----

----

|   | Report of Independent Registered Public Accounting Firm |  1 |
|--------|---------------------------------------------------------|---------|

|   | Balance Sheets |  2 - 3 |
|--------|----------------|-------------|

|   | Statements of Income |  4 |
|--------|----------------------|---------|

|   | Statements of Members’ Equity |  5 |
|--------|-------------------------------------|---------|

|   | Statements of Cash Flows |  6 |
|--------|--------------------------|---------|

|   | Notes to Financial Statements |  7 - 25 |
|--------|-------------------------------|--------------|

----

----

| VERMONT TRANSCO LLC                                                        |   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   |
| Balance Sheets                                                             |   |
|                                                                       |   |
| December 31, 2009 and 2008                                                 |   |
| Assets                                                                     |   | 2009 |   |   | 2008 |   |
|                                                                       |   |   |   |   |   |   |
| Utility plant (notes 2 and 4)                                              |   | $ | 727,217,713 |   |   |   | 567,926,246  |   |
| Less accumulated depreciation and amortization                             |   |   | (97,522,547 | )   |   |   | (89,288,784 | )   |
|                                                                       |   |   |   |   |   |   |   |   |
| Net utility plant                                                          |   |   | 629,695,166  |   |   |   | 478,637,462  |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Current assets:                                                            |   |   |   |   |   |   |   |   |
| Cash                                                                       |   |   | 733,150  |   |   |   | 72,900  |   |
| Bond sinking fund deposits                                                 |   |   | 526,000  |   |   |   | 490,000  |   |
| Bond interest deposits                                                     |   |   | 4,573,388  |   |   |   | 2,985,911  |   |
| Accounts receivable:                                                       |   |   |   |   |   |   |   |   |
| Affiliated companies                                                       |   |   | 1,938,667  |   |   |   | 1,122,329  |   |
| Other                                                                      |   |   | 6,963,198  |   |   |   | 6,261,636  |   |
| Due from related party (note 8)                                            |   |   | 4,628,430  |   |   |   | 4,317,277  |   |
| Due from Vermont Electric Power Company, Inc. (note 1(b))             |   |   | 39,287,043  |   |   |   | — |   |
| Note receivable – related party (note 8)                             |   |   | 925,000  |   |   |   | 700,000  |   |
| Note receivable – Vermont Electric Power Company, Inc. (note 8) |   |   | 10,000,000  |   |   |   | 10,000,000  |   |
| Materials and supplies                                                     |   |   | 6,248,996  |   |   |   | 6,684,808  |   |
| Prepaids and other assets                                                  |   |   | 1,562,514  |   |   |   | 1,156,118  |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total current assets                                                       |   |   | 77,386,386  |   |   |   | 33,790,979  |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Regulatory and other assets:                                               |   |   |   |   |   |   |   |   |
| Regulatory assets                                                          |   |   | 4,230,885  |   |   |   | 4,802,235  |   |
| Unamortized debt expense, net                                              |   |   | 2,712,165  |   |   |   | 1,799,001  |   |
| Deferred project costs and other                                           |   |   | 3,156,985  |   |   |   | 165,978  |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total regulatory and other assets                                          |   |   | 10,100,035  |   |   |   | 6,767,214  |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total assets                                                               |   | $ | 717,181,587 |   |   |   | 519,195,655  |   |
|  See accompanying notes to financial statements.                      |   |

----

| VERMONT TRANSCO LLC                                          |   |
|--------------------------------------------------------------|--------|
|                                                         |   |
| Balance Sheets                                               |   |
|                                                         |   |
| December 31, 2009 and 2008                                   |   |
| Members’ Equity and Liabilities                        |   | 2009 |   |   | 2008 |   |
|                                                         |   |   |   |   |   |   |
| Capitalization:                                              |   |   |   |   |   |   |
| Members’ equity (note 3)                               |   | $ | 325,469,433 |   |   |   | 249,678,381  |   |
| Mandatorily redeemable membership units (notes 3, 8, and 12) |   |   | 10,000,000  |   |   |   | 10,000,000  |   |
| First mortgage bonds, net of current maturities (note 4)     |   |   | 329,093,000  |   |   |   | 196,254,000  |   |
| Other long-term debt, net of current maturities (note 4)     |   |   | — |   |   |   | 152,115  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Total capitalization                                         |   |   | 664,562,433  |   |   |   | 456,084,496  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Commitments and contingencies (notes 7, 11, and 12)          |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |
| Current liabilities:                                         |   |   |   |   |   |   |   |   |
| Bank overdraft                                               |   |   | 2,975,031  |   |   |   | 1,594,738  |   |
| Current maturities of long-term obligations (note 4)         |   |   | 2,313,115  |   |   |   | 2,306,121  |   |
| Notes payable to bank (note 5)                               |   |   | — |   |   |   | 20,857,520  |   |
| Accounts payable:                                            |   |   |   |   |   |   |   |   |
| Associated                                                   |   |   | 1,168,310  |   |   |   | 811,020  |   |
| Other                                                        |   |   | 9,175,336  |   |   |   | 7,050,989  |   |
| Accrued interest on bonds                                    |   |   | 4,575,485  |   |   |   | 3,001,260  |   |
| Accrued construction expenses                                |   |   | 9,961,114  |   |   |   | 11,589,929  |   |
| Accrued expenses                                             |   |   | 3,917,234  |   |   |   | 1,967,211  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Total current liabilities                                    |   |   | 34,085,625  |   |   |   | 49,178,788  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Long-term liabilities:                                       |   |   |   |   |   |   |   |   |
| Deferred cost of removal liabilities                         |   |   | 3,339,769  |   |   |   | 2,175,131  |   |
| Deferred income                                              |   |   | 659,160  |   |   |   | — |   |
| Due to Vermont Electric Power Company, Inc. (note 1(b)) |   |   | 14,534,600  |   |   |   | 11,757,240  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Total liabilities                                            |   |   | 52,619,154  |   |   |   | 63,111,159  |   |
|                                                         |   |   |   |   |   |   |   |   |
| Total capitalization and liabilities                         |   | $ | 717,181,587 |   |   |   | 519,195,655  |   |
|  See accompanying notes to financial statements.        |   |   |   |   |   |   |   |   |

