ML19318D184

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Annual Financial Rept 1979
ML19318D184
Person / Time
Site: Seabrook  NextEra Energy icon.png
Issue date: 03/15/1980
From:
MAINE PUBLIC SERVICE CO.
To:
Shared Package
ML19318D157 List:
References
NUDOCS 8007080038
Download: ML19318D184 (21)
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s^ .i ~.' d RALPH A. BROWN C HAZEN STETSON

$'_ h President and Chairman of the Board U'

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p s Chief Executive Officer Y',

! y . , *N Nj FRANK E. LIVINGSTON Q, e s G. MELVIN HOVEY Treesurer Secretary

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  • 4 Vice President and Clerk t aj Engineering and Operations Q CLARENCE E. CAMBRIDGE DONALD A. LINCSAY Assistant Secretary RALPH A. BROWN C. HAZEN STETSON President and Chief Executive Chairman of the Board, PAUL R. CARIANI Officer, Maine Public Service Maine Public Service Cornpa /- Assistant Treasurer Company, Presque Isle, Maine Presque Isle, Maine contents President's Letter 1 NC i Review of 1979 Operations 2

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Financial Statements and

5 Notes 5-13

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Auditor's Opinion 13 DONALD F. COLLINS D. JAMES DAIGLE Consolidated Financial Pi tsident, President. Statistics 16-17 S. W. Collins Co. David D. Daigle & Sons.

Caribou. Maine Fort Kent, Maine Analysis of Five-Year Summary of Operations 18-19 Five-Year Summary of Operations 20 Eleven-Year Statistical Inside Summary Back Cover

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p - [ ANNUAL MEETING: Second Tuesday in May.

! '"25 PRINCIPAL OFFICE: 209 State Street.

Presque Isle, Maine 04769 Qf Ct / Transfer Agent: Manufacturers Hanover Trust Company. New York THC'h3 S. PINKHAM IRWIN F. PORTER Stock Registrar: Common Stock-Generai Manager, President. Manufacturers Hanover Trust Company, New York l Pinkham Lumber Co., Northern Natior,al Bank, Ashland, Maine Presque Isle, Maine

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WALTER M. REED. JR. PHILIP D. TINGLEY l # .

N l President. Honorary Director, l Reed Farms, Inc., Houlton Trust Co., j Fort Fairfield, Maine Houlton. Maine I i

1 l

pTCSl)/Clll S [Cl/Cr The continuing battle to retain the fuel charges collected when the Company revised its whole-Io our stoch/lo/ders and mie fuel adjustment clause in 1975 finally re-employceS sulted in an order from the Federal Energy Regu-The year 1979 can truly be said to be the year latory Commission which required the Company conservation made its greatest impact on your to refund $456,743 plus accrued interest to its Company's kilowatt-hour sales. While the effect three wholesale customers on January 14,1980.

of high energy costs has been very apparent The case i,s still under appealin the First Circuit since the e 3 embargo in 1973, this was the first Court, but the Company does not hold too much hope of success at this juncture. It is a case in year tota, sales actually declined from the pre.

vious yeat. point of consumer oriented regulation depriving a company of funds to which it is rightfu,,, en-Total kilowatt-hour sales dropped 2.3% from titled without regard for equal justice for the last year and would have been less had it not been company as well as the consumer.

fora modest gain of 3.5%in the large commercial-A group of anti-nuclear people i industrial classification. While total 1979 rev. been circulating petition,s to mobta, n Maine enues reached $21,239,729, up 6.9% from 1978, enough sig- have base revenues rose only $42,031, less than 0.3% natures,10% of the vote in the last gubernatorial from the previous year. The balance of the election, to force the Legislature to act or put to

$1,328,933 increase was a result of increased fuel referendum not only the question of prohibiting adjustment revenues occasioned by the sky. future construction of nuclear plants in Maine, rochetiny cost of oil, but also of shutting down Maine Yankee, Maine's only nuclear plant. 't presently appears they may in 1979 your Company's electricity was pro. have enough signatures to force this referendum.

