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: December, 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 December, 1997
Item 5(a) Other Material Events - Maine Public Utilities Commission
Stops its Investigation of the Operation and Shutdown of Maine
Yankee Atomic Power Company Generating Facility in Wiscasset,
Maine, MPUC Docket No. 97-781.
Reference is made to the Company's Form 10-Q for the period
ended September 30, 1997 in which the Company reported that
the MPUC had begun an investigation into various prudence
issues associated with the permanent closure of Maine Yankee.
The Company also reported that Maine Yankee and the Maine
owners of Maine Yankee, including the Company, appealed the
legality of the MPUC investigation to the Maine Supreme
Judicial Court.
On December 2, 1997, the MPUC issued an Order staying the
investigation. The MPUC noted that Maine Yankee had begun a
rate proceeding before the FERC on November 6, 1997, which
could address the prudence issues raised in the MPUC's
investigation. The MPUC therefore stayed its investigation in
order "to avoid unnecessary duplicative efforts by all parties
involved". The MPUC reserved the right to reopen the
investigation particularly if FERC declines to address the
prudence issues of concern to the Commission "if we feel it
necessary to further investigate these matters after the FERC
proceeding ends." The Company cannot therefore predict
whether the MPUC will reopen its investigation once the FERC
proceeding is concluded.
As a result, the Maine Supreme Judicial Court, on December 15,
1997, upon motion by Maine Yankee and the Maine owners, stayed
all proceedings in the appeal until the first to occur of
either December 31, 1998 or the 30th day after the conclusion
of the FERC's investigation.
Item 5(b) Other Material Events - Company Completes Power Agreements
On December 19, 1997, the Company announced the signing of
three separate energy agreements to allow the purchase of
power until 2000 from Hydro-Quebec and Alternative Energy's
Beaver Power Plant in Ashland, Maine. The Company, the common
link in a four-way commitment, has joined together with Hydro-
Quebec, Alternative Energy, Inc., and Cinergy, an electric
utility headquartered in Cincinnati, Ohio, to complete a 26-
month deal to purchase firm energy and capacity from H-Q and
AEI and market surpluses in partnership with Cinergy.
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Current Report, Form 8-K for Date of Report
Maine Public Service Company December, 1997
The purchases from Hydro-Quebec, a Montreal based utility,
ensure the availability of firm energy in our service
territory. H-Q's agreement with MPS runs from January 1, 1998
through February 29, 2000 and provides up to 130 MW of power.
The Company will take delivery of the energy at the Quebec-New
Brunswick border and will be responsible for any transmission
from that point. H-Q generates 96% of its electricity through
hydro power and operates a system of reservoirs which allows
it to store energy.
Under the agreement with Alternative Energy, Inc., the 40 MW
wood-generation facility located in Ashland, Maine, will
resume operations on February 15, 1998. According to AEI
officials, the plant has been shut down since 1994 and start-
up operations are already underway.
The Ashland facility was originally built under a contract
with Central Maine Power and was shut down in a 1994 "buy-
down" agreement with CMP. The contract was bought out in
June, 1997 by power marketer Citizens Lehman. The facility is
entirely owned and operated by AEI and its affiliates.
Headquartered in Bangor, Maine, Alternative Energy owns and
operates two other wood-fired electrical generating facilities
in the State.
The arrangement with Cinergy allows the Company to buy
electricity from H-Q and AEI and market surpluses through
Cinergy, one of the nation's largest electric utilities
actively involved in wholesale power trading and risk
management. The project gives Cinergy a position in the
Northeast to build on the relationships and customer base it
already has in this region.
Item 5(c) Other Material Events - Maine Public Utilities Commission
Approves Restructured Purchase Power Agreement with
Wheelabrator-Sherman (W/S)
Reference is made to the Company's Form 10-Q for the period
ended September 30, 1997 in which the Company reported that
the Company and W/S agreed to amend the existing Purchase
Power Agreement. The Company has a Power Purchase Agreement
(PPA) with W/S under which the Company is obligated to
purchase the entire output (up to 126,582 MWH) of a 17.6 MW
biomass plant through December 31, 2000. The PPA may be
renewed by either party for an additional fifteen years at
prices to be determined by mutual agreement or, absent mutual
agreement, by the MPUC.
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Current Report, Form 8-K for Date of Report
Maine Public Service Company December, 1997
On October 15, 1997, the Company and W/S agreed to amend the
PPA. Under the terms of this amendment, W/S agreed to
reductions in the price of purchased power of approximately
$10 million over the PPA's current term. The Company and W/S
also agreed to renew the PPA for an additional six years at
agreed-upon prices. The Company will also make an up-front
payment to W/S of between $8.6 and $8.7 million, depending
upon the exact date of the transaction. The Company believes
the amended PPA will help relieve the financial pressure
caused by the recent closure of Maine Yankee as well as the
need for substantial increases in its retail rates, and is,
therefore, in the best interests of the Company, its
customers, and shareholders.
The Company intends to finance the up-front payment to W/S
from funds obtained from the Finance Authority of Maine
(FAME). Absent FAME financing, the Company does not believe
it will be able to obtain the funds on terms sufficiently
economic to justify the arrangement with W/S. The amended PPA
must be approved by the MPUC if FAME financing is to be
obtained. In its filing with the MPUC, the Company further
asked the MPUC for a determination that any so-called stranded
investment created by the amended PPA will be recoverable
from customers to the extent permitted by Maine law.
On December 22, 1997, the MPUC approved the amended purchase
power agreement and determined that the additional costs
created by the amended PPA will be treated as stranded
investment. The Company will proceed with procuring the
necessary financing from FAME, but cannot predict whether the
financing will be available or, if available, the terms or
conditions.
MAINE PUBLIC SERVICE COMPANY
Registrant
Dated: December 23, 1997 /s/ Stephen A. Johnson
Stephen A. Johnson, Vice President,
Customer Service and General Counsel
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