SOURCE: Green Mountain Power

Green Mountain Power

June 23, 2011 08:11 ET

Offer Made to Combine CVPS & GMP Into One Stronger Company

Offer Increases Value for Customers, Community and Shareholders CVPS and GMP Customers to Save $144 Million Over First 10 Years

COLCHESTER, VT--(Marketwire - Jun 23, 2011) - The parent company of Green Mountain Power Corporation (GMP), Gaz Métro Limited Partnership (Gaz Métro), through a wholly-owned subsidiary, today submitted to the Board of Directors of Central Vermont Public Service Corporation (CVPS) a superior offer to purchase CVPS that would bring substantial cost savings to customers resulting from the consolidation of the GMP and CVPS service territories. This proposal provides a compelling alternative to the merger announced on May 30, 2011 between CVPS and Fortis Inc. (Fortis).

"By combining our forces and collective wisdom, we expect to bring significant benefits to electric customers across the state," said Mary Powell, President and CEO of GMP. "Having a locally-run company working to keep costs low for customers is the Vermont way."

"This is an opportunity to secure long-term cost savings for customers of both companies, invest in renewable energy and protect local jobs, while strengthening the Vermont economy," continued Ms. Powell. "It is positive for the customers and communities served by the combined utility."

Under this proposal, the combined enterprise will save customers more than $144 million over 10 years as a result of natural synergies through consolidation. These savings will be reflected in future rates. For example, the combined utilities will save money for customers by finding operational efficiencies, utilizing staffing changes that occur over time through natural turnover and retirements, cutting regulatory and public company costs, reducing expenditures on facilities, and better coordination of existing line crews.

Details of offer:

  • $144 million in savings to CVPS and GMP customers over first 10 years;
  • No layoffs at CVPS, other than certain executive management positions due to the consolidation of leadership teams;
  • Establishment of new southern head office in downtown Rutland;
  • New Rutland County solar development to make Rutland "Vermont's first solar city";
  • Establishment of a public trust with $1.0 million in annual income to support a low-income rate plan benefitting elderly and lower-income customers. This income stream will be made possible by an annual dividend generated through contribution by GMP and CVPS post-closing of an approximate 30% ownership interest in Vermont Electric Power Company (VELCO) -- operator of the state's most important transmission asset -- to a permanent trust under public direction. It will be supplemented by a donation from the combined entity;
  • Offer of $35.25 per CVPS share; and
  • Right for CVPS' shareholders to receive regular quarterly dividends until closing.

"We recognize and honor CVPS' longstanding community involvement in the Rutland region and are eager to strengthen those roots," said Ms. Powell. The offer includes a commitment to protect local jobs by pledging no layoffs at CVPS, other than certain executive management positions due to the consolidation of the leadership teams, as well as establishing a new head office for southern Vermont in Rutland's downtown. "Our long-term commitment to a vibrant and successful Rutland economy is good for our customers, good for the region and good for the entire state," Ms. Powell added.

In addition, the consolidated enterprise will have additional financial strength to invest in capital projects, including transmission upgrades and new renewable generation. It will seek to partner with local organizations to build Vermont's largest solar orchard in Rutland County with the goal of making Rutland "Vermont's first solar city."

The offer also includes a plan to establish the permanent Vermont Low Income Trust for Energy (VLITE) to support a low income rate plan. VLITE will provide $1.0 million per year to assist elderly and lower-income customers. VLITE will be supported by an annual dividend generated through contribution by GMP and CVPS post-closing of approximately 30% of VELCO's issued and outstanding voting stock to a permanent public trust, as well as a supplemental donation from the combined entity.

"The Vermont Low Income Trust for Energy helps solve the long-standing issue of helping customers with low incomes pay an affordable amount for their electric use by setting up a trust with a permanent income stream," said Ms. Powell. "Plus, the transfer of VELCO stock gives Vermonters ownership interest and control of the state's transmission backbone, which is a key part of securing Vermont's energy future."

"CVPS and GMP share many core values: a strong commitment to the community; a laser-focus on customer service; and the desire to keep rates as low as possible for our customers," said Ms. Powell. "It's because of these shared values that I'm optimistic about this offer and our ability to collaborate on how to best serve Vermont."

With the two utilities working under the same local management, Vermont will be able to maximize its investment in Smart Grid upgrades, as well as improve reliability by reducing the frequency and duration of outages by utilizing the combined team of line workers and customer service representatives available during storm events.

In addition to these benefits, the state will benefit from the expanded presence of a company with a long history of investment in Vermont and a strong reputation for commitment to the Vermont community. Gaz Métro has been the parent company of Vermont Gas Systems since 1986 and of Green Mountain Power since 2007.

"Gaz Métro continues to demonstrate its commitment to Vermont with increased investment and superior service for customers," said Sophie Brochu, President and CEO of Gaz Métro. "Our partnership in Vermont has proven that keeping smart, local management and providing them with the capital to grow is the right approach. Our plan to combine GMP and CVPS is an extension of that strategy."

Gaz Métro has submitted a proposal to CVPS' Board of Directors to acquire all outstanding common shares of CVPS stock at $35.25 per share, which is greater value on a per share basis than the terms contained in the agreement and plan of merger between CVPS and Fortis announced on May 30, 2011. This also includes assumption of approximately $230 million of CVPS debt.

CVPS-GMP Combination OfferFortis Offer
Customer savings and benefit • $144 million in customer savings over first 10 years through natural synergies. Savings will be reflected in future rates.
• Ongoing, annual income of $1.0 million through public trust to support elderly and lower-income customers.
• $21 million unspecified investment on behalf of customers.
Support for Rutland economy • No layoffs at CVPS (other than certain executive management positions due to the consolidation of the executive teams).
• Establishment of new southern head office in downtown Rutland.
• No layoffs at CVPS.
Support for renewable energy • New solar development in Rutland County to make Rutland first "solar city" in Vermont. • Not specified.
Support for transmission upgrades • Commitment to capital support for VELCO upgrades.
• Vermont customer ownership interest and control of VELCO through transfer of approximately 30% of VELCO stock to a public trust.
• Commitment to capital support for VELCO upgrades.
Shareholder value • $35.25 per share with shareholder right to receive regular quarterly dividend until closing. • $35.10 per share with normal dividends for two (2) quarters, then $0.01 dividends through deal approval.

About Green Mountain Power
Green Mountain Power generates, transmits, distributes and sells electricity in Vermont and is a leader in wind and solar generation. It serves more than 96,000 customers.

About Gaz Métro
With over $3.6 billion in assets, Gaz Métro is Quebec's leading natural gas distributor. Its 10,000 kilometer network serves 300 municipalities. Gaz Métro has operated in this regulated industry since 1957 and is the trusted energy provider to its customers in Quebec and Vermont, who choose natural gas for its competitive price, efficiency, comfort and environmental benefits. Gaz Métro is also present in the electricity distribution market and is involved in natural gas transportation and storage, the development of projects such as wind power, natural gas as fuel for the transportation industry, and biomethanation. Gaz Métro is committed to the satisfaction of its customers, partners, employees and the communities it serves.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares of Central Vermont Public Service. Certain items in this press release may constitute forward-looking statements. Statements that are not historical facts are forward-looking and involve risks and uncertainties that could cause actual outcomes or results to materially differ from those expressed in this release. Readers are cautioned not to place undue reliance on these forward-looking statements and such statements speak only as of the date of this release.