duced from a generation mix of 39.2% r.uclear, 31.9% oil and 28.9% hydro. Hydro production was As you read this letter, I trust you will agree 120% of normal in 1979 which fortunately offset that these are indeed difficult times to be in any the loss of generation from the Maine Yankee area o,f the ene,rgy business. The problems of Nuclear Plant, which had to be taken out of galloping oil pnces, when added to an already service for twelve weeks starting in March,1979 !nflationary economy and the resulting high and again in September for a month as a result of interest rates, has an awesome impact on a highly orders issued by the Nuclear Regulatory Com- capital intensive business such as an electric mission There were no rnajor problems found in utility. Add to this the over regulation of our either of the shutdowns. natural resources and the environment together with tax laws which provide litt:e incentive for Earnings per share of Common Stock dropped capital fo;mation and it is not surprising that the 16c per share to $3.84 in 1979 from the $4.00 per cost of new generating capacity and other equip-share posted in 1978. It should be noted that ment is mcreasing by leaps and bounds. We can

$2.12 per share of the 1979 earnings resulted from extricate ou Aelves from these problems,if action the Allowance for Funds Used During Construc- is taken promptly, but the process will take time, tion (AFUDC) versus $0.78 per share last year. patience and it will not be without pain.

On October 11,1979 the Company issued and To you our stockholders, our emp'oyees and sold to institutionalinvestors $8,000,000 principal our customers, we dedicate ourselves to getting amount of 10%% First Mortgage and Collateral this job done. With your help and cooperation it Trust Bonds and $4,000,000 of 9%% Preferred can be accomplished. Thank you Or your con-Stock. Proceeds were used to repay short-term tinued interest and support.

bank borrowings.

S.incerely, Tre Company's 1.43% joint interest, approxi- .

mately 34,000 kilowatts, in the Seabrook Nuclear Units 1 and 2 being constructed by Public Service Company of New Hampshire required an expen-

/ M[ [ h .X/ucy diture of $14.535,591, including AFUDC,asof the Ralph A. Brown year-end 1979. The two plants are 31% and 7% President completed, respectively.

Presque Isle, Maine - March 15,1980 As of December 17,1979 the New England P0wer Company's plan to construct two nuclear units aggregating 2,300 megawatts in Rhode

.g' Island had been cancelled oue to the inability to obtain the site desired and the general deteriora- .

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tion of the nuclear climate since the Three Mile ,

y, Is'and accident. Ycur Company had approxi- '_c mately $204,000 invested in this project at the ~' _. A year-end, some of which may be recovered from the sale of nuclear fuel already purchased for the plant.

1

MWh and 627 MWh for 1979 and 1978 respective-TCU[CW JOI1979 U[JCral[ONS ly, The necessity of replacing low-cost nuclear energy during the Maine Yankee shutdowns Revenue and Energy Sale 5 boosted purchased power ccsts from $7,638,595 in 1978 to $8,881,077 in 1979. Steam plant oper-Consolidated operating revenues for 1979 were ating expenses were down 6.0% from $1,217,905

$1,370,964 more than those of the previous year to $1,145,023 as a result of using considerably (6.9%); however, only $42,031 of that increase less fuel offset somewhat by higher unit cost and can be attributed to factors other than the pass- generat inflation. Diesel plant operating expenses through of increasing fuel costs via the fuel ad- rose slightly from $129,939 to $131,638 while justment clauses. Thus, there was no real growth operating expenses at the hydro stations ad-in 1979, apparently a reflection of newly- vanced 11.7% to $189,029 due primarily to infla-developed conservation attitudes among con- tion. The lag in billing fuel costs applying the sumere of electric energy in the Company's retail and wholesale fuel adjustment clauses service area. caused a net deferment to future billing pedods of $875,165, which was credited to the income Consolidated energy sales act statement in 1979, compared with $831,741 de-than in the previous year, deci,ually ming 2.3%werelower from ferred in 1978. Production maintenance ex-534.089 megawatt-hours (thousands of kilowatt- penses were down 9.6%, or $31,626, because the hours) in 1978 te 521,657 MWh in 1979. Of the year before included unusually high mainte-major classifications, only the large commercial nance charges for Unit #5 at the Tinker Plant and and industrial group recorded a ga,n i m sales !n for dam repair at the Squa Pan reservoir.

