Subsidiaries

Mountain Energy

Mountain Energy, Inc. had its best year ever in 1995, as cash flow from investments and after-tax income continued to increase. Mountain Energy produced a 1995 after-tax profit of $1.38 million, an increase of $557,000 from 1994, and contributed 29 cents of earnings per share to GMP's consolidated results.

During the year, Mountain Energy made new, long-term investments totaling $4.4 million in a New England hydroelectric facility and in energy-efficiency projects in New England, California, New York and New Jersey. Mountain Energy has now invested almost $16 million in nine projects, and GMP's cash investment in Mountain Energy at year-end was $10.7 million. A significant portion of Mountain Energy's capital needs is now being provided from the cash flow produced by its ongoing operations.

Mountain Energy has a diversified portfolio of electric investments with a substantial portion consisting of renewable projects. The 1995 results were led by the subsidiary's investment in a California hydro facility, which had an excellent year following heavy snows during the 1994-95 winter. Wind power and energy-efficiency investments were also substantial contributors to Mountain Energy's success in 1995.

Green Mountain Propane Gas Company

GMPG's year was a disappointment. In 1994, GMPG recorded a modest profit. Overall, GMPG posted a net loss in 1995, attributable to two causes:

• First and most important, an extraordinarily warm first quarter, which resulted in significantly reduced propane gas sales for heating.
• Second, increased competition in the propane gas business, which tightened operating margins.

GMPG, however, made important strides on several fronts.

• First, GMPG won new business from both residential and commercial customers, which should increase annual sales by 600,000 gallons, about 9 percent.
• Second, GMPG upgraded its computer system and initiated a pilot program with computers on its delivery trucks, which will result in increased efficiency for both deliveries and administration in 1996.
• Third, GMPG has increased the efficiency of its deliveries to large commercial customers with the introduction of a 9,000-gallon metered transport truck and a 5,000-gallon delivery truck.
• Fourth, during the year, GMPG streamlined its operations, reducing the number of full-time employees in 1995 by 18 percent, from 56 to 46.
• Finally, GMPG has developed a marketing plan for 1996 that incorporates more sophisticated market segmentation. This plan, which will be put into place during 1996, will allow GMPG to refine its targeting of prospective customers and also to achieve maximum delivery efficiencies.