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: November, 1997
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
Current Report, Form 8-K for Date of Report
Maine Public Service Company November, 1997
Item 5. Other Material Events - Company Files for Annual Increase in
Retail Rates Pursuant to Previously Approved Rate Plan
In the Company's Form 10-K for December 31, 1996, the Company
described the rate stabilization plan approved by the Maine
Public Utilities Commission (MPUC) in Docket No. 95-052 in
November, 1995. In addition, in the Company's Form 10-Q for
the quarter ended September 30, 1997, the decision by the
Maine Yankee Board of Directors to close the nuclear
generating facility and the impact of that closure on the
Company's rate plan and financial covenants was also presented
in detail.
Amendments to the Company's revolving credit agreement and
letter of credit and reimbursement agreement supporting the
tax exempt bond issue only exclude Maine Yankee incremental
replacement power costs through September 30, 1997. Without
these amendments, the Company would have been in violation of
interest coverage tests on these instruments. Interest
coverage tests for the periods after September 30, 1997 will
include Maine Yankee replacement power costs. Based on
projected 1997 financial results, it is likely that the
Company will be in violation of its coverage tests at the end
of 1997, without similar amendments or waivers from the Banks
providing the revolving credit agreement and letter of credit.
The Company and the Banks have discussed additional amendments
to the interest coverage tests. However, the Banks are
waiting for the MPUC's decisions on the restructured
Wheelabrator-Sherman agreement and the Company's February 1,
1998 rate increase pursuant to the rate plan as discussed
below. The Company cannot predict the terms of these
additional amendments to the interest coverage tests, but is
working with the Banks to reach a resolution.
On November 13, 1997, the Company filed with the MPUC its
annual rate increase pursuant to the Company's rate plan. The
filing supports an increase in retail rates of 7.6% effective
February 1, 1998. This increase consists of the following
elements:
- 2.75% specified annual increase provided in the rate
plan;
- 2.22% increase for 50% of the Maine Yankee replacement
power costs in accordance with the Maine Yankee plant
outage provisions of the rate plan; and
- 2.63% increase in accordance with the profit-sharing
mechanism of the rate plan since earnings for the review
period, i.e. the twelve months ended September 30, 1997,
were more than 300 basis points below the target return
on equity.
Current Report, Form 8-K for Date of Report
Maine Public Service Company November, 1997
The Company expects a decision by the end of January, 1998.
However, the MPUC has commenced an investigation of the
prudence of the Maine Yankee shutdown decision and of the
operation of Maine Yankee prior to the shutdown, as more fully
explained in the Form 10-Q for the quarter ended September 30,
1997. The Company has appealed to the Maine Supreme Judicial
Court the question of whether the MPUC has jurisdiction over
this subject matter, which the Company believes to rest
exclusively with the Federal Energy Regulatory Commission.
The Company cannot predict the outcome of legal challenges to
the investigation nor predict the effect of this investigation
on the MPUC's review of the Company's rate plan filing for the
February 1, 1998 increase.
If the Company's earnings provided under the rate plan are not
sufficient to satisfy its interest coverage tests and other
obligations, the Company will likely seek an emergency rate
increase. In addition, the Company will review all cash
expenditures, including its dividends on the Company's common
stock.
MAINE PUBLIC SERVICE COMPANY
Registrant
Dated: November 19, 1997 /s/ Larry E. LaPlante
Larry E. LaPlante, Vice President
Finance, Administration and Treasurer
