VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
DECEMBER 27, 2011
APPROVED MINUTES

As required under the VEC Bylaws, notice of this meeting was sent to each Director by deposit in U.S. mail on December 21, 2011.

CALL TO ORDER – AGENDA ITEM # 1
First Vice President Dan Carswell called the meeting to order at 12:00 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont.  Present were Directors Dorothy Allard, Michelle DaVia (Secretary), George Lague, Carol Maroni, Daniel Parsons (Second Vice President), John Ward (Treasurer), Mark Woodward, and Don Worth.  Also present from VEC were CEO David Hallquist, COO Jeffery Wright, CFO Michael Bursell, General Counsel Vickie Brown, Manager of Corporate Services Liz Gamache, Safety Manager Les Burns, Director of Policy and Programs Randy Pratt, Senior Power Resource Planner Craig Kieny (for part of the meeting), and Corporate Assistant Nina Russo-Sanchez.

First Vice President Dan Carswell conducted the meeting in Tom Bailey’s absence.

INTRODUCTION – NEW DIRECTOR GEORGE LAGUE - AGENDA ITEM #2
First Vice President Carswell introduced George Lague, new director for East Zone 1, to the Board and those present.

APPROVAL OF MINUTES - AGENDA ITEM #3
Ward moved and Worth seconded:

            That the minutes of the regular monthly meeting held on November 29, 2011 be approved as presented.

The motion carried unanimously and the minutes were approved as amended.

CEO SUMMARY - AGENDA ITEM #4
Hallquist informed the Board and those present of the passing of former Board member Howard Leighton and distributed copies of his obituary.

Hallquist provided an overview of the meeting agenda.  He noted that the annual meeting planning phase has started.

A discussion ensued as to whether the bylaws need to be amended since some Board members receive the Notice of Directors’ Meeting electronically and not by personal delivery or mail, as stated in the bylaws.  The Governance Committee will consider this in connection with other bylaw changes.

Hallquist clarified some concerns with changes proposed for Vermont’s Net Metering rule and recommended that this be a topic for the Power Supply Committee.

Hallquist informed the Board that a solar panel will be installed at VEC headquarters by the end of the year.

MANAGEMENT UPDATES – AGENDA ITEM #5
Financial Update

Chief Financial Officer Bursell and those present engaged in a discussion of items reported in the Financial Update included in the 12/27/11 Board packet.  Bursell reported November results and noted that VEC has had a very good year economically and that stability continues to improve.

Resolutions related to VEC $29M Bond

DaVia moved and Worth seconded:

            That the following Resolution of the Board of Directors be approved:

RESOLUTION OF BOARD OF DIRECTORS

WHEREAS, Vermont Electric Cooperative, Inc. (the “Company”) has previously executed and delivered the First Mortgage Indenture, dated as of August 1, 1997, as supplemented and amended (as supplemented and amended, the “Indenture”), between the Company and People’s United Bank, as Trustee (the “Trustee”);

WHEREAS, in order to borrow money for its corporate purposes, the Company, in accordance with Articles 2 and 4 of the Indenture, desires to issue a new series of First Mortgage Bonds secured by the Indenture, which it intends to issue in one or more series and designate as First Mortgage Bonds, 2012 Series A (the “Series 2012A Bonds”);

            WHEREAS, pursuant to Section 4.1 of the Indenture, prior to the issuance of the Series 2012A Bonds, the Company must furnish the Trustee with, among other things, a written application requesting authentication and delivery of the Series 2012A Bonds, an officers’ certificate, a supplemental indenture setting forth the terms and conditions of the Series 2012A Bonds and a certified resolution requesting that the Trustee authenticate and deliver the applied-for Series 2012A Bonds and specifying other matters required or permitted to be included and specifying the officers of the Company to whom to deliver the Series 2012A Bonds or upon whose orders to deliver the Series 2012A Bonds;

            WHEREAS, the Company intends to seek amendments to certain requirements of the Indenture to, among other things, permit distributions of patronage capital to its members and facilitate the issuance of the bonds herein described, subject to the approval of the holders of the Bonds issued under the Indenture, which amendments, if approved, are to be set forth in the Twentieth Supplemental Indenture (as defined below); and

WHEREAS, there has been presented to the Board of Directors of the Company a form of Twentieth Supplemental Mortgage Indenture (the “Twentieth Supplemental Indenture”) to the Indenture for the purpose of implementing the foregoing.

NOW, THEREFORE, BE IT RESOLVED, as follows:

1.              The Company hereby approves the Twentieth Supplemental Indenture, substantially in the form presented to this meeting.  The Company hereby authorizes each of the President, Chief Executive Officer, Chief Financial Officer, Executive Manager, Treasurer and Secretary (each, a “Designated Officer”), either acting alone or in conjunction with one another, to execute and deliver the Twentieth Supplemental Indenture, in substantially the form presented to this meeting, with such changes or modifications as the Designated Officer or Officers, acting upon the advice of counsel, may approve.