1979,110,452 MWh compared to 106,757 MWh in 1978, for a 3.5% improvement. Residential use Operation and maintenance costs of the trans-was down 2,421 megawatt-hours, or 1.5%, while mission system were $156,899 (21.6%) over the small commercial and industrial sales were off by previous year's $725,389, principally due to high-5,947 MWh, or 5.4%. Primarily because Loring A,ir er wheeling costs of energy through the trans-Force Base took 3,412 MWh less, sales to public mission systems of other companies. Distribution authorities as a group declined by 3,676 MWh, or operation and maintenance costs were up by 8.7%. Sales to other electric u!iSties were also 3.5%, while customer accounting costs rose 4.5%

down, principally because there was less energy Customer services and information expenses (3,482 MWh) available for sale to The New Bruns- were 18 0% greater than the previous year, re-wick Electric Power Commission (NBEPC) on an flecting continuing efforts to encourage energy economy-flow basis. The 635 MWh decline in conservation. Administrative and general ex-sales to resale customers other than NBEPC penses rose 13.0% as a result of inflationary pres-presumably reflects conservation among con- sures in most of the accounts in that classifica-sumers in their own service areas. tion.

Because of much lower taxable income, in-Operation and Maintenance come taxes charged to operating expenses, ir 979 water levels were excellent for a good including deferred taxes and investment tax po. :on of the year and as a result hydro genera- credit adjustments, totaled $1,192,064, compared tion war.,120.0% of normal, rebounding from the with $2,054,020 in 1978. Currently payable in-previous year's dismal 86.8% in light of the un- come taxes decreased from $458,671 in 1978 to expected shutdowns of the Maine Yankee nuclear $235,209 in 1979. The provision for deferred in-plant (discussed in the Regulatory Proceedings come taxes rose slightly in 1979, $755,452 com-section later in this review) good water conditions pared to $726,26' in 1978, while investment tax appeared at a very opportune time or fuel ex- credit adjustments charged on the income state-penses would have been much higher than they ment dropped sharply from $881,380 to $213,695, were. Whereas only 116,894 megawatt-hours respectively, because of the limited ability to were produced by the hydro olants in 1978, a absorb such credits agai. . t otherwise current total of 162,107 MWh came from that source in taxes payable. In 1978 totalinvestment tax credits 1979. Because of the greater hydro production were $1,178,547, $276,792 of which had to be only 378,917 MWh had to be purchased com- carried back to 1975, while 1979 produced invest-pared with 420,991 MWh in the > 3ar before. How- ment tax credits totaling $847,409, $590,022 of ever, regulatory shutdowns of Maine Yankee which was carried back to 1976. Current invest-reduced the energy available from that most ment tax credits are generated primarily by quali-economical source to 220,218 MWh during the fied progress expenditures cn the construction of year, compared with 263,137 MWh in 1978. To fill Seabrook Units 1 and 2, as highlighted below.

out the Company's needs a considerable arnount of additional energy was purchased frem The Construction New Brunswick Electric Power Commission, 139,411 megawatt-hours in 1979 against 112,502 In 1979 the Company and its Subsidiary ex-MWn last year, Less energy was requi.ed from pended $8,118,830 on additions, replacements the Company's own oil-burning plants than in the and improvements to utility property end equip-i pre',ious year, totaling 20,373 MWh from steam ment, including unfinished construction work in and 243 MWh from diesel compared with 26,913 progress. Of that total, approximately $5,713,000 2

4 F

represented progress paymente on the Com- mainder of the production is exported to the pany's share of Seabrook Units _1 and 2 nuclear Parent Company in Maine.

units being built by Public Service Company of New Hampshire as lead participant. Nearly The Parent Company owns 5% of the Common

$528,000 was used for the Company's ownership Stock of the nuclear generating company, Maine share of additional work required on William F. Yankee Atomic Power Company (Maine Yankee).

