Contents

CERES

11 Arlington Street

Boston, MA 02116-3411 USA

(617) 247-0700

(617) 267-5400 Fax

watt@ceres.org

& Safety Manager

Colchester, VT 05446

The Company is an investor-owned energy services company located in Vermont that serves one-quarter of the state’s population.

In 1998, Green Mountain Power had nine service centers located in Bellows Falls, Colchester, Montpelier, South Burlington (25 and 35 Green Mountain Drive), Wells River, White River Junction, Vergennes and Wilmington, Vermont.

Green Mountain Power owns and operates 11 generation facilities. These include: 1 wind plant; 8 hydro plants, two of which have fossil generation associated with them; and 2 fossil fuel plants, all of the plants are located in Vermont.

"Green Mountain Power shed two companies that were not producing acceptable profits. In 1998, we sold our propane gas subsidiary. In 1997, we sold a majority interest in a retail energy company started by Green Mountain Power, called Green Mountain Energy Resources, and early in 1999 we sold the rest of our interest in that company." 1998 Annual Report.

Accountability for environmental performance occurs in several ways at GMP. First level managers who have had extensive training in environmental, health and safety issues are responsible for compliance at the operational or field level. They, in turn, are accountable to senior staff up through the ranks so that senior managers at the vice president level share ultimate responsibility for implementation of the environmental program.

At the same time, accountability is tied to the various functional groups within the Company. Each operational unit has training and compliance responsibilities unique to it. Supervisory staff in each operational unit is accountable to senior management who reviews the Company’s performance.

No. GMP realizes that the need for employee recognition is important and needs to consider ways to incorporate employee recognition into its benefits program. Such appreciation, formalized in a recognition program, will benefit not only environmental performance, but will be valuable to all performance areas to the extent that appropriate recognition will improve employee morale and lead to enhanced employee performance.

Green Mountain Power uses an electronic publication called the "Update." This regular update report encourages employee suggestions and questions on all subjects, including environmental issues. Questions are directed to the proper employee for a response and an answer is returned in a short period of time.

One of the Company’s strengths is the nature and extent of on-going educational programs that are designed to promote environmental awareness and responsibility among workers. To date, this training has involved the majority of operational workers involved with fieldwork. The educational topics range from the regulatory requirements for handling hazardous and solid waste and spill response to encouraging stewardship through voluntary initiatives such as waste minimization and recycling programs.

The training program involves all field personnel who receive a minimum of two hours and as many as 20 hours of environmental, health and safety training on an annual basis. This includes review of spill response procedures, especially spills that may contain PCBs or ones that may affect the "navigable waters of the United States." It also includes emergency response procedures at GMP’s generating stations and compliance issues related to the handling, transport and storage of Company-generated hazardous and solid waste.

The Health and Safety component of the training program includes hazardous communications which focus on methods and observations for detecting the presence of hazardous chemicals or materials. It also focuses on use of Material Safety Data Sheets and other markers that may be important for understanding an emergency situation. These classes are presented upon initial assignment and reviewed every three years thereafter.

Respirator compliance is offered to all operational employees on an annual basis.

As noted above in response 2-11, the question and answer forum in the "update" provides an effective clearinghouse for the kind of information that these questions addresses. It is particularly effective because it is able to reach and serve all GMP personnel on a basis, thus providing consistent information to all workers simultaneously.

As Green Mountain Power continues to incorporate the CERES Principles into its way of doing business, such education and information-exchange opportunities will be expanded and improved.

Green Mountain Power has an agreement with Hydro-Quebec that provides access to Hydro-Quebec’s research facilities and resources. Research projects have been initiated which provide various economic, energy savings and/or environmental benefits. Three examples are:

Unless the research is for a customer and is confidential it can be shared with others.

• The research on electric vehicles will be shared with developers of that technology. EVermont shares its research results within the alternative vehicle research community.
• The induction heating technology is proprietary but the manufacturer will deploy the technology as quickly as possible.
• We will make the results of the power quality monitoring available to the wind turbine manufacturer. The information will enter the engineering community indirectly as we add to the body of expertise and information available. Utilities and alternative energy providers are learning from this type of project how to connect the turbines to the utility grid.

Green Mountain Power has established a separate responsibility center for its environmental department. Payroll and O&M costs are thereby tracked. The O&M budget accumulates training and travel costs, along with outside service costs, expendable equipment charges, industry dues, subscriptions, publications, etc. The payroll budget picks up those employees working in the designated environmental cost center or those who cross-charge the cost center for work on environmental projects. A separate project number can be set up by the environmental department manager to tracks costs according to specific projects, products and so on. The Company has two such project accounts established, one for environmental policy development and one for environmental training.

