c b REGULATION _s _s State Commissions. The Company is subject to the regulatory authority of the PSB with respect to rates, and the Company and Velco are subject to PSB jurisdiction respecting security issues, construction of major generation and transmission facilities and various other matters. Connecticut Valley is subject to the resulatory authority of the New Hampshire Public ~ Utilities Commission with respect to rates, security issues and various other matters. The Company and Velco ate, except as limited by the applicable statutes of the United States, subject to the regulatory authority of the New Hampshire Public Utilities commission as to matters pertaining to construction and transfers of utility property, rates and service in New Hampshire. Additionally, the Public Utilities Commission of Maine, the Connecticut Public Utilities Control Authority, the New Hampshire Public Utilities Commission and the Massachusetts Department of Public Utilities each has limited jurisdiction over the Company based on its ownership as a tenant-in-common of Wyman #4, Millstone #3, Seabrook #1 & #2 and Pilgrim #2, respectively. The Company is also subject to regulation with regard to zoning, land use and similar controls by various state and local authorities. {v~7 Public Utility Holding Corapany Act of 1935. ) Although the Company is a holding company, as defined in the Public Utility Holding Company Act of 1935, by reason of its ownership of the stock of Connecticut Valley, Velco and Vermont Yankee, it is presently exempt, pursuant to Rule 2, promulgated by the Commission under said Act, from all the provisions of said Act except Section 9(a)(2) thereof relating to the acquisition of securities of public utility affiliates. Federal Power Act. The Company and Velco are subject, as to some phases of their businesses, including certain rates, to the jurisdiction of FERC: the Company as a licensee of hydroelectric developments under Part I, and the Company and Velco as interstate public utilities under Parts II and III of the Fed:ral Power Act, as amended and supplemented by the National Energy Act. The Company has licet:ses expiring in 1987 and 1993 under Part I of the Federal Powe-Act for twelve of its hydroelectric plants. The Company has applied to FERC for abandonment of the license for ore plant no longer in operation. The Company has filed applications now pending /3. ye-. ,e. y y. v. -%i w ,y-- m

before FERC with respect to two previoucly abandoned plants and one proposed pro,ect. Environmental Matters. The EPA administers programs established under the Fdderal Water Pollution Control Act and the Clean Air Act which affect all of the Company's thermal generating facilities, as well as the nuclear facilities in which it-has an interest. The former Act establishes a national objective of complete elimination of discharges of pollutants into the nation's water and creates a rigorous permit program designed to achieve these effluent limitations. The latter Act empowers the EPA to establish clean air standards which are implemented and enforced by state agencies. The EPA has broad authority in administering these programs, including the ability to require installation of pollution control and mitigation devices and to limit or halt construction or operation of a unit. The Company is also subject to regulation with regard to environmental matters by various state and local authorities. The environmental standards administered by these j agencies, together with the equipment and technology available and the length of time afforded for meeting those standards, are in a period of development and change. Accordingly, both the timing and amount of capital and operating costs in this area are not subject to precise determination. While these. factors have had some impact upon the Company's past operations as a distribution company, the Company anticipates that they will have a more significant impact upon the capital costs and construction schedules of the new generating facilities in which it is participating. Nuclear Matters. The nuclear generating facilities of Vermont Yankee and the other such facilities in which the Company has or will have an interest are subject to extensive regulation by the NRC. The NRC is empowered to regulate the siting, construction and operation of nuclear reactors after consideration of public health, safety, environmental and antitrust matters. Under its continuing jurisdiction, the NRC may, after appropriate proceedings, require modification of units for which construction permits or operating licenses have already been issued, or impose new conditions on such permits or licenses, and may require that the operation of a unit cease or that the level of operation of a unit be temporarily or permanently reduced. i n, m -, -,,--..,-g 4,n ,-,u r- ,,-,-y-.y ,,....,,,e --ww ,,a,- -,,e,

VERMONT ELECTRIC POWER COMPANY, INC. g_j Velco purchases bulk power for resale at cost to the Company and the other electric utilities in Vermont and transmits such power over its high voltage transmission system to them. Velco participates for itself and as agent for the Company and eighteen other Vermont utilities in NEPOOL. The Company is the major user of Velco's services. The Company owns 58.4% of the common stock of Velco, the balance being owned by Green Mountain (29.0%), Citizens Utilities Company (3.4%) and other Vermont utilities. An agreement between Velco, the Company, Green Mountain and Citizens provides, among other things, that Citizens and Green Mountain may each require the Company to purchase the Velco common stock owned by each at its book value at the time of purchase. Under a contract with the State (the " Transmission ' contract"), telco transmits to certain Vermont utilities the 150,000 KW of power which the State purchases from PASNY and any other power the State may acquire outside Vermont. The Transmission Contract terminates by its terms June 30, 2000 but is subject to renewal by the State for a period not exceeding ten years. For Velco's services the State agrees to pay amounts equal to all Velco's costs (as defined) including operating expenses, taxes, interest on and r' amortization of its debt and a return on common stock, ( except that if Velco should use its system for the transmission of firm power owned by it (which it does not presently do), Velco's costs would be allocated between the State and Velco in proportion to the uses of the system for the transmission of firm power owned by the State and by Velco, respectively. The Transmission Contract also provides that contracts for the use by others of the Velco system (as therein defined) are subject to approval by the State, any revenues therefrom being deducted from Velco's costs allocable to the State. Velco, the Company and Green Mountain have entered into an agreement (the "Three Party Agreement") which imposes obligations on the Company and Green Mountain if, and only if, Velco trar. 3mits firm power owned by it. Velco does not now transmit, and does not presently have plans to transmit in the future, power owned by it. Nevertheless, if that transmission occurs, under the Three Party Agreement the Company and Green Mountain would have the right to purchase all such firm power not sold to others with their consent and be obligated to pay (in p*oportions.Jreed upon between the ' Company and Green Mountain) amounts sufficient, together with Velco's revenues from other sources, to pay all Velco's operating expenses, debt service and taxes. In connection with the transfer to Velco of their entit?ements of the 73 output of the Vermont Yankee plant, the Company and Green t i V. e y

Mountain entered into a Three-Party Power Agreement and Three-Party Transmission Agreement with Velco (the " Vermont Yankee Agreements"), whereby they have agreed to repurchase p)- (, from Velco all Vermont Yankee power not taken by other Vermont utilities and to pay transmission charges thereon in an aggregate amount sufficient, with Velco's other revenues, t6 pay all of Velco's expenses including capital costs. Velco's Bonds are secured by a first mortgage on the major part of Velco's transmission properties and by the assignment to the Trustee of the Transmission Contract, the Three Party Agreement, the Vermont Yankee Agreements and certain other contracts as specified in the Velco Indenture. Item 2. Properties. The Company. The Company's electric properties consist of five principal distribution systems: the Central, Bennington, St. Albans, St. Johnsbury and Brattleboro eystems. Transmission lines tie the Bennington and Brattleboro systems together. All, except the Brattleboro system, are connected to the transmission facilities of Velco and all except the St. Albans system are interconnected with the facilities of New England Electric System; also the Brattleboro system is directly connected with the Public Service Company ~of New Hampshire, and the St. Johnsbury system is indirectly connected through Velco to Public Service Company of New Hampshire. The Central and g-~s Bennington systems are also indirectly connected, through ( ) the transmission lines of Velco and the facilities of Niagara Mohawk Power Corporation. The electric generating plants of the Company consist of 18 hydroelectric generating stations, two gas turbine generating stations, one steam-electric generating station and one diesel-electric generating station, of which one hydroelectric generating station is located in New York and the remainder in Vermont. In addition, the Company owns undivided interests in an operating oil-fired generating l station located in Maine and in nuclear generating units in l New Hampshire, Massachusetts and Connecticut which are presently under construction (See " Power Sources" under Item 1, supra). The electric systems of the Company include about 610 ( pole miles of transmission lines, about 6,462 pole miles of overhead distribution lines and about 65 miles of l underground distribution lines which are located in Vermont except for about 23 pole miles of transmission lines which are located in New Hampshire. Connecticut Va'lley. Connecticut Valley's electric properties consist of two principal systems in New Hampshire l b,m l -. -.

which are not interconnected with each other but each of-which is connected directly with facilities of the Company. ('x'-) The electric systems of Connecticut Valley include about two pole miles of transmission lines and about 376 pole miles of overhead distribution lines and about three miles of underground distribution lines. Velco. Velco has no generating facilities but has approximately 455 pole miles of transmission lines and 23 associated substations located in Vermont. Velco's properties interconnect with the lines of New York State Power Authority at the New York-Vermont state line near Plattsburgh, New York; with the transmission facilities of Niagara Mohawk Power Corporation at the New York-Vermont state line near Whitehall, New York and North Troy, New York; with the lines of New England Power Company at Wilder, Vermont, near the New Hampshire-Vermont state line at Monroe, New Hampshire and at Claremont, New Hampshire, and near the Massachusetts-Vermont state line at North Adams, Massachusetts; and with the lines of Public Service Company of New Hampshire near the New Hampshire-Vermont state line at Littleton, New Hampshire and near the New Hampshire-Vermont state line at Ascutney, Vermont and at Vernon, Vermont. All of its transmission facilities are in Vermont except for approximately 4.3 pole miles of transmission lines in New Hampshire. x(J ) All the principal plants and important units of the N-Company and its subsidiaries are held in fee. Transmissian and distribution facilities which are not located in or over public highways are, with minor exceptions, located either on land owned in fee or pursuant to easements substantially all of which are perpetual. Transmission and distribution lines located in or over public highways are so located pursuant to authority conferred on public utilities by statute, subject to regulation of state or municipal j authorities. l l Item 3. Legal Proceedings. There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party l or to which any of their property is the subject. See Item 1 for descriptions of proceedings relating to nuclear units l and condemnation proceedings by Town of Springfield. j Item 4. Security Ownership of Certain Beneficial Owners and Management. l (a) Security ownership of certain beneficial owners: As of October 1, 1980, there was no person who was known to n I s_- l,

registrant to be the beneficial owner of more than five percent of any class of registrant's voting securities. (b) Security ownership of management: The following is a tabulation of the equity securities of the registrant beneficially owned by its directors, and its directors and l. officers as a group, as of January 22, 1981: Number of Shares Title Name of Beneficially Percent t Of Class Beneficial Owner Owned Of Class l Common Stock, $6 Par Value Robert P. Bliss, Jr. 754.338 i Allen O. Eaton 161.333 James E. Griffin 595.021 Luther F. Hackett 218. Robert T. Holden 220. Frances C. Hutner 1,100. F. Ray Keyser, Jr. 10. L. Douglas Meredith 1,000. Gordon P. Mills 500. Preston Leete Smith 100. Holmes H. Whitmore 500. Fred W. Yeadon, Jr. 200. All Directors and 7,071.174 0.24% ( Officers as a group (c) Changes in control: Not applicable. .l 4 \\m. _. - - - - - ~ . _ _ _. -. _ -,. -,,. -. _, _. _ - ~.. _.

2 PART II Item 5. Market for Registrant's Common Stock and Related Security Holder Matters. I; See the information under the heading " Shareholder Information" on page 32 of the registrant's 1980 Annual Report to Stockholders, which is hereby incorporated herein by reference; said Annual Report to Stockholders is filed as an exhibit hereto. The registrant's Articles of Association contain certain limitations, applicable so long as the Senior Prefer ed Stock is outstanding, on the registrant's right to declare dividends on the Common Stock out of net income or in the event Common Stock Equity (as defined) is less than 25% of Total Capitalization (as defined). The Indentures. relating to the registrant's Debentures contain similar restrictions on dividends. As of December 31, 1980 the Common Stock Equity was approximately 39.2% of Total Capitalization (as defined). As at December 31, 1980, $18,900,000 of the registrant's retained earnings were free of these indenture restrictions. Item 6. Selected Financial Data. See the information under the heading " Selected ~ Financial Data" on page 18 of the registrant's 1980 Annual- ~ Report to Stockholders, which is hereby incorporated herein by reference; said Annual. Report to Stockholders is filed as an exhibit hereto. See also Note 9 to the Notes to Consolidated Financial Statements (Item 8 below) relating to the change in accounting policy in 1980 with respect to accrual of revenues expected to be-allowed in rate proceedings. l Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. See the information under the heading " Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 18 and 19 of the registrant's 1980 Annual Report to Stockholders, which is hereby incorporated herein by reference; said Annual Report to Stockholders is filed as an exhibit hereto. See also Note 9 to the Notes to Consolidated Financial Statements (Item 8 below) relating to the change in accounting policy in 1980 with respect to accrual of revenues expected to be allowed in rate proceedings. ,-,,-,-,-.---._.r.. .__em__,,,.&_,,, .,,__.w ,,,.,~.,.,_,--,,,,-.n----wy,, ,,, -., -,_ - ~ ~ -. -. ,-.r--

Item 8. Financial Statements and Suplementary Data. (, See the consolidated financial statements and notes to the consolidated financial statemen's, together with the related report of Peat, Marwick, Mi;chell & Co. dated February 20, 1981, on pages 20 through 29 of the rdgistrant's 1980 Annual Report to Stockholders, which is hereby incorporated herein by reference; said Annual Report to Stockholders is filed as an exhibit hereto. PART III Item 9. Directors and Executive Officers of the Registrant. See the information under the heading "Elec. tion of Directors" on pages 2 and 3 of the registrant's definitive proxy material for its annual meeting of stockholders to be held on May 5, 1981, which is hereby incorporated herein by reference. Item 10. Management Remuneration and Transsctions. See the inftrmation under the heading "Information on Remuneration and Other Transactions" on pages 3 and 4 of the registrant's definitive proxy material for its annual meeting of stockholders to be held on May 5, 1981, which is hereby incorporated herein by reference. e e U -

Filed Hsrewith at Pace PART IV \\ \\m,/ Item 11. Exhibits, Financial Statements, Schedules and Reports on Form 8-K. (a) The following documents are filed as part of this report: 1. Financial Statements: 1.1. Central Vermont Public Service Corporation ~ and its wholly-owned subsidiary, Connecticut Valley Electric Company Inc.: (See Item 8) Consolidated Statement of Income and Retained Earnings, years ended December 31, 1980, 1979, 1978, 1977 and 1976. Consolidated Balance Sheet, December 31, 1980 and 1979. Consolidated Statement of Changes in Financial Position, years ended December 31, 1980, 1979, 1978, 1977 and 1976. Notes to Consolidated Financial Statements. 2. Financial Statement Schedules: g~ 2.1. Central Vermont Public Service Corporation and its wholly-owned subsidiary, Connecticut Valley Electric Company Inc.: Schedule III - Investments in Securities of Affiliates, years ended December 31, 1980, 1979 and 1978. 24 Schedule V - Utility Plant, years ended December 31, 1980, 1979 ind 1978. 27 Schedule VI - Accumulated Depreciation of Utility Plant, years ende.d December 31, 1980, 1979 and 1978. 27 Schedule VIII - R: serves, years ended December 31, 1980, 1979 and 1978. 30 Schedule IX - Short-Term Borrowings, year ended December 31, 1978. 33 Summary of Other Paid-In Capital, years ended December 31, 1980, 1979 and 1978. 34 (~') 2.2. Financial Statements and Schedules for Vermont (,/ Electric Power Company, Inc. - per index attached. 40 -m. . _ _.., - ~,

O \\- / 2.3. Financial Statements and Schedules for Vermont Yankee Nuclear Power Corporation - per index attached. 51 Schedules not included have been omitted because they are not applicable or the required information is shown in the -financial statements or notes thereto.. Separate financial statements of the Registrant (which is primarily an operating company) have been omitted since they are consolidated only with those of a totally held subsidiary. Other than Vermont Electric Power Company, Inc. separate financial statements of subsidiary companies not consolidated have been omitted since, if considered in the aggregate, they would not constitute a significant subsidiary. Other than Vermont Yankee Nuclear Power Corporation separate financial statements of 50 percent or less owned persons for which-the investment is accounted for by the equity method by the Registrant have been omitted since, if considered in the aggregate, they would not constitute a significant investment. 2.4. Accountants' Consent re Dividend Reinvestment and Common Stock Purchase Plan 65 The listing of exhibits hereto begins on page 66. V Certified Public Accoentants One Boston Place Pbat,Marwick,Mitchell&CQ Boston, Massachusetts 02108 ^ Accountants' Report The Stockholders and Board of Directors Central Vermont Public Service Corporation: Under date of February 20, 1981, we reported on the consolidated balance sheet of Central vermont Public Service Corporation and subdidiary as of December 31, 1980 and 1979, and the related consolidated statements of income and retained earnings and changes in financial position for each of the five years in the period ended December 31, 1980, as contained in the annual report to stock-holders for the year 1980. These financial statements and our report thereon are incorporated by reference in the annual report (Form 10-K) required to be filed by Central Vermont Public Service Corpora tion under the Securities itxchange Act of 1934. In connection with our examinations of the aforementioned consolidated finan-cial statements we also examined the supporting financial statement schedules listed in Sec tion 2.1 of the acconpanying index. In our opinion, such supporting schedules present fairly the information set forth therein. (A M T PEAT,' MARWICK, MI'ICHELL & CO. Boston, Massachusetts February 20, 1981 O O.

(^ \\ i \\ b sahedals III 1 CEN!1tAL YERMoNT RELLIC SERVICE CoRIMATION AND ITS WlOLLY-OWNED SUBSIDIART CoNEBCTICtff VALI2T ELECTRIC C(BGENT INC. Investments in, Equity in Earnings of, and Dividende Received frta Related Parties 1 Year ended December 31, 1980 Belance at Beginning of Year Additions Dedactions Enlance at he of Year Distribution Equity takan of earnin s o No. of shares or up in earnings by persone in

30. of shares or units. Principal Amount (losses) of which earnings units. Principal Amount Percent amount of in related parties (losses) were Percent ancnet of in ownership bonds and notes dollars for the period other taken up other censrohip bonds and notes dollars I

has of Issuer and Description of Investaant Bon-consolidated subsidiaries, at equity: verwont timetric Power %=v, Inc.-e-stock 58.b$ 30,971 shares $ 3,110,329 $ 228,738 $ 228,738 58.14 30,971 shares $3,110,329 C. v. neelty, Inc. - common stock 100.06 300 shares (159,838) (86,039) lop 04 300 shares (2b5,877) C. v. nealty, Inc. - notes $279,000 notes 279,000 000(1) 7 D o 000(3) $269,000 notes 269,000 3,229,49L 142,699 a 3,133,452 other pareens accounted for hr the equity method Verunnt Yankee Baal-Poser Corporatione stock 31 36 125,156 shares 13,331.7b8 1,815.495 1,871,340 31.$ 125,156 shares 18,269,903 4 genins Yankee Atonio Power Wne-e-stock 2.0$ 10,000 shares 1,336,716 131,b80 131,900 2.o$ 10,000 shares 1,336,296 4 1 connecticut Yankee Atenio Pmmer War-cosmoon ctock 2.05 7,000 shares 1,oes,786 6b,522 100,000(2) 56,000 2.o$ 7,000 shares 1,137,308 l' Yankee Atomie ximetrie compaars-stock 3.5$ 5,369 shares 716,688 6b,bk9 @, 771 3.56 5,369 shares 715,366 21,=13,93ti 2,wis,9eo 6 2,131,011 21.=5e, err 3 i sotals $26,6k3.k29 42,218,6ks $15o,000 $2,359,749 46o,000 424,59e,325 i (1) Purchased $50,000 mote for cash. n (2) Promissory Bote. I (3) Partial payments on two notes. l i -M-4 4-

-......... ~ j / ( - (. v Sebedule III Cmal. V53CT PJLIC O" ICE CC?ltV? ION AD ITS WOLLY-0WNO.7mID'A*? CCLWCTICt=' VA*. LEY T 'tcrFTO Cc3eY IT. Investments in, Equity in Earnings of, anu Sividends Facalvei from Belated Ferties Year ended December 31, 1979 Deductions palance at End of Year Balance at Beginning of year Add'tions . E tributions ] Equity taken up in earnings of earnings No. of shares or (losses) of by persons th No. of shares or units. Principal Amornt affiliates and which earnings units. Principal Amount Percent amount of in other persons (losses) wwre Percent amount of in ownership bonds and notes dollars for the period Other taken ue Other ownefehip bonds and notes. dollars Name of Issuer sad Demeription of Investmert Ebn-consolidated subsidiaries, at equity: Varmont Electric Power Compg, Inc.-common stock A1.7% 29,005 shares $ 2,914,712 1 234,163 $356,800(1) $ 235,146 $160,200(2) 58.4% 30,771 shares $ 3,110,329 C. Y. Realty, Inc. - common stock 100.0$ 300 shares (96,973) (62,865) 100.0% 300 shares (159,838) C. V. Realty, Inc. - notes $304,000 notes 30k OM 25,000(3) $279,000 notes 279.000 J.121.739 171.295 %6.500 245.146 185.200 L229 A91 Other persons accounted for by the equity siethod: VIruont Yankee Nuclear Power Corporation- - n stock-31.3% 125,156 shares 18,389,615 1,819,472 1,877,339 31.3% 125,156 shares 18,331,748 Maine Yankee Atomic Power Compag-common stock 2.0% 10,000 shares 1,336,213 133,003 132,500 2.0% 10,000 shares 1,336,716 Connecticut Yankee Atomic Fower Compag-cosumon ~ 56,700 2.0% 7,000 shares 1,028,786 stock 2.0% 7,000 shares 948,8C7 136,619 Yankee Atomic Electric Company-common stock 3.% 5,369 shares 7?h.953 66.900 75.165 3.g $,369 shares 716.688 Pl. 399.f AM 2.155.994 2.141.704 21.413.935 - Totals $?b.521.3R7 $2.327.292 $356.800 $2. 376.850 $185.200 $24.6k3 k29 (1) Purchased 3,568 shares of class a stock for essh. (2) Sale of 1,602 shares of Class E sto:k for cash. .(3) Partial payment of a note. a25# d.