Wyman Unit #4, an oil-fired, in-service unit con- Maine Yankee owns and operates an 855,000-structed by Central Maine Power Company. kilowatt nuclear plant at Wiscasset, Maine. Be-Voltage conversions and substation improve- cause of its stock ownership the Company is ments cost about $24,000, while meters, services, entitled to purchase approximately 5% of the transformers and other customer-related facili- Maine Yankee's generation. Except for hydro ties totaled approximately $259,000. Distribution energy, nuclear energy with its low fuel cost is, line extensions, rebuilds, and relocations due to by far, the most economical for the Company and highway construction came to nearly $675,000. its customers for the present and foreseeable Major improvements to the transmission system future. Reference is made to the Regulatory Pro-required exoenditures of about $741,000. Street ceeding section, which follows, for a discussion lighting, general equipment, and miscellaneous of the regulatory shutdowns of Maine Yankee betterments absorbed the remaining $179,000. during the year and their effect on revenues and expenses.

Near the end of the year New England Power Company, the lead participant in the proposed Maine Electric Power Company, Inc. (MEPCO) constructionof twonuclearunitsin Rhodelsland, owns and operates a 345-kilovolt transmission announced that it was cancelling the project be- line about 180 miles in length, connecting the

cause of its inability to acquire the site of the system of The New Brunswick Electric Power proposed plant. There is considerable uncertain- Commission (NBEPC) with the New England ty as to the ultimate disposition of the Company's Power Pool. MEPCO has contracts with NBEPC incurred costs in that project and the final amount under which it purchases Canadian energy for thereof. Consequently, as of December 31,1979, resale to various New England utilities. The

$203.845 was transferred from Construction Parent Company owns 7.49% of the Common Work in Progress to Other Deferred Debits and Stock of MEPCO and purchases a very small por-is included in that account on the balance sheet tion of MEPCO capacity (3,400 kilowatts). The in this report. MEPCO transmission line also provides the path by which the Company's share of Maine Yankee it is estimated that cash expenditures for con- and Wyman Unit #4 energy is delivered to the struction in 1980 will approximate $7,500,000, the NBEPC system and wheeled back to the Com-bulk of which will be required for continuing pany's system in Maine via the Company's inter-progress payments for the Company's share of connections at the international boundary.

the construction of Seabrook Units 1 and 2

($5,400,000), Improvements to the transmission Regulatory Proceedings system will cost about $179,000, while distribu-tion improvements will need an estimated By its order dated March 13,1979 the Federal

$ 1,428,000. - Numerous miscellaneous projects Nuclear Regulatory Commission (NRC) ordered will require the remainder of the estimated con- the Maine Yankee plant in Wiscasset, Maine, struction funds. Including fuel and Allowance for along with certain other nuclear facilities in the Funds Used During Construction,the Company's United States, shut down pending an analysis of share of the completed cost of Seabrook Units 1 the pipe supports in the auxiliary cooling sys--

and 2 is presently estimated at $48,000,000. The tems. As no deficiencies were found in the Maine two units are scheduled for completion in 1983 Yankee pipe supports, the NRC, af ter a seemingly (Unit #1) and 1985 (Unit #2). The Company will intarminable period of nearly three months, fi-own 1.460d6% of the completed plant, or 33,600 nally lifted its shutdown order on May 24 and the l 0:ilowatts of capacity. plant was gradually brought back to full service I on June 10. The NRC also ordered a shutdown for Affiliated Companies inspection and maintenance within 90 days there-af ter and the plant was again shut down for most Except for directors' qualifying shares the of September as a result of that order.

Company owns 100% of the Common Stock of a

. Canadian corporation, Maine and New Bruns- The Parent Company is entitled to purchase wick Electrical Power Company, Limited. The approximately 5% of the nuclear plant's output, Subsidiary owns and o.oerates the Tinker Station an entitlement which nas proved to be of enor-on the Canadian side of the international boun- mous benefit to the Company's ratepayers. Dur-dary separating Maine and the Canadian Province ing the three-month period c' the spring shut-j of New Brunswick..The Tinker Station has five down, replacement energy was purchased by the

[- hydroelectric units with a total capacity of Company under existing contracts with NBEPC, 35,000 kilowatts and a small diesel unit of 1,000 or was produced in tne Company's own oil-l kilowatts. The Subsidiary is re luired to serve the burning plants. The excess tuel costs of the re-l small communities of Andover, Perth, and Carl- placement energy amounted to $1,541,465 dur-ingford in New Brunswick, af ter which the re- ing the shutdown period in the spring. As a result