2.              Each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, on behalf of the Company, to request the Trustee to authenticate and deliver the Series 2012A Bonds in accordance with the terms of the Indenture; each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, in the name and on behalf of the Company, to approve and deliver all documents and certificates required to be delivered under the Indenture to effect the issuance, authentication and delivery of the Series 2012A Bonds.

3.              The Company hereby approves the form, terms and provisions of the Series 2012A Bonds, substantially in the form included in the Twentieth Supplemental Indenture, with such changes or modifications as the Designated Officer or Officers, acting upon the advice of counsel, may approve; the Company is hereby authorized to issue the Series 2012A Bonds in one or more series, and to perform its obligations under the Series 2012A Bonds, it being expressly understood that the final terms and conditions of the Bonds may vary as directed by the Designated Officers based on the lender or lenders selected and the loan program or programs offered by such lenders.

4.              Each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, in the name and on behalf of the Company, to execute the Series 2012A Bonds, with such changes therein as the Designated Officer or Officers executing the same may approve, all such approvals to be conclusively evidenced by the execution and delivery thereof on behalf of the Company.

5.              The Company hereby requests that the Trustee authenticate and deliver the Series 2012A Bonds in one or more series and in the original aggregate principal amount not to exceed $29,000,000 issued to each lender selected (provided, that, the principal aggregate amount of indebtedness evidenced thereby shall be subject to the limitation on advances set forth in Section 7 below), which Series 2012A Bonds shall mature in approximately thirty (30) years from the date of issuance or borrowing, or such shorter maturity as determined by the Designated Officers, and which shall be issued at fixed or variable annual interest rates, to be determined by the Designated Officers and be subject to redemption as set forth in such Series 2012A Bonds or the Indenture.

6.              The Company hereby approves the entry into one or more loan agreements, amendments to existing loan agreements, purchase agreements, or other agreements of similar tenor (the “Financing Agreements”) providing for the issuance and sale of the Series 2012A Bonds with either or both of the National Rural Utilities Cooperative Finance Corporation (“CFC”) or CoBank, ACB (“CoBank”), as determined by a Designated Officer, either acting alone or in conjunction with other Designated Officers, based on the terms provided to the Company; such Financing Agreements shall contain such terms and conditions as the Designated Officer or Officers executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof on behalf of the Company.

7.              The Company hereby approves the incurrence of debt pursuant to the Series 2012A Bonds by requests of advances to be made under the Financing Agreements, and hereby authorizes the Designated Officers to request such advances; provided, that, the aggregate principal amount of such advances shall in no event exceed $29,000,000.

8.              In connection with the transactions contemplated in the preceding resolutions, each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, in the name and on behalf of the Company, to make any filings with a governmental agency necessary, appropriate or desirable in order to carry out fully the intent and accomplish the purposes of the foregoing resolutions, and that any and all such filings heretofore or hereafter made by any such Designated Officer or Officers within the terms of these resolutions be, and they hereby are, adopted, affirmed, approved and ratified in all respects as the official filings of the Company.

9.              The Company hereby approves the form, terms and provisions of the amendments to the Indenture set forth in Article III of the Twentieth Supplemental Indenture presented to the Board. Each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, directed and empowered to seek the consent, approval and authorization of each of CFC and CoBank to the amendments to the Indenture set forth in Article III of the Twentieth Supplemental Indenture presented to the Board, with such changes or modifications as the Designated Officer or Officers, acting upon the advice of counsel, may approve (it being understood that the effectiveness of such amendments shall be conditioned upon the receipt of consents under the Indenture, if required by the Indenture). 

10.           Each Designated Officer, either acting alone or in conjunction with other Designated Officers, is hereby authorized, directed and empowered, in the name and on behalf of the Company, to take any action and to execute (by manual or facsimile signature) and deliver all such further documents, contracts, certificates, notices, letters, agreements, instruments, drafts, receipts or other writings that such Designated Officer or Officers may deem necessary, appropriate or desirable to carry out, comply with and effectuate the issuance of the Series 2012A Bonds and the delivery of the Twentieth Supplemental Indenture and the purposes of the foregoing resolutions and the transactions contemplated thereby and that the authority of such Designated Officer or Officers to execute and deliver any of such documents and instruments, and to take any such other action, shall be conclusively evidenced by their execution and delivery thereof or by their taking thereof.

The motion carried unanimously and the Resolution was approved.

DaVia moved and Worth seconded:

That the following Resolution of the Board of Directors be approved:

Click here to view resolution.

The motion carried unanimously and the Resolution was approved.

Operations Update
COO Wright summarized the Operations Update included in the 12/27/11 Board packet.  Wright informed the Board that he has included an analysis of VEC’s worst performing circuits in his report.  He hopes numbers to drop off next month.