G ) u v Schedule III CE2.TtAL VEIUO!rf IUBLIC SERVICE CDRIGATION AND ITS WHOLLY-0W!ED SUBCIDIARY 00WECTIaff VALLEY ELECTRIC COURNY INC. l Investmants in Equity in Ihrnings of, and Diviaends Received frea Belated Parties Year ended December 31, 1978 Balance at Perinnlrv of Year Additions Deductions malawe at End of Year Equity taken Distributions up in earnings of earnines No. of shares or (losses) of by persons in No. of shares or units. Principal Amount affiliates ani which earnings units. Principal Amount Percent amount of in other persons (losses) were Percent amount of in ownership bends and retes dollars for the period Other. taken up Other ownership bonds and notes _ dollars Name of Issuer and Description of Investment 2,911,612 $ 213,007 $100(1) $ 213,007 $ - 61.7% 29,005 shares $ 2,914,712 No > consolidated subsidiaries, at equity V:rmont Electric Power company, Inc.- - n stock 61.7% 29,00k shares $ 6 C. V. Realty, Inc. - -n stock 100.0% 300 shares (72,396) (24,577) 100.0% 300 shares (96,yI3) 2bo.000(2) $304,000 notes 30h.000 g C. V. Realty, Inc. - notes $544,000 notes 544.000 _g 213.007 240.000 _ 3.121.739

3. fe.216 168.430 Other persons accounted for by the equity method 31 3%

125,156 shares 18,739,454 1,837,889 2,187,728 31 35 125,156 shares 18,389,615 Vcruont Yankee Naclear Ibwer Oorporati:mmn r+ock Maine Ys.nkee Atomic Power Company-cosmon stock 2.0% 10,000 shares 1,336,170 134,043 134,000 2.0% 10,000 shares 1,336,213 2.0% 7,000 shares 949,8 4 61,327 62,300 2.0% 7,000 shares 948,867 Connecticut Tankee Atomic Power company-cosmon stock Yznkee Atomic Electric tv=pany-camon stock 3.5% 5,369 shares 718.752 92.105 85.90h 3.*>% 5,369 shares 724.953 21.399.648 21.744.216 2.12 % 364 2.469.932 $25.130.b32 $?.u3.79h $100 $2.682.939 $ g2 $2k.521.387 Ibtals l (1) Purchased one share of Class A stock for cash. (2) Payment of various notes. I .14 - i e I d. i w

Schedula V CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY-OWNED SUBSIDIArtY CONNECTICUT VALLEY ELECTRIC COMPANY INC. G Utility Plant + Year ended December 31, 1980 4 Balance at Other Balance at-baginning Additions Retirements Charges end of Description of year at Cost or Sales (Credits) _ year Electric plant: Intangible 161,809 10,044 171,853 Production 19,898,700 609.747 24,492 (219,935)(1) 20,264,020 Transmission 16,754,001 678.147 104,905 2,732 (2) 17,329,975 Distribution 78,554,380 4,680,572 1,037,829 (2,732)(2' 82,194,391 Ceneral 2,590,782 169,400 17,715 2,742,467 Completed construction not classified 1,383,954 102,686 1,486,640 Completed retirement not classified (307,122) 18,230 (325,352) Construction work in progress 36,758,797 11,597,809 ( (4,663) (3) 48,571,878 ( 219,935 (1) Experimental electric plant not classified 403,589 6,942 (4) 410.531 Total electric plant $156,198,890 $17,848,4gg $1,203,171 (5) $ 2,279 $172.846,403 (1) Transferred from Plant Held for Future Use to Construction Work in Progress. (2) Reclassification of plant from distribution to transmission. (3) Transferred to nonutility property. (4) Transferred from research, development and demonstration expenditures. 4 (5) Includes $1,426 of non-depreciable property. Schedule VI '\\u.s Accumulated Depreciation 4 of Utility Plant Year ended December 31, 1980 Balance at beginning of year $31,269,327 Additions: Charged to e:;.enses 3,664,424 Salvage va.ue of plant retired 477,547 Miscellaneous 5.412 35,416,710 Deductions: i Retirements, renewals and replacements 1,201,745 Removal cost of plant retired during year 512.148 Balance at end of year $33,702,817 . (a i i f m,... r., ,.,_..-r e _m ,o%_,,.., ~., .,y y .,r ..-y-

Schsdula V CENTRAL VERMONE PUBLIC SERVICE CORPORATION AND ITS WHOLLY-0WNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. Utility Plant Year ended December 31, 1979 Balance at Other Balance at beginning Additions Retirementa Charges and of Description of year at Cost or Sales (Credits) year Electric plants Intangible 161.809 161,809 Production 19,396,189 517.619 14,125 (983)(1) 19,898.700 Transmission 16,264,43* 539,479 88,809 38,897 (1) 16,754,001 Distribution 74,877,055 4.534,585 818,384 (38,876)(1) 78,554,380 General 2,361,051 245,829 17.060 962 (1) 2,590,782 Completed construction not classified 924,715 459,239 1,383,954 (307.122) Completed retirement not classified (274,207) 32,915 Construction work in progress 28,583,432 8,222,687 (47,322)(2) 36,758,797 Experimental electric plant not classified 168.884 228.867 5,838 (3) 403.589 Total electric plant $142.463.362 $14.748.305 $971.293 (4) $fjj,jgg) $156.198.890 (1) Reclassification of plant from production and distribution to transmission and general. (2) Transferred to nonutility property. (3) Transferred from research, development and demonstration expenditures. (4) Includes $(24) of non-depreciable property. Schedule VI Accumulated Depreciation of Utility Plant Year ended December 31, 1979 f Balance at beginning of year $28,890.634 Additions: Charged to expenses 3,466,258 Salvage value of plant retired 466,796 Miscellaneous 2.385 32,826.073 Deductions: Retirements, renewals and replacements 971,317 Removal cost of plant retired during year 585.429 Balance at end of year $31.269.327 \\ U 4,

Schedale V CM E CENTRAL VERMONT PUBLIC SERVICE CORPORATION ) AND ITS WHOLLY-0WNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. Utility Plant Year ended December 31, 1978 Balance at Other Balance at beginning Additions Retirements Charges end of Description of year at Cost or Sales (Credits) year Electric plant: Intangible 161,809 161.809 Production 16,019,877 3,508,942 132,630 19,396,189 Transmission 15,788,896 532.773 62,541 5,306 (1) 16,264,434 Distribution 71,820,076 3,949,499 887,697 (4,823)(1) 74,877,055 General 2,214,959 175,173 28,508 (483)(1) 2,361,051 Completed construction not classified 1,029,526 (104,811) 924,715 Completed retirements not classified (326,868) ,(52,661) (274,207) Construction work in progress 21,874,545 7,072,995 (364,108)(2) 28,583,432 Experimental electric plant not classified 168,884 (3) 168,884 Total electric plant $128,582,820 $15,134,571 $1,058,805(4) $ (195,224) $142,463,362 (1) Reclassification of plant from distribution and general to transmission. (2) Transferred to nonutility property. (3) Transferred from research, development and demonstration expenditures, (4) Includes $6,177 of non-depreciable property.

t. )

Schedule VI Accumulated Depreciation _ of Utility Plant Year ended December 31, 1978 Balance at beginning of year $26,953,706 Additions: Charged to expenses 3.148,314 Salvage value of plant retired 492.656 Miscellaneous (9,131) 30,585,545 Deductions: Retirements, renewals and replacements 1,052.628 Removal cost of plant retired during year 642,283 l Balance ar end of year $28,890,634 ~ ! L

Schidule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. Reserves Year ended December 31, 1980 i, Additions Balance at Charged to Charged Balance at i beginning cost and to other and of i of year expenses accounts Deductions year 1 i Reserves deducted from assets to which they apply: Reserve for uncollectible accounts receivable $ 298,194 $328,494 M (1) $433.602(2) $ 289.067 Reserve for investments in miscellaneous pro-perties - rental water heaters $1.316,561 $229,696 b $ 97.841 $1,448,416 Reserves shown separately: Injuries and damages ($ 938(3) reserve 72,698 ( M (4) $ 6.075(5) 79,403 (1) Collections of accounts previously written off. (2) Uncollectible accounts written off. (3) Hiscellaneous minor items. (4) Charged to construction and retirement work in progress. (5) Payments for construction accidents. f 1 i ~ i i l l i 4 ' i i

Schsdule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY-0WNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. a Reserves Year ended December 31, 1979 Additions i Balance at Charged to Charged Balance ac beginning costs and to other end of of year expenses accounts Deductions year Reserves deducted from assets to which they apply: Reserve for uncollectible accounts receivable $ 376.252 $207.828 $86.410(1) $372.356(2) $ 298,194 Reserve for investments in miscellaneous pro-perties - rental water heaters .$1.193.169 $182.044 $ 58.652 $1.316.561 Reserves shown separately: Injuries and damages ($ 459(3) reserve 66.163 ($10.773(4) $ 4.697(5) 72.698 (1) Collections of accounts previously written off. (2) Unco 11ectible accounts written off. ~ (3) Miscellaneous minor items. (4) Charged to construction and retirement work in progress. w (5) Payments for construction accidents. l l t i e l l l I

Schsdule VIII CENTRAL VERMONT PUBLIC SERVICE CORPORATION ) AND ITS WHOLLY-0WNED SUBSIDIARY l CONNECTICUT VALLEY ELECTRIC COMPANY INC. Reserves Year ended December 31, 1978 Additions Balance at Charged to Charged Balance beginning costs and to other at end of year expenses accounts Deductions of year Reserves deducted from assets to which they apply: Reserve for uncollectible accounts receivable $ 336,783 $355,777 $88,077,(1) $404,385(2) $ 376,252 Reserve for investments in miscellaneous pro-perties - rental water heaters $1,072,361 $157,488 $ 36,680 $1.193.169 Reserves shown separately: Injuries and damages ($ 513(3) reserve 58,196 ($10,165(4) $ 2,711(5) 66.163 (1) Collections of accounts previously written off. ~ (2) Uncollectible accounts written off. (3) Miscellaneous minor items. v (4) Charged to construction and retirement work in progress. (5) Payments for construction and public accidents. t 0 0

Schedule IX O CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. Short-Term Borrowinas Year ended December 31, 1978 Notes Payable - Banks: 1) Unused lines of credit at year end $8,000,000 2) Amount outstanding at end of period $6,600,000 3) Average interest rate at year end 11.13% 4) Maximum amount outstanding at any month end $7,700,000 5) Average amount outstanding during year $4,213,000 6) Average interest rate for the year 8.88% O O...

CENTRAL VERMONT PUBLIC SERVICE CORPbRATION AND ITS WHOLLY-0WNED SUBSIDIARY CONNECTICUT VALLEY ELECTRIC COMPANY INC. O Summary of Other Paid-In Capital Year ended December 31 1980 1979 1978 Balance at beginning of period $24,192,232 $23,613,476 $23,159,021 Conversion of second preferred stock to common stock 14,803 18,013 12,452 Excess of proceeds over par value from sales of common stock (56,662 shares in 1980, 45,893 shares in 1979 and 34,989 shares in 1978) 506,895 448,165 324,571 Amortization of capital stock expense related to the 13.50% series pre-ferred stock 78,083 132,940 132,940 Preferred and common stock issuance expenses (113,510) (20,362) (15,508) Balance at end of period $24,678,503 $24,192,232 $23,613,476 O O Next Page is Page 40 VERMONT ELECTRIC POWER COMPANY, INC. O INDEX TO FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1980, 1979 AND 1978 FINANCIAL STATEMENTS: Auditors' Report Balance Sheets Statements of Income and Retained Earnings Statements of Changes in Financial Position Notes to Financial Statements Report of Independent Public Accountants on Schedules SCHEDULES : V - Utility Plant VI - Accumulated Depreciation of Utility Plant All other schedules are omitted as the required information is inapplicable or the information is included in the financial statements or related notes. W 1

ARTHUR ANDERSEN 8. CO. Boston, MASSACIIUSETTS To the Stockholders and Board of Directors of Vermont Electric Power Company, Inc.: Ue have examined the balance sheets of VERMONT ELECTRIC POWER COMPANY, INC. (a Vermont corporation and subsidiary of Central Vermont Public Service Corporation) as of December 31, 1980 and 1979, and the related statements of income and retained earnings and changes in financial position for each of the three years in the ~ period ended December 31, 1980. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Vermont Electric Power Company. Inc. as of December 31, 1980 and 1979, and the results of its operations and the changes in its financial position for each of the three years in the period ended December 31, 1980, in conformity with generally accepted accounting principles consistently applied during the periods. QL % vG. Boston, Massachusetts, February 20, 1981. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - _ _ - - - - - - _ _ _ - - - - - _ _ I

.~m m m_. e v. v VERMONT ELECTRIC POWER COMPANY, INC. BALANCE SHEETS DECEMBER 31, 1980 AND 1979 ASSETS STOCKHOLDERS' INVESTMENT AND LI ABILITIES 1900 1979 1900 1979 CAPITALIZATION: UTILITY PLANT, at original cost $59,680,601 $57,243,738 Stockholders' investment (Notes 1 and 3)- Less-Accumulated depreciation and Common stock, $100 par value per share amortization (Note 2) 11,771,781 10.326,757 Class A, authorized 12,000 shares, outstanding 11,000 shares 4 1,100,000 $ 1.100,000 $47,908,820 $46,916,981 Class B, authorized 80,000 shares,

=

outstanding 42,000 shares 4,200,000 4,200,000 Expenditures for f uture transmission Retained earnings 23,250 23,250-facilities, at cost (Note 5) 284,922 $ 501,405 = $ 5,323,250 $ 5,323,250 Expenditures for Seabrook nuclear project, at cost (Note 6) $ 1,277,813 First mortgage bonds (Note 3)- Series A, 4.95% due through 1995 4 2,901,000 $ 3,401,000 Series B, 9-1/24 due through 1999 8,802,000 8,968,000 Series C, 10% due through 2000 4,506.000 4,500,000 Series D, 8-1/24 due through 2000 6,640,000 6,771,000 Series E, 84 due through 2000 6,640,000 6,779,000 Series F, 11-1/24 due through 1990 6,434,000 6,794,000 Series G, 9.70% due through 2000 8,718,000 8.866,000 CURRENT ASSETS: Cash 247,293 $ 133,063 444,641,000 $46,159,000 Temporary cash investments 223,669 199,494 Less-Bonds to be retired within Bond sinking fund deposits 521.167 481,500 one year 1,646,000 1.518,000 Bond interest deposits 748,308 786;981 Accounts receivable-f42,995,000 $44,641,000 Af filiated companies 13,605,131 5.267,6;* Other 1,053,580 2,451,388 Total capitalization $48,318,250 449,964,250 Notes receivable from affiliate 860,000 575,000 Materials and supplies, at average cost 414,800 422,206 CURRENT LI ABILITIES: Other 50.995 6, 46 8 Noted payable to banks (Note 4) 900,000 $ $17,724,943 $10,323,734 Cther current liabilities-Bonds to be retired within one year 4 1,646,000 $ 1,518,000 Accounts payable-Affiliated companics 3,570,277' 4,433,647 other 10,381,710 2,353,471 Accrued interest on bonds 748,308 786,981 Accrued taxes (Note 9) 549,889 616,665 DEFERRED CHARGES: Other 148,415 58,812 Unamortized cost of site locstion studies (Note 5) 380,788 $17.044,599 $ 9,767,576 Other, principally unamortized debt expense 344,164 331.105 $17,944,599 8 9,767,576 344,164 $ 711,893 COMMITMENTS AND CONTINGENCIES (Note 9). $66.262,849 $59,731,826 $66,262,849 $59,731,826 The accompanying notes are an integral part of these financial statements. o

VERMONT ELECTRIC POWER COMPANY, INC. STATEMENTS OF INCOMS AND RETAINED EARNINGS r ( FOR THE YEARS ENDED DECEMBER 31, 1980, 1979 AND 1978 1980 1979 1978 OPERATING REVENUES: Transmission services for the State of Vermont 4 2,317,397 $ 2,270,713 $ 2,321,072 Other tranrmission revenues 8,128,23e 8,154,378 7,525,042 Sales of power 95,977,071 72,121,063 66,717,943 $106,422,706 $82,546,154 $76,564,057 OPERATING EXPENSES: Purchased power $ 95,977,071 $72,121,063 $66,717,943 Transmission expenses-Operations 410,688 357,383 330,282 Maintenance 382,733 358,453 292,518 Rents 618,576 680,906 677,194 Administrative and general expenses 928,982 916,577 926,455 Amortization of site location studies (Note 5) 380,789 380,789 380,789 Amortization of expenditures for future transmission facilities (Note 5) 216,483 271,007 28,006 Depreciation and amortization (Note 2) 1,557,667 1,444,000 1,201,667 Taxes-Lccal property and other 1,579,690 1,435,242 1,3.14,142 Federal and state income (Note 7) 288,096 226,149 yy e- ) 4102,340,775 $78.191,569 $71,948,996 4 g~A OPERATING INCOME $ 4,081,931 4 4,354,585 4 4,615,061 J OTHER INCOME, including $7,623 in 1980 and $6,271 in 1979 of allowance for other funds used during construction 359,494 281,961 133,217 $ 4,441,425 $ 4,636,546 $ 4,748,278 INTEREST EXPENSE: Interest on first mortgage bonds $ 4,168,048 $ 4,267,147 $ 3,518,822 Other interest (Note 4) 37,360 29,965 920,260 Amortization of debt expense 26,935 27,483 21,397 Allowance for borrowed funds used during construction (Note 2) (192,918) (90,049) (66,201) 4 4,039,t25 $ 4,234,546 $ 4,394,278 NET INCOME (Note 1) 402,000 $ 402.000 $ 354,000 RETAINED EARNINGS AT BEGINNING OF PERIOD 23,250 23,250 23,250 425,250 $ 425,250 377,250 CASH DIVIDENDS DECLARED AND PAID 402,000 402,000 354,000 ("" kj RETAINED EARNINGS AT END OF \\- PERIOD 23,250 $ 23,250 $ 23,250 The accompanying notes are an integral part of these financial statements. --.

VERMONT ELECTRIC POWER COMPANY, INC. STATEMENTS OF CHANGES IN FINANCIAL POSITION "~*s FOR THE YEARS ENDED DECEMBER 31, 1980, 1979 AND 1978 (J 4 1980 1979 1978 SOURCES OF FUNDS: Internal sources-From operations-Net income 402,000 $ 402,000 $ 354,000 Charges (credits) not requiring funds-Depreciation and amortization 1,557,667 1,444,000 1,201,667 Amortization of site location studies 380,789 380,789 300,789 Amortization of future transmission facilitics 216,483 271,007 28,006 Amortizaticn of debt expense 26,935 27,483 21,397 Allowance for other funds ut-d during constructs n (7,623) . (6,271) 4 2,576,251 $ 2,519,008 $ 1,985,859 Less-Reduction in first mortgage bonds (1,646,000) (1,652,000) (1,265,000) Dividends declared and paid (402,000) (402,000) (354,000) Other, net (26,858) (40,627) 169,171 4 501,393 4 424,381 4 536,030 [-~s} \\m 3 Change in net current assets (exclusive of notes payable to banks)- Cash apd temporary cash investments $ (138,405) $ 576,497 $ 317,837 Accounts receivable (6,939,689) (1,401,080) 709,524 Accounts payable 7,164,869 1,266,213 (746,50G) Other, net (210,961) 234,042 77,214 $ (124,186) $ 675,670 $ 357,989 Internal sources, net 377,207 $ 1,100,053 $ 894,019 External sources-Notes payable to banks 900,000 $(10,000,000) s 500,000 Sale of first mortgage l bonds, Series G 9,000,000 Sales of Class D common stock 600,000 Sale of Seabrook nuclear project 1,729,876 External sources, not $ 2,629,876 $ (400,000) 4 500,000 $ 3,007,083 $ 700,053 $ 1,394,019 FUNDS USED FOR CONSTRUCTION: Utility plant $ 2,562,643 205,576 $ 1,031,074 Seabrook nuclear project 452,063 500,740 362,945 Allowance for other funds used during construction (7,623) (6,271) '~~ $ 3,007,083 700,053 $ 1,394,019 The accompanying notes are an integral part of these financial statements..

VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (1) The Company The Company is an affiliate of Central Vermont'Public Service Corporation ("CVPSC"), which owns 86.5% of its Class A common stock and 51.1% of its Class B common stock. The Company owns and operates the transmission system constructed to transport power under the terms of a contract, administered by the Vermont Public Service Board ("PSB"), with the State of Vermont. The transmission contract with the, State provides, among other things, for the Company to earn an annual return on its transmission operations equal to 6% of the par value of the Class A common stock and 8% of the par value of the Class B common stock. These defined earnings are distributed annually as dividends to the Company's stockholders. The Company earns no return from its other activities which include the Company's function as age L in the purchase, sale and transmission of power under contracts with other l Vermont utilities. (2) Summary of Significant Accounting Policies Depreciation and Amortization All of the Company's depreciable utility plant has been financed through sales of first mortgage bonds. The remaining utility plant has been financed through sales of common stock. The Company's contract with the State of Vermont provides for funding the amortization of first mortgage bonds. In accordance with these provisions, the Company utilizes the sinking fund method of depreciation for recovering the cost of utility plant. Depreciation and amortization are recorded as operating expenses in amounts equivalent to payments made to satisfy sinking fund requirements of the bonds over periods ranging from 15 to 30 years. l Maintenance Maintenance and repairs are charged to operating expenses and include replacements of less than retirement units. I Replacements of retirement units and betterments are charged to utility plant. The original cost of units retired and the cost of removal thereof, less salvage, are charged to accumulated depreciation and amortization. O._-.-

VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (2) Summary of Significant Accounting Policies (Continued) Allowance for Funds Used During Construction (AFUDC) AFUDC is the estimated cost, during the period of construction, of funds used for the construction program. Such allowance is not realized in cash currently but will be recovered in the futuro in the form of increased revenue collected as a result of depreciation expense recorded utilizing the method described above. The Company capitalized AFUDC at annual rates of 11.4% in 1980, 9.7% in 1979 and 9.2% in 1978. For other significant accounting policies, see the following Notes: [~ Note 5 - Expenditures for Site Location Studies and \\m-}> Ftture Transmission Facilities Note 6 - Expenditures for Seabrook Nuclear Project Note 7 - Federal Income Taxes Note 8 - Employee Benefits (3) First Mortgage Bonds The First Mortgage Bonds are secured by a first mortgage lien on the Company's utility plant. The bonds to be retired within the next five years will amount to $1,646,000 in 1981, $1,785,000 in 1982, $1,938,000 in 1983, $2,104,000 in 1984 and $2,289,000 in 1985. The terms of the indenture, as supplemented, under which l the First Mortgage Bonds were issued, require that total stockholders' investment and indebtedness of the Company subordinated to the First Mortgage Bonds must equal at least one-ninth of the aggregate principal amounts of the bonds outstanding or $4,960,0C0 as of December 31, 1980. J < a-I -m,

4 () VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 19 79 AND 1978 (Continued) (4) Notes Payable to Banks The Company uses short-term borrowings under lines of credit agreements with two banks to provide interim financing of up to $2,000,000 for plant construction. The Company had borrowings under these lines as of December 31, 1980 of.$900,000. As part of these agreements, the Company maintains average compensating balances equal to 7-1/2% of credit lines available, and an additional 7-1/2% of outstanding borrowings, i f any. Information regarding notes payable to banks for 1980, 1979 and 1978 is as follows: 1990 1979 1978 b \\-- Notes Outstanding-Amount at year-end 8 900,000 4 410,000,000 Average daily borrowings 237,158 235,068 9,719,000 Maximum amount based on 10,000,000 month-end balances 1,250,000 Weighted Average Interest Rate-l ' lear-end 14.50% 12.21% Daily average 14.39% 12.38% 9.47% (5) Expenditures for Site Location Studies and Future Transmission Facilities l The Company had engaged in studies to evaluate proposed generating plant sites in Vermont. In 1974, as a result of lower than expected load growth forecasts, it was determined not to l proceed with these studies. With the approval of the PSB, the costs j incurred for these studies have been amortized to expense over a I five-year period ending December 31, 1980. l During the early 1970's, projects for the planned expansion of the Company's transmission system resulted in expenditures for land, rights-of-wsy and engineering studies. As a result of lower than -s s ) expected load growth, the originally anticipated dates of j b-l l

s_/ VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEhENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (5) Expenditures for Site Location Studies and Future Transmission Facilities (Continued) completion for those projects have been postponed. In late 1978, the Company began amortizing the costs of th,ese facilities for which there were no definite plans for completion. The amounts amortized were $28,006 in 1978, 4271,007 in 1979 and $216,483 in 1980. The company plans to charge the remaining 4284,922 of expenditures to operating expenses in 1981. (6) Expenditures for Seabrook Nuclear Project (s_, In November 1980, the Company sold its investment in the Seabrook Nuclear Project to another Vermont utility at its book value of approximately $1,730,000, including approximately 4322,000 of allowance for funds used during construction. This sale resulted in a gain for income tax purposes equal to the allowance for funds used during construction, capitalized for financial reporting purposes but deducted for income tax purposer. i As the Company provides for income taxes based upon taxable income rather than book incore, the income tax provision in 1980 is increased to provide sor this gain. (7) Federal Income Taxes The Company computes its Federal income tax expense by applying the statutory rate to its taxable income, in accordance with the rate-making practices followed by the PSB with respect to the Company. The tax effects of all timing differences (differences between the periods in which transactions affect pretax income in i the financial statements and the periods in which they affect the determination of income subject to tax) are flowed through for both accounting and billing purposes. The Company expects that the unrecorded costs, arising from the tax effects of these timing differences, will be recovered in the future when the timing differences reverse and the related taxes become payable. c-

O VERMONT ELECTRIC POWER COMPANY, INC, NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (7) Federal Income Taxes (Continued) Federal and state income tax expense in 1980 and 1979 is as follows: 1980 1979 Federal $199,050 $143,457 State 89,046 82,692 $288,096 4226,149 (3 In 1978, utlization of net operating loss carryforwards offset taxable income. The principal reasons for the difference between income tax expense and an amount calculated by applying the Federal income tax rate to income before income tax expense are as follows: O O O d-

VERMONT ELECTRIC POWER COMPANY, INC. O NOTES TO FINANCIAL STATEMENTS DECEMBEh 31,, 1980, 1979 AND 1978 (Continued) (7) Federal Income Taxes (Continued) 1980 1979 _ 1978 Income before Federal income taxes $ 601,050 $ 545,457 $ 354,000 Federal statutory rate 46% 46% 48% Computed " expected" tax expense 4 276,483 $ 250,910 4 169,920 Increases (reductions) in taxes resulting from: Investment tax credit carry-forward utilized (490,900) (351,057) Interest and overhead charged to construction and expensed for tax purposes (100,947) (48,348) (36,052) Excess of book over tax depreciation 138,434 119,063 29,712 O Difference between property taxes accrued and paid 29,178 (10,809) 14,739 Net operating loss carryforward utilized (4,602) (362,350) Amortization of site location studies 175,162 175,162 182,778 Taxable gain on Seabrook sale 148,550 Other 23,090 13,138 1,253 Federal income tax expense $ 199,050 $ 143,457 $

=

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The Company records investment tax credits as a reduction of Federal income tax expense in the year such credits are utilized in its Federal income tax return. The Company has investment tax credit carryforwards of approximately $656,200 as of December 31, 1980 which expire as follows: $354,900 in 1984; $157,900 in 1985; $10,500 in 1986; and $132,900 in 1987. These investment tax credit carryforwards are subject to review by the Internal Revenue Service. v e-

n V VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (8) Employee Benefits The regular employees of the Company participate in the noncontributory trusteed Pension Plan of Central Vermont Public Service Corporation and its subsidiaries. The total pension expense was $60,500 in 1980, $61,680 in 1979 and $76,373 in 1978, which includes amortization of past service cost over a thirty-year period beginning January 1, 1976. The Company follows the practice of funding currently all costs accrued. A comparison of accumulated plan benefits and plan net assets for the Company's allocable share of the plan is presented below: January 1, Os ~- 1980 1979 Actuarial present value of accumulated plan benefits: Vested $231,340 $191,150 Nonvested 63,420 52,430 $294,760 $243,580

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Ne' assets available for benefits $435,119 $322,110

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The weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits was 6.5% for each year. The Company established an Employee Savings Plan, whereby, beginning in January 1981, the Company will match each participants' contribution to a maximum of 3% of the individual's annual earnings. (9) Commitments and Contingencies Capital expendi6ures in 1981 are estimated to total $2,854,000. Present intentions are to finance these expenditures on an interim basis with short-term borrowings which are expected to be replaced by first mortgage bonds and common stock. p>. s_- . f-

O VERMONT ELECTRIC POWER COMPANY, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (9) Commitments and Contingencies (Continued) The Company is currently undergoing an examination by the Internal Revenue Service (IRS) for the tax years 1973-1978. The additional tax liability cannot be determined at this time. However, under the terms of the Company's service contracts, any ultimate liability, which could be significant, to the IRS will be billed to the Vermont utilities in the period that the taxes become due and payable. A closing conference between the Company and the Internal Revenue Service is expected in April 1981. ~ (10) Supplementary Income Statement Information The following amounts have been charged to operating expenses for 1980, 1979 and 1978: 1980 1979 1978 Maintenance and repairs 4 462,843 4 438,411' 4 362,888 i

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Taxes other than income: State and municipal $1,531,878 41,392,942 $1,356,553 ______1_ ______1__ ______1___ l 41,579,690 81,435,242 $1,394,142 l

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l Rentals s 674,077 % 727,800 4 735,655 l

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Substantially all of the rentals are transmission rentals incurred under long-term contracts containing renewable provisions extending through June 30, 1985. Depreciation and amortization charges are set forth in the Statements of Income and Retained Earnings. i l

O g-

VERMONT ELECTRIC POWER COM?ANY, INC. NOTES TO FINANCIAL S" ATEMENTS DECEMBER 31, 1980, 1979 AND 1978 (Continued) (11) Related Party Transactions CVPSC personnel provide the Company with certain operational, maintenance, construction and administrative services, principally planning, engineering, personnel and purchasing services. These services are provided at cost and amounted to $304,163 in 1980, $210,879 in 1979 and $350,980 in 1978. CVPSC's President and Secretary also serve as s.hairman of the Board of Directors and Secretary of the Company, respectively. In addition, payments were made by the Company to CVPSC for the following: I 198019791978 h Materials and supplies 4 9,510 $ 3,727 414,137

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Office rent $42,900 $42,500 $39,900

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l i e S l t l l Nm , h-t

ARTHUR ANDERSEN & CO. Boston. MASSACHUSETTS .i i REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES To Vermont Electric Power Company, Inc.: In connection with our examination of the financial statements of Vermont Electric Power Company, Inc., we have also examined the supporting schedules listed in the accompanying index. In our opinion, these schedules present fairly, when read in p conjunction with the related financial stataments, the financial data required to be set forth thereir., in conformity with generally accepted accounting principles consistently applied during the periods. Y l l. Boston, Massachusetts, February 20, 19F1. O - -,.. - -. _ - - - _. -. - -.

SCHEDULE V VERMONT ELECTRIC PCMER COMPANY, INC. UTILITY PLANT YEAR ENDED DECEMBER 31, 1980 Balance at Other Balance at Beginning Additions Retirements Charges Ead of of Year at Cost or Sales (Credits) Year Electric Plants Intangible 7,937 $ 4 4 7,937 Transmission 54,608,408 33,126 1,496,177 (1) 56.071.459 General 1,456,629 92,654 143,352 (1) 1,507,327 Plant held for future use 1,071,686 108,109 (3) 1,179,795 Construction work in progress 99:078 2,454,534 (1,639.579)(1) 914,083 $57,243,738 $2,562,643 $125,780 $59,680,601 Expenditures for i future transmission facilities 501,405 184,087 (288,423)(2) 284,922 (2,662)(3) (103,528)(4) (5,957)(5) Expenditures for Seabrook Nuclear Project 1,277,813 452,063 (1,729,876)(5) Site location and engineering costs for future generating s I plants 380,788 (380,788)(6) \\, / $59,403,744 $3,198,793 4125,780 $(2,511,234) 459,965,523 (1) Reclassification of completed projects out of construction work in progress. (2) Transferred to operations. (3) Transferred to plant held for future use. (4) TTansferred to construction work in process. (5) Transferred to accounts receivable. (6) Being amortized to expense over five years, SCHEDULE VI ACCUMULATED DEPRECIATION AND AMORTIZATION OF UTILITY PLANT l YEAR ENDED DECEMBER 31, 1980 Balance at beginning of year $10,326,757 Additions: Charged to expense 1,557,667 Salvage value of plant retired and other 16,510 .__.- _ =_ $11,900,934 Deductions: Retirement, renewals and replacements 123,230 Removal cost of plant retired 5,923 Balance at end of year $11hh1h81 s_ -

j SCHEDULE V VERMONT ELECTRIC POWER COMPANY, INC. D UTILITY PLANT YEAR ENDED DECEMBER 31. 1979 Balance at Other Balance at Beginning Additions Retirements Charges End of of Year at Cost or Sales (Credits) Year Electric Plant a Intangible 7,937 4 4 7,937 Transmission 54,679,838 105,562 (8,052)(4) 54,608,408 42,184 (1) General 1,410,654 8,212 54,187 (1) 1,456,629 Plant held for future use 373,570 10,127 (4) 687,989 (4) 1,071,686 construction work in progress 195,449 (96,371)(1) 99,078 $56,471.999 $205,576 4113,774 $ 679,937 $57,243,738 Expenditures for future transmission faell. ties 1,452,350 214,802 (448,189)(2) 501,405 (27,494)(3) (690,064)(4) Expenditures for Seabrook Nuclear Project 777,065 503,867 (3,119)(3) 1,277,813 Site location and -s engineering costs for future generating plants 761,577 (380,789)(5) 380,788 459,462,991 $924,245 4113,774 $(869,718) $59,403,744 I (1) Reclassification of completed projects out of construction work in progress. (2) Transferred to operations. (3) Transistred to accounts receivable. (4) Transferrwd to plant held for future use. (5) Being amortized to expense over five years. SCHEDULE VI ACCUMULATED DEPRECIATION AND AMORTIZATION OF UTILITY PLANT YEAR ENDED DECEMBER 31. 1979 Balance at beginning of year $ 8,950,817 Additions: Charged to expense 1,444,000 Salvage value of plant retired and other 5,394 $10,400,211 Deductions: Retirement, renewals and replacements 63,255 l Removal cost of plant retired 10,199 \\,s/ Balance at end of year $10,326,757

SCHEDULE V VERMONT ELECTRIC POWER COMPANY, INC. UTILITY PLAlfr YEAR ENDED DECEMBER 31, 1978 Balance at Other Balance at Beginning Additions Re'irements Charges End of of Year at Cost at Sales (Credits) Year Electric Plants Intangible 7,937 4 4 4 7,937 Transmission 51,769,917 95,910 3,005,831 (2) 54,679,838 General 1,317,720 46,506 139,440 (2) 1,410,654 Plant held for future use 122,006 (5) 251,564 (5) 373,570 construction work 1,612,051 (1) in progress 624,152 909,068 t (3,145,271)(2)

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..s-453,719,726 41,031.074

$142,416 4 1,803,615 $56,471,999 Expenditures for future transmission facilities 3,346,298 248,016 (1,612,051)(1) 1,452,350 (149,343)(3) (7,000)(4) (373,570)(5) Expenditures for Seabrook Nuclear Project 414.120 362,945 777,065 Site location and b engineering costs l for future generating s-planta 1,142,365 (380,788)(6) 761,577 -= $58,622,509 $1,642,035 4142,416 $ (659,137) $59,462,991 (1) Transferred to construction work in process. (2) Reclassification of completed projects out of construction work in progress. (3) Transferred to operations. (4) Transferred to accounts receivable. (5) Ttansferred to plant held for future use. (6) Being amortized to expense over five years. l SCHEDULE VI ACCUMULATED DEPRECIATION AND AMORTIZATION OF UTILITY PLANT YEAR ENDED DECEMBER 31, 1978 Balance at beginning of year $7,705,785 Additions: Charged to expense 1,201,667 Salvage value of plant retired and other 201,406 $9,108,858 Deductions: 'N Retirement, renewals and replacements 142,416 Removal cost of plant retired 15,625 = _ - - Balance at end of year $8,950,817

Certified Public Accountants One Boston Place Feat,Marwick,Mitchell&CQ Boston, Massachusetts 02108 ACCOUNTRNTS' REPORT The Stockholdars and Board of Directors Vermont Yankee Nuclear Power Corporation: We have examined the financial statements and related schedules of Vermont Yankee Nuclear Power Corporation as listed in the accompanying index. Our examinations were made in accordance with generally accepted auditing stan-dards, and accordingly included such tests cf the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements in the accompanying index present f airly the financial position of Vermont Yankee Nuclear Power Corporation at December 31,1980 and 1979, and the results cf its operations and the changes in its financial position f or each of the years in the three year period ended December 31, 1980, in conf ormity with ger.erally accepted accounting principles applied on a consistent basis; and the schedules, in our opinion, present f airly the inf ormation set forth therein. l G d k o w ic k k M f b o e l PEAT, MARWICK, MITCHELL & CO. Bostcn, Massachusetts February 18, 1981 1 e I l 3(Q l l __

VEIUCNT YANREE N'JCLEAR POWER CORPORATION O I Index to Financial Statements and Schedules 1 Financial statements: Balanoe Sheets, December 31, 1980 and 1979 Statements of Incone and Retained Earnings, years ended j December 31, 1980, 1979 and 1978 Statements of Changes in Financial Positicn, years ended December 31, 1980, 1979 and 1978 Notee to Financial Statements Schedules I V - Utility Plant, years ended December 31,1980,1979 and 1978 e VI - Accumulated Depreciation of Utility Plant, years ended December 31, 1980, 1979 ard 1978 All other schedules are onitted as the required information is inapplictble or the required inf ormation is included in the financial statements or related notes. i 9 t e O. - -.

VERIONT YANKEE NUCLEAR POWER (DRPORATION Balance Sheets December 31, 1980 and 1979 Assets 1980 1979 Utility plant Electric plant, at oost $ 228,947,888 214,335,562 Less accumulated depreciation 61,267,447 53,003,149 Net electric plant 167,680,441 161,332,413 Nuclear f uel, at cost Assemblies in reactor 58,493,360 48,955,319 Fuel in process 15,662,953 16,011,781 Fuel in stock 2,283,785 Spent fuel 57,232,938 51,294,372 133,673,036 116,261,472 Less accanulated anortization 99,395,239 80,674,131 Net nuclear f uel 34,277,797 35,587,341 Net utility plant 201,958,238 196,919,754 Current assets: p) ( Cash (note 3) 1,639,289 4,053,574 Temporary investments, at cost which approximates Parket 199,833 Accounts receivable, principally f rom sponsors 7,757,520 9,482,524 Materials and supplies, at cost 3,911,527 3,188,717 Prepaid expenses 977,453 390,143 Total current assets 14,485,622 17,114,958 Def erred charges: Unamortized debt expense 522,368 410,944 Unamortized downtime costs 5,298,146 3,218,783 Other def erred charges 87,936 Total def erred charges 5,908,450 3,629,727 $ 222,352,310 217,664,439 See acccupanying notes to financirl statements. J a-

VERMONT YANKEE NUCLEAR POWER CORPORATION ( Balance Sheets December 31, 1980 and 1979 Capitalization and Liabilities 1980 1979 Capitalization Common stock equity (note 4): Common stock, $100 par value; authorized 400,100 shares; outstanding 400,014 shares S 40,001,400 40,001,400 Other paid-in capital 13,314,284 13,100,071 i Retained earnings 5,057,009 5,578,401 Total common stock equity 58,372,693 58,679,872 Redeemable cumulative preferred stock, 7.488 series; $100 par value; authorized 300,000 shares; outstanding 172,197 shares (183,254 shares in 1979) (note 4) ?l9,700 18,325,400 Long-term debt, net (note 5) 70,757,449 81,278,573 Total capitalization 152,349,842 173,283,845 O l Current liabilities: Notes payable (note 3) 5,200,000 6,000,000 Long-term debt to be retired within j one year (note 5) 2,229,000 4,348,000 l Accounts payable 12,021,402 4,065,958 Accrued interest 1,868,128 1,977,273 Accrued taxes 702,650 629,409 Dividends declared -- preferred 319,951 Total current liabilities 22,341,131 17,020,640 Unamore'ted gain on remoquired debt, net 1,480,457 392,370 Accumulated deferred income taxes 41,692,880 39,173,584 Accumulated deferred investment tax credits 4,488,000 2,794,000 Cannitments and contingencies (note 8) S 222,352,310 217,664,439 O b-

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VER)ONT YANKEE NUCLEAR POWER CORPORATION /% {) Statements d Income and Retained Earnings Years ended December 31,1980,1979 and 1978 1980 1979 1978 Operating revenues S 78,339,803 65,981,810 61,637,509 Operating expenses Nuclear fuel expense (note 2) 18,721,108 15,326,978 13,151,317 Other operating expenses 16,724,441 11,245,967 10,260,905 Maintenance 8,756,236 5,363,759 3,120,981 Depreciation 8,629,219 8,299,930 8,085,918 Taxas on incase (note 6) 6,296,000 6,564,000 7,509,531 Other taxes, principally property taxes 4,227,031 4,006,552 3,812,365 Total operating expenses 63,354,035 50,807,186 45,941,017 Operating income 14,985,768 15,174,624 15,696,492 Other income and deductions, net 72,097 190,387 153,024 Income bef ore interest expense 15,057,865 15,365,011 15,849,516 O' Interest expense: Interest on long-term debt 7,521,524 7,944,832 8,373,201 Other interest expense 366,938 162,557 71,949 Total interest expense 7,888,462 8,107,389 8,445,150 Net income 7,169,403 7,257,622 7,404,366 Retained earnings at beginning of year 5,578,401 5,774,009 6,899,155 12,747,804 13,031,631 14,303,521 l Dividends declared: Pref erred stock, $9.35 per share in 1980, and $7.48 per share in 1979 and 1978 1,690,585 1,453,020 1,537,267 Common stock, $15.00 per share in 1980 and 1979, and $17.48 in 1978 6,000,210 6,000,210 6,992,245 Retained earnings at end of year $ 5,057,009 5,578,401 5,774,009 Net income per average share d common stock outstanding S 13.70 14.53 14.68 See acccupanying notes to financial statements. OV _.