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of complaints by groups purporting to represent review the Commission's decision on the sur-consumers, the Maine Public Utilities Commis- charge issue. The Court granted a stay of the re-sion (PUC) instituted an investigation to deter- fund order pending the Court's decision on the mine what items may be included in fuel adjust- Company's appeal. On June 26,1978 the Court ment charges as a result of the spring shutdown rendered a decision which effectively said that of Maine Yankee. On May 5 the PUC issued a the Commission erred in relying on the " filed ruling allowing and ordering the Company to rate doctrine" when it rejected the surcharge and recover the additional cost of the replacement the Court vacated the ref und order and remanded encrgy over a twelve-month period via the fuel the case back to the Commission for further adjustment clause as applied to Maine jurisdic- proceedings, tional bills. On December 31 the PUC issued a

~new order requiring that the excess cost of re. On October 2,1979, the Federal Energy Regu-placement energy remaining unbilled to cus. latory Commission (FERC), successor to the tomers at that date (5602,443) must be recov. FPC, without rehearing issued an " Order on Re-ered through fuel adjustment over the twelve mand Denying Fuel Adjustment Clause Sur-months of 1980. The investigatory proceeding of charge," which ordered the Company to refund the PUC is still active at this writing. the surcharges collected. plus in,terest, within seventy-five days. The Commission appeared Other fuel costs relating to Mainejurisdictional simply to reiterate its previous reliance on the customers are recovered through fuel adjustment " filed rate doctrine" in its new order. Again, the over a three-month period after an initial one- Company petitioned the United States Court of month lag. Fuel costs related to sales for resale, Appeals for the First District for a review of the regulated by the Federal Energy Regulatory case and asked for a stay of the refund order. The Commission (FERC), are recovered through bil- Court granted a stay of the refund but subse-lings in the month following the month in which quently dissolved that stay on January 4,1980.

the fuel costs are incurred. Though the appeal has not yet been heard by the i Court, all legal barriers to the refund were ex-Af ter the Maine Yankee nuclear plant went into hausted and, upon advice of Counsel, refunds service on December 28,1972, the Parent Com- totaling $632,614.51 (including interest of pany, by reason ofits ownership of Maine Yankee $175,871.11) were made on January 14,1980. A stock, became subject to the jurisdiction of the decision by the Court on the merits of the case is Federal Power Commission (FPC) and was re- not expected until mid-1980.

quired to file its wholesale rate with the Commis-sion, which was done in 1973. The FPC accepted At the present time all fuel and purchased the rate for filing, but required the Company to energy costs related to retail rates under the 4

submit a revised fuel cost adjustment clause, jurisdiction of the PUC are passed on through the which it did on March 5,1975. By its order of May fuel adjustment with no fuel costs in the base 5,1975, the FPC permitted the new fuel cost ad- rates. As a result of a decision by the PUC to justment clause to become effective on May 11, implement a 1978 Act of the Legislature, the 1975, subject to refund, and ordered a hearing to Company will be required to change its fuel ad-be held to determine the legality of the proposed justment clause to recognize only changes in the fuel clause. level of fuel costs over or below such costs to be included in the base rates. In order to levelize fuel The major point at issue is the twelve-month adjustment rates to the maximum degree possi-j- surcharge provision which was designed to re- ble, the PUC has mandated the use of estimated

, coup unrecovered excess fuel costs outstanding fuel costs and energy sales for a future twelve-

, at the date of the change from a twelve-month month period with appropriate adjustments for determination period to one of a single month. under-collections or over-collections at the time That twelve-month surcharge was completely of a change. The required change in the Com-billed to customers as of May 10,1976, and was pany's fuel adjustment clause is expected to be L

fully collected by the Company. On September implemented sometimein 1980. Afterthat change 30,1976, tne administrative law judge in the case the level of fuel adjustment revenues should rendered an initial decision which found the sur- sharply decline, with a proportionate increase in charge not to be just and reasonable, but recom- base-rate revenues.

mended that the Commission resolve the sur-charge issue through a formal rule making pro- Employees ceedmg.

