Operating Committee May 15, 2014

Capital Projects Update

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Overview Project schedule update

Projects under construction or closeout

Statewide Radio Project

Bennington Substation

Projects under permitting

Georgia Interconnection Project

PV-20 Cable Replacement

Additional projects

Security Upgrade Project

Structure Condition Improvement

Substation Condition Assessment

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STATEWIDE RADIO NETWORK

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Statewide Radio Project status Field work & construction • Stowe site is commissioned • Temporary Waterbury site ready for commissioning

– Permanent Waterbury coverage scheduled for summer 2014 with AT&T • Repositioning radio sites for improved coverage

– Molly Stark Forest (Mt. Olga) in progress pending access approval from National Grid

• Working with Lamoille County Sheriff on joint Hyde Park site to improve coverage • Pole mount prototype configuration being reviewed for filler site usage

Operations • Network coverage currently at 93% • Working to improve coverage based on customer requests • Proceeding to collect lessons learned and close the project

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BENNINGTON SUBSTATION

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Bennington Substation status

Engineering design & procurement • Complete but for as-built drawings, grounding test and sound

measurements

Field work/construction • Above- and below-grade complete except for final road work and

restoration activities

• Asbestos removal completed at old site

Regulatory • Environmental compliance oversight will continue through old site

demolition due to contamination

Project schedule • Remaining substation demolition and closeout activities planned for 2014

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GEORGIA INTERCONNECTION PROJECT

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Georgia Interconnection Project

Planning studies & permitting • §248 petition proceeding schedule established a target date for CPG issuance by end of

September • Public hearing was held on March 17; no issues raised by any landowners Engineering & procurement • Engineering and design details continue for both the Georgia transformer addition and East

Fairfax capacitor bank • Team issued an RFP for some long-lead materials including breakers • 115/34.5kV transformer remains on schedule for delivery by November 2014 Project schedule • Georgia station’s power transformer remains on schedule for commissioning by May 2015 • East Fairfax capacitor bank in service date targeted for October 2015

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PV20 CABLE REPLACEMENT

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PV20 Cable Replacement status update Planning • Spring 2014 meetings planned with ISO-NE and Participant Advisory Committee to seek

approval Engineering design & Procurement • Lake and land surveys, resource assessments and soil borings nearly complete • Cable specification is underway Field Work / Construction • Environmental data collection in Lake Champlain to be completed in upcoming months • Cable installation and removal of existing cables tentatively scheduled for 2017 • NYPA* and VELCO to propose four 230kV submarine cables operated at 115kV to replace

seven 115 kV oil-filled cables Regulatory • NYPA to lead NY permitting process: SEQRA** if project impact area threshold is met, more

rigorous Article VII if not • VELCO to lead §248 process in VT—CPG filing anticipated 3Q 2014 Project schedule • Project schedule under review by project team

*NYPA: New York Power Authority **SEQRA: New York State Environmental Quality Review Act

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SECURITY UPGRADE PROJECT

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Security Upgrade Project summary

Project required to meet company security and NERC CIP-Version 5 requirements • Full compliance with NERC CIP Version 5 standards

required by April 1, 2016 Project activities • Security project construction progressing on schedule

– Eight substation sites completed – 24 additional sites under construction – Perimeter fence detection installations operating as

planned and are meeting company security requirements

• Installation of perimeter fence detection equipment completed at five substations that were vandalized in 2013

• Purchase of security equipment and materials for Phase 2 occurred in May 2014

• Connectivity via VELCO fiber optic system progressing well – Fiber infrastructure allows for faster data transfer with

higher quality on infrastructure VELCO owns, operates and controls

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Security Upgrade Project implementation update

• CIP Version 5 compliance scheduled by September 2014, well in advance of NERC April 2016 requirement

• Additional VELCO business security installations will continue through to 2016

• Project contractors on track and performing quality work • Expanded scope of work includes implementation of fiber optic

connectivity between VELCO headquarters and substation locations and for direct remote substation lighting controls

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STRUCTURE CONDITION IMPROVEMENT PROGRAM

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Project scope update

• Remaining structure replacements in scope for 2014 include the following lines: K20, K15, K51, K32, K34, K24 and 340 lines

• Structures scheduled for replacement include (275) 115kV structures and (43) 345/230kV structures

• Field assessment phase is complete with more than 5,500 structures inspected

Engineering & environmental update

• E&D Phase I modeling work under final review

• E&D Phase II structural strength analysis continues

• Engineering for structure replacement work continues

• Reviewing viability and financial benefits of replacing wooden poles with corten steel poles

• In accordance with the program execution plan, resources were retained for construction access review and compliance oversight

K22 Structure Replacement

Structure Condition Improvement Program status

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Construction update • Performed winter construction to allow for structure

replacements in large wetland areas • Over 100 structures replaced through the end of April • Outages have been scheduled for the upcoming

work, but one line is not scheduled to start before December

• Live line work is expected for a critical line due to potential reliability impact associated with an extended outage

K22/43 Structures Replacement

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SUBSTATION CONDITION ASSESSMENT

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Substation Condition Assessment Project

Scope of work • Develop criteria to systematically evaluate

existing substations • Perform condition assessment of substations

that were already identified as requiring some capital upgrades

• Conduct preliminary cost estimates to refurbish/replace station, as deemed necessary

• Prioritize based on system need/reliability concerns

Stations to be assessed in 2014 • Newport, St Albans, Barre, Berlin, Florence

and Windsor

Schedule • Complete all station assessments in 2Q 2014 • Newport: complete engineering 2014 and

perform upgrades by 2015 & 2016 • St Albans: complete engineering 2015 and

perform upgrades by 2016 • Barre: complete engineering 2016 and

perform upgrades by 2016 • Berlin: complete engineering 2016 and

perform upgrades by 2017 • Florence: complete engineering 2017 and

perform upgrades by 2017 • Windsor: complete engineering 2017 and

perform upgrades by 2017

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Substation Condition Assessment Project

Newport station recommendations • Replace the protection & control systems,

including P&C panels, conduit, cable trench and control cable

• Replace the 115kV breakers • Replace the 115kV capacitive voltage

transformers with wire wound transformers • Install new control building including ancillary

equipment • Replace all station lightning arresters • Replace AC station service and include

on-site generator • Replace DC station service with redundant

system • Expand fence to accommodate new control

building • Perform maintenance of equipment such as

switches, structural steel and foundations • Install provisions for future VEC 12.5kV switch

station

Newport milestone schedule • May 23, 2014: file 45-day notice • June 5, 2014: BOD approval & resolution • July 18, 2014: file§248 petition • March 18, 2015: receive CPG • May 1, 2015: start construction • December 18, 2015: final commissioning

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Questions?