VERDONT YANKEE NUCLEAR POWER CDRPORATION ( Statements of Changes in Financial Position Years ended December 31,1980,1979 and 1978 1980 1979 1978 Sour ce of f unds: From operations

• Net income

$ 7,169,403 7,257,622 7,404,366 Charges not requiring use of funds: Depreciation 8,629,219 8,299,93u 8,085,918 Amortization of nuclear f uel 18,721,108 15,326,978 13,151,317 l Amortization d def erred d)wntime costs 5,033,610 2,350,554 2,567,388 Def erred income taxes 2,519,296 4,013,170 5,667,414 Investment tax credit adj ustments 1,694,000 461,000 204,000 Amortization d debt and capital stock expense (8,054) 18,711 23,018 Total from operations 43, 758~,582 37,727,965 37,103,421 Decrease in working capital 7,949,827 6,242,579 Other, net 23,020 499,609 384,267 l $ 51,731,429 44,470,153 37,487,688 Use of funds: Electric plant additions 15,021,450 5,020,200 4,389,235 l Nuclear fuel additions 17,411,563 22,276,307 16,472,622 Downtime costs def erred 7,112,973 4,099,292 2,140,169 Reduction of long-term debt 3,388,948 4,521,124 4,521,124 i l Retirement of pref erred stock 1,105,700 1,100,000 1,.26,300 Pref erred stock dividends 1,690,585 1,453,020 1,537,267 l Common stock dividends 6,000,210 6,000,210 6,992,245 308,726 l Increase in working capital S 51,7'sl,429 44,470,153 37,487,688 Changes in components of working capital: Increase (decrease) in current assets: Cash (2,414,285) 596,224 2,771,088 Temporary investments 199,833 (2,591,448) (1,098,295) Accounts receivable (1,725,004) 2,822,731 (443,884) i Materials and supplies 722,810 434,319 230,395 Prepaid expenses 587,310 93,295 (36,484) 12,629,336) 1,361,121 1,422,820 Increase (decrease) in current liabilities: Notes payable (800,000) 6,000,000 Long-term debt to be retired within one year (2,119,000) 2,230,000 (2,269,000) Accounts payable 7,955,444 (78,723) 2,971,668 Accrued interest (109,145) (29,314) (155,354) Accrued taxes 73,241 (518,263) 566,780 Dividends payable 319,951 5,320,491 7,603,700 1,114,094 O Increase (decrease) in working capital $ (7,949,827) (6,242,579) 308,726 See acccmpanying notes to financial statements. -.. - -...

VERK)NT YANKEE NUCLEAR POWER CDRPORATICM Notes to Financial Statements December 31, 1980, 1979 and 1978 (1) Summary of Significant Accounting Policies (a) Regulation and Operations The Ccapany is subject to the regulatory authority of the Federal Energy Regulatory Commissim (FERC) and the Public Service Board of the State of Vermont as to transactions with associated companies, accounting and security issues. The Canpany is also subject to regulation by Federal or state agencies with respect to nuclear plant licensing and saf ety, air and water quality, land use and other envirornental matters. Pursuant to the terms of Power Contracts with sponsors, f or a term of 30 years consencing on December 1,1972, each Sponsor is obligated to pay the Company each month (regardless of the Plant's operating level or whether it is I operating or shutdown during the period), an amount equal to its entitlement percentage of the Company's total fuel costs and operating expenses with l respect to the Plant, and an allowed return on equity. Also, under terms of l the Capital Funds Agr eements, the Sponsors are committed, subject to l obtaining necessary regulatory authorizaticas, to make f unds available in amounts required to obtain or maintain liccnses nCessary to keep the Plant in operation. (b) Depreciation and Maintenance s Electric plant is being depreciated on the straight-line method at rates designed to f ully depreciate all depreciable properties through 1998. Renewals and betterments constituting retirement units are charged to electric plant. Minor renewals and betterments are charged to maintenance expense. At the time depreciable properties are retired, the original cost, plus cost of removal, less salvage of such property is charged to the acetmulated provision for deprociation. l (c) Amortication of Nuclear Fuel The cost of nuclear fuel is amortized to expense on the basis of the rate of burn down of the individual assenblies comprising the total core. The Company also accrues the estimated future costs of disposing of spent nuclear f uel. See note 2 of notes to financial statements. (d) Def erred Charges Costs associated with sched 11ed plant downtime f or replacement of nuclear fuel assemblies and major maintenance are amortized to expense over the esti-mated period until the succ9eding downtime (normally between twelve and f ourteen months). (e) T4.xes m Income The tax effects of timing diff erences are accounted for as prescribed by and in accordance with the rate-making policies of FERC. Provisions f or def erred inomne taxes reflect the tax ef f ects cf all timing differences. q (Continued) l i l VERMONT YANKEE NUCLEAR POWER CORPORATION O Notes to Financial Statements Investment tax credits Ere deferred and amortized to income over the lives of the related assets. (2) Nuclear Fuel Expense The Cogany accrues estiusted coats of disposing of nuclear fuel as a cogonent of nuclear fuel expense. Provisions for estimated costs of disposing of nuclear fuel in the reactor (at projected costs in 1988) are being accrued based en the rate of burn-down of assemblies in the reactor. Provisions for costs c2 disposing of nuclear fuel used prior to October,1977 (estimated to cost $39,300,000 in 1988) are being accrued over an 11 year period ending in 1988. Accruals for estimated costs of disposing of nuclear fuel increased 1980, 1979 and 1978 nuclear fuel expense by approximately $7,900,000, $5,800,000 and $4,900,000, respectively, and are expected to increase annual nuclear fuel expense by approximately $8,800,000 (including $4,300,000 for spent fuel) in 1981 and through the year 1988. Current estimates of disposal costs are subject to a number of uncertainties including the cost, availability and timing of disposal fac!11 ties, the extent of future inflation, regulatory requirements and the cost of future services, all of which may require periodic revisions in estimated coets of disposal. n v (3) Compensating Balances and Short-term Borrowings The Cowany had bank linus of credit aggregating $16,000,000 and $12,000,000 at December 31, 1980 and 1979, respectively, requiring average compensating balances equal to 7.5% of outstanding loans (there were $5,200,000 and $6,000,000 of loans outstanding at December 31, 1980 and 1979, re spe' ci-tively), and 7.5% of the line (increased to $25,000,000 in January,1981). During 1980 and 1979, respectively, the maximum amount cf short-term borrowings outstanding at any month end was $10,100,000 and $6,000,000 and the daily average amount of short-term borrowings outstanding was $1,948,100 and $975,300 with a corresponding weighted average interest rate of 17.774 and 15.35%. (4) Capital Stock So long as any shares of the Cumulative Preferred Stock are outstanding, the payment of cash dividends and distributions on Conmon Stock (other than redenotions, 91ch requires 30% connon equity af ter redemption) is limited when Connon Stock Equity (as defined) is less than 25% of Total Capitaliza-tion (as defined). At December 31, 1980 Common Stock Equity was 37.51% of: Total Capitalization. The 7.484 series Preferred Stock is redeemable (1) at par through a mandatory sinking fund in the amount of $1,100,000 per annum, (2) at the option of the Company, at par, an additional $1,100,000 per annum and (3) in whole or in A part from time to time, at redemption prices per share ranging from $106.97 in 1981 to $100 in ISM, together in each case with accrued and unpaid dividends to the redemption date. (Continued) _ -... a

VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial SP2tements (5) Long-Tera Debt A summary of long-term debt follows: 1980 1979 First mortgage bonds: Series A 5/84 due 1998 S 54,816,000 59,503,000 Series B 1/24 due 1998 10,357,000 11,150,000 Series C - 7.70% due 1998 13,687,000 14,840,000 Total first mortgage bonds 78,860,000 85,493,000 Unamortized premium on debt 126,449 133,573 Total long-term debt 78,986,449 85,626,573 Less long-term debt to be retired within one year 2,229,000 4,348,000 Long-term debt, not S 76,757,449 81,278,573 The Mortgage constitutes a first lien on utility plant, excluding nuclear fuel. Bonds issued under the Mortgage are further secured by the terms of the O Power Contracts (except for related fuel payments) and the Capital Funds Agreements with the sponsors. Sinking fund requirements with respect to First Mortgage Bonds amount to $4,514,000 annually. (6) Income Taxes The cosponents of income tax expense are: 1980 1979 1978 Current: Federal income taxes: Included in operating income S 1,436,209 1,419,479 826,912 Included in non-operating income 82,000 173,000 158,000 Vermont income taxes: Included in operating income 646,495 670,351 811,205 ?g164,704 2,262,830 1,796,117 Deferred: Federal income taxes: Included in operating income 2,198,791 3,695,521 5,412,088 Vermont income taxes: Included in operating income 320,505 317,649 255,326 Total deferred income taxes 2,519,296 4,013,170 5,667,414 Investment tax credit adjustments 1,694,000 461,000 204,000 Total income taxes S 6,378,000 6,737,000 7,667,531 (Continued). _ _ _..........

y 2 m = VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements A reconciliation of the Cowany's effective income tax rates with the Federal statutory rate is as follows: 1980 1979 1978 Federal statutory rate 46.0% 46.0% 48.0% State income taxes, net of Federal income tax benefit 3.9 3.8 3.7 Investment credit (4.5) (3.1) (2.4) Other 1.7 1.4 1.6 47,1% 48.1% 50.9% The principal items cowrising deferred income tax expense are: 198d 1979 1978 Excess of tax depreciation over financial statement depreciation $ 2,805,196 3,196,427 3,995,000 Excess of fuel amortization for financial statement purposes over tax amortization (1,742,770) (1,750,704) (1,614,000) Maintenance expenses deferred for financial statement purposen 1,034,770 735,875 / ~520,000 ) i Other 422,100 51,572 60,000 Investment tax credits utilized 1,780,000 3,.46g414 $ 2,519,296 4,013,170 5,667,414 (7) Pension Plans The Cowany has two non-contributory trusteed pension plans covering all regu-lar egloyees and follows the consistent policy of funding all costs accrued. Pension costs were $216,000, $230,000 and $250,000 for the years 1978 through 1980 including amortization of unfunded liabilities over a period ending in 1998. A comparison of accumulated plan benefits and plan t not assets is presented below: January 1, l 1980 1979 Actuarial present value of accumulated plan benefits: r Vested S 327,520 229,538 l Nonvested 61,935 67,932 389,455 297,470 l Net assets available for benefits $ 1,086,962 803,941 { Cj N g The weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits was 9% for 1980 and 1979. (Continued) __

VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (8) Commitments and Contineencies Certain intervenors, challenging the sufficiency of the Nuclear Regu).atory Commission's (NRC) environmental review of portions of the fuel cycle, i appealed the Mtc decision authorizing the Cogany's permanent, full power, forty-year operatins license, to the Court of Appeals for the District of Columbia Circuit, where their appeal was consolidated with another appeal from the NRC's generic rulemaking proceeding on the same subject. In July, 1976, that Court decided the apF' ',s by setting aside and remanding to the NRC for further proceedings certain aspects of the rulemaking which dealt with fuel reprocessing and waste disposal and by remanding the Vermont F Yankee decision to await the outcome of the rulemaking. On April 3, 1978 the United Butes Supreme Court ruled favorably on the Company's appeal from that decision and remanded the consolidated cases to the District of Coltun-bia Circuit where the matter is still pending., l The Cospany has coinnitments for nuclear fuel purchases through 1992 appromi-i mating $135,609,000. Expenditures for such cosmitments will be approxi-i mately $19,300,000 in 1981 and approximately $19.100,000; $19,300,000; $19,100,000 and $18,900,000 in the yeare 1982 through 1985, respectively. The Cogany has contracted for uranium concentrate to meet substantially all power production requirements through 1984. The Cowany has an enrichment O contract with the thited States Department of Energy through 2001 and has contractad for fuel fabrication requirements through 1984 and conversion services through 1983. The Cogany does not have contracts for disposal of spent fuel. Pursuant to an effective amendment to the plant's operating license, work is underway to expand tegorary storage capacity so that spent fuel removed from the reac-toe through 1987 can be safely stored while maintaining the ability to discharge a full core should that be necessary for operational reasons. By decision dated January 27, 1978 the NRC Atomic Safety and Licensing Appeal Board affirmed an earlier Licensing Board decision authorizing the license amendment to permit expansion of the fuel rack capacity for storage of spent fuel at the Veracnt Yankee plant. An appeal by one intervenor from that decision is currently pending before the Court of Appeals for the District of Columbia Circuit. Events at Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("1MI") have prompted a rigorous reexamination of safety related equipment and operating Procedu re s in all nuclear facilities. New regulatory requirements involving both physical and procedural changes have been and are being promulgated, with which all nuclear facilities will have to comply. Until j the scope of these improvements, as they apply to the Plant, and the time schedules for cogliance have been defined, neither the cost of any modifi-cations nor their effect, if any, on the operations of the Cog any can be definitively de termined. The Co w any presently anticipates these new requirements will necessitate significant capital expenditures during the period 1981 through 1983. (Continued) __

VFRONT YANKEE NUCLEAR POWER CDRPORATION Notes to Financial Statements The Company is responsible for costs which will be incurred to decommission its nuclear generating plant at the end of its useful life. The eventual costs of decommissioning will be largely dependent upon technolc;y and regulatory requirements at or near the time of decommipJioning (the plant's current operating license expires in 2007) and such requirements could materially affect estimates based upon current technology. The Company is not presently providing for decommissioning costs. The Price-Anderson Act provides that each owner of an operating power reactor may be assessed a retrospective premium of up to $5,000,000 per reactor in the event of any one nuclear incident occurring in any reactor in the United States (with a maximum assessment of $10,000,000 per year per reactor) should any nuclear incident result in liability losses which exceed the maximum available private insurance protection (presently $160,000,000). That Act further provides for federal indemnity for liability losses in excess of the above two layers of insurance up to the statutory limit of liability of $560,000,000. (9) Unaudited Quarterly Financial Information The follcaring quarterly financial information is unaudited and in the opinion of management includes all adjustments (consisting only of normal recurring O accruals) necessary to a f air statement of results of operations for such periods. Quarter ended 1980 December September June March Operating revenues $ 16,335,385 19,962,649 21,262,527 20,779,242 Operating income 3,676,672 3,510,178 3,874,904 3,824,014 Net income 1,813,183 1,781,930 1,773,445 1,800,845 Net income per share of common stock 2.88 3.60 3.58 3.64 Quarter ended l December September June MarQ 1979 ( Operating revenues $ 19,318,085 15,762,525 15,788,644 10,112,556 Operating income 4,089,777 3,516,110 3,804,876 3,763,861 Net income 1,999,078 1,611,900 1,826,582 1,820,062 Net income per share of common stock 4.11 3.12 3.66 3.64 (Continued) llpa _.._.

VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (10) Unaudited Information on the Effects of Changing Prices The following information is supplied for the purpose of providing certain information about the effects of changing prices. It should be viewed as an e9timate of the approximate effect of changing prices, rather than as a precise measure. A statement of income adjusted for changing prices follows (dollars in thousands): Year ended December 31, 1980 Conventional Adjusted for Adjusted historical general for changes in cost inflation specific prices Operating revenues S 78,340 78,340 78,340 Operating expenses: Nuclear fuel expense 18,722 23,347 23,163 Other operating expenses 16,724 16,724 16,774 Maintenance 8,756 8,756 8,756 Depreciation 8,630 16,48 1 18,343 Taxes on income 6,296 6,296 6,296 Other taxes, principally property taxes 4,227 4,227 4,227 Total operating expenses 63,355 75,831 77,509 O Operating income 14,985 2,509 831 Other income and deductions, net 72 72 72 Interest expense (7,888) (7,888) (7,888) Net income (loss) excluding ( reductica to net recoverable cost S 7,169 (5,307) (A) (6,985) (A) Gain from decline in purcoasing power of net amounts owed 16,608 16,608 Reduction to net recoverable cost (12,434) (10,756) 4,174 5,852 Increase in specific prices (current cost) of property, plant arci J.quipment held during the year (B) 26,262 Effect of increase in general price level 49,799 Excess of increase in gener" price level over increase in specific prices S 23,537 g (A) Including the reduction to net recoverable cost, the net loss would have been $17,741. (B) At December 31, 1980, the current cost of utility plant net of accumulated depreciation and amortization was estimated to be approximately $419,009,000 as compared with net utility plant recoverable through depre-clation and amortization of $201,958,000. (Continued)

VE100NT YANKEE NUCLEAR POWER CDRPORATION Notes to Financial Statements A five-year comparison d selected supplementary financial data adjusted for the affects of changing prices follows (in thousands of average 1980 dollars except per share amounts): Year ended December 31 1980 1979 1978 1977 1976 Operating revenues S 78,340 74,905 77,852 83,103 76,744 Historical cost information adiusted for general inflation: Net loss (excluding reduction to net recoverable cost) 5,307 761 Net less per share of common stock (excluding reduction to net recoverable cost) 17.49 6.01 Net assets at year-end at net recoverable cost 74,743 75,912 Current cost infortsation: Net loss (excluding reduction to net recoverable cost) $ 6,985 4,484 (v Net loss per share d comunon stock (excluding reduction to net recoverable cost) 21.69 15.31 Excess d increase in general price level over increase in specific prices 2,3,537 13,056 Net assets at yr,ar-end at net recovert.ble cost 74,743 75,912 ) General information: Gain from decline in purchasing power d net amounts owed $ 16,608 19,106 Cash dividends declared per common share $ 15.00 17.03 22.08 23.77 25.30 Average constaaer price index 246.8 217.4 195.4 181.5 170.5 Dollar amounts adjusted f or general inflation (constant dollar amounts) repre-sent historical costs stated in terms of dollars of equal purchasing power, as measured by the Constaners Price Index for all Urban Constumers (CPI-U). Dollar amounts adj usted for changes in,specifi; prices (current oost amounts) reflect the changes in specific prices of net utility plant f rom the date the plant was acquired to the present, and differ frcza constant dollar amounts to the extent that specific prices have increased more or less rapidly than prices in general. A (Continued) U.

~ l VERBONT DNEEE NOCLEAR PotetR G)RPORATI(3I Notes to Financial Statements The current cost of property, plant, and equipment, which includes land, land rights, intangible plant and construction work in progress, represents the estimated cost of replacing existing plant assets and was determined by indexing surviving plant by the Handy-Whitman Index of Public Utility Coostruction Costs. The current cost d nuclear fuel was determined by i engineering estimates of the replacement cost of f uel currently in the reactor. The current year's provisions for nuclear fuel expense and depre-clation on the constant dollar and current cost maounts & utility plant were determined by applying the Capany's depreciation and amortization rates to the restrted plant amounts. As prescribed in Financial Accounting Standard No. 33, income tames were not l adj usted. 1 Under terms of the Power Contracts, which specify costs billable to the Campany's sponsors, only the historical cost of utility plant is recover-eble in revenues as depreciation. Therefore, the excess d the cost of plant stated in terms d constant dollars or current cost that exceeds the historical cost of plant is not presently re:overable in rates as deprecia-tien, and is reflected as a reduction to not recoverable cost. The Company will be allowed to earn on the increased cost d its not investment when replacement of f acilities'actually occurs. To properly reflect the economics of rate regulation in the statement of income adjusted f or changing pricea, the reduction of not p.-operty, plant, and equipment should be dfset by the gain from the decline in purchasing power of not amounts owed. During a period of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary liabilities experience a gain. The gain f rom the decline in purchasing power of net amounts owed is primarily attributable to the substantial l maount d debt which has been used to finance property, plant, and equip-ment. Since the depreciation on this plant is limited to the recovery of historical costs, the Campany does not have the opportunity to realise a holding gain on debt and is limited to recovery only of the anbedded cost of l debt capital. l l e ,O __-_,__.~._._____._.__._,_,..--,__.________ur,..__

s Schedule V VEIUOtFF YANKEE NUCLEAR POISR CORPORATION l Utility Plant Year ended December 31, 1980, 1979 and 1978 1980 39 1978 Land and land rights 600,894 600,894 600,894 Structures and improvements 46,746,238 45,843,216 45,298,908 Reactor, turbogenerator and accessory equipment 170,228,195 154,390,600 152,937,256 Transmission equipment 6,066,322 6,066,322 6,066,322 Other 1,115,857 1,115,857 1,115,857 Construction work in progress 4,190,382 6,318,673 3,971,650 $ 228,947.888 214,335,562 209,990,887 Nei'her total additions of $15,021,450, $5,020,200 and $4,389,235, nor total c retirements of $409,12(, $675,525 and $653,160 during the years ended December 31,1980,1979 and 1978, respectively, exceeded 10% of the utility plant balance I at the end of the year. Schedule VI l Accumulated Depreciation d Utility Plant Year ended December l'1,,1380,1979 and 1978 1980 1979 1978 Balance at beginning d year $ 53,003,149 45,273,555 37,563,490 Additions: Charged to expense 8,629,219 8,299,930 8,085,918 Salvage and removal costs (net) 44,203 105,ld9 277,307 l l Deductions: Plant retired 409,124 675,525 653,160 Balaaw at end of year S 61,267,447 53,003,149 45,273,555 l Depreciation is being calculated on the entire plant as a composite unit (see note 1 of notes to financial statements). O

' O ACCOUNTANTS' CONSENT The Board of Directors Central Vermont Public Service Corporation: We consent to incorporation by reference in the Registration Statement on Form S-16 of Central Vermont Public Service Corporation of our report dated February 20, 1981, relating to the consolidated financial statements of Central Vermont Public Service Corporation and subsidiary for the five years in the period ended December 31, 1980 that appears in the annual report on Forr 10-K of Central Vermont Public Service Corporation. Boston, Massachusetts March 26,1981 4 O O Incorporated Filed Documents herewith SEC at Exhibit Docket Page 3.* Exhibits A. Articles of incorporation and bylaws Filed herewith: A-1 Articles of Association, as amended i Incorporated aerein by reference: A-2 By-laws 2.' 1. 3 2-52177 B. Instruments defining the rights of security holders Incorporated herein by reference: ()'

• B-1 Mortgage dated October 1, 1929 between the Company and Old Colony Trust Company, Trustee, securing the Company's First Mortgage Bonds.

