SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended June 30, 1996 Commission File Number 1-3429
MAINE PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
MAINE 01-0113635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___.
(APPLICABLE ONLY TO CORPORATE ISSUERS:)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Common Stock, $7.00 par value - 1,617,250 shares
Form 10-Q
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
See the following exhibits - Maine Public Service Company and
Subsidiary Condensed Consolidated Financial Statements,
including a statement of consolidated operations for the three
and six months ended June 30, 1996 and for the corresponding
period of the preceding year; a consolidated balance sheet as
of June 30, 1996, and as of December 31, 1995, the end of the
Company's preceding fiscal year; and a statement of
consolidated cash flows for the period January 1 (beginning of
the fiscal year) through June 30, 1996, and for the
corresponding period of the preceding year.
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements present fairly the
financial position of the companies at June 30, 1996 and
December 31, 1995, and the results of their operations for the
three and six months ended June 30, 1996 and their cash flows
for the six months ended June 30, 1996.
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MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Operating Revenues $14,780 $12,471 $30,405 $28,027
Operating Expenses
Purchased Power 8,444 6,523 15,948 15,490
Other Operation and Maintenance 2,941 1,765 6,195 4,357
Depreciation and Amortization 1,029 1,070 2,059 2,140
Taxes Other Than Income 418 399 861 834
Provision for Income Taxes 565 832 1,664 1,569
Total Operating Expenses 13,397 10,589 26,727 24,390
Operating Income 1,383 1,882 3,678 3,637
Other Income (Deductions)
Equity in Income of Associated Cos. 90 88 182 176
Allowance for Equity Funds Used
During Construction 3 2 5 2
Other Income Taxes (11) (32) (21) (53)
Other - Net (5) 5 (11) 0
Total 77 63 155 125
Income Before Interest Charges 1,460 1,945 3,833 3,762
Interest Charges
Long-Term Debt and Notes Payable 852 940 1,775 1,883
Less Allowance for Borrowed Funds
Used During Construction (1) (1) (2) (1)
Total 851 939 1,773 1,882
Net Income Available for Common Stock $609 $1,006 2,060 1,880
Average Shares Outstanding (000's) 1,617 1,617 $1,617 $1,617
Earnings Per Share of Common Stock $0.38 $0.62 $1.27 $1.16
Dividends Declared per Common Share $0.46 $0.46 $0.92 $0.92
The accompanying notes are an integral part of these financial statements.
-3-
MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
June 30, December 31,
ASSETS 1996 1995
Utility Plant
Electric Plant in Service $88,596 $88,648
Less Accumulated Depreciation 40,919 39,674
Net Electric Plant in Service 47,677 48,974
Construction Work-in-Progress 1,766 427
Total 49,443 49,401
Investment in Associated Companies
Maine Yankee Atomic Power Company 3,579 3,576
Maine Electric Power Company, Inc. 65 65
Total 3,644 3,641
Net Utility Plant and Investments 53,087 53,042
Current Assets
Cash and Temporary Investments 1,474 976
Deposits for Interest and Dividends 804 744
Accounts Receivable - Net 5,503 6,226
Unbilled Base Revenue 1,207 1,472
Deferred Fuel and Purchased Energy 125 125
Current Deferred Income Taxes 161 232
Inventory 1,380 1,244
Prepayments 525 543
Total 11,179 11,562
Other Assets
Restricted Investment 4,756 0
Recoverable Seabrook Costs 28,434 29,146
Regulatory Asset - SFAS 109 & 106 13,688 13,746
Deferred Fuel and Purchased Energy 3,263 2,575
Other 3,807 4,003
Total 53,948 49,470
Total Assets $118,214 $114,074
CAPITALIZATION AND LIABILITIES
Capitalization
Common Shareholders' Equity
Common Stock $13,071 $13,071
Paid-in Capital 38 38
Retained Earnings 32,134 31,562
Treasury Stock, at cost (5,714) (5,714)
Total 39,529 38,957
Long-Term Debt (less current maturities) 41,055 36,120
Current Liabilities
Long-Term Debt Due Within One Year 1,315 1,315
Notes Payable 3,805 1,400
Accounts Payable 0 5,231
Dividends Declared 744 744
Customer Deposits 74 79
Interest and Taxes Accrued 1,644 1,124
Total 7,582 9,893
Deferred Credits
Deferred Income Tax 24,716 24,997
Investment Tax Credits 758 795
Deferred Revenues 544 354
Miscellaneous 4,030 2,958
Total 30,048 29,104
Total Capitalization and Liabilities $118,214 $114,074
The accompanying notes are an integral part of these financial statements.
-4-
MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
Statements of Consolidated Cash Flows
(Unaudited)
(Dollars in Thousands)
Six Months Ended
June 30,
1996 1995
Cash Flow From Operating Activities
Net Income $2,060 $1,880
Adjustments to Reconcile Net Income to Net Cash
Provided by Operations
Depreciation and Amortization 1,350 1,286
Amortization of Seabrook Costs 709 854
Income on Tax Exempt Bonds-Restricted Funds (6) 0
Deferred Income Taxes (247) 1,497
AFUDC (7) (3)
Change in Deferred Fuel & Purchased Energy (687) 0
Change in Deferred Regulatory and Debt Issuance Cost 538 (1,775)
Change in Deferred Revenues 190 81
Change in Benefit Obligation 825 118
Change in Current Assets and Liabilities (42) (739)
Other 285 9
Net Cash Flow from Operating Activities 4,968 3,208
Cash Flow From Financing Activities
Dividend Payments (1,488) (1,488)
Tax Exempt Bond Issuance Costs (297) 0
Issuance of Tax-Exempt Bonds 15,000 0
Drawdown on Tax Exempt Bonds Proceeds 250 0
Retirements on Long-Term Debt (10,065) (65)
Short-Term Borrowings, Net (1,400) 0
Net Cash Flow Used For Financing Activities 2,000 (1,553)
Cash Flow Used For Investing Activities
Investment in Electric Plant (1,470) (1,564)
Investment in Restricted Funds (5,000) 0
Net Cash Used For Investment Activities (6,470) (1,564)
Increase in Cash and Temporary Investments 498 91
Cash and Temporary Investments at Beginning of Year 976 2,618
Cash and Temporary Investments at End of Period $1,474 $2,709
Change in Current Assets and Liabilities Providing
Cash From Operating Activities
Accounts Receivable $722 $484
Unbilled Revenue 264 908
Inventory (136) (43)
Deferred Fuel and Purchased Energy Costs 0 (2,177)
Other Current Assets 18 (137)
Accounts Payable & Accrued Expenses (906) 240
Other Current Liabilities (4) (14)
Total Change ($42) ($739)
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Year For:
Interest $1,878 $1,753
Income Taxes $1,647 $282
The accompanying notes are an integral part of these financial statements.
