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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 – June 23, 2011) –

Green Mountain Power
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.

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.

4 comments to Offer Made to Combine CVPS & GMP Into One Stronger Company

  • mataliandy

    Gaz Metro is subsidiary Enbridge, one of the primary stakeholders in one of most the ecologically-disastrous energy projects ever undertaken: tar-sands refining.

    The First People in the region have had their lands and waters destroyed so that multinational oil companies can waste billions of gallons of fresh water and burn billions of tons of CO2 to extract barely more energy than they put into the extraction process.

    On a lifecycle basis — that is, extraction all the way through combustion — tar sands causes about 20 percent more global warming pollution than conventional oil. Oil shale and liquid coal are even worse, causing nearly 50 percent more global warming pollution and over double the lifecycle emissions of conventional oil, respectively.

    I am not happy to see an increase in Gaz Metro control of VT’s electricity. This purchase and merger would create a fairly sizable monopoly over our state’s electrical power.

  • Whenever controversial comments are posted on the Green Energy Times web site that raise questions relating to the subject matter of our posting, GET will make every effort possible to find and post the relevant facts to clarify the issues at hand.

    When the question arose about Gaz Metro’s connection to Tar Sands development, knowing GMP’s positive position regarding renewables, we found it difficult to believe they would affiliate themselves with a company operating in direct opposition to their stated positive goals. GMP has been a leader in our state. They have kept rates low and encouraged renewable energy sourcing by offering higher credits for renewable energy fed back into the grid in their territory of operations.

    With this in mind, we went directly to GMP to learn the truth about any connections to Tar Sands development. Their comments below make it clear that Gaz Metro is not directly involved in Tar Sands development, though one of their share holders Endbridege clearly is. Based on the information below, Green Energy Times wholeheartedly endorses the acquisition of GMP by Gaz Metro and like so many we’ve talked to, we feel this merger is very hopeful and we are thankful things went in this direction.

    In terms of Endbridge’s involvement in Tar Sands development, we pray that through association with GMP and their Vermont customers’ who have expressed vocal opposition to these devastating practices, Endbridge will realize that their money can be far better spent by investing in clean, renewable energy.

    From GMP:

  • mataliandy

    Gaz Metro profits enrich their investing owners, including Enbridge, the “go-to” company for oil shale.

    In the mean time, Gaz Metro is a distributor of gas derived from shale, which is more warming than coal, because of the methane released in the extraction process.

    “The study contends that so much methane escapes from the extraction of shale gas over the life of a well that it allows more heat-trapping greenhouse gas into the atmosphere than coal.

    The report acknowledged that natural gas is cleaner to burn than other fuels but that greater pollution derives from leakage, whether accidental or purposely designed to relieve well pressure.”

    I am very disappointed that this deal has moved forward. More Vermonters will now be paying, directly and indirectly, to further increase the rate of global warming via their electric bills.

    Gaz Metro’s own press releases regarding shale gas production:

    Gaz Métro submits its brief on the sustainable development of shale gas to the BAPE

    The company stresses the importance of this industry for Quebec’s economic and environmental development.

    Montreal, November 17, 2010 – As part of the public hearings before the Bureau des audiences publiques sur l’environnement (BAPE) on the sustainable development of the shale gas industry in Quebec, Gaz Métro today presented a summary of the brief it has submitted to the BAPE. The summary emphasized the three main points made in the brief: the reliability and safety of the Gaz Métro network, the growth potential of the natural gas industry in Quebec and the economic and environmental benefits that could result from the development of the natural gas industry.

    “Natural gas accounts for nearly 11% of the energy used in Quebec. It powers our schools, our hospitals, our industries and our homes and is currently available at a very competitive price, in large part because of increased shale gas production, mainly in the United States. Higher production means a lower price, which is good news not only for Gaz Métro customers but also for Quebec as a whole. In the past two years, the low price of natural gas has served as an incentive for many consumers to switch from heavy fuel oil. The direct result has been a reduction of greenhouse gas (GHG) emissions in Quebec, to the tune of nearly 0.5 million tonnes.

    Quebec is therefore already reaping positive economic and environmental benefits from shale gas production. The development of the industry in Quebec in a safe, controlled manner would help keep prices low in the medium term. This would facilitate the switch to natural gas from polluting energy sources that produce more GHG emissions and would thereby improve Quebec’s environmental performance. “

    Shale oil and gas production is one of the most environmentally destructive processes on the planet. The benefits of the “clean” burning of the gas is entirely offset by the dirty production method.

    Without Gaz Metro’s pipelines, this product would not be able to profitably get to market.

    I am concerned about Green Mountain Power’s deceptive description of Gaz Metro’s activities. Vermonters are accustomed to – and deserve – honesty.

  • mataliandy

    Some other not-so-nice activities that our electric bills will help support:

    “Enbridge continues to vie for market leverage in natural gas transmission in the United States, capitalizing on recent extraction technologies.

    “The North American natural gas market has entered a period of abundant supply primarily due to horizontal drilling of shale gas plays in the United States,” states their 2010 annual report.”

    The “horizontal drilling” to which they refer is the hydrofracking that’s destroying residential water supplies throughout the Marcellas Shale region in the Eastern US.

    Gaz Metro may try to separate itself semantically from its 38.8% owners, but they’re going to have a hard time convincing anyone they mean it with information such as this on their web site:

    Mr. Bird is Executive Vice President, Chief Financial Officer and Corporate Development of Enbridge and is responsible for all financial affairs of the company, as well as for corporate planning, mergers, acquisitions and corporate development. Mr. Bird joined Enbridge in 1995 as Vice President and Treasurer after holding senior financial executive positions at a number of other public companies. He has also served as Senior Vice President, Corporate Planning & Development. Mr. Bird led Enbridge’s involvement in the development of the Vector and Alliance gas pipelines, in winning the gas distribution franchise for New Brunswick, and in acquiring the natural gas pipeline and gathering and processing business of Midcoast Energy.

    He also led the acquisition of the public minority interest of Enbridge Consumers Gas, established Enbridge’s 32 per cent interest in Noverco, and led the successful launch of Enbridge Income Fund. Mr. Bird served most recently as Executive Vice President, Liquids Pipelines, which included the responsibility for initiatives to secure $12 billion of crude oil pipeline development opportunities. He is a Director of Enbridge Income Fund, Enbridge Pipelines Inc. and Enbridge Gas Distribution Inc. He is also a Director of Noverco and Bird Construction Income Fund. During 2009 and early 2010, he served as a member of the Federal Minister of Finance’s Advisory Committee on Financing. He was named Canada’s CFO of the Year for 2010.

    In addition, the other 61.2% owner of Noverco, Trencap, is an investment fund. It’s owned 100% by Caisse de dépôt et placement du Québec, another investment fund whose fingerprints are all over the oil sands projects, as well as hydrofracking (sometimes referred to as “hydrocracking” or “horizontal drilling” in the industry).

    Noverco is simply a “holding company” whose sole purpose for existence is to create a layer of removal between the top-level investors and Gaz Metro in order to avoid certain regulatory issues that would arise if the ownership were direct.

    And what is Caisse de dépôt et placement du Québec up to? They invest Canadian pension funds in dirty energy:

    The presence of this group of quality, long term energy investors is a strong endorsement of OPTI and the Long Lake integrated oil sands project,” said Sid Dykstra, President & CEO of OPTI. “With this financing OPTI has taken another significant step towards the realization of our corporate goal of building a major integrated in-situ oil project using the OrCrude™ technology.”

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