B-3 2-2364 I

• B-2 Supplemental Indenture dated as'of August 1, i

1936, supplemental to B-1. B-4 2-2364 i B-3 Copy of Supplemental Indenture dated as of November 15, 1943, supplemental to B-1. B-3 2-5250

• B-4 Copy of Supplemental Indenture dated as of December 1,

1943, supplemental to B-1.

B-4 2-5250 l [ I'-

• Classified by the Securities and Exchange Commission

\\ as a basic document. s a ...n, w,.-.- .-----.--,,.---n.- .-----..,,._n-~n.-,.

= _ _ Incorporated Filed Documents herewith SEC at ) Exhibit Docket Page

• B-5 Copy of directors' resolutions adopted December 14, 1943, establishing the Series C Bonds 2nd dealing with other related matters.

B-5 2-5250 i = l

• B-6 Copy of Supplemental Indenture dated as of i

April 1,

1944, supplemental to B-1.

B-6 2-5466

• B-7 Copy of Supplemental Indenture dated as of February 1, 1945, sup-7.6.

2-5615 plemental to B-1. (22-385)

• B-8 Directors' resolutions adopted April 9,

1945, establishine the Series l

D Bonds an/ dealing with 7.8. 2-5615 other matt,ts. (22-385)

• B-9 Copy of Supplemental s

' '} Indenture dated as of September 2,

1947, supplemental to B-1.

7.9. 2-7489

• B-10 Cepy of Supplemental Indenture dated as of July 15, 1948, and directors' resolutions establishing t'

,e-ie' S Bonds and deal.. other matters. 7.10. 2-8388

• B-11 Copy of Supplemental Indenture dated as of May 1, 1950, and directors' resolutions, establishing the Series F Bondu and dealing with other matters.

7.11. 2-8388

• Classified by the fecurities and Exchange Commission as a basic document.

7- . ( x-. -a-- sy n -nem-,---e-v- -.,w,nws.u

---

.e--y,,

wn---4 -y-- n -r w, ,r w w

Incorporated Filed O herewith Documents SEC at Exhibit Docket Page

• B-12 Copy of Supplemental Indenture dated August 1, 1951, and directors' resolutions, establishing the Series G Bonds and dealing with other

matters, 7.12.

2-9073

• B-13 Copy of Supplemental Indenture dated May 1, 1952 and directors' resolutions, establishing the Series H Bonds and dealing with other matters.

4.3,13. 2-9613

• B-14 Copy of Supplemental C

Company Indenture dated as of 8-K July 10, 1953, sup-

July, plemental to B-1.

1953

• B-15 Copy of Supplemental Indenture dated as of

,a June 1, J954, and directors' resolutions, establishing the Stries K Bonds and dealing with other matters. 4.2.16. 2-10959

• B-16 Copy of Supplemental Indenture dated as of February 1, 1957, and directors' resolutions, establishing the Series L Bonds and dealing with other matters.

4.2.16. 2-13321

• B-17 Copy of Supplemental Company Indenture dated as of 8-K March 15, 1960.

March, 1960

• Classified by the Securities and Exchange Commission

(( N) as a basic document. _. _ _............. _..

_ = -.. Incorporated Filed Documents herewith {'"/ l Exhibit Docket Page N --- ~ "" ~ ~ TEC at s_

• B-18 Copy of Supplemental Company Indenture dated as of 8-K March 1, 1962.

March, l

1962

• B-19 Copy of Supplemental Company Indenture dated as of 8-K March 2, 1964.

March, 1964

• B-20 Copy of Supplemental Indent 6re dated as of March 1, 1965, and dirac-tors' resolutions, estab-Company lishing the Series M 8-K Bonds and dealing with

April, other matters.

1965 t

• B-21 Copy of Supplemental Indenture dated as of December 1, 1966, and directors' resolutions, Company establishing the Series 8-K p)s N Bonds and dealing with

January,

\\, other matters. 1967 i B-22 Copy of Supplemental Indenture dated as of December 1, 1967, and directors' resolutions, Company establishing the Series 8-K O Bonds and dealing with

December, i

l other matters. 1967 l [ B-2' Copy of Supplemental i Indenture dated as of July 1, 1969, and direc-tors' resolutions, es-Company tablishing the Series P 8-K I Bonds and dealing with

July,

( other matters. 1969 i ~ l l 1

• Classified by the Securities and Exchange Commission f3 as a basic document.

r-( ) '/

• I.

n..------ --..,-r ~ -

Incorporated Filed -Documents herewith O SEC at s/ Exhibit Docket Page__ \\ B-24 Copy of Supplemental Indenture dated as of ' December 1, 1969, and directors' resolutions, Company establishing the Series 8-K Q Bonds and dealing with

January, other matters.

1970 B-25 Copy of Supplemental Indenture dated as of May 15, 1971, and directors resolutions Company establishing tae Series R 8-K Bonds dealing with other

May, matters.

1971 B-26 Copy of Supplemental Indenture dated as of April 15, 1973, and directors' resolutions Company establishing the Series 8-K S Bonds and dealing with

May, other matters.

1973 B-27 Copy of Supplemental Indenture dated as of April 1, 1975, and directors' resolutions establishing Company the Series T Bonds and 8-K dealing with other mat-

April, ters.

1975 B-28 Copy of Supplemental-Indenture dated as of l April 1, 1977, modifying B-1. 2.42 2-58621, B-29 Copy of Supplemental Indenture dated as of July 29, 1977, and directors' resolutions establishing the Series U, V, W, and X Bonds. 2.43 2-58621 l i

• Classified by the Securities and Exchange Commission

(~ as a basic document. b Incorporated Filed Documents herewith SEC at -/ Exhibit Docket Page t Filed herewith: ^ B-30 Copy of Thirtieth Supplemental Indenture dated as of September 15, 1978, and directors' resolutions establishing the Series Y Bonds. B-31 Copy of Thirty-first Supplemental Indenture dated as of September 1, 1979 and establishing the Series Z Bonds. Incorporated herein by reference:

• B-32 Copy of Indenture of Mortgage, dated as of September 1, 1957, be-tween Vermont Electric Power Company, Inc.

f. ("Velco") and Bankers (%- Trust Company, securing (b)(1) Company Velco's First Mortgage 10-K Bonds. for 1957 1

• B-33 Copy of supplemental Indenture dated as of (b)(1)

Company l December 1, 1958, modi-10-K fying B-32. for 1958 I

• B-34 Copy of Trust Indenture dated asJof May 1, 1962 between the Company and Mellon National-Bank and Trust Company, Trustee, l

relating to the Company's 4 7/8% Debentures due May 1, 1987. 4.2.24. 2-26485 4 I

• Classified by the Securities and Exchange Commission as a basic document.,

l l e

Incorporated Filed O.- Documents _ _ __, herewith SEC at Exhibit Docket Page

• B-35 Copy of Trust Indenture dated as of May 1, 1968 between the Company and

+ The First National Bank of Boston, Trustee, re-Company i lating to the Company's 8-K 7% Debenturty due May 1,

May, 1993.

1968

• B-36 Copy of Trust Indenture dated as of April 1, 1970 between the Company and The First National Bank of Boston, Trustee, Company relating to the Company's 8-K 10 5/8% Debentures due

April, April 1, 1995.

1970 B-37 Copy of Supplemental Indenture dated as of December 1,

1969, modifying B-32.

2.35. 2-57458 B-38 Copy of Supplemental Indenture dated as of November 1,

1970, modifying B-32.

2.36. 2-57458 l B-39 Copy of Supplemental i Indenture dated as of December 1,

1971, modifying B-32.

2.37. 2-57458 B-40 Copy of Supplemental Indenture dated as of December 1,

1972, modifying B-32.

2.38. 2-57458 B-41 Copy of Supplemental Indenture dated as of I July 1, 1974, modifying ( B-32. 2.39. 2-57458

• Classified by the Securities and Exchange Cenmission f-~)s

( as a basic document I

Incorporated Filed Documents herewith SEC at Exhibit Docket Page B-42 Copy of Supplemental Indenture dated as of February 1,

1975, modifying B-32.

2.40. 2-57458 C. Material Contracts Incorporated herein by i reference:

• C-1 Copy of firm power Contract dated August 29, 1958, and supplements thereto dated September 19, 1958, October 7, 1958 and October 1,

1960, between the Company and the State of Vermont (the " State").

13.9. 2-17184

• C-2 Copy of Transmission Contract dated June 13, 1957 between Velco and O.

the State, relating to (b)(2) Company 10-K transmission of power. for 1957 C-3 Copy of letter agreement dated August 4, 1961 between Velco and the State, supplementing C-2 above. 13.36. 2-26485 C-4 Copy of First Amendment to C-2 above.tated September 23, 1969 between Velco and the State relating to terms and allowable return. 13.71. 2-38161

• Classified by the Securities and Exchange Commission as a basic docuaent.

,-,m , -. - e ,..e.--& .n,-, --n_, ,e--

Incorporated Filed /~N Documents herewith ) SEC at v Exhibit Docket Page

• C-5 Copy of subtransmission contract dated August 29, 1958 between Velco and the Company (there are seven similar contracts between (b)(3)

Company 10-K Velco and other utilities). for 1957

• C-6 Copies of Amendments dated September 7,

1961, November 2,

1967, March 22, 1968 and October 29, 1968 to C-5 above.

13.42. 2-32917

• C-7 Copy of Three-Party Agreement dated September 25, 1957 between the Company, Green Mountain and Velco.

13.8. 2-17184

• C-8 Copy of firm power Contract dated fx December 29, 1961, between

't i the Company and the State, ' ~' ~ relating to purchase of Niagara Project power. 13.17. 2-26485

• C-9 Copy of agreement dated July 16, 1966 and letter supplement dated July 16, 1966 between Velco and Public Service Company of New Hampshire relating to purchase of single unit power from Merrimack II.

13.33. 2-26485

• C-10 Copy of Letter Agreement dated July 10, 1968 modifying Exhibit A of C-9 above.

13.48. 2-32917

• C-11 Copy of Capital Funds Agreement between the Company and Vermont Yankee
• Classified by the Securities and Exchange Commission fs

( ) as a basic document. s Incorporated Filed Documents [_s\\ >} herewith SEC at Exhibit Docket Page dated as of February 1, 1968. B-2 70-4611 ~

• C-12 Copy of Amendment dated March 12, 1968 to C-11 above.

B-3 70-4611

• C-13 Copy of Power Contract between the Company and Vermont Yankee dated as of February 1, 1968.

B-4 70-4591

• C-14 Copy of Capital Funds Agreement between the Company and Maine Yankee dated as of May 20, 1968.

B-2 70-4658

• C-15 Copy of Power Contract between the Company and Maine Yankee dated as of May 20, 1968.

B-3 70-4658

• C-16 Copy of Agreement dated O-January 17, 1968 between s-Velco and Public Service Company of New Hampshire relating to purchase of additional unit power from Merrimack II.

13.47. 2-32917'

• C-17 Copy of Agreement dated February 10, 1968 between the. Company and Velco relating to purchase by Company of Merrimack II l

unit power. (There are'25 similar agreements between Velco and other ( utilities.) 13.49. 2-32917 l l l J

• Classified by the Securities and Exchange Commission

{"' as a basic document. 4 m i

I Incorporated Filed Documents herewith SEC at Exhibit Docket Page C-18 Copy of Three-Party Power Agreement dated as of November 21, 1969 among the Company, Velco, and Green Mountain relating to purchase and sale of power from Vermont Yankee l Nuclear Power Corporation. 13.69. 2-38161 C-19 Copy of Three-Party Transmission Agreement i dated as of November 21, 1969 among the Company, .Velco and Green Mountain providing for transmission of power from Vermont i Yankee Nuclear Power Corporation. 13.70. 2-38161 s

• C-20 Copy of Stockholders Agreement dated March 29,

+ 1957'between the Company, Velco, Green Mountain and Citizens Utility Company. 13.7. 70-3558 C-21 New England Power Pool Agreement dated as of l September 1, 1971, as amended to November 1, 1975. 4.8. 2-55385 l C-22 Agreement setting out Supplemental NEPOOL Understandings dated as of April 2, 1973. 5.10. 5-50198 C-23 Agreement dated October 13, 1972 for Joint I Ownership, Construction and Operation of Pilgrim Unit No. 2 among Boston i Edison Company and other i I l

• Classified by the Securities and Exchange Commission as a basic document.

j 4 Incorporated Filed Documents herewith h SEC at 's-- Exhibit Docket-Page utilities, including the Company. 5-3(d). 2-45390 ~ l C-24 Amendments to Exhibit C-23 dated September 20, 1973 and September 15, 1974. 5.14. 2-51999 C-25 Amendment to Exhibit C-23 dated December 1, 1974. 13-45. 2-54449 C-26 Amendment to Exhibit C-23 dated February 15, 1975. 13-52A 2-53819 C-27 Amendment to Exhibit C-23 dated April 30, 1975. 13,-52B 2-53819 l_ C-28 Amendment to Exhibit C-23 dated as of June 30, 1975. 13-45(a) 2-54449 C-29 Instrument of Transfer dated as-of October 1, 1974 assigning partial () interest under Company to Green Mountain Power Corporation. 5.40. 2-52177 C-30 Instrument of Transfer dated as of' January 17, i 1975 assigning a partial interest under Exhibit C-23 from the Company to the Burlington Electric Department. 5.44. 2-55458 C-31 Addendum dated as of { October 1, 1974 to Exhibit C-23 which Green Mount Power Cerporation becar .' party chereto. 5.41. 2-52177

• Classified by the Securities.and Exchange Commission

-as a basic document.

' s l

1

i Incorporated Filed Documents herewith i \\ ) SEC at Exhibit Docket Page C-32 Addendum dated as of January 17, 1975 to Exhibit C-23 by which the l Burlington Electric Department became a party thereto. 5.45. 2-55450 C-33 Agreement for Sharing Costs Associated with Pilgrim Unit No. 2 Transmission dated l October 13, 1972 among l Boston Edison Company and other utilities including the Company. 5-3(e). 2-45990 )! C-34 Addendum dated as of i October 1, 1974 to Exhibit C-33 by which Green i Muintai,n Power Corporation became a party thereto. 5.42. 2-52177 ! p)' C-35 Addendum dated as of (, January 17, 1975 to Exhibit C-33-by which Burlington Electric Department beca ne a party i thereto. 5.46, 2-55458 C-36 Agreement dated as of l May 1, 1973 for. Joint Ownership, Construction and Operation of New Ham 7 shire Nuclear Units amo..g Public Service and oth r utilities, including 4 Velco. 13-57. 2-48966 I l C-37 Amen nents to Exhibit C-36 dated May 24, 1974, June 21, 1974 and j. September 25, 1974 and dated as of October 25, l 1 i i f-g

• Classified by the Securities and Exchange Commission

( j as a basic document. ' .-w-e - en 4,, - -ewe-,-- e,-,,. .,e-,,.,, ,-g-e---..-...en,. a ,m., n,,,, - -.,, - -,..,,,, e ~~

rw q. Incorporated Filed O Documents herewith SEC at Exhibit Docket __Page 1974 and January 31, 1975. 5.1-12. 2-53674 C-38 Instrument of Transfer dated September 27, 1974, assigning partial interest under Exhibit C-36 from Velco to the Company. 5.37. 2-52177 C-39 Transm..sion Support Agreement dated as of May 1, 1973 among Public Service and other utilities, including Velco, with respect to New Hampshire Nuclear Units. 13-58. 2-48966 C-40 Sharing Agreement - 1979 Connecticut Nuclear Unit dated September 1, 1973 to which the Company is a g party. 6.43. 2-50142 C-41 Amendment to Exhibit C-40 dated as of August 1, 1974. 5.16. 2-51999 C-42 Instrument of Transfer dated as of February 28, 1974, transferring partial interest under Exhibit C-40 from the Company to Green Mountain. 5.39. 2-52177 C-43 Instrument of Transfer dated January 17, 1975 transferring a partial interest under Exhibit C-40 from the Company to Burlington Electric Department. 5.47. 2-55458 f'*g

• Classified by the Securities and Exchange Commission

( ) as a basic document..

Incorporated Filed .__ _Do_ c u_ m_ _e.n..t._s.... _ _.herewith (_,) Exhibit Docket Page__ C-44 Preliminary Agreement dated as of July 5, 1974 with respect to 1981 Montague Nuclear Generating Units. 5.5.17. 2-51733 a C-45 Amendment to C-44 dated June 30, 1975. 13-58(a) 2-54449 C-46 Agreement for Joint Ownership, Construction and Operation of William F. Wyman Unit No. 4 dated November 1, 1974 among Central Maine Power Company and other utilities including the Company. 5.16. 2-52900 C-47 Amendment to Exhibit C-46 dated as of June 30, 1975. 5.48. 2-55458 C-48 Instrument of Transfer (h dated July 30, 1975 (_,1 assigning a partial interest under Exhibit C-46 from Velco to the Company. 5.49. 2-55458 C-49 Transmission Agreement dated November 1, 1974 among Central Maine Power Company and other utilities including the l Company with Jespect to William F. Wyr:an Unit No. 4. 13-57. 2-54449 C-50 Amendment to Exhibit Annual Report C-23 dated as of 1-2301-2 for 1975. 1.4.7. 1975 i

• Classified by the Secdrities and Exchange Commission

('] as a basic document. %.),, t

Incorporated Filed (~~') Documents herewith (_,/ SEC at Exhibit Docket Page Filed herewith: C-51 Amendment effective as of January 1, 1980 to Exhibit C-8 C-52 Amendment dated December 31, 1976 to Exhibit C-21. C-53 Amendment dated January 31, 1977 to Exhibit C-21 C-54 Amendment dated July 1, 1977 to Exhibit C-21. C-55 Amendment dated August 1, 1977 to Exhibit C-21. --R / \\ 'q,, ! C-56 Amendment dated August 15, 1970 to Exhibit C-21. C-57 Amendment dated January 31, 1979 to Exhibit C-21. C-58 Amendment dated February 1, 1980 to Exhibit C-21. D. Statement re computation of per share earnings The computation can be clearly deter-mined from the information contained in the Consolidated Statement of Income and Retained Earnings. E. Statements re computation of ratios Not applicable. ,r~ -/.