-5-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned Canadian subsidiary, Maine
and New Brunswick Electrical Power Company, Limited (the Subsidiary).
The Company is subject to the regulatory authority of the Maine Public
Utilities Commission (MPUC) and, with respect to wholesale rates, the
Federal Energy Regulatory Commission (FERC).
The accompanying unaudited consolidated financial statements should be
read in conjunction with the 1995 Annual Report, an integral part of Form
10-K. Certain financial statement disclosures have been condensed or
omitted but are an integral part of the 1995 Form 10-K. These statements
reflect all adjustments that are, in the opinion of management, necessary
to a fair statement of results for interim periods presented. All such
adjustments are of a normal recurring nature. The Company's significant
accounting policies are described in the Notes to Consolidated Financial
Statements of the Company's Annual Report filed with the Form 10-K. For
interim reporting purposes, these same accounting policies are followed.
For purposes of the statements of consolidated cash flows,the Company
considers all highly liquid securities to be cash equivalents.
2. IMPLEMENTATION OF MULTI-YEAR RATE PLAN
As explained in the legal proceedings section of the Form 10-Q, item
1(b), the MPUC approved a four-year rate plan on November 13, 1995. The
Company wrote off approximately $8,340,000, net of income taxes, in 1995.
The write-offs consisted of $4,846,000, net of income taxes, of the
Company's investment in the Seabrook nuclear power project previously
allocated to the wholesale customers and $1,390,000, net of income taxes,
of other wholesale plant and regulatory assets, classified as
extraordinary items. In addition, $2,104,000, net of income taxes, of
deferred retail fuel representing replacement power costs incurred during
the 1995 Maine Yankee outage, were also charged to operations. Item
1(b) also details the significant accounting orders that became effective
January 1, 1996 concerning the deferral of $902,000, net of income taxes,
annually of Wheelabrator-Sherman purchases, the five year amortization of
the Company's $1.3 million, net of income taxes, share of the Maine
Yankee sleeving repair costs, the $638,000, net of income taxes,
amortization over ten years of deferred post-retirement benefits other
than pensions (SFAS 106). In addition, Item 1(b) discusses the five year
amortization of the $139,000 deferral of pension expenses and $92,000
deferral of early retirement expenses, both net of income taxes, related
to the lay-up of the Caribou Steam Units and the four year amortization
of $300,000, net of tax, of deferred fuel from the December 31, 1995
balance.
The elimination of the fuel clause reconciliation with the associated
fuel revenue accounting mechanism will complicate quarter-to-quarter
earnings comparisons for 1996 to 1995. The prior fuel revenue accounting
mechanism smoothed the recognition of fuel expenses over the annual fuel
reconciliation period.
-6-
The recoverable Seabrook costs represent costs to be charged to retail
customers, in accordance with previous rate orders. They are as follows:
Retail $ 43,136
Accumulated Amortization 14,702
Retail, Net 28,434
Wholesale 10,051
Accumulated Amortization (3,826)
Write-0ff (6,225)
Wholesale, Net -
Total $ 28,434
3. INCOME TAXES
A summary of Federal and State income taxes charged (credited) to income
is presented below. For accounting and ratemaking purposes, income tax
provisions included in "Operating Expenses" reflect taxes applicable to
revenues and expenses allowable for ratemaking purposes. The tax effect
of items not included in rate base is allocated as "Other Income
(Deductions)".
(Dollars in Thousands) Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Current income taxes $ 571 $ (72) $ 1,932 $ 125
Deferred income taxes 23 955 (210) 1,535
Investment credits (18) (19) (37) (38)
Total income taxes $ 576 $ 864 $ 1,685 $ 1,622
Allocated to:
Operating Income $ 565 $ 832 $ 1,664 $ 1,569
Other income 11 32 21 53
Total $ 576 $ 864 $ 1,685 $ 1,622
The following summarizes accumulated deferred income taxes established on
temporary differences under SFAS 109 as of June 30, 1996 and December
31, 1995.
(Dollars in Thousands)
June 30, December 31,
1996 1995
Seabrook $15,951 $16,071
Property 8,492 8,396
Regulatory expenses 1,063 915
Deferred fuel and purchased energy 1,003 1,027
Investment tax credits (528) (528)
Pension and postretirement
benefits (563) (262)
Other (702) (622)
Net accumulated deferred income
taxes $24,716 $24,997
-7-
4. REFINANCING
On April 4, 1991, the Maine Public Utilities Financing Bank (MPUFB)
issued $10 million of tax-exempt bonds (the "1991 Series") on behalf of
the Company. Pursuant to a letter of credit and reimbursement agreement,
the Company caused a Direct Pay Letter of Credit for a term of five years
to be issued by Barclays Bank PLC, New York Branch (Barclays Bank) for
the benefit of the holders of such bonds. To secure the Company's
obligations under the reimbursement agreement, the Company issued a
second mortgage bond to Barclays Bank as collateral for the Company's
obligation to repay Barclays Bank the $10 million principal amount of the
bonds plus 195 days of interest on the bonds. The bonds had a coupon
rate of 7.875% and, after considering the enhancement fees and other
costs, the annual cost to the Company was approximately 8.725%.