At the end of 1979, the Company had 168 full-The Company appealed the judge's initial de- time employees compared with 166 the year be-cision to the Commission, but on June 27,1977 fore, and there were 11 employees at the Subsi-the Commission issued an order modifying the . diary's Tinker Plant in both years. Thus, the com-initial decision by rejecting the Company's sur- bined total of 179 this year compares with the 177 charge proposal and ordering the Company to of a yearago. Consolidated payrollcosts reached refund the amounts collected under it. After sev- $3,000,919, a 5.0% increase over the $2,858,421 eral applications for rehearing and time exten- for 1978. The Parent Company and the interna-sions the Company petitioned the United States tional Brotherhood of ElectricalWorkers reached

. Court of Appeals for the First District, asking it to (continued on page f3) 4 m ,,

_____m_ _ _ _ - . ##+-

Maine Public Service Company w L

and Subsidiary f f[( . x statements of consolidated income Year Ended December 31, and retained earnings ,979 1978 Operating Revenues .. .. . . .. .. ... .... . . .. .... ... $21,239,729 $19,868.765 Operating Expenses Operation:

Power Purchased . . . . . .. . .... .. . ... .. .. .. . 8,881,077 7,638,595 Other....................... .... ... . . .... 4,170,629 3,850.652 Maintenance .. . ..... . .. ... ... .. . ...... 723,936 764,282

' Depreciation (Note 1) . . . . . . . . . . . . .. .. 1,702,651 1,494,171 Taxes:

Other Than Income . . . . ... .. ... .. ... ... .. 792,025 669,456 State income . . . . . . . . . . . . . . . . . ........... . .... ... 46,963 173,500 U.S. and Canadian Federal Income (Note 5):

C u r re n t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... .. . . 188,246 285,171 Deferred-Related to Deferred Fuel Expense . . . .. . 409,045 429,510 Other Deferred-Net . . . . . . . . . . . ... . .. . 334,210 284,467 Investment Tax Credits . .. . ... .... . .. . .. 213,695 881,380 Total Operating Exp^nses. . ... .. . . . ... 17,462,477 16,471,184 Operating income . . . . . . . . . . . ... ... .. .. .... .. .. 3,777,252 3,397.581 Other Income (Deductions)

Equity in income of Joint Ventures (Notes 1 & 3). ...... .... 344,123 347,403 Allowance for Equity Funds Used During Construction (Note 1) . 241,459 312.264 Foreign Exchange (Loss) Gain .. . . .. .. . .... . . . (44,210) 103,652 O th e r-Net . . . . . . . . . . . . . . . . . . . ... .. .. ... . .. . 26,685 (69.025)

To t a l . . . . . . . . . . . . . . . . . .......... . . .. 568,057 694,294 income Before Interest Charges . . . . . . . . . . . . . . . 4,345,309 4,091,875 Interest Charges Long-Term Debt, etc. . . ............ ... ......

. ... . 2,695,041 1.453,356 Less Allowance for Borrowed Funds Used During Construction (Note 1) . . . . . . . . . . . . . ... . .. . . .. ...... .. (1,178,893) (208,176)

To t a l . . . . . . . . . . . . . . . . . . . . . . . . .. .... . 1,516,151 1,245,180 N ;t income . . . . . . . . . . . . . . . . . . . . .. .... . ..... .. . 2,829,158 2.846,695 Dividends on Preferred Stock . . . .. . .. . . .... . .. ... 262,134 179.428 N:t income Available for Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 2,567,024 2,667.267

= Dividends on Common Stock (per share: $1.84in 1979and $1.61 in 1978) (1,230,181) (1,072,891)

R:tained Earnings, Balance at Beginning of Year. .... . . ... 10,791,237 9,196.861 R;tained Earnings, Balance at End of Year. . . . . . . . . . . . . . $12.128,080 $10,791,237 E rnings Per Share of Common Stock (based on 668,576 and 666,380 average shares outstanding during 1979 and 1978, res pectively) . . . . . . . . . . . . . . . . . . . . . .... ... . .. ... . $3.84 $4.00 S:e Notes to Consolidated Financial Statements.