----

| VERMONT TRANSCO LLC                                   |   |
|-------------------------------------------------------|--------|
|                                                  |   |
| Statements of Income                                  |   |
|                                                  |   |
| Years ended December 31, 2009, 2008 and 2007          |   |
|                                                  |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                  |   |   |   |   |   |   |   |   |   |
| Operating revenues:                                   |   |   |   |   |   |   |   |   |   |
| Transmission revenues                                 |   | $ | 90,649,734 |   |   |   | 73,575,150  |   |   |   | 49,903,641  |   |
| Rent of transmission facilities to others             |   |   | 2,435,380  |   |   |   | 1,624,487  |   |   |   | 1,562,284  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |   | 93,085,114  |   |   |   | 75,199,637  |   |   |   | 51,465,925  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transmission expenses:                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operations                                            |   |   | 3,369,434  |   |   |   | 3,396,212  |   |   |   | 2,577,857  |   |
| Maintenance                                           |   |   | 5,625,653  |   |   |   | 4,854,048  |   |   |   | 4,322,067  |   |
| Charges for transmission facilities of others         |   |   | 41,705  |   |   |   | 42,602  |   |   |   | 39,862  |   |
| Administrative and general expenses                   |   |   | 7,718,153  |   |   |   | 8,672,360  |   |   |   | 8,913,458  |   |
| Depreciation and amortization                         |   |   | 13,942,091  |   |   |   | 10,740,097  |   |   |   | 8,268,529  |   |
| Taxes other than income                               |   |   | 10,485,062  |   |   |   | 7,405,913  |   |   |   | 5,422,076  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                              |   |   | 41,182,098  |   |   |   | 35,111,232  |   |   |   | 29,543,849  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                      |   |   | 51,903,016  |   |   |   | 40,088,405  |   |   |   | 21,922,076  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Other (income) expenses:                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on first mortgage bonds                      |   |   | 13,477,726  |   |   |   | 11,994,760  |   |   |   | 11,228,262  |   |
| Other interest expense                                |   |   | 1,057,144  |   |   |   | 572,468  |   |   |   | 3,137,004  |   |
| Amortization of debt expense                          |   |   | 101,560  |   |   |   | 97,788  |   |   |   | 95,261  |   |
| Other                                                 |   |   | 12,712  |   |   |   | 27,602  |   |   |   | 27,726  |   |
| Interest income                                       |   |   | (239,474 | )   |   |   | (111,327 | )   |   |   | (103,200 | )   |
| Allowance for borrowed funds used during construction |   |   | (2,151,956 | )   |   |   | (3,256,055 | )   |   |   | (4,457,120 | )   |
| Allowance for equity funds during construction        |   |   | (2,977,719 | )   |   |   | (4,884,082 | )   |   |   | (1,910,194 | )   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Total other expenses, net                             |   |   | 9,279,993  |   |   |   | 4,441,154  |   |   |   | 8,017,739  |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before tax                                     |   | $ | 42,623,023 |   |   |   | 35,647,251  |   |   |   | 13,904,337  |   |
|  See accompanying notes to financial statements. |   |

----

| VERMONT TRANSCO LLC                                   |    |
|-------------------------------------------------------|---------|
|                                                  |    |
| Statements of Changes in Members’ Equity        |    |
|                                                  |    |
| Years ended December 31, 2009, 2008 and 2007     |    |
|                                                  |    | Membership units |   |   | Members’equity |   |   | Total members’ equity |   |
|                                                  | Class A |   |   | Class B |   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2006                         |    | $ | 70,369,480 |   |   |   | 7,630,620  |   |   |   | 3,626,980  |   |   |   | 81,627,080  |   |
| Issuance of membership units                          |    |   | 105,765,060  |   |   |   | 7,984,940  |   |   |   | — |   |   |   | 113,750,000  |   |
| Income before tax                                     |    |   | — |   |   |   | — |   |   |   | 13,904,337  |   |   |   | 13,904,337  |   |
| Distribution of income before tax to members          |    |   | — |   |   |   | — |   |   |   | (11,079,626 | )   |   |   | (11,079,626 | )   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2007                         |    | $ | 176,134,540 |   |   |   | 15,615,560  |   |   |   | 6,451,691  |   |   |   | 198,201,791  |   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Membership units at December 31, 2007                 |    |   | 17,613,454  |   |   |   | 1,561,556  |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2007                         |    | $ | 176,134,540 |   |   |   | 15,615,560  |   |   |   | 6,451,691  |   |   |   | 198,201,791  |   |
| Issuance of membership units                          |    |   | 22,782,180  |   |   |   | 15,900,820  |   |   |   | — |   |   |   | 38,683,000  |   |
| Income before tax                                     |    |   | — |   |   |   | — |   |   |   | 35,647,251  |   |   |   | 35,647,251  |   |
| Distribution of income before tax to members          |    |   | — |   |   |   | — |   |   |   | (22,853,661 | )   |   |   | (22,853,661 | )   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2008                         |    | $ | 198,916,720 |   |   |   | 31,516,380  |   |   |   | 19,245,281  |   |   |   | 249,678,381  |   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Membership units at December 31, 2008                 |    |   | 19,891,672  |   |   |   | 3,151,638  |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2008                         |    | $ | 198,916,720 |   |   |   | 31,516,380  |   |   |   | 19,245,281  |   |   |   | 249,678,381  |   |
| Issuance of membership units                          |    |   | 44,808,770  |   |   |   | 15,239,020  |   |   |   | — |   |   |   | 60,047,790  |   |
| Income before tax                                     |    |   | — |   |   |   | — |   |   |   | 42,623,023  |   |   |   | 42,623,023  |   |
| Distribution of income before tax to members          |    |   | — |   |   |   | — |   |   |   | (26,879,761 | )   |   |   | (26,879,761 | )   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2009                         |    | $ | 243,725,490 |   |   |   | 46,755,400  |   |   |   | 34,988,543  |   |   |   | 325,469,433  |   |
|                                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Membership units at December 31, 2009                 |    |   | 24,372,549  |   |   |   | 4,675,540  |   |   |   |   |   |   |   |   |   |
|  See accompanying notes to financial statements. |    |

----

| VERMONT TRANSCO LLC                                                                                                                    |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                   |   |
| Statements of Cash Flows                                                                                                               |   |
|                                                                                                                                   |   |
| Years ended December 31, 2009, 2008 and 2007                                                                                           |   |
|                                                                                                                                   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                                  |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                             |   | $ | 42,623,023 |   |   |   | 35,647,251  |   |   |   | 13,904,337  |   |
| Adjustments to reconcile income before tax to net cash      provided by operating activities:                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                                          |   |   | 13,370,741  |   |   |   | 10,168,747  |   |   |   | 7,691,370  |   |
| Amortization of regulatory assets                                                                                                      |   |   | 571,350  |   |   |   | 571,350  |   |   |   | 577,159  |   |
| Amortization of debt expense                                                                                                           |   |   | 101,560  |   |   |   | 97,788  |   |   |   | 95,261  |   |
| Changes in assets and liabilities:                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                                                                    |   |   | (1,517,900 | )   |   |   | (24,303 | )   |   |   | (2,679,060 | )   |
| Materials and supplies                                                                                                                 |   |   | 435,812  |   |   |   | (957,340 | )   |   |   | 4,381,043  |   |
| Regulatory assets                                                                                                                      |   |   | — |   |   |   | — |   |   |   | (27,875 | )   |
| Accounts payable                                                                                                                       |   |   | 3,772,475  |   |   |   | 2,099,253  |   |   |   | (8,965,121 | )   |
| Due from related party                                                                                                                 |   |   | (311,153 | )   |   |   | 13,847,108  |   |   |   | (321,116 | )   |
| Other assets and liabilities                                                                                                           |   |   | 1,975,888  |   |   |   | 3,104,015  |   |   |   | (1,494,247 | )   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                                                                              |   |   | 61,021,796  |   |   |   | 64,553,869  |   |   |   | 13,161,751  |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in bond sinking fund deposits                                                                                                   |   |   | (36,000 | )   |   |   | (33,000 | )   |   |   | (32,000 | )   |
| Advances to related party                                                                                                              |   |   | — |   |   |   | (10,000,000 | )   |   |   | (17,664,000 | )   |
| Capital expenditures, including interest capitalized                                                                                   |   |   | (166,183,460 | )   |   |   | (98,870,739 | )   |   |   | (115,881,757 | )   |
| (Advances to) repayments of related party notes receivable                                                                             |   |   | (225,000 | )   |   |   | 150,000  |   |   |   | — |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                                                                                                  |   |   | (166,444,460 | )   |   |   | (108,753,739 | )   |   |   | (133,577,757 | )   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in bank overdraft                                                                                                               |   |   | 1,380,293  |   |   |   | (218,324 | )   |   |   | 1,813,062  |   |
| Proceeds from bond issuance                                                                                                            |   |   | 135,000,000  |   |   |   | — |   |   |   | 80,000,000  |   |
| Repayment of bonds                                                                                                                     |   |   | (2,014,000 | )   |   |   | (1,877,000 | )   |   |   | (1,748,000 | )   |
| Debt issue costs                                                                                                                       |   |   | (1,014,724 | )   |   |   | (47,370 | )   |   |   | (357,675 | )   |
| Borrowings of notes payable to bank                                                                                                    |   |   | — |   |   |   | 20,857,520  |   |   |   | — |   |
| Repayments of notes payable to bank                                                                                                    |   |   | (20,857,520 | )   |   |   | — |   |   |   | (61,470,000 | )   |
| Repayment of other long-term debt                                                                                                      |   |   | (292,121 | )   |   |   | (400,682 | )   |   |   | (688,476 | )   |
| Due from Vermont Electric Power Company, Inc.                                                                                          |   |   | (39,287,043 | )   |   |   | — |   |   |   | — |   |
| Issuance of membership units                                                                                                           |   |   | 60,047,790  |   |   |   | 38,683,000  |   |   |   | 113,750,000  |   |
| Issuance of mandatorily redeemable membership units                                                                                    |   |   | — |   |   |   | 10,000,000  |   |   |   | — |   |
| Distribution of income before tax to members                                                                                           |   |   | (26,879,761 | )   |   |   | (22,853,661 | )   |   |   | (11,079,626 | )   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                                                                              |   |   | 106,082,914  |   |   |   | 44,143,483  |   |   |   | 120,219,285  |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                                                                        |   |   | 660,250  |   |   |   | (56,387 | )   |   |   | (196,721 | )   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of year                                                                                                                |   |   | 72,900  |   |   |   | 129,287  |   |   |   | 326,008  |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of year                                                                                                                      |   | $ | 733,150 |   |   |   | 72,900  |   |   |   | 129,287  |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest, net of amounts capitalized                                                                                     |   | $ | 7,830,970 |   |   |   | 9,392,394 |   |   |   | 8,300,276 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncash investing activity:                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| In 2009, 2008, and 2007, the Company recorded accrued construction expenses of $(337,977), $(8,698,749), and $7,839,770, respectively. |   |
|  See accompanying notes to financial statements.                                                                                  |   |