Barclays Bank notified the Company that it would not renew the Direct Pay
Letter of Credit for this issue. With the expiration of the Direct Pay
Letter of Credit on April 4, 1996, the entire $10 million principal
amount of the bonds was redeemed at par on April 1, 1996 in accordance
with the indenture. To meet its reimbursement obligation that resulted
from the draw on the Barclays Direct Pay Letter of Credit prior to its
expiration, the Company borrowed $10,000,000 under a refunding note from
Fleet Bank of Maine with interest at LIBOR plus .75% and a facility fee
of $25,000. For the term of the note, the effective interest rate was
7.27%.
On June 19, 1996, the Maine Public Utilities Financing Bank (MPUFB)
issued $15 million of its tax-exempt bonds due April 1, 2021 (the "1996
Series") on behalf of the Company. The proceeds of the new 1996 Series
were used to refund the 1991 Series through the payment of the refunding
note from Fleet Bank of Maine and provides $5 million for the acquisition
of qualifying property, of which $4.8 million remains in trust as of June
30, 1996. Pursuant to the long-term note issued under a loan agreement
between the Company and the MPUFB, the Company has agreed to make
payments to the MPUFB for the principal and interest on the bonds.
Concurrently, pursuant to a letter of credit and reimbursement
agreement, the Company caused a Direct Pay Letter of Credit for an
initial term of three years to be issued by the Bank of New York for the
benefit of the holders of such bonds. To secure the Company's
obligations under the letter of credit and reimbursement agreement, the
Company issued a second mortgage bond to the Bank of New York, as Agent,
under the reimbursement agreement, in the amount of $15,875,000. The
Company has the option of selecting weekly, monthly, annual or term
interest rate periods for the 1996 Series. The initial interest period
selected by the Company was weekly, and the intital weekly interest rate
was 3.75% per annum.
5. DISCONTINUANCE OF SFAS 71 FOR WHOLESALE BUSINESS SEGMENT
The wholesale market for electric power is now competitive, as evidenced
by the Company's loss of a major wholesale customer, Houlton Water
Company. The rates that the Company is now charging its remaining
wholesale customers are based on market pricing and not rate base/rate of
return regulatory formulas. For this reason, the Company has
discontinued the application of Statement of Financial Accounting
Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain Types
of Regulation," for its wholesale business jurisdiction. These write-
offs were classified as extraordinary items associated with the
discontinuance.
-8-
6. EARLY RETIREMENT PROGRAM
In March 1996, the Company offered an early retirement program to
selected employees. All eligible employees will participate in the
program. As a result, in accordance with Statement of Financial
Accounting Standards No. 88 (SFAS 88), "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," the Company recognized a first quarter charge of
$258,000, net of taxes.
-9-
Item 2. Management's Analysis of Quarterly Income Form 10-Q
Statements
Results of Operations
Earnings per share and net income available for common stock for
the three months ended June 30, 1996 along with the
corresponding information for the previous year are as follows:
Three Months Ended
June 30
1996 1995
Earnings per share $ .38 $ .62
Net income
available for Common
Stock - in Thousands $ 609 $1,006
For the second quarter of 1996 compared to the same quarter last
year, the decrease in consolidated earnings per share of $.24 is
attributable to the following:
Increase
(Decrease)
Increase in fuel expenses $ (.19)
Increase in Maine Yankee capacity expenses (.21)
Decrease due to loss of Houlton Water Company (.20)
Increase in power marketing activities .25
Increase in retail revenues due to rate
increases effective January 1, 1996,
net of a 1% decrease in sales .20
Other (.09)
Total $ (.24)
Under terms of a four-year rate plan approved by the Maine
Public Utilities Commission (MPUC), the fuel clause was
eliminated with the exception of the annual deferral of
$902,000, net of income taxes, of the costs of its purchases
from Wheelabrator-Sherman, an independent power producer. The
elimination of the fuel clause reconciliation with the
associated fuel revenue accounting mechanism will complicate
quarter-to-quarter earnings comparisons for 1996 to 1995. The
prior fuel accounting mechanism smoothed the recognition of fuel
expenses over the annual fuel reconciliation period. After
-10-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
considering this deferral and the effects of fuel accounting in
1995, retail fuel expenses for the second quarter of 1996 were
$.19 per share more than for the same quarter in 1995. Maine
Yankee capacity expenses, including the amortization of the 1995
resleeving expenses, increased in 1996 further reduced earnings
by $.21 per share. The loss of Houlton Water Company as a
wholesale customer, due to competitive bidding, also reduced
earnings for the second quarter of 1996 by $.20 per share
compared to the same period in 1995. Partially offsetting these
decreases were a $.25 per share increase due to power marketing
activities, principally the sale of the Company's Maine Yankee
and Wyman No. 4 entitlements, and a $.20 per share increase due
to a rate increase effective on January 1, 1996 partially offset
by a 1% decrease in retail sales. The January 1, 1996 increase
in retail rates was approved by the Maine Public Utilities
Commission (MPUC) under the terms of a four-year rate plan.
Consolidated operating revenues for the quarter ended June 30,
1996 and 1995, are as follows:
1996 1995
(Dollars in Thousands) $ MWH $ MWH
Retail 10,878 115,293 10,556 116,510
Sales for Resale 484 12,013 1,643 28,028
Total Primary Sales 11,362 127,306 12,199 144,538
Secondary Sales 3,095 145,927 196 6,719
Other Revenues/Rev. Adjust. 323 76
Total Operating Revenues 14,780 273,233 12,471 151,257
-11-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
Primary sales in the second quarter of 1996 were 127,306 MWH,
a decrease of 17,232 MWH from the same period last year.