Incorporated Filed /N __Do_cuments. herewith ( EEC at Exhibit Docket P_ age F. Annual report to security holders Filed herewith: F-1 1980 Annual Report to Stockholders e G. Letter re change in accounting principles G-1 Letter dated October 30, Company 1980 of Peat, Marwick, 10-Q, Mitchell & Co. 3rd Quarter 1980 H. Previously unfiled documents Not applicable. I. Subsidiaries of the registrant Filed herewith: (> c 1 (,) I-l List of subsidiaries of registrant (b) No reports on Form 8-K were filed during the last quarter of the fiscal year ended December 31, 1980. Y e ) \\ s

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the unidersigned, thereunto duly authorized. CENTRAL VERMONT PUBLIC SERVICE CORPORATION e By /s/ James E. Griffin James E. Griffin, President and Chief Executive Officer By /s/ Robert E. Schill Robert E. Schill, Vice-President and principal financial officer By /s/ T. W. Millspaugh T. W. Millspaugh, Treasurer and principal accounting officer g-4 \\ ) \\' March 27, 1981 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 27, 1981 Robert P. Bliss, Jr. Director March 27, 1981 Allen O. Eaton Director 4 __ s/ James E. Griffin / March 27, 1981 8#- James E. Griffin Director n v March 27, 1981 /s/ Luther F. Hackett o' Luther F. Hackett Director March 27, 1981 /s/ Robert T. Holden Robert T. Holden Director March 1981 Frances C. Hutner Director March 27, 1981 /s/ F. Ray Keyser, Jr. F. Ray Keyser, Jr. Director March 1981 L. Douglas Meredith Director March 27, 1981 /s/ Gordon P. Mills [T) Gordon P. Mills L Director March 27, 1981 /s/ Preston Leete Smith Preston Leete Smith Director March 1981 Holmes H. Whitmore Director March 27, 1981 /s/ Fred W. Yeadon, Jr. Fred W. Yeadon, Jr. Director v I L _U

FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1981 Commission file number i Central Vermont Public Service Corporation (Exact name of registrant as specified in its charter) l Incorporated in Vermont 03-0111290 ~' (State or other jurisdiction of (I.R.S.. Employer incorporation or organization) Identification No.) O 77 Crove Street, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) 802-773-2711 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) 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. As of April 30, 1981 there were outstanding 3,019,844 shares of Common Stock, $6 Par Value. O

CENTRAL VERMONT PUBLIC SERVICE CORPORATION CONSOLIDATED STATENENT OF INCOME (dollars in thousands except amounts per share) f Quarter Twelve Months Ended March 31 Ended March 31 1981 1980 1981 1980 OPERATING REVENUES $30,937 $24.050 $97.622 $81,191 OPERATING EXPENSES Operation Purchased power 15,755 13.366 50,052 39,339 Production and transmission 2,105 1,730 6,882 6,077 Other operation 3,282 3,003 12,217 11.215 Maintenance 1.593 1,022 4,950 4,124 Depreciation 952 912 3,704 3,530 other taxes, principally property taxes 1,161 1,150 4,358 4,397 Taxes on income 2,099 537 4,275 2.910 Total operating expenses 26.947 21.720 86.438 71.592 OPERATING INCOME 3,990 2,330 11,184 9,599 OTHER INCOME AND DEDUCTIONS Equity in earnings of companies not consolidated 557 575 2,201 2,338 Allowance for equity funds during construction 604 502 2,597 1,837 Other income, net 219 18 596 189 Taxes on income (146) (52) (423) (318) y TOTAL OPERATING AND OTHER INCOME 5.224 3.373 16.155 13.645 INTEREST EXPENSE Interest on long-term debt 1,590 1,595 6,370 5.413 Other interest 724 156 1,298 939 Allowance.for borrowed funds during construction (705) (424) J 984_) (1,566) Net interest expense 1.609 jd27 4,684 4,786 NET INCOME 3,615 2,046 10,471 s,859 Preferred stock dividend requirements ^41 431 2.308 1,726 Net income applicable to common stock M Qg $ 8,163 $ 7,133 Average shares of common stock outstanding 3,011,779 2,952,404 2,986,760 2,933,348 NET INCOME PER SHARE OF COMMON STOCK $.99 $.55 $2.73 $2.4 3

1 o n a 4 CENTRAL VERMONT PUBLIC SERVICE CORPORATION i f CONSOLIDATED STATEMENT OF RETAINED EARNINGS (dollars in thousands) Quarter Twelve Months i Ended March 31 Ended March 31 1981 1980 1981 1980 Balance at beginning of period $23,763 $22,480 $22,739 $20,706 Net income 3,615 2,046 10,471 8,859 l 27,378 , 24,526 33,210 29,565 Cash dividends declared Preferred stock 641 431 2,308 1,726 Common stock 1,442 1,356 5,607 5,100 Total dividends declared 2,083 1,787 7,915 6,826 Balance at end of period $25,295 $22,739 $25,295 $22,739 9 i 4 O

CENTRAL VERMONT PUBLIC SERVICE CORPORATION CONSOLIDATED BALANCE SHEET (dollars in thousands) March 31 December 31 1981 1980 ASSETS UTILITY PLANT, at original cost $124,855 $124,275 Less accumulated depreciation 34,643 33,703 90,212 90,572 Construction work in progress 51,937 48,572 Net utility plant 142,149 139,144 INVESTMENTS IN AFFILIATES, at equity 24,986 24,592 NONUTILITY PROPERTY, less accumulated depreciation 3,701 3,723 CURRENT ASSETS Cash 2,868 640 Accounts receivable, less allowance for uncollectible accounts 14,965 11,069 Refundable income taxes 5,673 6,048 Unbilled revenue 7,09u 7,050 Materials and supplies, at average cost 2,021 2,035 Prepayments 833 1,530 Other current assets 493 910 Total current assets 33,943 29,282 DEFERRED POWER COSTS 7,177 8,405 OTHER DEFERRED CHARGES 8,682 6,049 g j $220,638_ $211,195 CAPITALIZATION AND LIABILITIES CAPITALIZATION Common stock, $6 par value, authorized l 5,000,000 shares; outstanding 3,016,998 shares and 3,004,176 shares, respectively $ 18,102 $ 18,025 l Other paid-in capital 24,808 24,679 Retained earnings 25,295 23,763 Total common stock equiry 68,205 66,467 Preferred and preference stock 15,229 15,236 Preferred stock with sinking fund requirements 11,970 11,970 l Long-term debt 75,736_ 75,760 Total capitalization 171,140 169,433 CURRENT LIABILITIES l Notes payable - banks 1,600 1,600 Commercial paper 15,650 10,700 Accounts payable 3,826 4,008 Accounts payable - affiliates 3,627 8,767 Accrued interest 1,842 1,082 l Accrued income taxes 1,941 602 l Deferred revenue 4,913 Other current liabilities 1,590 1,495 Total current liabilities 34,989 28,254 1 s DEFERRED INCOME TAXES 9,840 9,326 DEFERRED INVESTMENT TAX CREDITS 4,104 3,740 DEFERRED CREDITS AND MISCELLANEOUS RESERVES 565 442 ) $220,638 $211,195 i \\

CENTRAL VERMONT PUBLIC SERVICE CORPORATION j CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION (doll'a'rs in thousands) Quarter Ended March 31 1981 1980 SOURCE OF FUNDS Funds from operations Net income $ 3,615 $ 2,C46 Principal non-cash charges (credits) to income Depreciation 952 912 Deferred income taxes and investment tax credits 878 362 Allowance for equity funds during construction (604) (502) Dividends received (less) than equity income (74) (92) Other (770) 554 Total funds from operations 3,997 3,280 Funds from outside sources Long-term debt 10,750 Common stock 180 154 s Change in short-term debt 4,950 (7,600) s Total funds from outside sources 5,130 3,304 Total funds provided S 9,127 $ 6,584 USE OF FUNDS Construction and plant expenditures S 4,299 $ 3,828 Dividends declared 2,083 1,787 Investments in affiliates 320 (60) Retirement of long-term debt 24 39 Net increase (decrease) in other working capital items 2,876 (1,485) Net decrease in deferred power costs (1,228) (444) Other, net 753 2,919 Total funds used $ 9,127 $ 6,584 CHANGES IN OTHER WORKING CAPITAL ITEMS Accounts receivable $ 3,561 $ 4,044 Cash and other current assets 1,100 1,001 Accounts payable 5,322 (917) Accrued income taxes (1,339) (454) Deferred revenue (4,913) (4,563) Other current liabilities (855) (596) Net increase (decrease) in other working capital items $ 2,876 $(1,485)

d CENTRAL VERMONT PUBLIC SCRVICE CORPORATION NOTE TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1981 During 1980, the Company applied to the Vermont Public Service Board (PSB) for retail rate increases to be effective on April 23, 1980 (approximately $4,300,000 on an annual basis which the Company began billing subject to refund on October 23, 1980) and October 6, 1980 (an additional amount of approximately $3,450,000 on an annual basis none of which was billed before March 31, 1981). These two applications were based on increased costs of purchased power incurred by the Company. The Company has also applied to the PSB for an additional retail rate increase to be effective January 1, 1981 (an additional amount -s A of approximately $18,031,000 on an annual basis none of which i. was billed before March 31, 1981). Based on previous PSB decisions, and as allowed by Vermont law, the Company anticipates that rates eventually approved will be effecti;e retroactive to April 23, 1980, October 6, 1980 and January 1, 1981, respectively. The financial statements include estimates of revenues, based on management's judgement, expected to be allowed by the PSB for the periods subsequent to April 23, 1980. Operating revenues related to these pending rate cases amount to approximately $3,588,000 for the quarter ended March 31, 1981 and $6,660,000 for the twelve months ended March 31, 1981. Ov . ~..

CENTRAL VERMONT PUBLIC SERVICE CORPORATION 7m ( ) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL \\/ CONDITION AND RESULTS OF OPERATIONS March 31, 1981 The Company's net income of $3,615,000 for the first quaster of 1981 was $1,569,000 more than the first quarter of 1980. Net income was $.99 per share of common stock fc. the first quarter of 1981 compared with $.55 per share fo. 1980. Operatino Revenues During the first quarter of 1981 operating revenues were $30,937,000, an increase of 28.6% over the same period in 1980. The increase in revenues was due to several retail rate increases totaling approximately 20%, a 3.3% increase in unit sales to retail customers, and an increase of $1,462,000 in revenue from wholesale customers resulting from higher unit sales. See Note to Consolidated Financial Statements for further information concerning revenue subject to pending rate increases. Total unit sales of electricity for the quarter increased by 9.5%, compared with a year ago. (~% ) Operatina Expenses Purchased power costs of $15,755,000 were $2,389,000, or 17.9%, higher than the first quarter of last year. Costs of purchased power, which represent more than 50% of our total operating expenses, are classified as costs for capacity available to the Company and costs for energy received. Capacity costs were up by $1,055,000, compared with a year ago, and energy costs were higher by $1,334,000. These cost increases were caused by a number of factors. The units of capacity and the energy purchased increased by 8.6% and 6.6%, respectively, and the average price per unit purchased increased by 6.9% for capacity and 12.2% for energy. Energy costs are directly related to the escalating prices for oil, nuclear fuel and coal and more importantly to the proportion of the Company's purchased energy that comes from each of these fuel sources, with oil being significantly more expensive than nuclear fuel. Production and transmission expenses increased by $375,000 principally due to higher oil prices and a 51% increase in generation at the Wyman #4 plant. Maintenance evpenses rose by $571,000 resulting from increased maintenance expenditures for the company's hydroelectric production facilities and distribution lines. I l t V

In 1981 taxes on income were higher by $1,656,000 compared with the same period a year ago. This increase results from higher recorded income before taxes. (j Other income grew by $201,000, principally due to improved profitability in the Company's rental water heater program. Cost of Money and Financino Plans Interest expense on short-term debt for 1981 rose by $568,000 due to higher average short-term borrowings and higher interest rates. During the first quarter of 1981 average short-term borrowings were $16,347,000 and short-term interest rates averaged 17.6%. Preferred stock dividend requirements increased by $210,000, compared with the first quarter of 1980, because of the issuance in July, 1980 of $8,000,000 of 12.75% Series Preferred Stock. The Company plans to sell $15,000,000 of First Mortgage Bonds during the second quarter of 1981 and to use the proceeds received to reduce short-term debt outstanding at that time. Construction Procram The Company's continuing construction program including its participation as a joint owner in several nuclear generating units, represents a large undertaking relative to the Company's present size. In order to finance this construction program the Company must be able to produce adequate internally generated (N funds and also to be able to issue long-term debt and equity (,,/ securities, as necessary. To accomplish this, the Company must receive adequate and timely rate increases. For the first quarter of 1981, internally generated funds (funds from operations less dividends declared) were 44.5% of total construction and plant expenditures, compared with 39.0% for the first quarter of 1980. Allowance for Funds Durino Construction Allowance for funds used during construction is the cost, during the period of construction, of funds used to finance construction projects. The allowance for equity funds and borrowed funds used during construction have continued to grow in recent years due to the continuing increase in the Company's construction work in progress for future nuclear generating plants, particularly the Seabrook, Millstone and Pilgrim units. i 1 v i i I

VERM)MT ELECTRIC POWER COMPANY, INC. STATENENT 0? INCOME AND RETAINED EARNINCS (dollars in thousands) Quarter Twelve Months Ended March 31 Ended March 31 1981 1980 1981 1980 Operating revenues Transmission services for the state of Vermont S 656 514 $ 2.459 $ 2,273 Other transmission revenues 2,027 2,097 8,058 8,133 Sales of power 25,636 24.577 97,036 79.568 Total operating revenues 28,319 27,188 -107.553 89.974 Cperating expenses Purchased power 25,636 24,577 97,036 79,568 Transmission expenses 110 100 421-369 operations Maintenance 95 50 428 331 162 166 614 670 Rents Administrative and general expenses 414 305 1,180 1,181 Amortization of site location studies 95 286 381 Depreciation and amortization 412 380 1,590 1,463 Other taxes, principally property taxes 423 380 1,623 1,443 Taxes on income 28 56 259-216 Total operating expenses 27,280 26.109 103.437 85,622 Operating income 1,039 1,079 4,116 4,352 Other income Interest 99 78 373 316 Allowance for other funds during construction 3 5 8 3 Total operating and1 a income 1,138 1.160 4,494 4.676 Interest expense Interest on first mortgage bonds 1,019 1.,051 4,136 4,259 Other interest 54 91 Amortization of debt expense 6 7 27 28 Allowance for borrowed funds during construction (42) 1 (162) (13) Net interest expense 1.037 1.059 4,092 4,274 Net income 101 101 402 402 Retained earnings at beginning of period 23 23 124 124 124 124 526 526 Cash dividenda declared and paid 402 402 Retained earnings at end of period 124 124 124 124 \\

..~. - - - . _ -.. -. ~ _ _ _. - 3 VERMONT ELECTRIC POWER COMPANY, INC. BALANCE SHEET (dollars in thousands) i March 31 December 31 i

1981, 1980 Assets Utility plant, at original cost

$60,369 $59,681 Less accumulated depreciation and amortization 12.183 11,772 Net utility plant 48,186 47,909 Expenditures for future transmission facilities, at cost 139 285 Current assets cash 58 247 Temporary cash investment 224 Bond sinking fund deposits 477 521 Bond interest deposits 1,325 748 Accounts receivable 2,952 1,054 Accounts receivable - affiliates 5,033 13,605 Materials and supplies, at average cost 420 415 Other 943 911 Total current assets 11,208 17,725 N Other deferred charges, principally unamortized debt expense 357 344 $59,890 $66,2f;3 C 'italization and Liabilities Capitalization Common stock, $100 par value l Class A, authorized 12,000 shares, outstanding 11,000 shares $ 1,100 $ 1,100 Class B, authorized 80,000 shares, outstanding 42,000 shares 4,200 4,200 Retained earnings 124 23 Total stockholders' equity 5,424 5,323 First mortgage bonds 42,504 42,995 Total capitalization 47,928 48,318 Current liabilities Notes payable - banks 1,200 900 Bonds to be retired within one year 1,681 1,646 Accounts payable 2,436 10,382 Accounts payable - affilitces 4,267 3,570 Accrued interest on bonds 1,325 748 Accrued taxes 862 550 Other 191 149 Total current liabilities 11,962 17,945 $59,890 $66,263 4

~ VERMONT ELECTRIC POWER COMPANY, INC. STATEMENT OF CHANGES IN FINANCIAL POSITION (dollars in thousands) Quarter Ended March 31 1981 1980 SOURCES OF FUNDS: Internal sources From operations Net income 101 $ 101 i Cnarges (credits) not requiring funds [ Depreciation and amortization 412 380 Amortization of site location studies 95 Amortization of debt expense b 7 Future transmission facilities 146 111 (3) Allowance for other funds during construction 665 691 Less Reduction in first mortgage bonds (491) (456) Other, net (19) (3) 155 232 Change in net current assets (exclusive of interim financing) Cash 413 79 Accounts receivable 6,674 501 Ac_ounts payable (7,249) (788) Other, net 396 223 234 15 Internal sources, net 389 247 External sources j Notes payable to banks 30^ ~ 689 S 247 FUNDS USED FOR CONSTRUCTION: Utility plant 689 $ 113 Seabrook nuclear project 137 Allowance for other funds during construction (3) 689 $ 247 4

VERMONT YANKEE NUCLEAR POWER CORPORATION Part I Item 1. Summarized Financial Information (Unaudited) Results for the interim periods shown are subject to usual year-end audit by independent public accountants: however, in the opinion of management all adjustments necessary'to a fair statement of the results are included for the interim periods shown. 1-A. Statement of Income and Retained Earnings For the three months ended March 31, March 31, 1981 1980 OPERATING REVENUES $22,000,166 $20,779,242 OPERATING EXPENSES: Nuclear fuel expense-6,211,966 6,345,102 Other operation expenses 4,676,591 3,901,028 Maintenance 2,167,904 1,959,998 Depreciation 2,308,107 2,123,078 Taxes on income 1,507,000 1,609,000 Other taxes, principally property taxes 1,070,079 1,017,022 Total operating expenses 17,941,647 16,955,228 NET OPERATING INCOME 4,058,519 3,824,014 OTHER INCOME AND DEDUCTIONS, NET 8,7.45 11,385 Income before interest expense 4,067,:!o4 3,835,399 INTEREST EXPENSE Interest on long-term debt First mortgage bonds 1,793,011 1,911,076 Other interest expense 475,225 123,478 Total interest expense 2,268,236 2,034,554 NET INCOME 1,799,028 1.800,845 RETAINED EARNINGS, JANUARY 1 5,057,009 5,578,401 6,856,037 7,379,246 CASH DIVIDENDS DECLARED Preferred stock 319,727 685,370 Common Stock 1,500,052 3,000,105 Total dividends 1,819,779 3,685,CQ p RETAINED EARNINGS - MARCH 31 $ 5,036.258 $ 3.693.771 G Net income per average share of common stock outstanding $3.70 $2.79 Cash dividends paid per share on common stock outstanding $3.75 $3.75 Dividends declared per share on common stock outstanding $3.75 $7.50

O k, m Capitalization and Liabilities March 31, 1981 December 31, 1980 Crpitalization: Common stock equity Common stock, $100 par value: authorized 400,100 shares; outstanding 400,014 shares $ 40,001,400 $ 40,001,400 Other paid-in capital 13,352,443 13.314,284 Retained earnings 5,036,258 5,057,009 Total common stock equity 58,390,101 So,372,693 Redeemable cumulative preferred stock, 7.48% series; $100 par value; authorized 300,000 shares; outstanding 171,037 shares (172,197 shares at 12/31/80) 17,103,it0 17,219,700 Long-term debt, net 74,498,668__ 76,757,449 Total capitalization 149,992,469 152,349,842 Ourrentliabilities: C Notes payable 13,500,000 5,200,000 Long-term debt to be retired within one year 3,699,000 2,229,000 Accounts payable 7,142,085 12.021,402 Accrued interest 239,902 1,868,128 Accrued taxes 2,243,156 702,650 Dividends declared -- preferred 319,839 319,951 Total curr,ent liabilities 27,143,982 22,341,131 Unamortized gain on reacquired debt, net 1,673,990 1,480,457 Accumulated deferred income taxes 41,349,880 41,692,880 Accumulated deferred investment tax credits 4,785,000 4,488,000 $224,945,321 $222,352,310 4 0Q t

VERMONT YANKEE NUCLEAR POWER CORPORATION 1-C. Statement of Changes in Financial Position For the three months ended March 31, 1981 March 31, 1980 Source of funds: From operations $12,007,478 $11,089,184 Decrease in working capital 3,840,841 2,133,334 Other, not 384,083 340,566 A16,232,402 S13,563,084 Use of funds.: Electric plant additions 799,790 S1,805,868 Nuclear fuel additions 10,572,462 7,428,883 Downtime costs deferred 665,590 226,814 Reduction of long-term debt 2,258,781 2,258,781 Preferred stock dividends 319,727 342,685 Common stock dividends 1,500,052 1,500,053 Retirement of preferred stock 116,000 $16,232,402_ $13,563,084 O o v

With respect to the financial statements included herein, which are unaudited, in the oP nion of management all adjustments (consisting only i of normal recurring accruals) necessary to a fair statement of the results of operations for auch interim periods have been included. The financial information for Centrcl Vermont Public Service Corporation included in this form has been reviewed prior to filing by the Company's independent public accountants, Peat, Marwick, Mitchell & Co. and all adjustwnts or additional disclosures proposed by the independent accountants have been reflected in the data presented. 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. O CENTRAL VERMONT PUBLIC SERVICE CORPORATION By e -- T.W.Millspaugh,Tkasu (Authorized Officer and l Chief Accounting Officer) l l l O l Dated May 13, 1981

Certified Public Accountants O One Boston Place Feat,Marwick,Mitchell&CQ Boston, Massachusetts 02108 617-723-7700 The Board of Directors 1 Central Vermont Public Service Corporation We have made a review of the consolidated Dalsnee sheet of Central Vermont Public Service Corporation and subsidiary as of March 31, 1963 and the related consolidated statements of income and changes in financial position for the three months then ended and the three months ended March 31, 1980 in accordance with standards established by the Ametican Institute of Certified Public Accountants. We previously audited the December 31, 1980 consolidated balance sheet of Central Vermont Public Service Corporation and subsidiary and expressed our opinion in our report dated February 20, 1981. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial informa-tion, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is O cepted substantially less in scope than an examination in accordance with generally ac-auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based cm our review, we are not aware of any material modifications that should be made to the aforementioned financial statements for them to be in conformity with generally accepted accounting principles. j 04.AL April 29,1981 O

