PSB Approves CVPS Purchase of VEC's Southern Vermont Territory.

RUTLAND, Vt. -- The Vermont Public Service Board has approved Central Vermont Public Service's (NYSE: CV) purchase of the southern Vermont franchise territory of Vermont Electric Cooperative, a sale designed to rationalize service territories and lower local electric rates.

The closing took place today, when CVPS paid VEC approximately $4 million. CVPS will provide service starting Saturday.

Under the agreement, CVPS acquired VEC's southern Vermont assets and the rights to serve 2,770 customers. A residential customer using 500 kilowatt-hours would pay $80.19 as a VEC customer, but the bill will drop to $68.01 as a CVPS customer. A 4.07 percent increase, scheduled to take effect Jan. 1, will mean a monthly bill of $70.78 for that same customer, a savings of $9.41 compared to VEC. A handful of commercial customers will see a small rate increase.

"The agreement reduces most local rates and strengthens CVPS," President Bob Young said. "It allows our fixed costs to be spread over a larger base. Bottom line, it's good for CVPS, good for VEC, and good for customers."

VEC Chief Executive Officer David Hallquist said the sale provided significant cash, while divesting a service area a great distance from most of VEC's territory, which is primarily in northern Vermont.

"We leave these customers in good hands," Hallquist said. "CVPS is hiring all five local VEC employees, and will maintain the Wilmington office. We, meanwhile, can put the proceeds to work for our remaining members."

Customers affected by the sale are in Halifax and parts of Andover, Dover, Newfane, Townshend, Wardsboro, Jamaica, Marlboro, Guilford, Vernon, Wardsboro, Wilmington, Windham, Whitingham and Readsboro.

The former VEC members will be covered by CVPS's 17 SERVE Standards, which measure everything from reliability to customer service, and are reported to state regulators. SERVE stands for Serving Everyone with Reliability, Value and Excellence. The new customers will also be eligible for all CVPS programs, including even monthly billing, Electripay and CVPS Cow Power[TM].

The purchase is the second by CVPS in recent months. CVPS closed on the purchase of Rochester Electric Light and Power, a privately held, 900-customer company, in August.

CVPS, founded in 1929, is Vermont's largest electric utility, now serving about 155,000 customers. More than 100 companies have merged into CVPS since its founding. VEC, a member-owned cooperative, was founded in 1938 and serves about 37,000 members.

Forward-Looking Statements 

Statements contained in this report that are not historical fact are forward-looking statements intended to qualify for the safe-harbors from the liability established by the Private Securities Litigation Reform Act of 1995. Statements made that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Actual results will depend, among other things, upon the actions of regulators, performance of the Vermont Yankee nuclear power plant, effects of and changes in weather and economic conditions, volatility in wholesale electric markets and our ability to maintain our current credit ratings. These and other risk factors are detailed in CV's Securities and Exchange Commission filings. CV cannot predict the outcome of any of these matters; accordingly, there can be no assurance that such indicated results will be realized. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this press release. CV does not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this press release.