----

| (1)   | Summary of Significant Accounting Principles |
|-----------------|----------------------------------------------|

| (a)   | Description of Business |
|-----------------|-------------------------|

|                                              |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| VELCO                                             |   |   | 12     | %      |   |   | 14 | % |
| Central Vermont Public Service Corporation (CVPS) |   |   | 34     |   |   |   | 33 |   |
| Green Mountain Power Company (GMP)                |   |   | 28     |   |   |   | 29 |   |

| (b)   | Corporate Manager |
|-----------------|-------------------|

----

|                                                        |   | 2009   |        |   | 2008   |   |
|-------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Liability due to taxes collected                            |   | $      | (11,425,140 | )      |   |   | (9,464,588 | ) |
| Liability due to payroll, pension and related benefit costs |   |   | (3,109,460  | )      |   |   | (2,292,652 | ) |
| Receivable due from VELCO                                   |   |   | 39,287,043  |   |   |   | — |   |
|                                                        |   |   |        |   |   |   |   |   |
| Due from (to) VELCO                                         |   | $      | 24,752,443  |   |   |   | (11,757,240 | ) |

| (c)   | Regulatory Accounting |
|-----------------|-----------------------|

----

| (d)   | Revenue Recognition |
|-----------------|---------------------|

| (e)   | Utility Plant |
|-----------------|---------------|

| (f)   | Long–Lived Assets |
|-----------------|-------------------------|

----

| (g)   | Allowance for Borrowed Funds Used during Construction |
|-----------------|-------------------------------------------------------|

| (h)   | Materials and Supplies Inventory |
|-----------------|----------------------------------|

| (i)   | Unamortized Debt Expense |
|-----------------|--------------------------|

| (j)   | Income Taxes |
|-----------------|--------------|

----

| (k)   | Pension and Other Postretirement Plans |
|-----------------|----------------------------------------|

| (l)   | Use of Estimates |
|-----------------|------------------|

| (m)   | Commitments and Contingencies |
|-----------------|-------------------------------|

| (n)   | Fair Value |
|-----------------|------------|

----

| (2)   | Utility Plant |
|-----------------|---------------|

|                                           |   | 2009   |        |   | 2008   |   |
|------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Land and rights of way                         |   | $      | 58,577,888  |   |   |   | 32,813,905 |   |
| Transmission equipment                         |   |   | 484,504,675 |   |   |   | 428,726,805 |   |
| Communications equipment                       |   |   | 15,163,134  |   |   |   | 11,162,825 |   |
| Buildings and office equipment                 |   |   | 46,971,015  |   |   |   | 42,669,595 |   |
| Construction work-in-process                   |   |   | 122,001,001 |   |   |   | 52,553,116 |   |
|                                           |   |   |        |   |   |   |   |   |
|                                           |   |   | 727,217,713 |   |   |   | 567,926,246 |   |
|                                           |   |   |        |   |   |   |   |   |
| Less accumulated depreciation and amortization |   |   | 97,522,547  |   |   |   | 89,288,784 |   |
|                                           |   |   |        |   |   |   |   |   |
|                                           |   | $      | 629,695,166 |   |   |   | 478,637,462 |   |

