GREEN MOUNTAIN POWER CORPORATION Annual Report to Shareholders 2001 Improving customer satisfaction and shareholder confidence in ten not-so-easy steps Financial and Operating Highlights 2001 2000 1999 Financial Data Operating revenues . $283,464,000 $277,326,000 $251,048,000 Operating expenses . $267,005,000 $272,066,000 $243,102,000 Net income (loss), continuing operations . $ 10,860,000 ($ 305,000) 3,061,000 Net income (loss), discontinued operations . ($ 182,000) ($ 6,549,000) ($ 7,279,000) Net income (loss) applicable to common stock . $ 10,678,000 ($ 6,854,000) ($ 4,218,000) Total utility plant . $309,953,000 $298,496,000 $288,711,000 Common Share Data Weighted average shares outstanding . 5,630,000 5,491,000 5,361,000 Year-end shares outstanding . 5,685,000 5,567,000 5,410,000 Basic earnings (loss) per average share, continuing operations. $ 1.93 ($ 0.06) $ 0.57 Basic earnings (loss) per average share, discontinued operations . ($ 0.03) ($ 1.19) ($ 1.36) Basic earnings (loss) per average share . $ 1.90 ($ 1.25) ($ 0.79) Dividends paid per share . $ 0.55 $ 0.55 $ 0.55 Year-end book value per share . $17.81 $16.53 $18.60 Dividend yield on ending market value . 2.95% 4.40% 7.39% Return on average common equity . 11.02% –7.10% –4.00% Operating Data Electric customers—year-end . 87,000 86,000 84,000 Retail and requirements sales (MWH) . 1,956,000 1,955,000 1,920,000 Other sales for resale (MWH) . 2,365,000 2,574,000 2,153,000 Average revenue per kWH (cents) . 10.44 9.52 9.47 Number of Employees—Year-End Green Mountain Power . 193 197 196 Subsidiaries . 0 5 5 Table of Contents Dear Shareholder: Statements of Cash Flows . .18 By Thomas P. Salmon and Christopher L. Dutton . .2 Capitalization Data . .19 Charts and Graphs Balance Sheets . .20 Notes to Financial Statements . .22 GMP Service Territory . .2 Auditor’s Report . .35 Power Supply Costs by Source . .5 Eleven-Year Profile New England Investor-owned Utilities Retail Rates . .5 Statements of Income . .36 GMP’s Energy Sources—2001 . .6 Balance Sheets . .38 Customers Served per Employee . .6 Statements of Cash Flows . .40 Quarterly Stock Market Price Data . .7 Common Stock Data . .42 Board of Directors Employees, Plant Investment, Sales of Securities . .44 Power Supply Statistics, Electric Sales . .46 Board of Directors . .8 Shareholder Information . .48 Board of Directors Committees . .8 GMP Officers . .8 Management’s Discussion and Analysis It is the policy of Green Mountain Power to provide equal Management’s Discussion and Analysis . .9 employment opportunities to all qualified employees and Consolidated Financial Statements applicants.Through its affirmative action plan and affirmative Statements of Income . .17 action efforts, GMP ensures that the policy is enforced. 1 Dear GREEN MOUNTAIN POWER’S operating results for 2001 were as Green satisfying as we had hoped they would be when we reported to you last year: • The return on common equity for core operations was 11.25 percent, the target established by the Vermont Public Service Board to be a fair return Mountain for Green Mountain Power shareholders. • Consolidated earnings per share were $1.85, up from a loss of $1.25 per Power share in 2000. • The year-end price of Green Mountain Power stock was $18.65 per share, shareholder: a gain of nearly 50 percent from the $12.50 per share price on January 1, 2001, producing a price-to-earnings ratio of 10. • Customer satisfaction was 90 percent, a gain of five percent from the previous year. • Productivity, as measured by Green Mountain Power’s customer-to- employee ratio of 454 to one, was among the highest in the electric utility industry. • The credit rating agencies restored Green Mountain Power’s investment- grade ranking and set our outlook as “positive.” But the numbers tell only part of the developing story of Green Mountain Power. The employees of your Company have done no less than reinvent the way we do business. Recognizing that satisfied customers are essential for finan- The employees of your cial success, we have a laser focus on responding to customer needs, and we are using new technology to do it faster, smarter and more efficiently than ever Company have done no less before. We’ve developed innovative ways to help our customers over the web, than reinvent the way we do while incorporating satellite computer technology to assist lineworkers in responding quickly during outages and providing the reliable service our cus- business. Recognizing that tomers demand. We’ve even offered money-back guarantees on some of our satisfied customers are services. In short, we expect to wow our customers with our service. Here’s how: essential for financial success, we have a laser focus on responding to customer needs, and we are using new technology to do it faster, smarter and more efficiently than ever before. 