Sales for resale decreased 16,015 MWH due to the loss of the
Company's largest wholesale customer, Houlton Water Company
(HWC). HWC began purchasing their energy from Central Maine
Power on January 1, 1996, resulting from HWC's solicitation
for competitive prices in late 1994. In 1995, HWC represented
11.1% of the Company's consolidated MWH sales and 8.4% of
consolidated operating revenues. Secondary sales increased by
139,208 MWH, reflecting the availability of Maine Yankee
during the second quarter of 1996 while the plant was out of
service during the same quarter in 1995, and an increase in
power marketing activities.
Retail revenues for the second quarter of 1996 were
$10,878,000 compared to $10,556,000 for the same period of
1995, reflecting the new retail rates effective January 1,
1996, offset by a 1,217 MW decrease in retail sales. For
1995, an element of revenues was determined using seasonal
fuel revenue accounting associated with the prior fuel clause,
eliminated with the rate plan, which smoothed the recognition
of fuel expenses and the element of revenues over the
reconciliation period. Sales for resale revenues decreased in
1996 due to the loss of HWC as discussed above.
During the second quarter of 1996, secondary sales of the
Company's Wyman Unit No. 4 and Maine Yankee entitlements for
varying lengths of time were made at prevailing market rates,
representing the Company's power marketing activities. Since
Maine Yankee was not available for the same period in 1995,
secondary sales for the quarter were limited to Wyman No. 4
entitlements.
-12-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
For the second quarters ended June 30, 1996 and 1995, total
operating expenses were $13,397,000 and $10,589,000,
respectively. The changes in operating expenses and energy
sources are as follows:
Increase/(Decrease)
(Dollars in Thousands) $ MWH
Purchased Power Expenses
Maine Yankee 896 84,276
Wheelabrator-Sherman 373 1,640
NB Power (864) (34,396)
Bangor Hydro-Electric 76 3,364
LG&E Power Marketing 1,451 67,431
System Purchases (11) (337)
1,921 121,978
Deferred Fuel 1,065
Generating Expenses (304) (1,050)
Other Operation & Maint. Expenses 415
Depreciation and Amortization
Expenses (41)
Income Taxes (267)
Taxes Other than Income 19
Total 2,808 120,928
Maine Yankee was out of service for all of the second quarter
of 1995, while it operated at a 90-percent level of operation
during the entire second quarter of 1996. Reference is made
to the Company's 1995 Annual Report, "Analysis of Financial
Condition and Review of Operations - 1995, Maine Yankee", for
further discussion of the 12-month outage for sleeving repairs
to the plant's steam generator tubes. For an update on Maine
Yankee, please see the following section titled, "Maine Yankee
Status". The 84,276 MWH increase in Maine Yankee production
and a 67,431 MWH increase in purchases from LG&E in 1996
allowed the Company to reduce purchases from NB Power by
34,396 MWH and provided the energy for the 139,208 MWH
increase in secondary sales mentioned above. With the
implementation of the rate plan, the change in deferred fuel
expenses reflects the elimination for 1996 of the fuel revenue
accounting associated with the prior fuel clause, as discussed
-13-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
in the "Legal Proceedings" section of this Form 10-Q, item
1(b). During the second quarter of 1996, under the same rate
plan, the Company has deferred $375,000 ($1.5 million
annually) of its Wheelabrator-Sherman purchased power costs.
Generating expenses decreased by $304,000, primarily due to
the Steam Units at Caribou being placed on inactive status on
January 1, 1996 and decreased production at Wyman Unit No. 4.
See "Caribou Units" below for further discussion. The Company
has a 3.3455% ownership interest in Wyman Unit No. 4, and does
not control the generation levels. Other operation and
maintenance expenses increased by $415,000 due to a $160,000
increase in wheeling expenses due to increased power marketing
activities, a $97,000 increase in overhead line maintenance
and a $70,000 increase in legal expenses, primarily due to the
People's Heritage Bank suit discussed in the "Legal
Proceedings" section of this Form 10-Q, item 1(c).
Maine Yankee Status
Reference is made to the Company's 1995 Annual Report,
"Analysis of Financial Condition and Review of Operations -
1995, Maine Yankee", for discussion of the 12-month outage for
sleeving repairs to the plant's steam generator tubes and
Maine Yankee's return to service at 90% of the plant's
capacity on January 22, 1996.
On June 7, 1996, the Nuclear Regulatory Commission (NRC)
formally notified Maine Yankee that it planned to conduct an
"Independent Safety Assessment" of the Maine Yankee Plant to
provide an independent evaluation of the safety performance of
Maine Yankee and as a "follow-on" to the NRC's Office of
Inspector General (OIG) report. The NRC stated that the
overall goals and objectives of the assessment were: "(a)
provide an independent assessment of conformance to the design
and licensing basis; (b) provide an independent assessment of
operational safety performance; (c) evaluate the effectiveness
of licensee self-assessments, corrective actions and
improvement plans and; (d) determine root cause(s) of safety
significant findings and conclusions." The NRC further
informed Maine Yankee that the assessment would be carried out
by a team of NRC personnel and contractors who were
"independent of any recent or significant involvement with the
-14-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
licensing, regulation or inspection of Maine Yankee," and was
expected to last until early October, 1996. Such a rigorous
assessment by the NRC could result in the Maine Yankee Plant
being shut down for some period of time. Maine Yankee,
however, cannot predict the outcome of the Independent Safety
Assessment.
Maine Yankee cannot predict whether or when the plant will
attain a 100-percent operating level, or the results of the
internal and external investigations of the allegations
brought to Maine Yankee's attention on December 4, 1995.
Maine Yankee intends to cooperate with the governmental
investigations, however, and believes that the information
filed with the NRC on April 25, 1996, in support of plant
operation at full capacity should allow the Company to operate
the plant at that level while meeting all applicable NRC
safety requirements.
On July 20, 1996, Maine Yankee brought the plant off line to
add pressure relief capacity to the primary component cooling
system ("PCCS"). The need to add this relief capacity was
determined during a comprehensive internal review by Maine
Yankee of plant systems and equipment. During this review,
Maine Yankee found a possible inadequacy in the ability of the
PCCS to allow sufficient pressure to be relieved from the PCCS
under design-basis postulated accident conditions.
Caribou Units
Reference is made to the Company's Form 8-K dated July 13,
1995 in which the Company reported that, at a regular meeting
on July 7, 1995, the Board of Directors authorized placing on
inactive status Steam Units 1 and 2 of the Company's Caribou
Generating Facility in Caribou, Maine. The Company
inactivated the Units on January 1, 1996 and expects that they
will remain inactive for five years or longer. These two
units, which represent 23 MW of capacity, have become surplus
to the Company's needs due to the closure of Loring Air Force
Base and the loss in 1996 of the Company's largest customer,
the Houlton Water Company. During the Units' inactive period,
the plant equipment will be protected and maintained by the
-15-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
installation of a dehumidification system that will permit the
plant to return to service in approximately six months.
Placing Steam Units 1 and 2 on inactive status will save the
Company approximately $3.5 million over the next five years.
These savings result primarily from a savings in operation and
maintenance expense. The Company eliminated 12 positions at
the plant and conducted a voluntary early retirement program
that avoided involuntary termination of employees whose
positions at the units have been eliminated. The expenses of
the voluntary early retirement plan of approximately $231,000,
net of income taxes, as well as the expenses to lay-up the
Steam Units will be amortized over five years in accordance
with the rate plan. The rate plan allows the Company to
continue rate base treatment for unrecovered plant costs and
depreciation on the Caribou Steam Units, which had a net book
value of approximately $718,000 as of January 1, 1996.
Steam Unit No. 1 went into operation in the early 1950s and
Unit No. 2, in the mid 1950s. The Company still has a diesel
generation station of approximately 7 MW and a hydro facility
of approximately 1 MW and will continue to employ 11 employees
at the Caribou facility.
Financial Condition
The accompanying Statements of Consolidated Cash Flows reflect
the Company's liquidity and the net cash flows generated by or
required for operating, financing and investing activities.
For purposes of the Statements of Consolidated Cash Flows, the
Company considers all highly liquid securities to be cash
equivalents.
Net cash flows from operating activities were $4,968,000 for
the first six months of 1996. $10,000,000 of tax-exempt bonds
were issued in 1991 and were refinanced with a new $15,000,000
issue, with the remaining $5,000,000 deposited with the
trustee to be withdrawn based on qualified property additions.
See "New Financing" below for further discussion. $250,000
was drawn from the trustee of the tax-exempt bonds discussed
below for issuance expenses incurred. For the period,
-16-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
$1,470,000 was invested in electric plant, $1,488,000 was paid
in dividends and $65,000 was used to reduce other long-term
debt. $1,400,000 was used to pay off short-term borrowings.
For the six months ended June 30, 1995, net cash flows from
operating activities were $3,208,000. For the first six
months of 1995, the Company invested $1,564,000 in electric
plant, paid $1,488,000 in dividends, and reduced long term
debt by $65,000. Cash flows for 1995 were impacted by the
reduction in earnings and the previously mentioned replacement
power purchases during the Maine Yankee outage.
See "Legal Proceedings", paragraph 1(b) of this Form 10-Q for
a description of the multi-year rate plan approved by the
Maine Public Utilities Commission in November, 1995, effective
January 1, 1996. The rate plan will assist the Company in
dealing with the economic uncertainties that lay ahead with
the loss of Loring and Houlton. The Plan provides stable,
predictable rates for our customers, economic development
rates to encourage investment in our service territory, and
competitive returns for our shareholders.
New Financing
On June 19, 1996, the Maine Public Utilities Financing Bank
(MPUFB) issued $15 million of its tax-exempt bonds due April
1, 2021 (the "1996 Series") on behalf of the Company. The
proceeds of the new 1996 Series were used to refund the $10
million 1991 tax-exempt Series through the payment of a
refunding note from Fleet Bank of Maine and provides $5
million for the acquisition of qualifying property. Pursuant
to the long-term note issued under a loan agreement between
the Company and the MPUFB, the Company has agreed to make
payments to the MPUFB for the principal and interest on the
bonds. Concurrently, pursuant to a letter of credit and
reimbursement agreement, the Company caused a Direct Pay
Letter of Credit for an initial term of three years to be
issued by the Bank of New York for the benefit of the holders
of such bonds. To secure the Company's obligations under the
letter of credit and reimbursement agreement, the Company
issued a second mortgage bond to the Bank of New York, as
-17-
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements
Results of Operations (Continued)
Agent, under the reimbursement agreement, in the amount of
$15,875,000. The Company has the option of selecting weekly,
monthly, annual or term interest rate periods for the 1996
Series. The initial interest period selected by the Company
was weekly, and the initial weekly interest rate was 3.75% per
annum. Please see further discussion in Footnote 4 of the
financial statements accompanying this Form 10-Q.
-18-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(a) Maine Public Utilities Commission, Re: Electric Utility
Industry Restructuring Study, Docket No. 95-462.
In 1995, the Maine Legislature passed Resolve 89 "To
Require a Study of Retail Competition in the Electric
Utility Industry" (the "Resolve"), to begin a process for
developing recommendations on the future structure of the
electric utility industry in Maine. The process included
the appointment of a Work Group on Electric Utility
Restructuring to develop a plan for the orderly
transition to a competitive market for retail purchases
and sales of electricity. The Company participated in
this Work Group, which was unable to reach a consensus on
a recommended plan by its reporting deadline.
