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): January 14, 1998
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
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Item 1 through Item 4. Not applicable.
Item 5. Other Events.
(a) Storm damage to Company's system. On January 7 through 9, 1998, an ice storm
of unprecedented breadth and severity struck the Company's service territory,
causing power outages for approximately 280,000 of the Company's 520,000
customers, on January 9 immediately after the storm, and substantial widespread
damage to the Company's transmission and distribution system. To restore its
electrical system, the Company has supplemented its own crews with utility and
tree-service crews from throughout the northeastern United States and the
Canadian maritime provinces, with assistance from the Maine national guard.
As of January 20, 1998, service has been restored to approximately 95 percent of
the affected customers. Although accurate predictions are difficult because of
the breadth of the damage to its system, the Company estimates its restoration
costs, including capital items, to be approximately $55 million, of which
the incremental non-capital costs could reach or exceed $45 million.
On January 15, 1998, the Maine Public Utilities Commission ("MPUC") issued an
Order (the "Order") allowing the Company to defer on its books the incremental
non-capital costs associated with the Company's efforts to restore service in
response to the damage resulting from the storm. The Order requires the Company,
as part of its annual filing under its Alternative Rate Plan ("ARP"), to file
information on the amounts deferred under the Order and to submit a proposal as
to how the costs associated with the Order should be recovered under the ARP.
The MPUC also specifically requested the Company to include in its filing its
views on whether it is reasonable to allow recovery of such costs over a
one-year period commencing July 1, 1998, or whether a longer or shorter period
would be appropriate.
(b) Extension of Maine Yankee standstill agreements; preliminary FERC order. As
previously reported, Maine Yankee Atomic Power Company ("Maine Yankee"), in
which the Company has a 38-percent equity interest, entered into agreements in
August 1997 with the holders of its outstanding First Mortgage Bonds and its
lender banks (the "Standstill Agreements") under which the bondholders and banks
agreed that they would not assert that the August 1997 voluntary permanent
shutdown of the nuclear generating plant owned by Maine Yankee (the "Plant")
constituted a covenant violation under Maine Yankee's First Mortgage Indenture
or its two bank credit agreements. The parties also agreed in the Standstill
Agreements to maintain Maine Yankee's bank borrowings at a level below that of
the prior aggregate bank commitments, which level Maine Yankee considers
adequate for its foreseeable needs. The Standstill Agreements, as extended in
October 1997, were to terminate on January 15, 1998, by which date MaineYankee
was to have reached agreement on restructured debt arrangements reflecting its
decommissioning status. Also as previously reported, on November 6, 1997, Maine
Yankee filed a rate proceeding with the Federal Energy Regulatory Commission
("FERC") reflecting the Plant's decommissioning status and requesting an
effective date of January 15, 1998, for the amendments to Maine Yankee's Power
Contracts and Additional Power Contracts, which revise Maine Yankee's wholesale
rates and clarify and confirm the obligations of Maine Yankee's sponsors to
continue to pay their shares of Maine Yankee's costs during the decommissioning
period.
On January 15, 1998, Maine Yankee, its bondholders and lender banks revised the
Standstill Agreements and extended their term to April 15, 1998, subject to
satisfying certain milestone obligations during the term of the extension. One
such obligation is that Maine Yankee must accept an underwritten commitment to
refinance its bonds and bank debt by February 12, 1998, which commitment must be
subject only to closing conditions that are reasonably capable of being
satisfied by April 15, 1998, and reasonably satisfactory to the bondholders and
banks. Maine Yankee has reached general agreement on the structure and basic
terms of an underwritten refinancing arrangement which it believes would satisfy
the obligation in the extended Standstill Agreements upon receipt of a final
commitment by the prospective underwriter. The Company cannot predict whether a
satisfactory refinancing arrangement will be consummated by Maine Yankee.
On January 14, 1998, the FERC issued an "Order Accepting for Filing and
Suspending Power Sales Contract Amendment, and Establishing Hearing Procedures"
(the "FERC Order") in which the FERC accepted for filing the rates associated
with the amended Power Contracts and made them effective January 15, 1998,
subject to refund. The FERC also granted intervention requests, including among
others those of the MPUC, Maine Yankee's largest bondholder, and two of its
lender banks, denied the request of an intervenor group to summarily dismiss
part of the filing, and ordered that a public hearing be held concerning the
prudence of Maine Yankee's decision to shut down the Plant and on the justness
and reasonableness of Maine Yankee's proposed rate amendments. The Company
expects the prudence issue to be pursued vigorously by several intervenors,
including among others the MPUC, which stayed its own prudence investigation
pending the outcome of the FERC proceeding after a jurisdictional challenge by
Maine Yankee and the Company. The Company cannot predict the outcome of the FERC
proceeding.
Item 6 through Item 9. Not applicable.
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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
Chief Financial Officer
Dated: January 20, 1998