This information is compiled for analytical purposes, use in our regulatory process and for actual to budget reporting purposes.

This application is a normal function of our accounting system and as such we have not had any particular challenges or successes.

The database for all waste tracking will be in place by January 1, 2000. This will be expanded to include energy usage by the year 2001.

AUDITS

Workplace Health and Safety:

Safety field audits, with the focus on safety and health, are done for employees on an ongoing basis. The frequency varies depending on the time of year.

Department of Transportation (DOT) audits are performed by outside contractors.

Facilities audits are done on a monthly basis. The focus is on Occupational Safety and Health Administration (OSHA) compliance but environmental deficiencies may be picked up as well.

An environmental audit of records was conducted in May 1998.

The Company has had for more than ten years an active internal inspection program in which plants and facilities are inspected for compliance with state and federal regulations.

Company personnel conduct about 99% of the health and safety audits while the remaining 1% is conducted by outside sources.

In the environmental arena, 80% of the audits (inspections) are conducted by GMP personnel.

Inspections, not audits, are conducted internally by Green Mountain Power personnel throughout the Company at all sites subject to state and federal laws.

Green Mountain Power utilizes internal energy efficiency engineers that work in the Energy Services Department to work with Corporate Services facilities managers in assessing energy efficiency opportunities at all corporate facilities. Facilities staff request technical analyses, site visits and new construction plan reviews on a regular basis for energy efficiency project assessment and implementation consideration. Energy engineers respond to the specific request.

None formally. However, individual energy efficiency projects company-wide are presented to Energy Services Department engineering staff for evaluation. Engineering and economic analyses are conducted and forwarded to Facilities staff for consideration.

Program Content

Site Selection

Coverage

Frequency

Protocols

Audit Team Selection

Reporting of Results

Corrective Action Planning and Tracking

Other

Since Green Mountain Power delivers efficiency programs to a customer base of 80,000 and employs seven energy engineering professionals that conduct audits as part of their jobs, it is deemed unnecessary to incorporate outside review.

The Safety and Health program consists of training, audits, and hazard awareness building. Constant analysis reveals where problems exist. Special attention is focused on such areas.

A positive discipline policy has emphasized coaching in areas where infractions of the rules occur. However, there are mechanisms in place to permit progressive discipline where serious problems exist.

Green Mountain Power has an aggressive back-to-work policy. Injured employees come back on light duty as soon as permitted by their physicians.

Office workstations are adjustable to accommodate the individual needs of employees.

"Work Injury prevention Workshops" have been offered to all employees. The workshops are presented by a professional physical therapist and focus on how to work more safely and effectively at work, e.g., understanding the limitations and the need for proper stretching and use of equipment.

Hardhats are required to be used at all times in the field, even when there isn’t a specific hazard exposure. The purpose is to encourage a habit of wearing this protective equipment so it will be used when needed.

GMP updates employees through monthly meetings and e-mail communication.

When audits occur, a discussion follows with the overall findings, emphasizing not only the violations, but the areas of compliance as well.

Bulletin boards are located in each district office and have updated safety propaganda posted constantly.

The Company is forthcoming with all information related to these kinds of risks and risk evaluations. As part of GMP’s on-going program to reduce risk and improve communications, among both its employees and the greater community, it shares information, as it becomes available, with those who would benefit most.

Behavior modification can be difficult when updating or changing work procedures as a result of new regulations.

Secondly, the area of Safety and Health has so many constantly changing rules and regulations, it is difficult to know and comply with all of them at all times.

Each injury or vehicle accident is entered into a database. From that database reports can be generated to reflect the type of injury, age group of the injured employees, locations where these injuries occur, specific department performance, etc. With this data, an accurate determination can be made regarding the type and amount of training that is needed to improve performance and decrease injuries.

Emphasis is placed on management training. Managers are taught about the regulations and their responsibilities as agents of the company to enforce them. They also learn how to perform personnel and facility audits, and how to conduct hazard analyses.

As a company that operates in a regulated environment, most major decisions receive a comprehensive review in the public arena. Through formal and informal channels the Vermont Department of Public Service comments on Green Mountain Power proposals on behalf of the Vermont public. In some cases formal public hearings serve as a forum for comments.

Green Mountain Power’s formal and informal policies encourage employees to solicit public input from a variety of channels.