The Resolve also directed the Maine Public Utilities
Commission (MPUC) to conduct a study to develop at least
two plans for the orderly transition to retail
competition in the electric utility industry in Maine and
to submit a report of its findings by January 1, 1997.
One plan would be designed to achieve "... full retail
market competition for purchases and sales of electric
energy by the year 2000" and the other to achieve a more
limited form of competition. The Resolve also stated
that the MPUC's findings would have no legal effect, but
would "... provide the Legislature with information in
order to allow the Legislature to make informal decisions
when it evaluates these plans."
On December 12, 1995, the MPUC issued a Notice of Inquiry
(the "Notice") initiating its study. In the Notice, the
MPUC solicited detailed proposals and plans for achieving
retail competition in Maine by the year 2000 and
requested the proposals include specific plans for an
orderly transition to a more competitive market. The
Notice required that plans and proposals be filed with
the MPUC by interested parties no later than January 31,
1996, and outlined a schedule calling for submittal of a
final report to the Legislature in December, 1996.
On January 30, 1996, the Company filed its restructuring
proposal with the MPUC. The major elements of this
proposal are:
-19-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
(a) The separation of the Company's generation assets
(including contracts and entitlements) from its
transmission and distribution assets. The Company
suggested this separation could be accomplished by either
a functional separation of generation from distribution
and transmission within the Company's existing corporate
structure or by separating generation, on the one hand,
and distribution and transmission, on the other, into two
wholly-owned subsidiaries. The Company strongly opposes
any recommendation that it be required to divest itself
of its generation assets.
(b) The economic and resource planning regulation of
generation would cease. The FERC would continue to
regulate transmission, and distribution would remain a
franchised monopoly subject to continued regulation by
the MPUC. The owner of the distribution system would be
obligated to connect all willing customers.
(c) If certain necessary changes in the operation and
management of the regional transmission grid are in
place, all retail customers in Maine would, by the year
2000, be entitled to purchase electric energy directly
from any entity that wished to supply it to them.
(d) The Company would be entitled to full recovery of
all its stranded costs. This recovery would be
accomplished by a charge on the distribution system that
would apply to all retail customers. In its filing, the
Company estimates that its stranded costs could be as
high as $68 million. This amount consists primarily of
the above-market costs of the Company's contract with
Wheelabrator-Sherman, a non-utility generator, estimated
at $44 million and deferred regulatory assets, such as
its Seabrook investment of $24 million.
The Company's proposal, however, was only one of over a
dozen received by the MPUC in response to its Notice,
some of which take positions on these matters that vary
substantially from the Company's.
On July 19, 1996, the MPUC issued its Draft Plan in this
matter, which, in its own terms, represents the MPUC's
"preliminary view" on how to restructure Maine's electric
-20-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
utility industry. The Draft Plan recommends the
following:
. As of January, 2000, all Maine consumers would
have the option to choose an electric power
supplier.
. As of January, 2000, Maine would not regulate,
as public utilities, companies producing or selling
electric power.
. Regulated public utilities would continue to
provide electric transmission and distribution
services.
. As of January, 2000, the Company, Central
Maine Power Company (CMP) and Bangor Hydro-Electric
Company (BHE), the State's three largest electric
utilities, would be required to structurally
separate their generation assets and functions from
transmission and distribution functions. CMP and
BHE would be required to fully divest themselves of
their generation assets by 2006. The Draft Plan
does not recommend generation divestiture for the
Company. Instead, the MPUC requested additional
comment "on whether MPS should be required to
divest its generation assets as described [in this
Draft Plan], by another method, or not at all."
. All contracts between the utilities and any
qualifying facilities under PURPA will remain with
the transmission and distribution companies.
. The utilities should be provided a reasonable
opportunity to fully recover its generation-related
stranded costs. All of the Company's anticipated
stranded costs are generation-related.
The MPUC has requested comment on its Draft Plan by
August 30, 1996. These comments could result in the
MPUC's modification of its preliminary recommendations.
Moreover, because the MPUC's final recommendation will
not have any binding legal effect, this issue must
ultimately be resolved by the Maine Legislature. Many
parties to this proceeding have taken positions that vary
-21-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
substantially from those set forth in this Draft Plan and
those parties can be expected to advocate their positions
before the Legislature. The Company cannot, therefore,
predict what form the restructuring of Maine's electric
utility industry will ultimately take or what effect that
restructuring will have on the Company's business
operations or financial results.
(b) Multi-year Rate Plan is Approved for the Company by the
MPUC in Maine Public Service Company Re: Proposed
Increase in Retail Rates, MPUC Docket No. 95-052
On May 1, 1995, Maine Public Service Company filed with
the Maine Public Utilities Commission a proposed increase
in the rates it charges its retail customers. The
Company at the same time filed a five-year rate plan
requesting new rates beginning in January, 1996 as
detailed below. Reference is made to the Company's Form
10-Q for the quarter ended June 30, 1995 for a complete
description of the Company's filed rate plan.
After extensive negotiations, the Company, the MPUC Staff
and the Public Advocate filed a Stipulation with the
Commission on November 6, 1995, which established a four-
year rate plan for the Company. The one remaining party
to this proceeding, McCain Foods, Inc., opposed this
Stipulation. After a hearing on November 13, 1995, the
MPUC approved this Stipulation over the objection of
McCain Foods, Inc.
Under the terms of the Stipulation, the Company has the
right to receive the following increases:
January 1, 1996 4.4% $2.1 million
February 1, 1997 2.9% 1.4 million
February 1, 1998 2.75% 1.4 million
February 1, 1999 2.75% 1.4 million
These increases will be subject to increases or decreases
resulting from the operation of the profit-sharing
mechanism, as well as the mandated costs and plant outage
provisions described below. The Company agreed that it
will seek no other increases, for either base or fuel
rates, except as provided under the terms of the rate
-22-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
plan. There will be no fuel clause adjustments during
the term of the plan.