2 Our MORE THAN HALF of our customers believe reliability is the most important quality for an electric sophisticated utility. No other measure of service, including price, is even half that important to our customers. We have computer deployed very sophisticated technology to make sure we respond quickly to any interruptions on our system. Every piece of electrical equipment we own has been surveyed and mapped with the Global Positioning technology System (GPS). Combining a Geographic Information System (GIS) with the GPS, we have created a improves powerful tool to track information and respond to customers. Our lineworkers now have laptop computers in reliability. their trucks to bring them information, including extremely accurate maps, actual pictures of poles and transformers, and spreadsheets of technical information about every piece of equipment on our system. The GIS/GPS system radically improves both the quality and quantity of information available to us during outages, which significantly cuts our time in responding. In line with our focus on efficiency, the GIS/GPS program reduces paper work and streamlines prep work for jobs, allowing lineworkers to spend more time in the field actually accomplishing their mission. Further developments in the GIS/GPS system enable us to track outages as they occur. The moment a customer calls to tell us about an outage, a report is automatically updated to track the outage, crew dispatchers are automatically notified, and our electronic maps show that the customer has lost service. We can now analyze more accurately the extent of any storm damage and prepare a faster, more efficient response, including giving customers an estimated restoration time. Busy signals WHEN CUSTOMERS CALL, they want an answer quickly. Often they can find out what they need are a relic of from our interactive voice system. Other times, they need to speak with us. Our call center performance has improved steadily. Most of our calls are answered within 30 seconds. There are times during power outages the past. when the number of telephone lines coming into our offices cannot possibly accommodate the thousands of customers trying to call us. So that those customers are not met with a frustrating busy signal when they need to tell us that their power is out, we have contracted with an outside automated service to take all overflow calls. The connection is seamless for the customer, who can receive essential information or report the outage and hang up, knowing we will take care of the problem. Green Mountain Power lineworkers Steve Caldwell and Steve Bolduc use our new GIS/GPS information technology system to check the circuit maps during an outage. Immediate access to up-to-date maps, work schedule and system information helps us respond faster and more efficiently. 3 Customers TODAY’S CONSUMER EXPECTS to get information over the can access web. We know that 70 percent of our customers have access to the their accounts Internet, either at home or at work. In late 2001, we created a new Internet web site for Green Mountain Power, greenmountainpower.biz. We over our wanted a site that was customer focused and easy to use. If customers want web site. to check a bill amount, see if their payment was received, or even adjust an estimated bill amount, they can now do it 24 hours a day over the web. Our web site gives them more flexibility and greater access to information than they have ever had from a utility. With My Home, our unique web device, We offer WHILE WE REDEVELOPED our web site, we also set out to customers can do a My Home, build a fun way for our customers to understand their own usage patterns and how their consumption relates to their bill. The result was My Home, a simple layout of their an interactive unique web device that gives customers unprecedented appreciation of how web vehicle to they use electricity and how much they pay for it. Customers can do a sim- home, add the ple layout of their home, add the appliances they use every month, and My help customers appliances they use improve their Home calculates their usage and compares it to their most recent bill. It is easy to see which appliances use the most electricity, so customers can learn understanding exactly how their usage habits affect their bills. We are seeking a patent on every month, and of electricity this technology, which was an instant success in Vermont, and other elec- calculate their usage tric companies around the country have expressed an interest in My Home. usage. and compare it to their most recent bill. Chrissie Drescher, a customer in Hinesburg, Vermont, uses the new My Home feature on the Green Mountain Power web site to learn more about her family’s electricity consumption.