Green Mountain Power’s "public" is quite well defined - its 83,000 electric customers. For Green Mountain Power to succeed its customers must understand the business and the issues it faces. The Company’s monthly letter to customers delivers timely information on company successes, decisions that face the Company’s employees, and the results of the decision-making processes.

Informal involvement with constituent groups is also essential to Green Mountain Power, especially when sensitive environmental issues are being reviewed and resolved. For example, in the late 1980s, Green Mountain Power proposed to build a six megawatt, eleven turbine wind farm on a ridgeline in southern Vermont. One of the early tasks was to meet with environmental groups that support both preservation of natural areas and the production of renewable energy. With the help and insight of these groups, Green Mountain Power assessed the public reaction to the impacts of construction and access to previously unoccupied natural areas. Together they considered how these negative factors would be balanced to the positive benefits of producing electricity from the wind. To the benefit of Vermont and Green Mountain Power’s customers, the Searsburg Wind Power Facility was commissioned in 1997.

In Green Mountain Power’s view one of the most important methods of improving environmental commitment lies with children and their understanding of conserving energy and producing it in a sustainable manner. To foster this goal, Green Mountain Power enlisted the support of its employees to speak about the energy business to their communities and children in their schools.

2. GMP has used its network of hydroelectric dams to improve fishing and the fishery in the primary waterway in its territory, the Winooski River. Improvements include voluntary minimum-stream flows, fish passages, and trap-and-truck operations.
3. For many years, GMP has operated a public education program in the various public schools within its service territory. This program, operated by employees working on a voluntary basis, is designed to teach future electricity consumers how electricity is made and used, how to use it efficiently, and how to conserve energy and other natural resources. In recent years, the Company has expanded this education outreach work by creating a separate education program for wind energy. Based at the Company’s Searsburg, Vermont wind farm, which is the largest commercial wind project in the Northeast, the education program aims to promote use of this benign natural resource and teach the public how such projects can be built and operated with minimal impact on the environment.

Throughout the 1990s, Green Mountain Power has been faced with a major environmental challenge – potential responsibility for a Superfund site and government clean up proposals that would have had serious financial consequences for the Company. As the following paragraphs from Green Mountain Power’s 1998 Annual Report indicate, through the hard work of a community based team which includes key Green Mountain Power representatives, the end product is now being viewed as a model of community participation and accountability. Most importantly, it is a solution that fits the nature of the site and character of Vermont.

"In June 1998, the Coordinating Council reached a consensus agreement on a recommended plan for remediation of the Pine Street Barge Canal site. As part of the Council’s process of reaching a consensus recommendation, the Company and certain other parties conditionally agreed to fund environmentally beneficial projects in the greater Burlington area, the cost of which may reach $3 million. In June 1998, the EPA formally proposed the Council’s recommended plan and received public comments.

On September 1998, the EPA issued its final Record of Decision, announcing selection of the proposal remedy. The proposed remedy includes:

• Construction of an underwater cover over canal sediments that present the highest risk to the environment;
• Placement of a soil cap over certain contaminated wetland areas and restoration of those areas;
• Improvements that will better distribute storm water entering the site; and
• Monitoring of the site to ensure that the cap is effective over the long term and that harmful contamination does not migrate offsite."

The Pine Street Barge Canal site solution provides an excellent example of how community participation can achieve the best result for the environment and for the region. In the process, all parties benefited.

Environmental considerations are incorporated into virtually every policy, both corporate and public, in force at GMP at this time. The Company’s corporate mission statement includes a strong commitment to environmental protection; the GMP Board of Directors in 1997 adopted an environmental policy that tracks consistently with the CERES Principles; the Company uses an environmental screen in evaluating all power sources; GMP supported successful efforts to create a statewide Energy Efficiency Utility; and, as a key part of human resource policy, all field personnel at GMP are required to undergo extensive and continuing training in environmental protection.

Vermont has a relatively low level of economic, political and racial diversity. Consequently, the issue of environmental justice has not come up insofar as Vermont populations are concerned.

These issues have touched Vermont and its electric utilities, however, through the power purchase agreements between Vermont utilities and Hydro-Quebec. The development of large-scale hydro projects in Quebec has affected native peoples in Quebec. To the extent that Green Mountain Power purchases power from these sources, it is involved peripherally with this issue.

Beyond this issue, several factors provide assurance that when such issues arise, they will be handled in an appropriate manner. First, Green Mountain Power is a relatively small organization with a responsive management that is sensitive to environmental and social issues. Second, Vermont as a state is extremely sensitive to environmental issues. And finally, compared with other electric utilities, Green Mountain Power engages in relatively few activities that have significant negative environmental impacts.

