BURLINGTON ELECTRIC DEPARTMENT’S WRITTEN ASSESSMENT

OF THE RISKS AND BENEFITS OF THE PROPOSED EAST AVENUE LOOP PROJECT

Project Summary

On May 29, 2008, the Vermont Public Service Board (“PSB”) issued to Vermont Electric Power Company, Inc. and Vermont Transco, LLC (“VELCO”), the City of Burlington Electric Light Department (“BED”) and Green Mountain Power Corporation (“Green Mountain Power”) (collectively, the “Petitioners”) a certificate of public good (“CPG”) for the so-called East Avenue Loop Project (the “EAL Project” or “Project”), finding that its construction will promote the general good of the State of Vermont. The Project consists of the following components:

1. Replacement of the existing 4.8-mile 115 kV line in the 150 foot VELCO right-of-way between VELCO’s Essex substation and its East Avenue substation with two new 115 kV lines;

2. Expansion of the existing East Avenue substation adjacent to Centennial Field to 110’ x 376.5’ to accommodate new equipment, including three transformers, four circuit breakers, and a new control house;

3. Installation of a new 1.5-mile 34.5 kV line from the East Avenue substation to the BED substation at the McNeil Generating Station, with most of the new line to be installed underground from Centennial Road to just west of Colchester Avenue, and along the existing underground conduit on Riverside Avenue until Intervale Road; and

4. Construction of a new substation within the existing BED McNeil substation, which will accommodate an existing transformer to be relocated from BED’s Lake Street substation, a new 15 kV metal enclosed modular substation, and three circuit breakers.

The Project will also allow the removal of several BED 13.8 kV circuits connected to BED’s Lake Street substation, including the overhead lines that span the Burlington Waterfront Park.

Pursuant to 30 V.S.A. §248(c), BED is required to provide Burlington voters with a written assessment of the risks and benefits of the proposed EAL Project which were identified by the PSB in the CPG, and any other risks and benefits that may be identified by BED. A complete copy of the PSB’s Order and CPG is available for inspection and copying at the Office of the City Clerk/Treasurer and Burlington Electric Department.

Need for the Project

As identified by the PSB, “The present electric sub-transmission and distribution network in the EAL Chittenden County area cannot provide adequate and reliable electric service to the customers served in that area. Under the present system configuration and loads, significant amounts of Chittenden County’s electric load -- including critical facilities like Fletcher Allen Health Care, the University of Vermont and its research facilities, the City of Burlington water and wastewater processing facilities, and the City of Burlington downtown commercial core -- may be lost under a number of single contingency scenarios, including loss of the single East Avenue substation 115/34.5 kV transformer or loss of the single 115 kV K-25 line that is the sole radial connection between the East Avenue and Essex substations. The East Avenue Loop Project addresses these serious reliability problems (emphasis supplied). The Project will provide a redundant delivery supply point to East Avenue so that power is not instantaneously lost for failure of critical facilities, and will also provide necessary reinforcement to the sub-transmission and distribution network in this area.”

Environmental Risks

As with construction of any electric transmission project, there are environmental and aesthetic risks associated with the EAL Project. As part of the PSB proceedings the Petitioners entered into agreements with the Vermont Department of Public Service, the Vermont Agency of Natural Resources, Winooski Valley Park District and the City of South Burlington, and the Vermont Agency of Commerce and Community Development Division of Historic Preservation, to address each of these party’s concerns with the Project. VELCO also entered into an agreement with the University of Vermont to address its concerns. As a result of these agreements, all parties supported the PSB’s issuance of a CPG for the Project. In addition, these agreements and the evidence submitted by Petitioners allowed the Board to find that the Project “will not have an undue adverse effect on aesthetics, historic sites and water purity, the natural environments and the public health and safety.” The PSB also concluded that “[t]he electric and magnetic fields (“EMF”) produced by the Project will not have an undue adverse effect on the public health or safety.”

Section 248 Criteria

Before issuing a CPG, section 248 of Title 30 of the Vermont Statutes requires the Board to find that construction of the EAL Project meets nine (9) separate criteria. In addition to the findings discussed above, the Board found as follows:

1. “The Project will not interfere with the orderly development of the region, with due consideration having been given to the recommendations of the municipal and regional planning commissions, the recommendations of municipal legislative bodies, and the land conservation measures contained in the plan of any affected municipality.”

2. “The Project is required to meet the present and future demand for services which could not otherwise be provided in a more cost effective manner through energy conservation programs and measures and energy efficiency and load management measures.”

3. “The Project will not adversely affect system stability and reliability; in fact, the Project will enhance system stability and reliability.”

4. “The Project will result in economic and social benefits to the state of Vermont and its residents. . . . The Project will improve the reliability of the electric transmission system serving all of Chittenden County, including the City of Burlington, by removing critical loads from single contingency exposure.”

5. “The Project will not have an undue adverse effect on aesthetics, historic sites and water purity, the natural environment, and the public health and safety.”

6. “The Project is consistent with the principles for resource selection expressed in the Integrated Resource Plan (“IRP”) of . . . BED.”

7. “The Project complies with the electric energy plan approved by the Department [of Public Service] under 30 V.S.A. § 202.”

8. “No element of the Project is located within the vicinity of the water bodies designated by the Vermont Water Resources Board as Outstanding Resource Waters, and therefore the Project will not have any effect on Outstanding Resource Waters.”

9. “The proposed Project can be served economically by existing or planned transmission facilities without undue adverse effect on Vermont utilities or customers.”

Project Costs

The total cost of the EAL project is estimated at $43,484,000 for all project elements. The VELCO portions of the Project are considered “pool transmission facilities,” or PTF, and are eligible for regional cost treatment. VELCO has received approval from ISO New England, Inc., the operator of the bulk transmission system in New England, for treatment of $25,141,670 of the Project’s costs as PTF, meaning Vermont’s share of those costs will be approximately $1.27 million. The total costs of BED’s portion of the Project are estimated at $7.8 million. BED intends to pay its share of the Project with proceeds from the revenue bonds Burlington voters overwhelmingly approved in March 2008.

Burlington Benefits

In addition to the benefits outlined above, the Project will allow BED to underground or relocate its distribution lines on the waterfront, resulting in an aesthetic improvement in this area. The EAL Project also puts an underlying transmission system in place that will allow GMP to remove its waterfront lines after construction of phase II, which is projected to occur in year 2010. BED also will relocate its distribution circuit from the Centennial Woods Natural Area to University Road and will abandon this right of way, allowing this area to return to a natural state. VELCO intends to abandon its second 150 foot, unused power line easement at Centennial Woods. Additionally, the Project will allow BED to avoid paying transmission charges to GMP for BED’s share of McNeil power, which presently costs ratepayers approximately $340,000 per year.