C sk Peblic8ervice CORPCFATION DIVIDEND REINVESTMENT AND CO3DION STOCK v PURCIIASE PLAN The Dindend Reinvestment and Common Stock Purchase Plan (" Plan") of Centr Public Service Corporation (" Company") provides the Company's stockholders with AUTO 31ATIC DIVIDEND REINVEST 31ENT 4 of Common and/or Preferred Stock dividends in Common Stock of the Company and INVESTA1ENT OF OPTIONAL CASH PAY 31ENTS of between $25 and $5,000 in any quarter in Common Stock of the Company or r-INVESTAIENT OF OPTIONAL CASH PAY 31ENTS ONLY. Participants pay NO brokerage commission or service charge. N Stockholders participating in the Plan who are employed by the Company and its subsidiaries nay have an aggregate of $25 to $1,000 per quarter deducted from their pay checks and invested in Common Stock. The purchase price for the shares of Common Stock, $6 Par Value, to be sold by the Company pursuant to the Plan will be the average of the closing asked price for the Common Stock in the over-the-counter market during the five trading days immediately preceding the applicable dividend C reinvestment date. This Prospectus relates to 150,000 authorized and unissued shares of Common Stock of the Com-pany registered for purchase under the Plan. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 5 SECURITIES AND EXCHANGE CO3DHSSION NOR HAS THE CO31311SSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. l ANY REPRESENTATION TO THE CONTRA 2YIS A CBDHNAL OFFENSE. l The date of this Prospectus is August 15,1980. l w"

1 \\ DESCRh"ITON OF THE PLAN Purpose. of the Company's Common Stock and/or Preferred Stock withTh rovides holders of record shares of Common Stock without payment of any brokern a convenient method of in.cting in .) such additional shares will be purchased from the Comp mmmission or service charge. e of Common Stock, the Company will receive needed fu d Beeuse of its authorized but unissued shares any w See "Use of Proceeds". n s. Pcrticipation. ferred Stock, $25 Par Value, or Second Preferred Stock $50 PIIold ar Value, or Pre-to pirticipate in the Plan by completing th ar Value, of the Company are eligible

tional Bank of Boston (" Agent"). Beneficial owners whose common and/or pref registered in names other than their own (eg tr%d.rred into their own names in order to be eligibl.., broker or bank nominee) must have their option invest cash payments of between $25 and $5 000 icash e to participate. Participants may (a) have automatically reinvested and at their their cash dividends and invest only optional cash p n any quarter, or th) continue to receive employees of the Company or its subsidiaries may also h Participating shareholders who are ayments.

ducted from their pay checks each quarter to be invested in Cave an aggregate of imm p;rticipant may re-enroll at any time in the same manner as ommon Stock. -ENROLL. A former of administration of the Plan will be paid by the CompanyTher a enrollment. ased under the Plan. All costs optiona: cash pay nent or makes an investment for the parti iEa each time the Agent receives an taining cumulative information on a calendar year basis c pant's account. These statements, con-ret:ined for income tax purposes. price of shares purchased by the Agent an or each calendar year should be the amount of United States income tax withheldForeign participants will receive an ann annual Prospectus relating to the Plan and copies of the communiIn addition, each participant owned by the participant. mon Stock as well as a proxy for each shareholders' meetin ng all shares of Common Stock Purchases. including fractions computed to three decimal places equ l tA partici es of Common Stock, by the purchase price. a o States income tax withholding, the Agent will invest in CommoIn the case of dends less the amount of tax required to be withheld o United n Stock an amount equal to the divi-will be the average of the asked price (which may not representThe per share purchase pr last five trading days immediately preceding the applicable d e war Street Journal, for the end reinvestment date. pants but will be registered in the name of the Agent (or its nom v y not be issued to partici-nee) as agent for the participant ~ ' 2 y w

F D' s unless c. participant otherwise notifies the Agent in writing. No certificates will be issued for fractional P shares of Common Stock and any fractional shares will continue to be credited to the participant's cecount under the Plan. 6 Dividend Heinvestment. Unless a participant has checked the " optional cash payments only" box on the Authorization Form, the Agent will invest in additional Common Stock the participant's cash dividends on Common Stock and/or Preferred Stock including dividends paid on fract*onal Dividends on Common Stock are normally paid on or about the 15th day of February,3 fay, shires. August and November and will be invested as of the dividend payment date. Dividends for all series of Preferred Stock, $100 Par Value, and Preferred Stock, $25 Par Value, are normally paid on the 1st day of January, April, July and October and will be invested as of the date five business Dividends for d:ys after the dividend payment date (" Preferred dividend reinvestment date"). the Second Preferred Stock, $50 Par Value, are normally paid on the 15th day of January, April, July and October and will be invested as of the next succeeding Common Stock dividend paymmt date. A stockholder will receive a separate Authorization Form for each class and saries of stock owned and for each different name in which stock is held. Dividends will be reinvestcJ on all (but not less than all) the shares as to which an executed Authorization Form is returned. Dividends from Com. men Stock purchased by reinvestment of dividends on Preferred Stock will also automatically be reinvested. In order to commence dividend reinvestment, the Authorization Form must be received by the Agent two weeks prior to the dividend payment date for the class of stock as to which dividends are to be reinvested. If the Authorization Form is received after that date, dividend reinvestment will begin as of the next applicalde dividend payment date. Optional Cash Payments. If a participant has checked the " optional cash payments only" box on the Authorization Form, a participant will be paid the cash dividends on stock registered in his name es well as dividends on the shares held in his Plan account. Any number of optional cash payments may be made in each quarter but the aggregate of such > payments per participant may not be less than $25 nor more than $5,000. The same amount of money need not be invested each quarter, and there is no obligation to make an optional cash pay-ment in any quarter. If a participant sends cash payments which aggregate less than $25 or more than $5,000 in a quarter, the amount under $25 or over $5,000 will be re+urned by the Agent to the participant. Optional cash payments should be made by check payable to the Agent accompanied by the Authorization Form or, thereafter by the cash payment form which will be attached to the statement of account. Optional cash payments of participants received at least five days preceding a dividend reinvest-ment dite will be invested as of the next such date. SINCE NO INTEREST WILL BE PAID BY THE CO3fPANY OR THE AGENT ON OP-TIONAL CASH PAY 31ENTS,IT IS SUGGESTED THAT ANY OPTIONAL CASH PAY 31ENT BE SENT SO AS TO REACH THE AGENT BETWEEN FIFTEEN AND FIVE DAYS BEFORE A DIVIDEND REINVEST 31ENT DATE. 3

l l I l Payroll Deductions. If a participating employee elects payroU deductions on the Payroll Deduction Authorization Form, the Company will deduct any amount specified by such employee, aggregating between $25 and $1,000 per quarter, fre his pay check each pay period. The Agent will invest the accumulated payroll deductions for the employee in Commen Stock. A. g In ceder to commence payroll deductions, the Payroll Deduction Authorization Form must be received by the Agent two weeks before the payday on which the employee wishes to commence dedue-tions. All deductions made not later than the last da of the month prior to the next Preferred Stock dividend payment date will be invested as of the next Preferred dividend reinvestment date. All dedmtions made after that date will be held by the Company and invested on the next succeeding Preferred dividend reinvestment date. NO INTEREST WILL BE PAID BY THE COMPANY OR THE AGENT ON PAYROG DEDUCTIONS. b Tax Consequences. A participant will be treated for federal incor:e tax purposes as having received on the dividend payment date divideods equn] to the full amount of the cash dividends psyable on such date with respect to his stock-even though that amount is not actually received by him in cash but instead is applied to the purchase of additional stock for his account. II An employee of the Company who participates in the payroll deduction aspect of the Plan will have the same federal income tax obligations with respect to the payroll deductions as he would other-wise have had if the money were not deducted from his pay check. Administration. The Firrt National Bank of Boston administers the Plan for participants, main-tains records, sends statements of account to participants and performs other duties re'ating to the Plan. All requests of or notices to the Agent should be addressed to The First Nuional Bank of ,j Boston, CVPS Plan, P. O. Box 1681,~ Boston, Massachusetts 02105. The Company and the Agent in administering the Plan will not be liable for any act done in good faith or for any good faith omission to act including, without limitation, any clain. of liability arising out of failure to terminate a participant's account upon such participanti death orior to receipt of eO notice in writing of such death or with respect to any fluctuation in the ma&+ value after purchase ) ' y or sale of stock. The Company cannot assure a profit or protect against a loss on the stock purchased under the Plan. The Company reserves the right to amend, suspend, modify or terminate the Plan at any time. Notice of any such amendment, suspension, modification or termination will be sent to all participants. The Agent may resign and the Company may dismiss the Agent at any time upon 120 days' advance A_ written notice to the other. ? Withdrawal. In order to withdraw from the Plan, a participant must notify the Agent in writing that he wishes to withdraw. If a participant withdraws from the Plan or if the Company terminates the Plan, certificates for whole shares of Common Stock credited to the account of the participant under the Plan will be issued and a cash payment will be made for any fractional share of Common Stock based on the bid price of the shares of Common Stock of the Company in the over-the-counter market on the next business day following the day the withdrawal request is received by the Agent or the Plan is terminated (as reported in the Eastern Edition of The Wall Street Journal). In the requect for withdrawal from the Plan, a participant may direct the Agent to sell all shares of Common Stock cred-4 k

i - e ited to his account under the Plan. The Agent will make such a sale in the market on any of the ten trading days after rtceipt of the request. The participant will receive the proceeds of the sale less any . related brokerage commission and any transfer tax. If the written request to withdraw is received by the Agent between the record date for a dividend and the payment date for that dividend, the amount of the dividend and any optional cash payments which otherwise would have been invested as of the dividend reinvestment date will be paid to the withdrawing participant. All subsequent dividends will be paid in cash. If the request to withdraw is received by the Agent subsequent to a dividend payment date, the dividend paid on such date and/or any optional cash payments received will be invested for the P participant's account. The participant's next dividend and all subsequent dividends will be paid to him in cash, In addition to the withdrawal request sent to the Agent, an employee participant who has elected w payroll deductions must notify the Company in writing to discontinue the payroll deductions y~ sufficiently in advance of the employee's next pay check to allow processing (normally one week 2 preceding the employee's last pay check prior to the preferred dividend reinves+ ment date). If the notice is so received by the Company, no further payroll deductions will be made and the accumulated amount withheld will be paid to the employee in ca9h. If the request is not received in sufficient time, no further payroll deductions will be made Mc any accrued payroll deductions will be held by the Company and invested by the Agent on the rext preferred dividend reinvestment date. + i If a participant transfers all shares of Common Stock and/or Preferred Stock registered in his a :. name (as opposed to the shares credited to his account under the Plan), the participant will continue j ],. in the Plan as before with respect to shares credited to his account under the Plan until the participant g withdraws from the Plan. USE OF PROCEEDS p The proceeds to the Company from the sale of the shares of the Common Stock, $G Par Value, (' offered by the Company hereby are expected to be applied toward the payment of short term bsnk i borrowings, if any, or to be used for the Company's construction program and for other corporate i purposes. U DESCRIPTION OF COMMON STOCK The authorized capital stock of the Company consists of 5,000,000 shares of Common Stock, $6 Par Value (the " Common Stock"); 500,000 shares of Preferred Stock, $100 Par Value, and 1,000,000 shares of Preferred Stock, $25 Par Value (collectively, the " Senior Preferred Stock"); 7,993 shares of Second Preferred Stock, $50 Par Value (the "Second Preferred Stock"); and 1,000,000 shares of Preference Stock, $1 Par Value (the " Preference Stock"). The Senior Preferred Stock, the Second Preferred Stock and the Preference Stock are together referred to as " Preferred Stock". The Second Preferred Stock, the Preference Stock and the Common Stock and any other stock which may be subsequently authorized which is junior to the Senior Preferred Stock as to dividends of assets are together referred to as " junior stock". Each class of Preferred Stock may be is.. sed in one or more series. 5

W (,% ~ aside .. Whei ever all dividends accrued on all shares of Preferred Stock shall have been paid t Vand subje t to the limitations described below, the Board of Directors may declare divid .on the Comnion 'tock payable then or thereafter out of any remaining surplus or net profits. }ser' ior Preferred Stock is entitled, when and as declared by the Board of Director, o lative quarterly dividends at the annual ratc per share designated in its title in preference to the junior stock. The Articles of Association contain certain limitations, applicable so long as the Senior Preferred Stock is outstanding, on the Company's right to declare dividends on the Common Stock out of net income or in the event Common Stock Equity (as defined) is less than 25% of Total Capi-talization (as defined). The Indentures relating to the Company's Debentures contain similar restrie-tions on dividends. As of December 31, 1979 the Common Stock Equity was approximately 42.29 of Total Capitalization (as defined). The Indenture securing the Company's Bonds contains restrie-U tions which permit dividends or other distributions on, or purchase or retirement of, Preferred Stock only out of net income of the Company after specified dates. As at December 31; 1979, $18,300,000 of the Company's retained earnings were free of these indenture restrictions. 4 Each share of Common Stock is entitled to one vote. If and when dividends on the Senior Preferred Stock are in arrears in an amount exceeding two qt,arterly dividends, each share of Senior ji' Preferred Stock has, subject to the qualification in the last sentence of this paragraph, the same 4 voting power as does a share of Common Stock, except that while shares of Senior Preferred Stock have special voting power to elect directors as described below, such shares shall not otherwise partici-pate with junior stock in the election of the remaining directors. If dividends payable on th'e Senior Preferred Stock are in arrears in an amount equal to four or more quarterly dividends on all series of Senior Preferred Stock, until all arrearages have been paid, the Senior Preferred Stock has the right to elect a majority of the Board of Directors. In exercising such voting rights, the Preferred Stock, $100 Par Value, shall have one vote per share and the Preferred Stock, $25 Par Value (includ-l [, _ ing the New Preferred Stock) shall have one-quarter (%) vote per share. l' Upon any liquidation, dissclution or winding up, after payment in full to holders of the Pre-l ferred Stock, the remaining net assets of the Company shall be paid or distre :ted to the holders of the Common Stock ratably according to the number of shares held by each. The Common Stock has no conversion rights. IIolders of the Common Stock have no preemptive rights. The Common Stock-is not liable for further calls or to assessment. l I INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 1; 1 The following documents are hereby incorporated by reference in this Prospectus: (a) Annual Report of the Company on Form 10-K for the year ended December 31, 1979, filed with the Commission pursuant to section 13 of the Securities Act of 1934. l ~ (b) Quarterly reports of the Company on Fcrm 10-Q for the fiscal quarters ended March 31, E l nd June 30,1980. lc) Proxy Statement of the Company dated April 4,1980 for the Annual Meeth of' Stock hold rs held May 6,1980. s ~ 6 .s. l es~ m l l l I

All documents fikd pursuant to Sections 13 and 14 of the Securities Exchange Act of 1934 sub-sequent to the date of this Prospectus and prior to the termination of this offering shall be deemed . to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of ( such documents. ADDITIONAL INFORMATION The Company's principal offices are located at 77 Grove Street, Rutland, Vermont 05701 and the Company's telephone number is 802-773-2711. b Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities of the Securities and Exchange Commission at Room 6101, 1100 L Street, N.W., Washington, D.C.; Room 1228, Everett McKinley Dirksen Building, 219 South

Dearborn Street,

Chicago, Ill.; Room 1100, Federal Building,26 Federal Plaza, New York, N.Y.; and Suite 1710, Tishman Building,10960 Wilshire Boulevard, Los Angeles, Calif. Copies of this material is can also be obtained at prescribed rates from the Public Reference Section of the Commission at its

• I principal office at 500 North Capitol Street, N.W., Washington, D.C. 20549.

LEGAL OPINIONS The legality of the Common Stock offered hereby will be passed upont N the Company by Messrs. Hopes & Gray,225 Franklin Street, Boston, Massachusetts, who as to legal conclusions affected by the laws of Vermont, New Hampshire and Maine, may rely, respectively, upon Ryan Smith & .p Carbine, Ltd., Rutland, Vermont, Messrs. Sulloway Hollis & Soden, Concord, New Hampshire, and Messrs. Verrill & Dana, Portland, Maine. N EXPERTS ( The financial statements and schedules incorporated herein by reference have been so incorporated in reliance upon the reports of Peat, Marwick, Mitcheil & Co., independent ceritfied public accountants, and upon the authority of said firm as experts. The statements made as to matters of law and legal conclusions under the caption " Description of J. Common Stock" have been reviewed by Messrs. Hopes & Gray and are incorporated herein upon their authority as experts. 7

V e l STATE OF VERMONT 7' PUBLIC SERVICE BOARD i Docket No. 4460 ,Pe'.'. tion of Central Vermont I Hearing at lP ab...ic Service Corporation X Montpelier, Vermont <for an increase in rates 1 August 14, 1980 Order Entered: ci o2 h [/ PRESENT: Richard H. Saudek, Chairman Rosalyn Hunneman, Board Member APPEARANCES: Donald Rushford, Esq. for Central Vermont Public Service Corporation Michael L. Burak, Esq. Gerald R. Tarrant, Esq. for the Public Thomas Viall, Esq. Assistant Attorney General for the State of Vermont xI INTRODUCTION Pursuant to a petition filed with the Vermont Public Service l Board (" Board") on March 21, 1980, Central Vermont Public Service l Corporation (" Central Vermont" or "Compi.ny")' requested a C.23%, or $4,328,600, increase in retail rates to be effective April 23, 1980 The Board suspended the effectiveness of the rate increase on April 16, 1980, and ordered an investigation. Thereafter attorneys for the Public and the Attorney General entered appearances. A hearing on the petition was held'in Montpelier, Vermont on August 14, I I On October 24, 1980, the Board issued an order approving a ll980. l bond and thereupon the Company implemented the rate increase subject lto refund. 30 V.S.A. S227. FINDINGS OF FACT AND DECISION <^ ( ) i .The rate request is based solely on power costs that have ! increased from the level reflected in the Company's last retail

i I I r' irate request, which became effective on January 1, 1980.* The ( i '~ costs underlying that request were based on a test year ending September 30, 1979, as adjusted for known and measureable changes. IIn the instant' case, Central Vermont offered evidence of changes in power costs occurring up to May 13, 1980,** and the Public's evidence contained adjustments up to the end of May, 1980. The following issues are in dispute: (1) use of actual or normalized hydroelectric generation; (2) inclusion or exclusion of the Yankee Atomic nuclear plant at Rowe, Massachusetts in the Company's rate base and power dispatch; (3) axpensing or capitalization of certain l seismic studies and repairs at the Yankee Atomic and Vermont Yankee nuclear plants; (4) treatment of Yankee Atomic decommissioning costs; (5) method of cost allocation between wholesale and retail ('^; customers; (6) implementation of a rate increase on a kilowatt-hour ) or other basis; and (7) updating. A. Hydroelectric Generation The Company presented evidence on hydroelectric generation based on two months actual results, one month estimated and nine months normalized. It argues that actual data, where available,. 'Iis preferable to estimated or averaged data. The Public presented t I[hydroelectricoutputbasedonatenyearaverage. It asserts that ! normalization is necessary for generation which is subject to wide l I l fluctuation, in order to provide a sounder basis for anticipating future experience. I The Company also presented evidence that its other costs 1 'have not decreased since the last rate filing. ~.s m) At the hearing, Central Vermont attempted to introduce evidence of power cost changes up through July, 1980, but the aboard granted a motion to exclude this evidence.

f The Public's method of normalizing is more appropriate. 7, Normalization of hydroelectric output has been used consistently ~s in prior rate cases because it tends to portray more accurately a " normal" picture of a utility's operations. The Company's assertion I that actual data should be used if available does not apply to items such as this, subject to wide fluctuations from one year to the next. It would be unfair to set rates for the future on the basis of one year of low precipitation. B. Yankee Atomic Generation on January 19, 1980, a mechanical failure at Yankee Atomic caused the plant to shut down. It was still shut down at the time of the hearing, but witnesses for both the Company and the Public stated that the plant was expected to resume operations in November, 1980. In its proposed power dispatch, the Company eliminated Yankee Atomic as a source and increased other sources to make up the deficiency. The Public adjusted the Company's proposed dispatch by including Yankee Atomic at the output (146 megawatts) expected at resumption of operations and by adjusting other sources accord-ingly. Both proposed dispatches were pro forma, that is, neither proposed dispatch reflected Central Vermont's actual operations for l hanyperiodoftime. The Company states that the Public's dispatch kjrepresents an update 14 months beyond the end of the test year. j It argues that this update was too far beyond the test year and that i

since the Board rejected the Company's proposed update at the hear,

t i ing, this adjustment must be rejected as well. The Public argues l l Ithat inclusion of Yankee Atomic is necessary in order to present an accurate picture of the period the rates are to be in effect. I 1 s ~~ ~T- -,e, .,--,.n..

l ; Yankee Atomic operated close to its normal schedule through- ,(,,) out the test year ending September 30, 1979. The parties agreed that it was expected to resume operations a few months after the lhearing. (The. future impact of any decision may be reduced by the fact that Central Vermont has filed for two add ~tional rate in-creases.*) In light of the above factors, we believe it is more appropriate to include Yankee Atomic in the Company's power dispatcT. If later experience proves that adjustments are nec 4aary, they can be made in the context of the additional rate requesus. The inclus-ion of Yankee Atomic in the power dispatch and the normalization of ' hydro generation reduces the Company's pro forma power costs to $3,658,536. The Attorney General, in his brief, requested that Central Vermont's " rate base should be decreased in the amount of its 3.5% 7s s ? l \\/ ownership interest in Yankee Atomic, and the revenue requirement ~ lshouldbereducedappropriately." He argues that Yankee Atomic is no longer used and useful due to the January, 1980 shutdown. This position is inconsistent with the inclusion of Yankee Atomic in 'the Company's dispatch ** and contradicts the expectations of the i other parties that it was expected to resume operations. Moreover', we know of no regulatory principle that compels elimination from iirate base of a plant that experiences a temporary unscheduled out-age due to causes beyond the utility's control. The Commission t decision relied upon by the Attorney General (involving the Three Central Vermont stated in its brief that the first rate ! I ) request (Docketed as 4496) was filed to " assure a basis for re- ! covering [recent] cost increases, in the absence of an assurance I 7-~s l Hby the Board that an update would be provided." l i The Atv.orney General stated that, except for this item, . he " joins in the submission which is believed to be submitt.ed by the Public." As stated above, the Public advocated inclusion of iYankee Atomic in the Company's power dispatch. l t

f Mile Island plant) involves circumstances clearly different than ,this case. Pennsylvania Public Util. Comm'n et al. v. Metropolitan Tdison Co., 29 PUR 4th 502 (1979). In that case the Commission i ' excluded from rate base, a nuclear unit expected to be out of ser-vice at least two to four years. In fact, the Commission expressed uncertainty as to whether the unit would ever resume op'erations. In addition, the Commission refused to exclude from rate' base, anoth r.r nuclear unit expected to be out of service up to nine months. For 'these reasons, the Attorney General's adjustment is rejected. C. Seismic Studies and Repairs i Both Yankee Atomic and Vermont Yankee performed certain seis-mic studies.* In addition, Vermont Yankee incurred costs in connection with repair work on the torus and Yankee Atomic incurred ' costs relating to repair of a turbine. Both companies treated these costs as expenses to be included in the demand charges to their customers under their respective power contracts approved by the Federal Energy Regulatory Commission ("FERC"). As a result, Central Vermont originally sought to include these costs as expenses in 'this rate case. The Public argues that these costs are of a capi,tal. I l nature, involving benefits extending over the remaining lives of I the plants, and that they should be treated as if amortized over a ' l i$60 month period. Central Vermont stated in its brief that it did :

• i i

not contest the Public's treatment as long as the amortization re-dflected the impact of the Company's cost of money and income taxes. There was testimony that Connecticut Yankee and Maine

Yankee also incurred costs for seismic studies.

