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: April, 1999
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
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Current Report, Form 8-K for Date of Report
Maine Public Service Company April, 1999
Item 5(a) Other Material Events - Maine Public Utilities Commission Issues
Order Approving Sale of Generating Assets
Reference is made to the Company's Form 10-K for December 31, 1998,
where the Company's efforts to divest of its generating assets in
accordance with Maine's restructuring law are discussed. On July
7, 1998, the Company reported that it had agreed to sell all of its
generating assets to WPS Power Development, Inc. (WPS-PDI) for $37.4
million. On August 7, 1998, the Company filed with the Maine
Public Utilities Commission (MPUC) for approval of this sale.
In an earlier order approving the Company's divestiture plan, Docket
No. 97-670, the MPUC noted a number of concerns regarding sale of
the assets. Principal among these concerns is whether the Company's
lack of any connection to New England electrical markets, except
through the Province of New Brunswick, Canada (NB) and the
transmission system owned by the Maine Electric Power Company (the
MEPCO line) presented unique issues concerning development of an
adequate competitive retail market for electricity in northern Maine
and directed the Company to address these concerns when it filed for
approval.
On January 29, 1999, the Company filed a Partial Stipulation in this
Docket. Under the terms of this Stipulation, the parties agreed
that access to northern Maine's electrical markets exclusively
through the transmission of the New Brunswick Power Corporation (NB
Power) and the MEPCO line "is no longer a substantial barrier to the
development of an adequate retail market for electricity in northern
Maine" and that any market power issues in northern Maine should not
prevent the MPUC from approving the sale of the Company's generation
assets to WPS-PDI.
The basis for this Stipulation is a Products and Service Agreement
reached in principal between NB Power, on the one hand, and the
Company, Houlton Water Company, Eastern Maine Electric Cooperative,
Inc. and the Van Buren Light and Power District (collectively, "the
northern Maine utilities"), on the other (the "P&SA"). Under this
Agreement, NB Power agrees to supply: (i) tie-line interruption
service, on a firm or non-firm basis, to any northern Maine utility
requiring it; (ii) ancillary services to any northern Maine utility;
(iii) transmission services through NB to any northern Maine utility
at a fixed rate that can be increased only by authorization of the
proper NB regulatory authority; and (iv) bona fide offers of
energy and capacity and other electric products and service to any
customer of any northern Maine utility. It is understood that
northern Maine utilities will transfer these services at cost to
competitive electricity providers.
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Current Report, Form 8-K for Date of Report
Maine Public Service Company April, 1999
In its April 5, 1999 Order, the MPUC approved the Company's sale of
its generation assets to WPS-PDI. The MPUC noted that the P&SA
"mitigates market power to a significant extent and, as a result, it
is reasonable to allow the sale of MPS assets." The MPUC expressly
did not decide whether the sale could proceed in the absence of the
P&SA.
As of this date, NB Power has not executed the P&SA. The parties
have discovered a misunderstanding concerning the terms under which
NB Power would offer some of the ancillary services. All parties
are attempting to reach a common understanding on these terms. MPS
expects the parties will be able to reach agreement on these
issues, but cannot predict the outcome with full certainty. The
Company cannot, moreover, predict whether NB Power would sign the
P&SA absent agreement on those remaining terms. The Company
does believe that NB Power's refusal to execute the P&SA would cause
the MPUC to reconsider its approval of the sale to WPS-PDI, but
cannot predict the result of any such reconsideration.
Item 5(b) Other Material Events - Maine Public Utilities Commission Issues
Order Approving Stipulation Under Rate Stabilization Plan.
Reference is made to the Company's Form 10-K for December 31, 1996
where the Company's rate stabilization plan approved by the Maine
Public Utilities Commission (MPUC) (Docket No. 95-052) in
November, 1995 is described. In addition, the Company's Form 10-K
for December 31, 1998, describes a January, 1998 Stipulation
approved by the MPUC in Docket No. 97-830, which established the
rate increase beginning February 1, 1998 and the minimum rate
increase effective February 1, 1999. The Stipulation also
prescribes that the savings from the restructured
Wheelabrator-Sherman (W-S) Power Contract would offset Maine Yankee
replacement power costs. For the final year of the rate plan
beginning February 1, 1999, the Company filed on November 13, 1998,
with the MPUC for a 6.4% increase. The Company also stated that it
would forego part or all of this 1999 increase if the sale of its
generating assets was allowed to go forward. On December 15, 1998,
the MPUC granted the Company's request to defer the increase to
April 1, 1999, as well as extend the rate plan by one month to
February 29, 2000, to coincide with the start of retail competition
in Maine.
In its April 6, 1999 Order, the MPUC approved a March 25, 1999
Stipulation between the Office of the Public Advocate (OPA) and the
Company. Under this Stipulation, customer rates will not increase
on April 1, 1999, if the MPUC approved the sale of the Company's
generation assets as described in Item 5(c) above. The approval of
the Stipulation also resolved certain issues associated with the
treatment of capacity cost
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Current Report, Form 8-K for Date of Report
Maine Public Service Company April, 1999
savings from the closure of Maine Yankee under the Company's
rate stabilization plan.
The principal provisions are as follows:
1) The Company is entitled to a 3.66% specified rate increase as
of April 1, 1999. Rather than increase customer rates, the Company
will recognize the revenues that this increase would have
generated and, correspondingly, record a deferred asset on the
Company's books of account. The parties to the Stipulation also
agreed to recommend the use in rates of available value from the
asset sale corresponding with the specified rate increase once the
MPUC determines the Company's allowed stranded cost recovery in
Docket No. 98-577, Public Utilities Commission, Investigation of
Stranded Costs, Transmission and Distribution Utility, Revenue
Requirements and Rate Design of Maine Public Service Company.
2) The Stipulation also resolves a dispute over the determination
of Maine Yankee replacement power costs. The Stipulation allows the
Company to continue to recognize and defer Maine Yankee replacement
power costs on an energy-only basis, offset by Wheelabrator-Sherman
contract restructuring savings, through the end of the rate plan.
The Company agreed to begin amortizing on April 1, 1999, Maine
Yankee replacement power costs in the amount of $150,000 per month
or a total of $1,650,000 for the remaining eleven months of the rate
plan.
3) With the Commission's approval of the generation asset sale, as
discussed in Item 5(a), the parties agreed that the Company would
not increase retail rates on April 1, 1999, to reflect any increase
under the Maine Yankee replacement power provisions of the rate
plan. Any Maine Yankee deferred replacement costs will be deferred,
and, beginning on March 1, 2000, will be offset by a corresponding
amount of available value as allowed in Docket No. 98-577.
MAINE PUBLIC SERVICE COMPANY
Registrant
Dated: April 9, 1999 /s/ Larry E.LaPlante
Larry E. LaPlante, Vice President,
Finance, Administration & Treasurer
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