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: January, 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 January, 1997
Item 5. Other Material Events - Maine Yankee Atomic Power Company
The Company owns five percent of the common stock of the Maine
Yankee Atomic Power Company (Maine Yankee), which entitles it
to purchase approximately 4.9% of the energy produced by the
plant, approximately 35% of the Company's requirements in
1996. As reported in the Company's 10-Q dated November 12,
1996, the Maine Yankee power plant has been limited to
operating at 90 percent of capacity since early 1996 pending
resolution of issues relating to investigations initiated by
the Nuclear Regulatory Commission (NRC). The plant has also
been out of service since December 6, 1996, to resolve cable-
separation and associated issues. Having detected indications
of minor leakage in a small number of the plant's fuel rods,
Maine Yankee has used this out-of-service time to inspect the
plant's fuel assemblies and has determined that several fuel
assemblies should be replaced.
On January 29, 1997, the NRC announced that it had placed the
plant on its "Category 2" "watch list", which includes plants
that display "weaknesses that warrant increased NRC
attention," but do not warrant a shut-down order. The plant
is one of 14 nuclear units in the United States on the January
29 "watch list" and one of six listed there for the first
time.
The Company expects the plant to remain off-line until the
fuel assembly replacement and a thorough inspection of the
plant's electrical cabling are completed, and restarting is
approved by the NRC. The Company cannot predict how long the
plant will remain off-line, and has made replacement power
plans for an outage that could last several months.
The Company has been incurring replacement power costs of
approximately $170,000 per week while the plant has been out
of service. In addition, the Company is responsible for five
percent of an estimated additional $30 million in operating
costs, or approximately $1.5 million. Further costs are
expected when Entergy Corporation, recently selected by Maine
Yankee's owners to manage the plant's overall operations,
begins providing management services to Maine Yankee.
Additional costs may also be expected if the complexity of the
cable-separation and associated issues require an extended
period for their resolution. These additional costs can be
expected to adversely impact the Company's 1997 financial
results.
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Current Report, Form 8-K for Date of Report:
Maine Public Service Company January, 1997
Under the Company's multi-year rate plan, described in the
Company's Form 10-Q dated November 12, 1996, the Company has
the right to receive specified retail rate increases through
1999. This plan also includes provisions for additional cost
recovery in certain extraordinary situations such as very low
earnings or in the event of a Maine Yankee plant outage
exceeding six consecutive months. The Company will continue
to assess whatever options it may have to recover any
additional costs and, in addition, is making every effort to
reduce its 1997 cash expenditures. These efforts will include
a review of the level of dividends on the Company's Common
Stock.
Moreover, the Company's short-term revolving credit agreement,
as well as a letter of credit supporting its 1996 revenue
bonds, contain interest coverage tests that the Company must
satisfy to avoid default. The Company now believes, based on
the projected additional Maine Yankee expenses and replacement
power costs during the plant outage, that it will likely be in
violation of these interest coverage tests for the twelve
months ended March 31, 1997. The Company will seek a waiver
of these requirements from the necessary parties, but cannot
predict the terms of any such waiver or even if they will be
granted.
In a related matter, a Maine-based group has announced its
intention to start gathering signatures toward a new
referendum to force a permanent closure of the plant by 2000.
The group stated that it hoped to put the issues before the
Maine electorate in November, 1998. The Company cannot
predict whether such a referendum will be held or its outcome.
For a detailed discussion of a comprehensive Independent
Safety Assessment of the plant and NRC investigations of Maine
Yankee, please refer to the Company's Form 10-Q dated November
12, 1996 and the Company's Form 8-K dated December 18, 1996.
MAINE PUBLIC SERVICE COMPANY
Registrant
Dated: January 31, 1997 Larry E. LaPlante
Larry E. LaPlante, Vice President
Finance, Administration and
Treasurer
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