| (3)   | Members’ Equity |
|-----------------|-----------------------|

----

|                                       |   | 2009   |        |   | 2008   |   |        | 2007   |   |
|--------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                       |   |   |        |   |   |   |        |   |   |
| Village of Barton                          |   | $      | —     |   |   |   | —     |   |   |   | 5,209 |   |
| Village or Morrisville                     |   |   | 1,311,868   |   |   |   | 1,311,867   |   |   |   | 1,290,448 |   |
| Village of Orleans                         |   |   | —     |   |   |   | —     |   |   |   | 5,340 |   |
| Town of Readsboro                          |   |   | —     |   |   |   | —     |   |   |   | 775 |   |
| Swanton Village                            |   |   | 612,110     |   |   |   | 612,110     |   |   |   | 612,110 |   |
| Vermont Electric Cooperative               |   |   | 5,289,123   |   |   |   | 5,289,123   |   |   |   | 5,265,670 |   |
| Washington Electric Cooperative            |   |   | 3,611,960   |   |   |   | 2,929,675   |   |   |   | 2,397,923 |   |
| Central Vermont Public Service Corporation |   |   | 114,763,263 |   |   |   | 87,698,447  |   |   |   | 78,840,936 |   |
| Village of Stowe                           |   |   | 21,071,663  |   |   |   | 19,451,068  |   |   |   | 750,568 |   |
| Village of Northfield                      |   |   | 306,503     |   |   |   | 306,503     |   |   |   | 306,503 |   |
| Green Mountain Power Corporation           |   |   | 95,228,388  |   |   |   | 77,559,339  |   |   |   | 65,439,819 |   |
| City of Burlington Electric Department     |   |   | 17,425,924  |   |   |   | 9,841,861   |   |   |   | 5,580,740 |   |
| Village of Enosburg                        |   |   | —     |   |   |   | —     |   |   |   | 7,675 |   |
| Town of Hardwick                           |   |   | —     |   |   |   | —     |   |   |   | 11,652 |   |
| Village of Hyde Park                       |   |   | 139,561     |   |   |   | 139,562     |   |   |   | 139,562 |   |
| Village of Jacksonville                    |   |   | —     |   |   |   | —     |   |   |   | 1,879 |   |
| Village of Johnson                         |   |   | —     |   |   |   | —     |   |   |   | 5,187 |   |
| Village of Ludlow                          |   |   | —     |   |   |   | —     |   |   |   | 16,513 |   |
| Vermont Electric Power Company, Inc.       |   |   | 30,068,009  |   |   |   | 27,269,351  |   |   |   | 25,609,998 |   |
| Village of Lyndonville                     |   |   | —     |   |   |   | —     |   |   |   | 23,464 |   |
| Vermont Public Power Supply Authority      |   |   | 35,641,061  |   |   |   | 17,269,475  |   |   |   | 11,889,820 |   |
|                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|                                       |   | $      | 325,469,433 |   |   |   | 249,678,381 |   |   |   | 198,201,791 |   |
|                                       |   |   |        |   |   |   |        |   |   |   |   |   |

| (4)   | Long-Term Debt |
|-----------------|----------------|

----

| (a)   | First Mortgage Bonds |
|-----------------|----------------------|

|                                     |   | 2009   |        |   | 2008   |   |
|------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Series L, 7.30% due through 2018         |   | $      | 7,412,000   |   |   |   | 8,021,000 |   |
| Series N, 7.42%, due through 2012        |   |   | 20,813,000  |   |   |   | 21,823,000 |   |
| Series O, 6.26% due through 2034         |   |   | 23,029,000  |   |   |   | 23,424,000 |   |
| Series P, 5.72% due through 2036         |   |   | 30,000,000  |   |   |   | 30,000,000 |   |
| Series Q, 5.59%, due through 2036        |   |   | 35,000,000  |   |   |   | 35,000,000 |   |
| Series R, 5.75%, due through 2037        |   |   | 80,000,000  |   |   |   | 80,000,000 |   |
| Series S, 4.81%, due through 2029        |   |   | 135,000,000 |   |   |   | — |   |
|                                     |   |   |        |   |   |   |   |   |
|                                     |   |   | 331,254,000 |   |   |   | 198,268,000 |   |
|                                     |   |   |        |   |   |   |   |   |
| Less bonds to be retired within one year |   |   | 2,161,000   |   |   |   | 2,014,000 |   |
|                                     |   |   |        |   |   |   |   |   |
|                                     |   | $      | 329,093,000 |   |   |   | 196,254,000 |   |

