___moody’s investors service upgrades burlington, vermont electric revenue bonds to baa1 from baa2; outlook stable__

Upgrade Recognizes Financial Position Improvement

New York, November 09, 2015 — Moody’s Investors Service has upgraded the rating on the outstanding $29.03

million Burlington, Vermont Electric System Revenue Bonds to Baa1

from Baa2. The outlook is stable. Burlington also has $46.8

million General Obligation bonds issued for electric utility purposes

(Baa2; positive). The city issues approximately $3

million General Obligation bonds annually for electric purposes.

The pledge of payment is after the payment of debt service on the electric

system revenue bonds.

SUMMARY RATING RATIONALE

The rating upgrade takes into consideration the improved financial record

of Burlington Electric Department (BED) ; competitive rates;

the shift to a more diverse power supply mix; and the strengthening

local economy.

BED serves the City of Burlington, Vermont (Baa2 positive) which

has a diverse local economy; stability is provided by the institutional

presence of a major university and medical center; and the city serves

as a commercial center for a large geographic area. The rating

also considers BED’s reliable and competitive power supply which is less

subject to market volatility and is significantly renewable; the

utility’s improving financial record including expected strengthening

forecasted metrics; and supportive rate regulation. While

the BED is subject to the state public service board regulation,

new rates may be collected 45 days after the filing with the state.

The regulatory board must consider bond covenants and sufficiency of revenues

to support voted bonded authorizations. The rate setting record

has been supportive and timely with full recovery of requested costs recovered

since 2004. The utility has a conservative General Fund transfer

policy.

A positive factor in the rating is the proactive stance of management

in its strategic planning regarding the evolving power industry.

A focus on efficiency programs; renewable energy supply and positioning

the utility organization through improved operations factor into our view

about BED. Retail rates are also competitive. While the

McNeil Generation Station, a wood burning electric generation facility

represents 43.9% of FY 2015 BED energy, the carbon

neutral-renewable energy source is well-maintained and has

had a sound operating record. Vermont is also exempt from the federal

EPA Clean Power Plan (CPP) so compliance issues are not a factor.

BED’s financial record has been improving with a focus on stronger financial

metrics with adjusted debt service coverage trending towards 1.50

times and forecasted coverage in the same range. The adjusted coverage

includes payment of General Obligation bond debt service. Combined

electric revenue bond and General Obligation bond debt service is level.

FY 2015 financial results include adjusted debt service coverage of 1.71

times and days liquidity on hand of 94 days. BED’s elimination

of a material adverse clause from its line of credit also was a positive

factor. BED expects an erosion of net income in FY 2018 due to

several factors but management is taking reasonable mitigation measures

to resolve. In addition, BED has had a sound record of rate

adjustments when appropriate. No additional rate adjustments are

currently expected in next two fiscal years.

OUTLOOK

The stable outlook reflects the improving trend of BED’s financial position

that is reflected in the utility’s financial forecasts showing continued

improvement in financial metrics.

WHAT COULD CHANGE THE RATING UP

*The rating could be upgraded once BED registered a longer trend of

both debt service coverage and adjusted days liquidity

*Continued and sustained improvement in the City of Burlington general

financial record

WHAT COULD CHANGE THE RATING DOWN

*Deterioration in financial record of the city and utility

*Unsupportive regulatory board regarding cost recovery and the maintenance

of sound utility financial metrics

OBLIGOR PROFILE

The utility serves the City of Burlington, Vermont, the state’s

largest city and economic center. BED is a department of the city

government and has a monopoly in service area. BED is regulated

by state public service board but is not like an investor-owned

utility oversight.

LEGAL SECURITY

The bonds are secured by the net revenues of the electric system.

There is a 1.25 times rate covenant and the debt service reserve

requirement is equal to maximum annual debt service on the senior revenue

bonds.

The department also has approximately $43 million of general obligation

(GO) bonds that are expected to be repaid from electric department operating

revenues. The rate covenant on the consolidated debt outstanding

is 1.00 times. Per the General Bond Resolution, the

claim on the revenues of the department by the revenue bondholders is

prior to any claim of the GO bondholders.

USE OF PROCEEDS

N/A

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was U. S. Public

Power Electric Utilities with Generation Ownership Exposure published

in November 2011. Please see the Credit Policy page on www. moodys. com

for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt,

this announcement provides certain regulatory disclosures in relation

to each rating of a subsequently issued bond or note of the same series

or category/class of debt or pursuant to a program for which the ratings

are derived exclusively from existing ratings in accordance with Moody’s

rating practices. For ratings issued on a support provider,

this announcement provides certain regulatory disclosures in relation

to the rating action on the support provider and in relation to each particular

rating action for securities that derive their credit ratings from the

support provider’s credit rating. For provisional ratings,

this announcement provides certain regulatory disclosures in relation

to the provisional rating assigned, and in relation to a definitive

rating that may be assigned subsequent to the final issuance of the debt,

in each case where the transaction structure and terms have not changed

prior to the assignment of the definitive rating in a manner that would

have affected the rating. For further information please see the

ratings tab on the issuer/entity page for the respective issuer on www. moodys. com.

Regulatory disclosures contained in this press release apply to the credit

rating and, if applicable, the related rating outlook or rating

review.

Please see www. moodys. com for any updates on changes to

the lead rating analyst and to the Moody’s legal entity that has issued

the rating.

Please see the ratings tab on the issuer/entity page on www. moodys. com

for additional regulatory disclosures for each credit rating.

Dan Aschenbach

Senior Vice President

Public Finance Group

Moody’s Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U. S.A.

JOURNALISTS: 212-553-0376

SUBSCRIBERS: 212-553-1653

Chee Mee Hu

MD – Project Finance

Public Finance Group

JOURNALISTS: 212-553-0376

SUBSCRIBERS: 212-553-1653

Releasing Office:

Moody’s Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U. S.A.

JOURNALISTS: 212-553-0376

SUBSCRIBERS: 212-553-1653

Moody’s Investors Service Upgrades Burlington, Vermont Electric Revenue Bonds to Baa1 from Baa2; Outlook Stable

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