Fitch Ratings Upgrades Green Mountain Power.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 19, 2002

Fitch Ratings has upgraded the ratings of Green Mountain Power Corp.'s (GMP) first mortgage bonds to 'BBB+' from 'BBB' and preferred stock to 'BBB' from 'BBB-'. The Rating Outlook is changed to Stable from Positive.

The higher ratings are supported by the recent sale of the Vermont Yankee (VY) nuclear plant, continued improvement of credit measures and improved liquidity. On July 31, 2002, Entergy Corp. completed the purchase of VY, in which GMP had a 19% equity interest, for $180 million. The sale eliminates the associated nuclear operating risk for GMP and will provide about $7 million in net proceeds. The transaction included a power purchase agreement (PPA) with Entergy that dedicates 20% of the VY plant's output to GMP through 2012. The average annual price will not exceed 3.9 to 4.5 cents per kilowatt-hour during the term of the agreement. Beginning in November 2005, the PPA will include a 'low market adjuster', which will adjust the purchase price downward to within 10%-15% of the market price if power prices fall below the PPA price.

GMP's financial improvement is largely due to the rate order implemented in January 2001 that allowed full recovery of the costs associated with a long-term purchase power agreement with Hydro Quebec (HQ). Credit measures have considerably strengthened since 2000 and are currently supportive of the new rating. Credit quality also benefits from fixed-price power supply agreements with Hydro Quebec and Morgan Stanley that, together with the Entergy PPA, cover approximately 90% of projected load.

Primary credit concerns are the customer concentration posed by a large IBM plant, which accounts for about 19% of retail sales, and some commodity price exposure. The price exposure results from GMP's reliance on the wholesale market for approximately 10% of it's power supply and from a call option that allows HQ to purchase power from GMP at a below market rate of approximately 2.6 cents per kilowatt hour. In conjunction with last year's rate settlement, HQ agreed to limit its calls during 2002 and GMP has hedged anticipated calls through 2003. Beyond 2003, some price exposure remains, and will be dependent on market prices and GMP's hedging strategy. The unit contingent PPA with VY is also a potential source of commodity price risk in the event of an outage. The commodity exposure is mitigated by planned development of new generation in New England, which would moderate regional electricity prices.

GMP's liquidity has been strengthened by a new $35 million 364-day revolving bank facility, which replaces a $15 million revolver of similar terms. Though GMP intends to reduce the size of the facility to $20 million following a planned long-term debt issuance later this year, the new credit facility will provide additional liquidity in the event that unanticipated power purchases are required.

Green Mountain Power Corporation is a vertically integrated utility providing electric service to 87,000 customers, primarily residential and commercial users in Northwest and Central Vermont.