The Company also agreed to write off, in 1995, and not
collect in retail rates the following amounts:
(a) $4,845,812, net of income taxes, of its
investment in Seabrook previously allocated to wholesale
sales.
(b) $1,390,000, net of income taxes, in other plant
investment, i.e. rate base, except transmission plant,
previously associated with the wholesale customers.
(c) $3,500,000 ($2,104,000, net of income taxes) in
deferred fuel.
The total amount of the write-offs, net of income taxes,
in 1995 are approximately $8,340,000, or approximately
$5.16 per share of common stock.
As a condition of the Stipulation, the Company requested
waivers for interest coverage tests under its revolving
credit arrangement and the Letter of Credit supporting
the public utility revenue bonds, 1991 series. Unless
these write-offs were considered extraordinary for
purposes of the interest coverage tests, the Company
would have been in violation of these interest coverage
tests. The waivers were received from the various
lenders prior to the MPUC's issuance of its order in this
proceeding.
The Company will also be permitted to defer an amount of
$1.5 million annually of the costs of the W/S purchases
over the term of the rate plan. The approved rate plan
provides that the Company can seek recovery of this
deferred amount (up to a total of $6 million) in rates
beginning in the year 2001, after the current term of the
W/S contract has expired. The Company will further
amortize over the four years of the rate plan, $300,000,
net of income taxes, in deferred fuel with the remainder,
approximately $1.3 million, net of income taxes, being
deferred until the year 2000.
-23-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
The approved rate plan further provides for the following
treatment of the Maine Yankee steam generator sleeving
costs: the Company will amortize its share of these
costs in equal amounts over a five-year period beginning
on January 1, 1996. At the expiration of the rate plan,
the remaining one-fifth of the costs will be amortized in
2000 subject to rate treatment at that time.
The approved rate plan contains a profit-sharing
mechanism based upon a target return of equity (ROE) of
11%, calculated according to retail ratemaking
mechanisms. This profit-sharing mechanism will apply
only to the last two rate increases scheduled to occur on
February 1, 1998 and February 1, 1999. As part of this
review process, the target ROE will be subject to
adjustment based on an index by averaging over a twelve-
month period the dividend yields on Moody's group of 24
electric utilities and Moody's utility bond yields. The
profit-sharing mechanism works as follows:
If the Company's ROE exceeds the target ROE by less than
300 basis points, this gain accrues entirely to
shareholders. Similarly, any deficiency of up to 300
basis points below the target ROE is borne entirely by
the shareholders.
All deficiencies of 300 or more basis points below the
target ROE will be shared equally by shareholders and
customers. All earnings of 300 or more basis points
above the target ROE must first be applied to reduce any
of deferred W/S costs described above. Any remaining
excess earnings will be shared equally by customers and
shareholders.
The plan also allows the Company to terminate the rate
plan and file for rate increases under traditional rate
application procedures if its earnings fall 500 or more
basis points below the target ROE during any twelve-month
period during the term of the plan.
The method agreed to by the parties for measuring earned
ROE for the purpose of the profit-sharing mechanism and
rate termination provision described above, allocates
various revenues and expenses between the wholesale and
retail jurisdictions using allocators that, in part,
-24-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
reflect the Company's 1994 allocations. With the loss of
sales to Houlton Water Company in 1996, the Company
estimates that the use of the agreed-upon allocators will
produce a calculation of earnings for the profit-sharing
and termination mechanisms that could be as much as 400
basis points above the Company's actual financial ROE.
Because of this disparity, the Stipulation provides that
the agreed-upon allocation methodology will not apply if
the use of those allocators will require the Company to
write off any additional assets in accordance with
Generally Accepted Accounting Principles (GAAP). In that
event, the parties have agreed to develop a different
method for calculating profit-sharing and termination
that will not require the Company to write off any
additional assets.
The plan also provides that if either Maine Yankee or
Wheelabrator-Sherman cease operation for more than six
months, the Company shall be allowed to adjust its
allowed rate increases by 50% of the net costs or net
savings resulting from the outage, together with any
carrying costs on the balance deferred. Any net costs or
net savings during the first six months of the outage
would accrue entirely to shareholders.
The plan further contains a mechanism for allocating the
savings resulting from any restructuring of the W/S
contract during the term of the plan. Any savings would
be allocated first to the W/S deferred costs accumulating
at $1.5 million annually, then to the deferred fuel
balance as of December 31, 1995 being deferred until
2000, next to eliminate any on-going W/S deferrals and
finally, any savings that remain will be allocated 95% to
customers and 5% to shareholders.
The plan provides that the Company can flow through to
customers at the time of the scheduled rate increases,
increases or decreases resulting from certain mandated
costs, such as tax or accounting changes, but not costs
resulting from natural disasters. To qualify, a mandated
cost must receive MPUC approval, must be beyond the
control of the Company's management, must effect the
Company specifically or the electric utility generally
and must exceed $300,000 in annual revenue requirements.
-25-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
The Stipulation also provides for a number of accounting
orders. Among these are orders: permitting the Company
to amortize deferred post-retirement benefits other than
pension (SFAS 106) expenses in equal amounts over a ten-
year period beginning January 1, 1996, along with the
recovery of current year SFAS 106 costs; permitting the
Company to continue rate base treatment for unrecovered
plant costs and depreciation on the Caribou Steam Units
as well as the deferral and amortization over five years
of the reduction in force expenses (including pension
expenses under SFAS 88) resulting from the closing of
those units; and continued deferral and amortization of
replacement power and capacity costs associated with
Maine Yankee scheduled outages. Finally, the Stipulation
clarifies that the rate plan is not deregulation for
accounting purposes and provides for the continuing
recovery in rates of certain "regulatory assets", such as
the retail portion of the Company's Seabrook investment,
previously allowed by the MPUC.