| 2010       |   | $      | 2,161,000   |   |
|------------|--------|--------|-------------|--------|
| 2011       |   |   | 11,821,000  |   |
| 2012       |   |   | 19,789,000  |   |
| 2013       |   |   | 11,821,000  |   |
| 2014       |   |   | 13,916,000  |   |
| Thereafter |   |   | 271,746,000 |   |
|       |   |   |        |   |
| Total      |   | $      | 331,254,000 |   |

| (b)   | Other Debt |
|-----------------|------------|

----

| (5)   | Notes Payable to Bank |
|-----------------|-----------------------|

| (6)   | Income Taxes |
|-----------------|--------------|

| (7)   | Pension and Other Postretirement Benefits |
|-----------------|-------------------------------------------|

| (a)   | Defined Benefit Plan |
|-----------------|----------------------|

----

|                                           |   | Pension benefits |       |
|------------------------------------------------|--------|------------------|------------|
|                                           |   | 2009             |       |   | 2008 |   |
| Change in projected benefit obligation:        |   |             |       |   |   |   |
| Benefit obligation at beginning of year        |   | $                | 17,053,020 |   |   |   | 13,985,144 |   |
| Service costs                                  |   |             | 1,016,923  |   |   |   | 1,253,617 |   |
| Interest cost                                  |   |             | 944,414    |   |   |   | 1,114,591 |   |
| Actuarial loss (gain)                          |   |             | (1,108,509 | ) |   |   | 1,250,017 |   |
| Benefits paid                                  |   |             | (733,966   | ) |   |   | (550,349 | ) |
|                                           |   |             |       |   |   |   |   |   |
| Benefit obligation at end of year              |   |             | 17,171,882 |   |   |   | 17,053,020 |   |
|                                           |   |             |       |   |   |   |   |   |
| Change in plan assets:                         |   |             |       |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   |             | 10,881,288 |   |   |   | 12,654,874 |   |
| Actual return on plan assets                   |   |             | 1,822,461  |   |   |   | (2,549,237 | ) |
| Employer contribution                          |   |             | 906,000    |   |   |   | 1,326,000 |   |
| Benefits paid                                  |   |             | (733,966   | ) |   |   | (550,349 | ) |
| Fair value of plan assets at end of year       |   |             | 12,875,783 |   |   |   | 10,881,288 |   |
|                                           |   |             |       |   |   |   |   |   |
| Funded status                                  |   | $                | (4,296,099 | ) |   |   | (6,171,732 | ) |
|                                           |   |             |       |   |   |   |   |   |
| Accumulated benefit obligation                 |   | $                | 12,575,266 |   |   |   | 12,082,659 |   |

|                                                              |   | 2009   |      |   | 2008   |   |
|-------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Effect of the change in measurement date to be recovered in rates |   | $      | —   |   |   |   | 265,178 |   |
| Net actuarial loss                                                |   |   | 3,527,325 |   |   |   | 5,443,363 |   |
|                                                              |   |   |      |   |   |   |   |   |
|                                                              |   | $      | 3,527,325 |   |   |   | 5,708,541 |   |

----

|                                     |   | Pension benefits |       |
|------------------------------------------|--------|------------------|------------|
|                                     |   | 2009             |       |   | 2008 |   |   | 2007 |   |
| Components of net periodic benefit cost: |   |             |       |   |   |   |   |   |   |
| Service cost                             |   | $                | 1,016,923  |   |   |   | 1,253,617 |   |   |   | 758,614 |   |
| Interest cost                            |   |             | 944,414    |   |   |   | 1,114,591 |   |   |   | 817,913 |   |
| Expected return on plan assets           |   |             | (1,026,169 | ) |   |   | (1,135,735 | ) |   |   | (825,620 | ) |
| Recognized net actuarial loss            |   |             | 11,235     |   |   |   | 27,818 |   |   |   | 81,154 |   |
| Net amortization                         |   |             | 52,476     |   |   |   | 65,596 |   |   |   | 52,476 |   |
|                                     |   |             |       |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                |   | $                | 998,879    |   |   |   | 1,325,887 |   |   |   | 884,537 |   |

|                                             |   | Pension benefits |   |
|--------------------------------------------------|--------|------------------|--------|
|                                             |   | 2009             |   |   | 2008 |   |   | 2007 |   |
| Weighted average assumptions:                    |   |             |   |   |   |   |   |   |   |
| Discount rate, pension expense                   |   |             | 6.00   | % |   |   | 6.25 | % |   |   | 5.75 | % |
| Discount rate, projected benefit obligation      |   |             | 6.00   |   |   |   | 6.00 |   |   |   | 6.25 |   |
| Expected long-term rate of return on plan assets |   |             | 7.50   |   |   |   | 7.50 |   |   |   | 7.50 |   |
| Rate of compensation increase                    |   |             | 4.50   |   |   |   | 4.50 |   |   |   | 4.50 |   |

|                                       |   | Pension benefit payments |
|--------------------------------------------|--------|--------------------------|
| Fiscal year ending December 31:            |   |                     |
| 2010                                       | $      | 659,640                  |
| 2011                                       |   | 420,294                  |
| 2012                                       |   | 526,804                  |
| 2013                                       |   | 599,305                  |
| 2014                                       |   | 787,360                  |
| 2015 – 2019                          |   | 4,394,909                |
|                                       |   |                     |
| Expected contribution for next fiscal year | $      | 1,000,000                |

