SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
DECEMBER 2, 2003
GREEN MOUNTAIN POWER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VERMONT 03-0127430
(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
1-8291
COMMISSION FILE NUMBER
163 ACORN LANE,
COLCHESTER, VERMONT 05446
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(802) 864-5731
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
ITEM 9. OTHER INFORMATION
On December 3, 2003, Christopher L. Dutton, President and Chief Executive
Officer of the Company, and Robert J. Griffin, Vice President, Treasurer and
Controller of the Company, will make a presentation at a conference on
"Investing in the Electric Utilities Industry" presented by the Wall Street
Transcript being held in New York, New York. The presentation will include a
discussion of the following matters:
1. The Company's principal financial and growth objectives include prospects
for dividend growth, a transmission investment opportunity in northwestern
Vermont subject to approval by the Vermont Public Service Board ("VPSB"), and
continued growth in business services.
2. The Company currently has a dividend payout ratio of slightly less than 40
percent of earnings, well below the payout ratios of other comparable electric
utilities. The current payout ratio, if continued at its low level, would
result in significant growth in the proportionate share of equity in the
Company's capital structure, which would be costly for the Company's customers
to support. Therefore the Company expects to increase its dividend rate over
the next five years to bring the Company's dividend payout ratio in line with
comparable companies at between 50 and 70 percent of earnings. The Company
expects to evaluate its current dividend rate in the first quarter of 2004.
3. The Company owns approximately 30 percent of the Vermont Electric Power
Company ("VELCO"), which owns and operates most of the transmission assets in
Vermont. VELCO and the Company are presently seeking approval from the VPSB to
expand the transmission capacity of an existing line that supports reliability
in northwestern Vermont (the "Northwest Reliability Project"). VELCO's Project
costs are estimated at $128 million for all of Vermont and the Company could
invest up to $24 million in VELCO through 2008, primarily for its proportionate
share of the Northwest Reliability Project. If the Northwest Reliability
Project is approved, the Company would finance its investment through the
issuance of debt over this period of time. The Company's capital structure is
expected to continue to be weighted evenly between debt and equity over this
timeframe. The Company considers the Northwest Reliability Project to be vital
to maintaining a reliable electric system for its customers and to sustaining
the economic health of the region.
4. The Company expects earnings of approximately $1.90 to $1.95 per share for
2003 and a return on equity for utility operations of 10.5%, if the VPSB
approves a three-year rate plan described in a Memorandum of Understanding
("MOU") between the Company and the Vermont Department of Public Service. If
the MOU is not approved, the Company's allowed and estimated return on equity
for 2003 would remain at 11.25 percent and expected earnings would increase to
between $2.05 and $2.10 per share. The MOU rate plan provides for no rate
increase in 2004, and modest rate increases of 1.9 percent in 2005 and 0.9
percent in 2006. The Company believes that the financial stability that the
rate increases provide through 2006 outweighs the modest reduction in return on
equity.
5. The Company will reiterate that it does not expect to make material
investments in new unregulated operations through 2007. If the Northwest
Reliability Project does not go forward, the Company would consider accelerating
increases in dividends or buying back equity to meet its goal of maintaining a
capital structure that is evenly divided between debt and equity.
Appended is the abbreviated text of a graphic media presentation relating to the
above-listed matters used at the December 3, 2003 presentation.
Abbreviated Text of December 3, 2003, Power Point Presentation
Safe Harbor Statement
There are statements in this information that contain projections or estimates
and that are considered to be "forward-looking" as defined by the Securities and
Exchange Commission (the "SEC"). In these statements, you may find words such
as believes, expects, plans, or similar words. These statements are not
guarantees of our future performance. There are risks, uncertainties and other
factors that could cause actual results to be different form those projected.
Management Strategy
Superior Dividend Growth
Invest in Transmission
Grow Utility Services Business
VELCO Transmission Growth Strategy
Current capitalization structure for VELCO
Potential to increase equity
Invest up to $24 million thru 2008
Attractive risk-adjusted return
Utility Services Growth Strategy
Reduces rates for customers
Solid growth potential
More efficient use of workforce
Financial Overview
Capital Structure
Targeted 50% common equity (50% to be achieved by year-end)
No preferred equity, no hybrids, limited use of short-term debt
Limited debt maturities (millions):
2003 2004 2005 2006 2007
$8 $0 $0 $14 $0
Effective Risk Mitigation Strategies
Power Supply
Power supply contracts reduce outage and other operating risks.
All Company power contract costs being recovered in rates:
Morgan Stanley effective through 2006
Vermont Yankee contract expires in 2012
Hydro-Quebec contract expires 2015
IBM
Seventeen percent of retail revenues, lowest margin customer. A worst-case
hypothetical shutdown of IBM would require an estimated rate increase of between
5 to 8 percent.
While IBM has reduced its workforce over the past couple of years from 8,500 to
6,000, the company's results and rate needs have not been impacted, in part due
to low unemployment and steady growth in our service territory.
Regulatory
A Memorandum of Understanding (MOU) with the Vermont Department of Public
Service is currently before the Vermont Public Service Board. The MOU, if
approved, would provide for modest rate increases in 2005 and 2006 and a cap on
the Company's return on equity for utility operations of 10.5 percent. The
Company believes the MOU, if approved, would provide it an opportunity to
achieve its allowed rate of return through 2006.
Weather
Weather derivatives used to lessen risk associated with adverse weather
patterns' effect on earnings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cased this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREEN MOUNTAIN POWER CORPORATION
Registrant
DATED: December 2, 2003 By:/s/ROBERT J. GRIFFIN
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ROBERT J. GRIFFIN, VICE PRESIDENT,
CONTROLLER AND TREASURER
DATED: December 2, 2003 By:/s/ROBERT J. GRIFFIN
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ROBERT J. GRIFFIN, VICE PRESIDENT,
CONTROLLER AND TREASURER
(AS PRINCIPAL FINANCIAL OFFICER)
There are statements in this information release that contain projections
or estimates and that are considered to be "forward-looking" as defined by the
Securities and Exchange Commission (the "SEC"). In these statements, you may
find words such as believes, expects, plans, or similar words. These statements
are not guarantees of our future performance. There are risks, uncertainties
and other factors that could cause actual results to be different from those
projected.
For further information, please contact Robert Griffin, Controller and
Treasurer of Green Mountain Power, at 802-655-8452 or Dorothy Schnure, Manager
of Corporate Communications, at 802-655-8418, or 802-482-2503 after 6:00 p.m.