Corporate Services Update
Manager of Corporate Services Gamache reviewed information provided in her report included in the 12/27/11 Board packet and answered questions from the Board.

A discussion ensured regarding Coop Life production and articles and about how to get information concerning the State’s Comprehensive Energy Plan to members in time for members to influence legislation.  Gamache reported that this Coop Life issue will lay groundwork for further communications with members about the Comprehensive Energy Plan to be rolled out after the January Board meeting, with the goal to be sure that our messages to members are aligned with the Board’s directions. 

Safety Update
Safety and Compliance Manager Burns summarized information reported in his Safety Update included in the 12/27/11 Board packet.

Two-Minute Safety Drill
Burns noted the need to dress appropriately and take plenty of breaks when shoveling snow and snow blowing.  He suggested to clear snow often, to push the shovel instead of lifting, and to be very careful of snowblowers.

Program & Policy Update
Manager of Programs & Policy Pratt reviewed information reported in his Program & Policy Update included in the 12/27/11 Board packet.  He provided an update on consumer behavior study, noting that the friends and family installations are ongoing but will take longer than was anticipated.

Discussion ensued concerning the proposed state low income assistance program.

General Counsel Update
General Counsel Brown reported that there are no major updates in addition to what was provided in the 12/27/11 Board packet.

Brown reported that VEC has developed a lot of credibility with the Department of Public Service and the Public Service Board and noted that one benefit of that is that our filings seem to make their way smoothly through the approval process.

The meeting resumed in the Robert P. Northrop Boardroom at 2:19 p.m.

PROPOSED GMP ACQUISITION - AGENDA ITEM #6
Board Action Requested:  Approve Resolution

Hallquist requested that the Board enter into executive session to discuss contractual agreements.

DaVia moved and Lague seconded:

            That the Board enter into executive session to discuss contractual agreements.

By majority vote of those present the Board entered into executive session.

By majority vote of those present the executive session ended.

Resolution – Page 105
DaVia moved and Parsons seconded:

            That the following Resolution of the Board of Directors be approved:

That VERMONT ELECTRIC COOPERATIVE Inc. (VEC) be and hereby is authorized to execute, deliver and perform the MEMORANDUM OF UNDERSTANDING AND AGREEMENT between VEC and GREEN MOUNTAIN POWER, (the “Agreements”) which have been exhibited to this meeting and which shall be appended to the minutes hereof substantially in form and substance as presented; and

That the CEO, CFO, COO, or any one or more of them be and hereby is and are authorized and directed on behalf of VEC to sign, execute and deliver, the said Agreements substantially in such form and substance as presented to this meeting and to do all things which any one or more of them by so doing deems in his, her or their sole judgment to be necessary or advisable to act on, carry out or perform the said Agreements or cause it to be acted on, carried out or performed; and

That the CEO, CFO, COO, or any one or more of them be and hereby is and are authorized and directed on behalf of VEC to sign, execute and deliver any and all instruments or documents of whatever kind or character which any one or more of them by so doing deems in his, her or their sole judgment to be necessary or advisable to act on, carry out or perform the said Agreements or cause it to be acted on, carried out or performed AND TO AGREE TO SUCH MODIFICATION OF THE MEMORANDUM OF UNDERSTANDING AND AGREEMENT WHICH ANY ONE OR MORE OF THEM BY SO DOING DEEMS  IN HIS, HER OR THEIR SOLE JUDGMENT TO BE NECESSARY OR ADVISABLE TO CARRY OUT THE INTENT OF THIS BOARD OF DIRECTORS; and

That all of the foregoing is contingent upon all approvals of state and federal boards, courts or tribunals or other bodies as are or may be required by law or the Bylaws.

The motion carried by unanimous vote and the Resolution was approved.

BEAT THE PEAK - AGENDA ITEM #7
Craig Kieny entered the meeting.

Gamache gave an overview presentation of the Beat the Peak program and answered questions presented to her by the Board.

ANY OTHER BUSINESS - AGENDA ITEM #8
Committee meeting dates were scheduled:

Governance Committee will meet on Monday, January 16, 2012, at 9:00 a.m. to review bylaw changes regarding enacting e-voting and to review voting process and lessons learned.

Executive Committee will meet on Wednesday, January 18, 2012, at 10:00 a.m. to begin the CEO review process.

Communications Committee will meet on Tuesday, January 31, 2012, at 9:30 a.m. to discuss functions, missions, and goals.

Hallquist noted that the 2012 NRECA Annual Meeting might be valuable for new Board members to attend.

ADJOURN OR RECESS – AGENDA ITEM #9
There being no further business before the meeting,

Allard moved and Worth seconded:

That the meeting be adjourned.

No discussion was forthcoming and the motion carried unanimously.

The meeting adjourned at 4:15 p.m.

Respectfully submitted: