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): March 29, 1995
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>
Item 1 through Item 4. Not applicable.
Item 5. Other Events.
(a) Maine Yankee Atomic Power Company steam generator
tubes. The Company owns a 38-percent stock interest in Maine
Yankee Atomic Power Company ("Maine Yankee"), which owns and
operates an 860-megawatt nuclear generating plant in Wiscasset,
Maine (the "Maine Yankee Plant" or the "Plant"), and is entitled
under a cost-based power contract to an approximately equal
percentage of the Maine Yankee Plant's output. As previously
reported, during the refueling-and-maintenance shutdown that
commenced in early February of 1995, Maine Yankee detected
through new inspection methods and procedures increased
degradation of the steam generator tubes at the Plant well above
its expectations, and has been assessing the extent of
degradation and evaluating available courses of action to address
the problem. The Company also reported that it could incur
substantial costs for replacement power, depending on the
duration of the outage and the prices of such power, as well as
substantial capital expenditures, especially if repair
technologies did not prove to be feasible and Maine Yankee
elected to replace the steam generators.
The Company also reported that with the termination of its
reconcilable fuel-and-purchased-power adjustment under the
Alternative Rate Plan ("ARP") that became effective on January 1,
1995, the cost of such replacement power would in general be
treated like other Company expenses and would not be deferred and
collected through a specific fuel-rate adjustment as it would
have been under the regulatory mechanisms in place prior to 1995,
and recovery of such costs would be limited by the ARP. The
Company also stated in previous reports that costs associated
with replacement power during an extended Maine Yankee Plant
outage would have an adverse impact on the Company's 1995
financial results.
After careful assessment of the extent of tube degradation,
Maine Yankee has concluded that close to 60 percent of the
Plant's 17,000 steam-generator tubes could be cracked to some
degree. That conclusion has eliminated the possibility of
mitigating the degradation by plugging additional tubes and has
rendered most likely the option of repairing the degraded tubes
by welding short reinforcing sleeves in all the steam-generator
tubes, which Maine Yankee is still investigating. Similar
repairs have been undertaken at other nuclear plants in the
Unites States and abroad, but not on the scale of the Maine
Yankee project. On April 14, 1995, the United States Nuclear
Regulatory Commission issued a license approving such a sleeving
process for the Maine Yankee Plant.
The Company estimates that its share of the costs of such
repairs would range from $10 million to $15 million. In
addition, the Company expects to incur additional fuel costs over<PAGE>
and above what it would have incurred if the Maine Yankee Plant
had continued to operate in the range of approximately $3.5
million to $4.5 million per month while the outage persists.
Maine Yankee has informed the Company that such a sleeving
project could be completed in time for the Plant to return to
service by the end of 1995.
The Company cannot predict how long the Maine Yankee Plant
will be out of service. The impacts of the costs of unbudgeted
repairs and replacement power costs that will ultimately be borne
by the Company are still being assessed and no impacts have been
included in the Company's 1995 first-quarter results. However,
such costs will have an adverse impact on the Company's financial
results for 1995.
(b) Federal Energy Regulatory Commission proposed
rulemaking on transmission access and stranded costs. On March
29, 1995, the Federal Energy Regulatory Commission ("FERC")
issued a Notice of Proposed Rulemaking that it said was intended
to "facilitate the development of a competitive market by
ensuring that wholesale buyers and sellers can reach each other
and to eliminate anticompetitive and discriminatory practices in
transmission services". If the proposal should be adopted in its
present form, all utilities under the FERC's jurisdiction would
be required to file non-discriminatory open-access transmission
tariffs that would be available to all wholesale sellers and
buyers of electric energy, and would be required to take service
under those tariffs for their own wholesale sales and purchases
of energy.
Under the proposal, transmitting utilities would be
required to offer point-to-point and network transmission
services, as well as ancillary services such as scheduling and
dispatch. The proposed rule also includes pro-forma tariffs that
spell out the minimum requirements for transmission service. The
proposal anticipates a two-stage implementation process under
which generic pro-forma tariffs would initially take effect under
rates fixed by the rulemaking, and, in the second stage,
utilities and their customers could file for modification of the
tariffs and rates within the limits of the non-discriminatory
open-access provisions of the rule.
In the other major segment of the proposal, which deals
with utilities' stranded costs, the FERC established the
principle that utilities are entitled to "full recovery" of their
"legitimate and verifiable" stranded costs at both the state and
federal level, stressing that recovery of such costs is critical
to the successful transition to a more competitive electric
utility industry. The FERC takes the position that although it
expects the states to deal with costs stranded due to retail
wheeling or direct-access programs, the FERC would intercede if
the state regulatory commission has no authority to address
stranded costs at the time retail wheeling is required. The FERC
would also provide recovery mechanisms for stranded costs due to<PAGE>
municipalization or other instances where former retail customers
become wholesale customers, as well as for wholesale stranded
costs.
As previously reported, on February 27, 1995, the Maine
Public Utilities Commission ("MPUC") had initiated a rulemaking
proceeding on stranded costs with a proposed rule that would
eliminate 50 percent of stranded costs from eligibility for
recovery by means of a "mitigation factor". On April 18, 1995,
the MPUC terminated its rulemaking, noting that the FERC was
addressing the same subject matter and that it would be
appropriate for the MPUC to avoid creating "parallel and
duplicative proceedings".
The Company cannot predict what any final FERC rules on
transmission access and stranded costs will contain, or what
structural or other changes to the electric utility industry or
the Company may ensue, but will continue to take all necessary
action to position itself for a more competitive industry
environment and is planning to vigorously support adoption of
final rules that would ensure full recovery of any stranded
costs.
(c) 1995 first-quarter results. On April 20, 1995, the
Company reported its results for the three-month period ended
March 31, 1995, pointing out that its electricity sales fell 4.8
percent, compared with the first quarter of 1994, with decreases
in the residential, commercial and industrial sectors. The
Company's operating revenues were $263.3 million for the quarter,
an increase of 9.2 percent from a year ago. Revenues were
affected, the Company said, by lower kilowatt-hour sales, a 1994
price increase for most of its customers, price discounts for
competitively targeted customer classes, and the elimination
under the Alternative Rate Plan ("ARP") of the reconciliation of
fuel expenses beginning in January 1995.
The Company explained that the adoption of the ARP had
effectively eliminated the fuel clause, which has the affect of
causing more fuel-related revenue to be recorded as it occurs,
rather than being deferred and spread out over the entire year as
it had been under the prior system. The effect is magnified, the
Company said, by the fact that some of the Company's customers
have rates that are higher in the winter than in other months.
The Company further explained that the seasonal impact on
reported revenues and reported earnings will have no impact on
results over a calendar year, but will affect quarter-to-quarter
comparisons that include 1994 periods and will contribute
significantly to allocating a disproportionately high percentage
of 1995 earnings capacity to the first quarter.
The Company's release also reported net income of $26.4
million for the quarter, up from $11.4 million a year ago, and
earnings for common stock of $23.8 million, compared with $8.8
million in the first quarter of 1994. Earnings per share of<PAGE>
common stock were $0.73, compared with $0.27 for the
corresponding 1994 period.
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:
D. E. Marsh
Vice President, Corporate
Services, and Chief Financial
Officer
Dated: April 24, 1995<PAGE>
