NOTE 4 - INVESTMENTS IN AFFILIATES

VELCO Summarized consolidated financial information for VELCO follows (dollars in thousands):

	Three months ended June 30						Six months ended June 30
	2011			2010			2011			2010

Operating revenues	$	33,912		$	25,429		$	68,139		$	51,202
Operating income	$	19,552		$	14,050		$	39,267		$	28,987

Income before non-controlling interest and income tax	$	15,831		$	12,435		$	31,600		$	24,970
Less members' non-controlling interest in income		14,537			11,455			29,074			22,905
Less income tax		466			560			933			526
Net income	$	828		$	420		$	1,593		$	1,539

Company's common stock ownership interest		47.05	%		47.05	%		47.05	%		47.05	%
Company's equity in net income	$	392		$	198		$	752		$	674

Accounts payable to VELCO were $5.2 million at June 30, 2011 and $5.8 million at December 31, 2010.

Transco Summarized financial information for Transco, also included in VELCO consolidated financial information above, follows (dollars in thousands):

	Three months ended June 30						Six months ended June 30
	2011			2010			2011			2010
Operating revenues	$	34,040		$	25,852		$	68,451		$	52,017
Operating income	$	20,283		$	14,821		$	40,785		$	30,279
Net income	$	16,137		$	13,082		$	32,274		$	26,160

Company's ownership interest		41.02	%		33.33	%		41.02	%		33.33	%
Company's equity in net income	$	6,525		$	4,841		$	13,050		$	9,698

Transmission services provided by Transco are billed to us under the VTA. All Vermont electric utilities are parties to the VTA. This agreement requires the Vermont utilities to pay their pro rata share of Transco's total costs, including interest and a fixed rate of return on equity, less the revenue collected under the ISO-NE Open Access Transmission Tariff and other agreements.

Transco's billings to us primarily include the VTA and charges and reimbursements under the NOATT. Included in Transco's operating revenues above are transmission services to us amounting to $3.3 million in the second quarter and $5.5 million in the first six months of 2011 and $1.7 million in the second quarter and $3.1 million in the first six months of 2010. These amounts are included in Transmission - affiliates on our Condensed Consolidated Statements of Income. Accounts payable to Transco were $0.5 million at June 30, 2011 and there were no accounts payable due at December 31, 2010. Accounts receivable from Transco was $0.2 million at December 31, 2010.

VYNPC Summarized financial information for VYNPC (dollars in thousands):

	Three months ended June 30						Six months ended June 30
	2011			2010			2011			2010
Operating revenues	$	49,120		$	29,177		$	98,093		$	75,772
Operating (loss) income	$	(564	)	$	(370	)	$	(817	)	$	(1,439	)
Net income	$	119		$	125		$	210		$	226

Company's common stock ownership interest		58.85	%		58.85	%		58.85	%		58.85	%
Company's equity in net income	$	71		$	73		$	124		$	133

VYNPC's revenues shown in the table above include sales to us of $17.1 million in the second quarter and $34.2 million in the first six months of 2011 and $10.2 million in the second quarter and $26.4 million in the first six months of 2010. These amounts are included in Purchased power - affiliates on our Condensed Consolidated Statements of Income. Accounts payable to VYNPC were $5.6 million at June 30, 2011 and $5.9 million at December 31, 2010.

Maine Yankee, Connecticut Yankee and Yankee Atomic We own, through equity investments, 2 percent of Maine Yankee, 2 percent of Connecticut Yankee and 3.5 percent of Yankee Atomic. All three companies have completed plant decommissioning and the operating licenses have been amended by the NRC for operation of Independent Spent Fuel Storage Installations. All three remain responsible for safe storage of the spent nuclear fuel and waste at the sites until the DOE meets its obligation to remove the material from the sites. Our share of the companies' estimated costs are reflected on the Condensed Consolidated Balance Sheets as current and non-current regulatory assets and nuclear decommissioning liabilities. These amounts are adjusted when revised estimates are provided. At June 30, 2011, we had regulatory assets of $0.6 million for Maine Yankee, $3.9 million for Connecticut Yankee and $1.6 million for Yankee Atomic. These estimated costs are being collected from customers through existing retail rate tariffs. Total billings from the three companies amounted to $0.3 million in the second quarter and $0.7 million in the first six months of 2011 and $0.4 million in the second quarter and $0.7 million in the first six months of 2010. These amounts are included in Purchased power - affiliates on our Condensed Consolidated Statements of Income.

DOE Litigation: All three companies have been seeking recovery of fuel storage-related costs stemming from the default of the DOE under the 1983 fuel disposal contracts that were mandated by the United States Congress under the Nuclear Waste Policy Act of 1982. Under the Act, the companies believe the DOE was required to begin removing spent nuclear fuel and greater than Class C waste from the nuclear plants no later than January 31, 1998 in return for payments by each company into the nuclear waste fund. No fuel or greater than Class C waste has been collected by the DOE, and each company's spent fuel is stored at its own site. Maine Yankee, Connecticut Yankee and Yankee Atomic collected the funds from us and other wholesale utility customers, under FERC-approved wholesale rates, and our share of these payments was collected from our retail customers.

In 2006, the United States Court of Federal Claims issued judgment in the spent fuel litigation. Maine Yankee was awarded $75.8 million in damages through 2002, Connecticut Yankee was awarded $34.2 million through 2001 and Yankee Atomic was awarded $32.9 million through 2001. This decision was appealed in December 2006, and all three companies filed notices of cross appeals. In August 2008, the United States Court of Appeals for the Federal Circuit reversed the award of damages and remanded the cases back to the trial court. The remand directed the trial court to apply the acceptance rate in 1987 annual capacity reports when determining damages.

A final ruling on the remanded case in favor of the three companies was issued on September 7, 2010. Maine Yankee was awarded $81.7 million, Connecticut Yankee was awarded $39.7 million and Yankee Atomic was awarded $21.2 million. The DOE filed an appeal on November 8, 2010 and the three Yankee companies filed cross-appeals on November 19, 2010. Interest on the judgments does not start to accrue until all appeals have been decided. Our share of the claimed damages of $3.2 million is based on our ownership percentages described above.

The Court of Federal Claims' original decision established the DOE's responsibility for reimbursing Maine Yankee for its actual costs through 2002 and Connecticut Yankee and Yankee Atomic for their actual costs through 2001 related to the incremental spent fuel storage, security, construction and other costs of the spent fuel storage installation. Although the decision did not resolve the question regarding damages in subsequent years, the decision did support future claims for the remaining spent fuel storage installation construction costs.

On July 1, 2009, Maine Yankee, Connecticut Yankee and Yankee Atomic filed claimed costs for damages incurred for periods subsequent to the original case discussed above. Maine Yankee claimed $43 million since January 1, 2003 and Connecticut Yankee and Yankee Atomic claimed $135.4 million and $86.1 million, respectively since January 1, 2002. For all three companies the damages were claimed through December 31, 2008. A trial date has been set for the beginning of August 2011.

Due to the complexity of these issues and the potential for further appeals, the three companies cannot predict the timing of the final determinations or the amount of damages that will actually be received. Each of the companies' respective FERC settlements requires that damage payments, net of taxes and further spent fuel trust funding, if any, be credited to wholesale ratepayers including us. We expect that our share of these awards, if any, would be credited to our retail customers.