EMERGENCY RESPONSE

The Company is involved in public Safety Awareness Days, and is an active participant on Safety Councils for various state and national organizations.

GMP’s Safety Manager is on the Board of Directors for the Vermont Safety & Health Council, Chairperson of the Safety Committee for the Electric Council of New England, Director of Safety for the Vermont Civil Air Patrol and is Founder and Director of the Vermont Electric Utility Safety & Environmental Consortium covering the 22 Vermont utilities.

In some circumstances Public Safety may be jeopardized by damage to power lines, i.e., ice storm damage, wires down, trees on lines, etc.

There are two ways to misuse electricity: one is to waste it when it can be used more efficiently and the other is to use it in an unsafe manner. To ensure that customers use electricity safely, Green Mountain Power regularly communicates with its customers using bill inserts. Specific messages are targeted to parents to urge them to teach their children about electrical safety, to construction workers to be aware of overhead lines when they work at a site, to people cutting wood to check for power lines nearby as well as offering frequent messages for electrical safety around the home. Green Mountain Power’s safety manager also does training of children in our schools and other places.

In 1998 Green Mountain Power (GMP) provided energy efficiency services through nine distinct programs to over 4,000 customers. Energy savings totaled approximately 8,300 MWh, or 0.5% of GMP’s annual MWh sales, enough energy to supply 1,050 average households in Vermont for one year. Since 1992, we have helped our customers reduce their annual electric usage by a cumulative 79,000 MWh, or 4.4% of projected usage without Demand-Side Management.

In 1998 GMP was an active member in a number of regional and national energy efficiency organizations. These included the Northeast Energy Efficiency Partnership (NEEP), an organization dedicated to developing region-wide programs promoting market transformation to higher energy standards, and the Consortium for Energy Efficiency (CEE), an organization dedicated to promoting a consistent set of energy efficiency standards nation-wide. At the national level GMP continued its affiliation with federal energy conservation initiatives by remaining a U.S. Environmental Protection Agency (EPA) Energy Star Building Partner, a GreenLights Energy Star Program Utility Ally and a GreenLights Energy Star Program Surveyor. Along with EPA’s initiatives, GMP was also a U.S. Department of Energy Motor Challenge Ally.

Yes. Green Mountain Power sets the retail price above the marginal cost.

Since 1992 GMP has offered comprehensive services to its customers to promote the efficient use of electrical energy. In 1998 these services achieved a savings of 8,300 MWH or 0.5% of GMP's annual sales, enough energy to supply 1,505 average households in Vermont for one year. This was a 1% increase in savings over 1997. Like all aspects of the electrical utility business today, the challenge in 1998 was to provide energy efficiency services to customers more effectively and with substantially less personnel. GMP met this challenge by exceeding its 1998 savings goal by 3.5% while reducing staff required to deliver these services by 42%.

Green Mountain Power makes a conscious effort to use power from renewable resources, rather than fossil fuels. The 1998 fuel mix demonstrates the extent to which we were successful:

Hydro: 44%, nuclear: 27.5%, coal: 2.0%, oil: 1.5%, gas: 2.4%, wood 3.5%, wind 0.6%, opportunity purchases (can’t break down by fuel): 18.5%

This power supply both reduces air emissions and preserves natural resources for future generations.

FUEL SUPPLIERS

OTHER SUPPLIERS

There is currently no Company-wide policy to incorporate environmental criteria in supplier choices.

Site visits are not a normal part of the evaluation process. This is due to the Company’s limited resources, both financial and staffing. It does rely, instead, on published audits to which it has access through various industry-related affiliations. It also relies on information gathered through industry-related forums that exist for the purpose of information sharing and networking. Occasionally field audits are carried out but these are infrequent, usually only when the facility in question is located within driving distance of Green Mountain Power’s service territory.

The Company’s energy mix is approximately 48% Green Power.

GMP has a very good relationship with our new alliance partner CED Twin State. Twin State will now be the Company’s sole supplier for electrical supplies. GMP is delegating to Twin State a lot of the electrical responsibilities it had in the past. For example, GMP has set up the White River, Bellows Falls and Wilmington stockrooms for Twin State to service the inventory. Twin State will on a regular basis inventory, order and shelf all stock that is delivered. This allows GMP to have a lower inventory on our books and will save time and money for the Company. Twin State will also keep a closer watch on items that require long lead time.

ELECTRICITY

Generation

Transmission/Di