----

|         |   | Plan assets |       |   | Asset allocation |   |
|--------------|--------|-------------|------------|--------|------------------|--------|
| Asset class  |   | 2009        |       |   | 2008             |   |   | 2009 |   |   | 2008 |   |
| Money market |   | $           | 1,346,097  |   |             |   | 1,344,066 |   |   |   | 10 | % |   |   | 9 | % |
| Equities     |   |        | 7,704,246  |   |             |   | 6,060,580 |   |   |   | 60 |   |   |   | 68 |   |
| Fixed income |   |        | 3,825,440  |   |             |   | 3,476,642 |   |   |   | 30 |   |   |   | 23 |   |
|         |   |        |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total        |   | $           | 12,875,783 |   |             |   | 10,881,288 |   |   |   | 100 | % |   |   | 100 | % |

| (b)   | Postretirement Plan |
|-----------------|---------------------|

----

|                                                  |   | Postretirement benefits |      |
|-------------------------------------------------------|--------|-------------------------|-----------|
|                                                  |   | 2009                    |      |   | 2008 |   |
| Change in projected benefit obligation:               |   |                    |      |   |   |   |
| Benefit obligation at beginning of year               |   | $                       | 1,594,557 |   |   |   | 1,570,138 |   |
| Service cost                                          |   |                    | 93,871    |   |   |   | 95,852 |   |
| Interest cost                                         |   |                    | 82,303    |   |   |   | 113,129 |   |
| Actuarial gain                                        |   |                    | (90,981   | ) |   |   | (28,096 | ) |
| Benefits paid                                         |   |                    | (183,618  | ) |   |   | (156,466 | ) |
|                                                  |   |                    |      |   |   |   |   |   |
| Benefit obligation at end of year                     |   |                    | 1,496,132 |   |   |   | 1,594,557 |   |
|                                                  |   |                    |      |   |   |   |   |   |
| Change in plan assets:                                |   |                    |      |   |   |   |   |   |
| Fair value of plan assets at beginning of year        |   |                    | 773,509   |   |   |   | 617,810 |   |
| Actual return on plan assets                          |   |                    | 83,017    |   |   |   | (125,623 | ) |
| Employer contribution, net of reimbursement from VEBA |   |                    | (99,508   | ) |   |   | 437,788 |   |
| Benefits paid                                         |   |                    | (183,618  | ) |   |   | (156,466 | ) |
|                                                  |   |                    |      |   |   |   |   |   |
| Fair value of plan assets at end of year              |   |                    | 573,400   |   |   |   | 773,509 |   |
|                                                  |   |                    |      |   |   |   |   |   |
| Funded status                                         |   | $                       | (922,732  | ) |   |   | (821,048 | ) |

|                                                |   | 2009   |    |   | 2008   |   |
|-----------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Change in measurement date to be recovered in rates |   | $      | 61,145  |   |   |   | 115,602 |   |
| Net actuarial loss                                  |   |   | 718,116 |   |   |   | 884,552 |   |
|                                                |   |   |    |   |   |   |   |   |
|                                                |   | $      | 779,261 |   |   |   | 1,000,154 |   |

----

|                                     |   | Postretirement benefits |    |
|------------------------------------------|--------|-------------------------|---------|
|                                     |   | 2009                    |    |   | 2008 |   |   | 2007 |   |
| Components of net periodic benefit cost: |   |                    |    |   |   |   |   |   |   |
| Service cost                             |   | $                       | 93,871  |   |   |   | 95,852 |   |   |   | 67,397 |   |
| Interest cost                            |   |                    | 82,303  |   |   |   | 113,129 |   |   |   | 88,743 |   |
| Expected return on plan assets           |   |                    | (40,515 | ) |   |   | (71,111 | ) |   |   | (42,203 | ) |
| Recognized net actuarial loss            |   |                    | 22,234  |   |   |   | 27,793 |   |   |   | 40,041 |   |
| Net amortization                         |   |                    | 32,953  |   |   |   | 37,360 |   |   |   | 22,234 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                |   | $                       | 190,846 |   |   |   | 203,023 |   |   |   | 176,212 |   |

|                                        |   | Postretirement benefits |   |
|---------------------------------------------|--------|-------------------------|--------|
|                                        |   | 2009                    |   |   | 2008 |   |   | 2007 |   |
| Weighted average assumptions:               |   |                    |   |   |   |   |   |   |   |
| Discount rate, postretirement benefit       |   |                    | 6.25   | % |   |   | 6.25 | % |   |   | 5.75 | % |
| Discount rate, projected benefit obligation |   |                    | 5.50   |   |   |   | 6.25 |   |   |   | 6.25 |   |
| Expected return on plan assets              |   |                    | 6.50   |   |   |   | 7.50 |   |   |   | 7.50 |   |
| Rate of compensation increase               |   |                    | 4.50   |   |   |   | 4.50 |   |   |   | 4.50 |   |

