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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22,
1994
CENTRAL MAINE POWER COMPANY
(Exact name of registrant as specified in its charter)
Maine 1-5139 01-0042740
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
83 Edison Drive, Augusta, Maine 04336
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (207)
623-3521<PAGE>
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Item 1 through Item 4. Not applicable.
Item 5. Other Events.
As previously reported, the Company has been engaged in
discussions with its largest customers with the objective of
entering into multi-year rate agreements that would ensure
retention of those customers. Such customers have competitive
options that the Company believes must be addressed by lowering
its applicable tariffs to more competitive levels.
In furtherance of that goal, on November 22, 1994, the
Company filed with the Maine Public Utilities Commission ("MPUC")
revised rate schedules for its two rate classes for large
industrial customers. The filing was expressly made contingent
on the MPUC's approval of the stipulation filed on October 14,
1994, with the MPUC containing the terms of an alternative rate
plan ("ARP"), previously reported, with rate-cap, pricing
flexibility and other features (including substantial
restructuring charges against 1994 Company earnings), agreed to
by parties to the pending ARP proceeding that is scheduled to be
decided by the MPUC in late December.
Pursuant to the pricing flexibility provisions of the
pending ARP stipulation, the November 22 filing contains a
memorandum of agreement that is being considered (or, in some
cases, has been signed) by large industrial customers of the
Company that expressed interest in fixing their electric-service
rates for a five-year period. The memorandum contemplates the
negotiation and execution of separate five-year definitive
agreements between the Company and individual large customers
providing for non-cumulative rate reductions of fifteen percent
for the three years 1995 through 1997, sixteen percent for 1998,
and eighteen percent for 1999, below the December 1, 1994,
levels.
Subject to the terms of the agreements, the participating
customers would agree to take electrical service from the Company
for five years. Those customers would also agree not to switch
fuels, install new self-generation equipment, or seek another
supplier of electricity for existing electrical load during that
period. New electrical load in excess of a stated minimum level
could be served by other available sources, but the Company could
compete for that load.
In addition, the agreements provide for liquidated damages
to be paid to the Company for a breach or early termination of a
definitive agreement by a customer. A cessation of business
operations or a plant or process relocation out of the Company's
service territory would not constitute a breach or early
termination. The parties' rights with respect to existing
"stranded costs" would not be affected by the agreements.
The contracts would also provide the Company with a limited<PAGE>
right to interrupt a participating customer's load upon payment
of an agreed charge, starting on November 1, 1997. This feature
is optional with the customer and failure to comply with the
Company's request to interrupt would subject the customer to
agreed penalty provisions.
In addition to finalization and execution of agreements,
conditions to effectiveness of the agreements include the
following: (1) approval by the MPUC of the October 14, 1994 ARP
stipulation; (2) approval by the MPUC of waivers of filing
requirements and notice provisions contained in the ARP to allow
the new rate schedules to become effective upon the later to
occur of approval of the ARP or January 1, 1995; and (3) an MPUC
order providing that the time period under the ARP has expired
for raising issues of non-conformity with the ARP, anti-
competitiveness, or undue discrimination with respect to the
initial rate schedules or the agreements.
The Company believes that without the tariff reductions
provided in the agreements, some of its industrial customers
would be likely to install additional self-generation or take
other steps to decrease their electricity purchases from the
Company. The revenue loss from such a usage shift could be
substantial.
The Company estimates that if all the agreements are signed,
the contingencies listed above are satisfied, and the tariff
reductions are approved, its gross revenues will be approximately
$27 million lower in 1995 than would have been the case if the
industrial customers who are expected to execute definitive
agreements continued to pay full retail rates without reducing
their purchases from the Company. The reduction in the rate
tariffs, however, would result in a significant reduction in
payments made by the Company under contracts with several non-
utility generators for purchased power, since several of those
contracts contain price provisions based on the Company's retail
rates. The Company would address the remaining revenue shortfall
through further cost reductions and the pursuit of appropriate
incremental sales.
The Company cannot predict whether the contingencies listed
above, including approval of the ARP, will be satisfied, but
believes that the ARP submitted for MPUC approval has broad
support among the parties to the proceeding and is consistent
with the guidelines for such a plan issued by the MPUC in its
December 14, 1993, base-rate order.
Item 6 through Item 8. Not applicable.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CENTRAL MAINE POWER COMPANY
By:
Douglas Stevenson
Treasurer
Dated: December 5, 1994<PAGE>
