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CVPS Signs Two Power Contracts -- Fills Portfolio for 2012

Central Vermont Public Service (NYSE: CV) has signed two new power supply contracts, filling the 2012 gap in its portfolio created by the end of the existing contract with Vermont Yankee, at attractive prices.

"These contracts serve to ensure our reliable power supply through the end of 2012 at very competitive prices," CVPS President and CEO Larry Reilly said. "We were able to secure contracts at firm prices -- where performance is guaranteed such that the sellers would pay to replace any power should they otherwise fail to deliver."

CVPS, in cooperation with World Energy Inc., an energy management services firm, conducted a highly structured Internet auction that involved approximately a dozen prescreened northeastern generators and energy marketers in bidding to provide CVPS's needed supplies. When the bidding closed, CVPS signed two contracts with an average price of approximately $47.50 per megawatt-hour, or 4.75 cents per kilowatt-hour.

The contracts will provide about 570,000 megawatt-hours of energy, or about 20 percent of CVPS's power supply during the life of the contracts, for $27 million.

"In a circumstance such as this, we have found that employing a competitive auction process obtains the best deals for our customers," said Reilly. "These purchases will help us remain among the lowest-cost utilities in New England, despite cost pressures from infrastructure upgrades, particularly from transmission improvements and higher-cost, new renewable power content requirements."

One contract is for energy supplied 24 hours per day from April 1, 2012 through the end of next year, while the other contract will provide peak and off-peak power during specific periods when CVPS had remaining supply gaps next year.

The contracts will also fill CVPS's energy needs during the planned Vermont Yankee refueling outage this fall. Some of the energy will be purchased for as little as $39 a megawatt-hour, or 3.9 cents per kilowatt-hour. CVPS currently pays Vermont Yankee 4.4 cents per kWh, and Hydro-Quebec about 6.2 cents per kWh. Market prices, though generally, relatively low of late, were as high as several hundred dollars per megawatt-hour during the recent heat wave.

The contracts are for so-called "system power," meaning they are not conditioned on the operation of individual power generation sources. Because CVPS plans to conduct similar auctions in the future and bidders were unknown to each other, the names of the winning bidders and full details of the process will remain confidential.

The new contracts join several other longer-term agreements CVPS has signed to replenish its portfolio after the current Vermont Yankee and Hydro-Quebec contracts end. CVPS has signed new contracts largely for renewable energy from Hydro-Quebec, wind farms in Coos County, N.H., and southern Vermont, and a Gilman, Vt., hydro project.

CVPS is also in the process of purchasing the Vermont Marble Power Division of Omya, including four hydroelectric facilities with a current combined capacity of 18.5 megawatts, which CVPS plans to upgrade. After the acquisition, CVPS will own and operate the largest fleet of hydroelectric generating stations in New England. In large part due to its electricity supplies, Vermont has the lowest per-capita air emissions in the country.

CVPS continues to expand its Cow Power generation; recently built a 50-kilowatt solar project on Route 7 in Rutland Town; and upgraded a Passumpsic River hydro facility in St. Johnsbury.