FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February, 1995
MAINE PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Maine 1-3429 01-0113635
(State, or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
209 State Street, Presque Isle, Maine 04769
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 207-768-5811
<PAGE>
Current Report, Form 8-K for Date of Report:
Maine Public Service Company February, 1995
Item 5. Other Material Events
(a) Maine Public Service Company Notifies the Maine Public Utilities
Commission of its Intent to File for a General Rate Increase.
On February 10, 1995, Maine Public Service Company filed with the Maine
Public Utilities Commission notice of its intent to file, on or about April
10, 1995, a general rate case. The Company will at the same time file a
five-year rate plan which, if approved, will result in new rates beginning
in early 1996 as detailed below.
The Company has taken a number of measures to delay this action as long as
possible but is faced with a period of declining sales and escalating power
costs. In 1996, when the proposed rates would begin, the Company anticipates
a 10.5% reduction in sales to its primary customers, compared to 1994 sales,
principally Loring Air Force Base and the Company's largest Wholesale
Customer, Houlton Water Company. In December of 1994, Houlton selected a
competing offer from Central Maine Power Company to be served from its newly
acquired subsidiary located in the Company's service territory (see item (b)
below). The 5% contractual annual increase in the cost of power from the
Wheelabrator-Sherman facility also must be collected from the Company's
customers through future rate increases.
Using traditional ratemaking principles, MPS anticipates its general rate
case filing will support an increase in annual base revenues of approximately
$4.8 million, or a 9.5% increase in total retail rates. In addition, the
Company would also be entitled to a fuel clause increase of $500,000 in 1996
due solely to the loss of sales to the Houlton Water Company. However, the
Company does not intend to request an increase under such traditional
principles, but proposes instead a five-year rate plan, which covers the
years 1996 to 2000. The rate plan provides the Company with the rate setting
mechanism to meet growing competition in the electric utility industry while
providing stable and predictable rates to customers without competitive
options. This plan will also eliminate the need to file for annual rate
increases and saves the expenses associated with such filings. The general
elements of this plan are described below.
Total average retail rates, including fuel, will increase from 1995 levels
in accordance with the following schedule:
1996 4.5% - $2.2 million
1997 4.5% - $2.3 million
1998 3.5% - $1.9 million
1999 3.0% - $1.7 million
2000 3.0% - $1.7 million
If these rate increases are approved, the Company's rates will have increased
by approximately 30% during the decade of the 1990s compared to actual and
projected inflation of about 43% for the same period.
<PAGE>
Current Report, Form 8-K for Date of Report:
Maine Public Service Company February, 1995
Item 5. Other Material Events - Continued
As part of the Plan, the Company will propose to eliminate the annual fuel
adjustment clause except for the cost of power purchased from the
Wheelabrator-Sherman Energy Company, an independent power producer. During
the years 1996-2000, MPS will defer up to $3 million annually of its power
costs from the Wheelabrator-Sherman facility. After the current contract
with Wheelabrator-Sherman expires at the end of 2000, the Company will begin
to collect this deferral, along with carrying charges, when the price for
comparable power is expected to be lower than under the existing W-S
Contract.
MPS also proposes to write-off and not collect in retail rates
approximately $4.9 million, net of income taxes, of its remaining investment
in the Seabrook project previously supported by its Wholesale Customers,
principally Houlton Water Company.
The Plan also includes a sharing mechanism based on the proposed allowed
return on equity (ROE) at 12%. As part of an annual review process, the
allowed ROE will be adjusted annually based on an index by averaging over a
twelve-month calendar year the dividend yields on Moody's group of 24
electric utilities and Moody's utility bond yields. If the annual return is
two percentage points below the allowed return on equity, 50% of the
deficiency will be collected from customers in the subsequent year. If the
annual return on equity exceeds the allowed ROE, 50% of the excess will be
used to reduce current rates or to reduce the Wheelabrator-Sherman deferral
previously described.
The rate plan will also provide the Company with flexible pricing
provisions under which the Company can offer discounts to individual or to
selected rate classes with only minimum review by the MPUC. These provisions
will enhance its ability to compete with other suppliers of retail fuel. In
addition, the Company will propose economic development rates for new
commercial and industrial activities. An adjustment to any element of the
plan could require adjustments to other elements of the plan.
(b) Houlton Water Company's Application for Certificate of Public
Convenience and Necessity for Purchase of Firm Requirement Service from
Central Maine Power Company, MPUC Docket 94-476.
Reference is made to the Company's Form 8-K of December 7, 1994, in which
the Company reported that its largest wholesale customer, the Houlton Water
Company (HWC), had begun negotiations with Central Maine Power Company (CMP)
for the purpose of entering into a long-term contract for HWC's power
requirements beginning January 1, 1996. On December 29, 1994, HWC informed
the Company that it had executed a long-term power contract with CMP and that
it was therefore terminating its contract with the Company effective December
31, 1995.
On December 29, 1994, HWC filed with the Maine Public Utilities Commission
(MPUC) for approval of the purchase from CMP. This proceeding was given the
MPUC Docket No. 94-476. On January 12, 1995, the Company requested
permission to intervene in this proceeding. This request was granted on
February 1, 1995. The Company intends to argue that the MPUC should not
grant HWC's requested approval. The Company will base its argument on CMP's
intention to serve HWC's load from a facility that CMP acquired using State
<PAGE>
Current Report, Form 8-K for Date of Report:
Maine Public Service Company February, 1995
Item 5. Other Material Events - Continued
financing. The Company believes that State energy and regulatory policy
prohibits CMP from using a facility supported by State financing to the
detriment of the retail customers of any other utility. The Commission has
taken argument on whether its authority is broad enough to consider the
issues raised by the Company. The Company cannot predict the outcome of this
proceeding.
(c) Complaint and Petition of Maine Public Service Company to the Maine
Public Utilities Commission With Respect to a June 4, 1984 Power Purchase
Agreement Between Maine Public Service Company and the Wheelabrator-Sherman
Energy Company, Docket Nos. 94-301, 81-276, 83-264 and 83-303.
Reference is made to the Company's Form 8-K dated January 27, 1995 in which
the Company reported that on January 19, 1995, the MPUC issued its Order
dismissing the Company's Complaint and Petition in its entirety. After
reviewing the Commission's Order, the Company has determined that it will not
appeal this dismissal.
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 hereunto duly authorized.
MAINE PUBLIC SERVICE COMPANY
Registrant
February 13, 1995 L. E. LaPlante
Larry E. LaPlante, Vice President
Finance and Treasurer