|                 |   | Plan assets |    |   | Asset allocation |   |
|----------------------|--------|-------------|---------|--------|------------------|--------|
| Asset class          |   | 2009        |    |   | 2008             |   |   | 2009 |   |   | 2008 |   |
| Cash and equivalents |   | $           | 81,442  |   |             |   | 509,682 |   |   |   | 14 | % |   |   | 66 | % |
| Equities             |   |        | 491,958 |   |             |   | 263,827 |   |   |   | 86 |   |   |   | 34 |   |
|                 |   |        |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total                |   | $           | 573,400 |   |             |   | 773,509 |   |   |   | 100 | % |   |   | 100 | % |

----

| (c)   | Supplemental Executive Retirement Plan |
|-----------------|----------------------------------------|

| (d)   | Deferred Compensation |
|-----------------|-----------------------|

| (e)   | Defined Contribution Plan |
|-----------------|---------------------------|

| (8)   | Related Party Transactions |
|-----------------|----------------------------|

----

| (9)   | Asset Retirement Obligations |
|-----------------|------------------------------|

----

| (10)   | Fair Value of Financial Instruments |
|------------------|-------------------------------------|

|                                    |   | 2009     |        |   | 2008       |   |
|-----------------------------------------|--------|----------|-------------|--------|------------|--------|
|                                    |   | Carrying |        |   |       |   |   | Carrying |   |   |   |   |
|                                    |   | amount   |        |   | Fair value |   |   | amount |   |   | Fair value |   |
| Financial assets:                       |   |     |        |   |       |   |   |   |   |   |   |   |
| Cash                                    |   | $        | 733,150     |   |       |   | 733,150 |   |   |   | 72,900 |   |   |   | 72,900 |   |
| Bond sinking fund deposits              |   |     | 526,000     |   |       |   | 526,000 |   |   |   | 490,000 |   |   |   | 490,000 |   |
| Bond interest deposits                  |   |     | 4,573,388   |   |       |   | 4,573,388 |   |   |   | 2,985,911 |   |   |   | 2,985,911 |   |
| Accounts receivable                     |   |     | 8,901,865   |   |       |   | 8,901,865 |   |   |   | 7,383,965 |   |   |   | 7,383,965 |   |
| Notes receivable                        |   |     | 10,925,000  |   |       |   | 10,925,000 |   |   |   | 10,700,000 |   |   |   | 10,700,000 |   |
| Due from VELCO                          |   |     | 39,287,043  |   |       |   | 39,287,043 |   |   |   | — |   |   |   | — |   |
|                                    |   |     |        |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                  |   |     |        |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Notes payable to bank                   |   | $        | —     |   |       |   | — |   |   |   | 20,857,520 |   |   |   | 20,857,520 |   |
| Accounts payable                        |   |     | 10,343,646  |   |       |   | 10,343,646 |   |   |   | 7,862,009 |   |   |   | 7,862,009 |   |
| Accrued interest on bonds               |   |     | 4,575,485   |   |       |   | 4,575,485 |   |   |   | 3,001,260 |   |   |   | 3,001,260 |   |
| Long term debt                          |   |     | 2,313,115   |   |       |   | 2,313,757 |   |   |   | 2,458,236 |   |   |   | 2,459,198 |   |
| First mortgage bonds                    |   |     | 329,093,000 |   |       |   | 325,414,901 |   |   |   | 196,254,000 |   |   |   | 200,555,031 |   |
| Construction and other accrued expenses |   |     | 13,878,348  |   |       |   | 13,878,348 |   |   |   | 13,557,140 |   |   |   | 13,557,140 |   |
| Due to VELCO                            |   |     | 14,534,600  |   |       |   | 14,534,600 |   |   |   | 11,757,240 |   |   |   | 11,757,240 |   |

----

| ·   | Cash, bond sinking fund deposits, bond interest deposits trade accounts receivable, notes payable to banks, accounts payable, accrued interest on bonds due from (to) VELCO, and construction and other accrued expenses: The carrying amounts, at face value or cost plus accrued interest, approximates fair value because of the short-term maturity of these instruments. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Notes receivable: Because of the short-term maturity of this instrument, cost approximates fair value. |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | Long-term debt and First mortgage bonds: The fair value of the Company’s long-term debt is determined by discounting the future cash flows of each instrument at rates that reflect, among other things, market interest rates. At December 31, 2009 and 2008, the Company utilized Moody’s long-term corporate bond yield average for utility entities with an Aa rating. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (11)   | Business and Credit Concentrations |
|------------------|------------------------------------|

| (a)   | Significant Customers |
|-----------------|-----------------------|

| (b)   | Significant Capital Projects |
|-----------------|------------------------------|

| (12)   | Commitments |
|------------------|-------------|

| (13)   | Subsequent Events |
|------------------|-------------------|

----