Since there was

no evidence as to the amount of the costs nor the impact on Centraf jVermont, any adjustment would be inappropriate.

n i l M

I ,. - This method of amortization produces a result similar to the method (,s s/ employed in prior rate cases: amortization and inclusion of the unamortized balance in the rate base.

See, e.g.,

Petition of a JCentral Vermont Public Service Corporation, etc., Docket No. 4230, ~ I. ] Findings and Order (Dec. 8, 1978) (amortization of deferred capa-city cost). We find this treatment to be appropriate in this case with respect to the seismic studies and Vermont Yankee repairs. There is no evidence, other than in very general terms, as to the cost of the Yankee Atomic turbine repairs. Therefore, no informed adjustment can be made. We believe, however, that to the extent the cost (and resulting demand charge) is known, it should'be trea-ted in a manner consistent with the above in the context of a future rate case. The above adjustments reduce the Company's f-'s

• revenue deficiency by $791,526.

D. Yankee Atomic Decommissioning Costs Central Vermont included as a power cost, its share of de-commissioning costs budgeted by Yankee Atomic. The Company has ll;;not yet been charged for these costs, ($35,000),although Yankee Atomic intends to file a rate case with FERC to determine the j ,! appropriate amount to be billed. The Public argues, and the Company conceded,* that this item should be excluded from the power costs lin this case. I ! E. Jurisdictional Allocation / Central Vermont allocated the burden of the proposed rate l increase between wholesale and retail customers on the basis of the (~N Although Central Vermont omitted mention of this issue I (_,) I in its brief, one of its witnesses agreed to this treatment at I the hearing. R

u. i i !: Icosts that each class imposes on all aspects of the company's cost of service. This method, which has been used in prior Central Vermont rate cases, results in a 10.56% allocation to wholesale. The Public's allocation was based rolely on the proportional energy usage of the classes. In response to this method, the Company pro- . posed a third method: allocation based on proportional usage of energy and demand, in accordance with the 70-30 New England Power Pool (NEPOOL) formula. The Company argues that, if its original method is rejected, this method is appropriate because the rate request encompasses increases in both energy and capacity costs. We find that the NEPOOL method most accurately apportions the costi increases involved in this proceeding and is therefore most approp-riate. F. Implementation of Rate Increase O Central Vermont proposes to implement any rate increase by I means of a surcharge applied uniformly to each kilowatthour (kwh) jsold.* The Public argues that the increase.should be applied only I I eto the demand portion of the Company's rates, whers Nssible, but l I I i that the PASNY block should not be increased. We believe that both' I i proposals are inappropriate. As the Public contends, a uniform kwh' l increase creates an imbalance among the v6rious rates. Off-peak iand summer rateF Would increase, on a percentage basis, much more than on-pcak'and winter rates. Application of the increase solely i

to demand charges, where possible, gives out improper signals be-

.cause increased energy costs comprise a significant portion of the 3 total increased costs.

Since there was no evidence that the Company' rate design should be substantially altered, an increase on a In itc brief, the Company offered to exclude the PASNY ' block from the surcharge. ~i

l 1. percentage basis is the most appropriate method. This method main-O tains the cost relationship between the various classes. The PASNY 6-block should not be increased, since none of the increases sought to be recovered in this case are attributable to PASNY power. G. Updating A large part of the hearing in this case involved the pro-priety of, and the extent to which, the Company should be allowed to update its power costs. At the hearing, the Board rejected certain updated information in part because the original cost in-formation was based on relatively recent data. Notwithstanding this ruling, Central Vermont included updated data in its brief and asserted that the Board is required, as a matter of law, to base its decision on this data. The Board has authority to exercise its judgment in the matter of updating. In re New England Telephone & Telegraph Co., 135 Vt. 527, 539 (1977). Although it is true that the most recent data !available should be used, there is no blanket requirement that the Up-l Board reopen hearings solely to receive new updated evidence. l dating is inappropriate where, as here, (1) the company's original i I' fcase reflected events just three months prior to hearings, (2) the IIpproceedings progressed in a timely fashion, and (3) the Company ijjfiled for an-additional increase in response to the lack of updat i q ing.* In spite of these considerations, the company requested, by i i From November, 1979, through October, 1980, Central Vermont filed four rate increase requests. In light of this fact, and the Lother demands on the Board, it seems almost ludicrous to suggest !that the Board is required to hold hearings on every new development O ithat the Company wishes to bring to the Board's attention. The ipractices of pro forming and adjusting for changes since the test j } year are aimed at obviating the need for updates, except particularly icompelling circumstances. u.

h h h h /~i (_,1 imotion that the record be reopened to consider the cost information contained in its brief. In light of the increased delays this re- . quest would engender, this motion is denied. i The parties also sharply disagreed on the weight to be accor-ldedcertainincrementalcostinformationtheCompanypresentedto prove that its costs have increased beyond the level reflected in lits original case. Although the Company stated that this informa-j I tion was offered solely for recoupment purposes whereas this decision exclusively addresses prospective rates, a few comments are necessary to provide guidance in the event that the parties l disagree on recoupment. The Public asserts that the adjustment llproposedbyCentralVermont,basedontheincrementalcostdata, is incorrect because there is no recognition of increased revenues'. ,s The impact of increased revenues is reflected, however, by the -s deduction of average costs from the incremental costs. This re-llsults in recognition of the revenue impact because revenues are i based on average costs. Central Vermont's calculation is not appropriate, however, .f for purposes of recoupment. Its incremental cost figure is 1' based on a study not in evidence, nor was there any reference to l[the study in this proceeding. The incremental figure is not based l on either the test year or the recoupment period and it apparently i Most importantly, while incremental costs ' excludes capacity costs. l l 'may be appropriate for purposes of rate design, we are not prepared to find that this method should be used to determine revenue re-I

quirements.

Beyond the fact that incremental cost-based rates \\r), w/

i li I. I! b p 'would almost invariably yield revenues in excess of average costs, i 4 'there are still too many legitimate differences of opinion as to how incremental costs should be calculated. Unle'ss and until those concerns are met, revenue level and recoupment should be derived by traditional methods. i l l t 1 i O i I i i i i I i h Il 5 II i; .i ) I, I -.f i O i

i' O ORDER IT IS HEREBY ORDERED, ADJUDGED AND DECREED by the Public Service Board of the State of Vermont that: 1. Central Vermont Public Service Corporation is entitled to rates which would produce additional retail revenues of $2,324,321, in accordance with the Findings herein. 2. Central Vermont Public Service Corporation shall file tariffs, with copies to the parties, within fifteen (15) days of the filing of this Order, in conformity with the above Findings. lSuchtariffsshallbereviewedbytheBoard'sstaff. In the absence I of any subsequent Board Order, said tariffs shall be applied to service rendered on or after seven (7) days from the date of filing. 3. Should Central Vermont Public Service Corporation seek jrecoupment under 30 V.S.A. 5226 (b), the calculation of recoupment shall be served on the parties as well as the Board. The parties shall attempt to resolve any differences with respect to recoupment. l If the parties are unable to resolve their differences, the Board j hshall take such further action as it deems appropriate. DatedatMontpelier,Vermontthisjhkdayof e,1981. 6 !j / l 5 ,i f $ ) PUBLIC SERVICE 4 do [. [lT., n M BOARD !i // # ~, j' ) OF VERMONT / //A f- ) l \\ f.. Ar~ ' OFFICE OF THE CLERK bem% 6,/77/ FILED: + FATTEST: ( _,,h sd l i CLERK OF Tile ' BOARD l l a

b, APPENDIX Total Retail 1 2 Power Cost Increase $3,658,536 $3,005,982 3 Amortization Adjustment (791,526) (652,786) Decommissioning Charge Adjustment ( 35,000) ( 28,875) Revenue Deficiency $2,832,010 $2,324,321

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Percent Increase 3.35% Notes

1. Allocation method: 81.3% of energy ca.sts and l

82.5% of demand costs allocated to retail. l 2. Based on Public's pro forma power dispatch (Public exhibit 2, schedule 2).

3. Five-year amortization of seismic study and torus repair costs, calculated as follows:

Cost of Seismic studies () and Torus Repair $1,100,000 907,500 Five-year Amortization 220,000 181,500 t [ Cost of Capital at 10.8% 53,695 44,299 Federal and State Income Taxes 33,512 27,648 i i l Sub-total $ 307,207 253,447 l t l' Gross Revenue Tax 1,267 4 1,267* 6 ( Annual Recovery 308,474 254,714 i e l Amortization Adjustment 791,526 652,786 I

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i; I I' il 4 i i I I 0 l l I k

p wa, 3 Aso & STATE OF VERMONT ("] PUBLIC SERVICE BOARD %_/ No. 4460 Petition of Central Vermont X Public Service Corporation 1 Order entered: March 20, 1981 for an increase in rates 1 INTRODUCTION On February 26, 1981, the Public Service Board rendered its final order in Docket No. 4460 in which it ordered Central Vermont Public Service Corporation to file revised tariffs within fifteen days of _ hat order. Those tariffs were to take effect seven daya after filing if a subsequent Board order were not ,is s ue d. In addition, the Company was ordered to calculate recoup-Iinent and serve such calculations on the parties. f-) The Board has reviewed the tariff filings as well as the calculations, and has received a letter from the staff objecting to the Company 's filings. Our review indicates that the tarif f filings were not calculated in accordance with our February 26, 1981 order and, therefore, should not take effect. ORDER IT IS HEREBY ORDERED, ADJUDGED AND DECREED by the Vermont Public Service Board that: 1. Central Vermont Public Service Corporation shall file individual rate schedules reflecting the increase allowed as set forth in the Board's February 26, 1981 order. ~'N b. ___mm'smu

a 2. The Company shall recalculate its recoupment in accordance with the Board's February 26, 1981 order applying such recoupment during the suspension perika on a service-regdered basis. t 3. The Company shall calculate the amount it has over-collected during the ' period its bonded rates were in effect, beginning October 24, 1980, on a service-rendered basis. 4. The company shall indicate separately the amount it is

entitled to" recover for recoupment after refunds have been credited l

lor deducted from that amount. l S. Such tarif fs, rate schedules and calculations shall lbe filed no later than April 1,19 31. 6. All filings shall be based on a service-rendered asis. 7. A hearing on the matter will be scheduled by the Clerk of the Board notifying the parties of the date and time of the l hearing. t Dated ~at Montpelier, Vermont, this 20th day of March, 1981. s/ Richard H. Saudek ) ) PUBLIC SERVICE s/ Rosalyn L. Hunnenan ) BOARD ) s/ Sanuel S. Blc.mi;w.g ) OF VERMONT ) OFFICE OF THE CLERK Filed: March 20,~1981 s/ Susan M. I h Attes t: Clerk of the Board

E 1. it e i 1 1* - j i I, t 1 i THE UNITED ILLUMINATING COMPANY t 6 s I Units No. 1 and No. 2 I Seabrook Nuclear Power Station I i ~ Seabrook, New Hampshire i I Information furnished pursuant ) ' 550.33 af Commission's Rules and Regulations with respect to the particular Applicant naped above as part of Final Safety Analysis Report and Operating License Application for the above Units. j i 4 July 1981 T 9 2 i l l + i I i vm,..v~,--r,, r,e e..,m.w ,, -.,,,,,~-w,-se-,w,a.,vn. .n .ew- ~ ~e,m v+,+,,,,- ,-ev ww-e e -~ ~ ~ r, w me - ~

i I. ORGANIZATION AND CONTROL U (a) Name of Applicant The United Illuminating Company (UI) (b) Address of Applicant 80 Temple Street New Haven, Connecticut 06506 (c) Description of Business of Applicant UI is engaged principally in the production, purchase, trans-mission, distribution and sale of electricity for residential, commercial and industrial purposes in a service area of about 335 square miles in the southwestern part of the State of Connecticut. The population of this area is approximately 704,000, or 23% of the population of the State. The service area, largely urban and suburban in character, includes the principal cities b of Bridgeport (population 148,000) and New Haven (population 130,000)_ and their surrounding areas. During 1980, approximately 36.9% of UI's electric revenues was derived from residential sales, 33.9% from commercial sales, 27.1% from industrial asles and 2.1% from other sales. Subject to the power of alteration, amendment or repeal by the Connecticut legislature, and subject to certain approvals, permits and consents of public authorities and others prescribed by statute, UI has valid franchises to engage in the above-described business, the right to erect and maintain certain facilities, on public highways and grounds, and the power of eminent domain. (~') o,

UI owns and operates four fossil fuel-fired electric gener-OU ating stations at Bridgeport and New Haven, Connecticut, whose generating capability at December 31, 1980, totaled 1,244 mega-watts. UI also owns 9.5% of the common stock of Connecticut Yankee Atomic Power Company, which owns and operates a 580 mega-watt nuclear electric generating station at Haddam Neck, Connecticut; and UI is entitled ta an equivalent percentage (55 megawatts) 'of this station's generating capability. The maximum demand on UI's electric generating system occured in July, 1980, and totaled 971.1 megawatts. In addition to its 17.5% ownership share in the Seabrook Units, UI holds ownership shares of 3.685% (42 megawatts) in the Millstone Unit No. 3 nuclear generating unit under construction at Waterford, Connecticut, and scheduled for completion in 1986, and 3.3% (38 megawatts) in the Pilgrim Un1 L No. 2 nuclear V generating unit proposed for construction at Plymouth, Massachussetts, and planned for completion in 1987. UI owns and operates approximately 95 circuit miles of overhead electric transmission lines and 14 circuit miles of underground electric transmission lines, all operated at 345 kilovolts or 115 kilovolts and located within or immediately adjacent to UI's service area. These transmission lines inter-connect UI's four electric generating stations with the New England electric transmission grid. UI owns and operates 21 bulk electric supply substations and 76 distribution substations. It has approximately 2,950 pole-line miles of overhead electric distribution lines and approximately 125 conduit-bank miles of underground distribution l lines. e UI is a participant in the New England Power Pool (NEP00L), a regional organization whose objectives are to assure that the bulk power supply of New England and any adjoining areas served conforms to proper standards of reliability, to attain maximum practicable economy, consistent with such proper standards of reliability, and to provide for equitable sharing of the resulting l benefits and costs. Substantially all planning operation and dispatching of electric generating capacity for New England is done on a regional basis under NEP00L. UI's generating units are dispatched and generating reserves are equalized through NEPEX, the dispatching agency of NEPOOL. (d) Corporation Organization UI is a corporation organized under the laws of Connecticut. As of December 31, 1980, UI had 36,381 b domestic shareholders owning 7,652,410 common shares and 66 foreign shareholders owning 7,722 common shares. (e) Corporate Officers and Directors The names and residence address of UI's directors and principal officers are as follows: Name Residence PRINCIPAL OFFICERS John D. Fassett, Chairman of the Board and Chief Executive Officer 46 Old Orchard Road, North Haven, CT 06473 James F. Cobey, Jr. President 1000 Ridge Road, Hamden, CT 06517 Leon A. Morgan Executive Vice President-Operations, Engineering and Q Customer Services 43 Forest Brook Road, Guilford, CT 06437 V Name Residence PRINCIPAL OFFICERS (cont'd) Charles W. Cook, Jr. Vice President - Customer Services 1314 Deer Run Circle, Cheshire, CT 06410 Robert L. Fiscus Vice President-Finance and Accounting 86 Cricket Lane, Huntington, CT 06484-John V. Fratus, Jr. Senior Vice President - Covernmental Relations 32 Tanager Lane, Trumbull, CT 06611-Richard J. Crossi Vice President-Corporate Planning and Development 410 Juniper Lane, Cheshire, CT 06410 Albert Harary Vice President-Management Services 70 Haverford Street, Hamden, CT 06517 David W. Hoskinson Vice President-Operations 45 Still Hill Road, Hamden, CT 06518 OQ Marcus R. McCraven Vice President-Environmental Engineering 565 Rayzoe Terrace, Hamden, CT.06514 Harold J. Moore, Jr. Vice President-Employee Relations 413 Ridge Road, Hamden, CT 06517 Anne G. Spinney (Mrs.) Vice President - -Communications 234 Fountain Street, New Haven, CT 06515 James L. Benjamin Controller 43 Old Farm Road, Madison, CT 06443 William A. Elder Treasurer 59 Old Farm Road, Madison, CT 06443 Richard F. Skinner Secretary 87 Charnes Drive, East Haven, CT 06513 j James F. Crowe Assistant Vice President - - Engineering 971 Choate Avenue, Hamden, CT 06518 't

r Name Residence DIRECTORS John M. C. Betts 2477 Durham Road, Guilford, CT 06437 Dr. D. Allan Bromley 35 Tokeneke Drive, Hamden, CT 06518 James F. Cobey, Jr. 1000 Ridge Road, Hamden, CT 06517 John D. Fassett 46 Old Orchard Road, North Haven, CT 06473 Norwick.R. Goodspeed 2821 Congress St., Greenfield Hill, Fairfield, CT 06430 Angus N. Cordon, Jr. 206 Armory Street, New Haven, CT 06511 Geraldine W. Johnson 1385 Chopsey Hill Road, Bridgeport, CT 06606 Frederick J. Mancheski 90 Ogden Street, New Haven, CT 06511 Dr. Leland Miles 332 North Cedar Road, Fairfield, CT 06430 Leon A. Morgan 43 Forest Brook Road, Guilford, CT 06437 Robert D. Russo, M.D. 208 Brooklawn Avenue, Bridgeport, CT 06604 All of the directors and principal officers of UI are citizens of the United States of America. UI is not owned, controlled or dominated by an alien, foreign corporation or foreign government. II. FINANCIAL QUALIFICATIONS Under the Seabrook Joint Ownership Agreement, UI is responsible for its proportionate ownership share (17.5%) of the operation and maintenance costs of the Units and a similar j_ percentage of the ultimate cost of decommissioning the Units. Based upon the estimates set forth above under Part IV of the General Information, UI's 17.5% share of the operation and maintenance costs is estimated to be $26,250,000 per Unit per year for the first five years of operation, '~ and between $7,350,000 and $15,050,000 for the decommissioning l of the two Units, depending on the method of decommissioning..-

In addition, UI's share of fuel expenses during the initial five-year operating periods is estimated at $89,775,000. As evidence of its financial qualifications to meet these costs, UI submits herewith: (1) 1980 Annual Report to shareowners (Exhibit I). (ii) 1980 Annual Report on Form 10-K (Exhibit II). (iii) 1981 Quarterly Report on Form 10-Q (Exhibit III). (iv) Prospectus, dated March 24, 1981, relating to 1,400,000 shares of Common Stock, no par value (Exhibit IV). p (v) Decision dated December 8, 1980, of the Connecticut Department of Public Utility Control in Docket No. 800601, UI's most recently completed rate proceeding (Exhibit V). III. REGULATORY AGENCIES AND PUBLICATIONS (a) Regulatory Agencies The following regulatory agencies have jurisdic-tion over the rates and services of UI: Connecticut Department of Public Utility Control Hartford, CT 06115 Federal Energy Regulatory Commission Washington, DC 20426 (b) Publications The following news publications are used by UI for official notification and are appropriate for notices %s regarding the Units:,

j.________..___ ,j i 1 i (b) Publications (cont'd) The New Haven Register f j Frontage Road l New Haven, CT 06519 + i' + [ The New Haven Journal Courier l } ' Fro;.1tage Road _ 06519 l -- New Haven, CT i i i The Bridgeport Post j 410 State Street-l Bridgeport, CT 06604 1-1- The Bridgeport Telegram 410 State Street Bridgeport, CT 06604 4 i' s 1 1 4 i f i - t l 1- } I I. i } l-i l i G ! ~ -n.--.. ..._,n~~-}}