On January 2, 1996, McCain Foods, Inc., which had
objected to the Stipulation, appealed the MPUC's approval
of the rate plan to the Maine Supreme Judicial Court.
This action was docketed as PUC 96-13. On March 20,
1996, the Company and McCain Foods filed with the
Commission a Power Purchase Agreement under which McCain
agreed to purchase all its electrical requirements from
the Company through 2000. On April 29, 1996, the MPUC
approved the Agreement and McCain dismissed its appeal
shortly thereafter.
In addition to the four-year rate plan, the MPUC, under
this docket, also approved the Company's proposal to
develop flexible rates to retain or attract new
customers. On October 23, 1995, the Company implemented
a reduced Rate AH for residential electric space heat.
Customers who have a permanent electric space heat system
that supplies at least 50% of their heating requirements
have been offered a discount up to 40% from October to
April.
On November 27, 1995, the MPUC approved two new rates
that became effective December 1, 1995. The first, Rate
F, provides farmers with a discounted price for
electricity used in storage facilities, reducing their
-26-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
winter electric rate ten percent from November through
March. The second, Rate EDR, an economic development
rate, provides a multi-year discount in the cost of
electric service for large commercial and industrial
customers who create new electrical load. This reduced
rate should encourage development in our electrical
service territory by providing an incentive rate while a
new business gets established or an existing business,
meeting certain criteria, completes expansion. Depending
on eligibility, the discount offered will range from 20%
the first year to 5% in the fourth year. After the four-
year period, EDR customers will be billed under the
Company's standard electric rates.
(c) Peoples Heritage Bank v. Maine Public Service Company
U.S. District Court (D. ME) Civil Action No. 95-0180-B
On September 18, 1995, Peoples Heritage Bank filed
against the Company a civil action for declaratory and
monetary relief seeking recovery for response costs,
damages and attorneys fees incurred because of the
release of hazardous substance at a site in Presque Isle,
Maine. In 1992, Peoples Heritage purchased the property
and shortly thereafter discovered that the soil at the
site was contaminated with polychlorinated biphenyls
(PCBs) which it now alleges originated with two
electrical transformers placed on the site by the
Company. Peoples Heritage claims to have spent in excess
of $250,000 to remove the PCB contaminated soil and seeks
reimbursement of this amount.
The suit is brought pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 (CERCLA), the Federal Declaratory Judgment Act and
under common law grounds of strict liability for
abnormally dangerous activities, negligence and trespass.
The Company has denied liability in this matter but
cannot predict the outcome of this action.
-27-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
(d) Maine Public Service Company, Request For Open Access
Transmission Tariff, FERC Docket No. ER 95-836-000.
On March 31, 1995, the Company filed an open access
transmission tariff with the Federal Energy Regulatory
Commission (FERC). This tariff provides fees for various
types and levels of transmission and transmission-related
services that are required by transmission customers.
The tariff, as filed, substantially increases some of the
fees for transmission services and provides separate fees
for various transmission-related services. On May 31,
1995, the FERC approved the filed tariff, subject to
refund. The filing has been vigorously contested by the
Company's wholesale customers. In April, 1996, the FERC
issued Order 888, a final rule on open transmission
access and stranded cost recovery. As a result, the
Company refiled its tariff on July 9, 1996 to comply with
the Order. Utilities are required to file tariffs under
which they would provide transmission services,
comparable to that which they provide themselves, to
third parties on a non-discriminatory basis. A decision
by the FERC is not expected until later in 1996. The
Company cannot predict FERC's ultimate decision in this
matter.
(e) Maine Public Service Company, Proposed Increase in Rates
(Rate Design), MPUC Docket No. 95-052.
On June 15, 1995, the MPUC issued an order bifurcating
the Company's request for rate design from the revenue
requirement portion of this docket (see item (b) above).
Based upon marginal cost of service principles, the
Company has proposed a substantial redesign of its
current rates. For example, under the Company's proposed
rates for large industrial customers would have decreased
from their current level by nearly 8%, while rates for
residential customers would have increased by over 8%.
The Company's proposals were vigorously contested by the
MPUC Staff and the Public Advocate, who propose only a
small decline for large industrial customers and a very
minor increase for residential. Hearings were held on
this matter before the MPUC on March 14 and 15, 1996.
-28-
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Continued
On June 26, 1996, the MPUC issued its Order in this
matter. The MPUC found that, despite some infirmities in
the Company's supporting data, the Company was entitled
to a more substantial reallocation of its rates than
advocated by the MPUC Staff and Public Advocate. As a
result, rates for large industrial customers will
decrease by approximately 4.5%, while rates for
residential and commercial customers will increase by
approximately 1% and 3%, respectively. These changes
became effective June 29, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders, held on May
14, 1996, the only matter voted upon was the uncontested
election of the following directors to serve until the 1999
Meeting of Stockholders, each of whom received the votes
shown:
Non-voters and
Nominee For Against Abstentions
D. James Daigle 1,380,715 22,433 214,102
Deborah L. Gallant 1,374,834 28,314 214,102
G. Melvin Hovey 1,379,191 23,957 214,102
Walter M. Reed, Jr. 1,374,834 24,219 218,197
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) Reports on Form 8-K.
A Form 8-K was filed on July 25, 1996, under Item 5,
Other Material Events.
-29-
FORM 10-Q
PART II. OTHER INFORMATION - Continued
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.
MAINE PUBLIC SERVICE COMPANY
(Registrant)
Date: August 8, 1996 Larry E. LaPlante
Larry E. LaPlante, Vice President
Finance, Administration and Treasurer
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