5

Maine Public Service Company and Subsidiary consolidae assets December 31, 1979 1978 Utility Plant (Notes 1 and 4)

Electric Plant in Service. . . .. .. . ... $54,667,859 $52,658,872 Less Accumulated Depreciation ..... .... ...... . . 18,849,887 17,399.839 Net Electric Plant in Service. . . . .. ..... .. . 35,817,972 35,259,033 Construction Work-in-Progress. . . . . . . . 14,575,838 8,827,534 To t a l . . . . . . . . . . . . . . ... .. . . .. . 50,393,870 44,080,567 investments in Associated Companies (Notes 1 and 3)

Maine Yankee Atomic Power Company . . . . . . . . . 3,340,759 3.339,500 Maine Electric Power Company, Inc. . . . . . . 92,888 98,689 Total . . ... . .. .. . . . 3,433,647 3,438,159 Net Utility Plant and Investment in Associated Companies 53,827,517 47,524.756 Current Assets Cash................ . ...... . .. . . . ... 961,327 585,329 Deposits for interest and dividends . . . ... ... . 492,367 371,762 Accounts Receivable:

Customer (less allowance for uncollectible accounts-1979. $63.487; 1978, $70,852) . . . . . ... . . . 1,954,221 2,405,845 Other.............. ...... . ........... .. . .. 266,151 117,046 Refundable Federal income Taxes (Note 1) .... .. . . .. 711,602 680,007 Deferred Fuel and Purchased Energy Costs (Note 1) . . 2,252,601 1,377,436 Materials, Fuel, and Supplies (at average cost) . ..... . 1,340,497 1,073,013 Prepayments . . . . . . . . . . . .. .... . .. ...... .. . . 90,218 61,216 Total . . .. ... . . .. . ... . .. .. . 8,068,984 6,671.654 Deferred Debits Unamortized Debt Expense (being amortized over terms of related debt)......................... .. .. . . .. . . . . 253,205 181,034 Miscellansous (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. 406,798 151,037 Total . . . . . . . .. .. .. .... .. ... ... . 660,003 332,071

$62,556,504 $54,528,481 t

See Notes to Consolidated Financial Statements.

6

_ _ _ _ _ .i

w lance sheets

' l _~

liabilities and capital December 31, 1979 1978 Capitalization Common Shareholders Equity (Note 8):

Co m m o n Stoc k * . . . . . . . . . . . . . . . . . . . . . . ... . ...... $ 4,711,175 $ 4.669,266 Paid-i n Ca pital . . . . . . . . . . . . . . . . . . . . . ... ... ..... 1,697,256 1,614.209 Retained Earnings . . . . . . . . . . . .. . .. .. 12,128,080 10.791.237 Total . . . . ..... ..... . . , .. .. . .. . .. . 18,536,511 17,074.712 Redeemable Cumulative Preferred Stock * (Note 9) . .. . .. 6,069,000 2,129,000 Long-Term Debt * (less current maturities) . . . . . . . . . . . . . . . . 25,941,208 19.153.928 Current Liabilities

' Long-Term Debi Due Within One Year:

3% Series Bond Due September 1,1980 . . .. . . . . . 710,000 --

Other.................................... . ..... 518,128 516,544 Notes Payabic to Banks (Note 6) . .. . .. ... . .... ... . 2,600,000 9,400,000 Accounts Payable . . . . . . . . . . . ............. ..... .......... 1,C59,082 1,486,025 Deferred income Taxes Related to Deferred Fuel Costs (Note 1) 1,120,355 711,310 Divtiends Decla red . . . . . . . . . . . . . . . . . . . . . . . . ... . . 438,935 317,986 Custemer Deposits . . . .. ........ . . .... . .. . . 18,141 30,406 Taxes Accrued . . . . . . . . . ... ....... .. .. .. .. . . 61,207 29,319 Interec t Accrued . . . . . . . . . . . . . . . . .. .. ........ . . 585,783 423.168 To t a l . . . . . . . . . . . . .... .. .. . ..... .... . ..... . 7,711,631 12,914.758 1

D;ferred Credits income Taxes (Note 1) . . . . . . . . . . . . . . . . . .. . ... ......... 1,783,978 1,449,768 investment Tax Credits (Note 1) . . .... . . . .. .. 2,474,105 1,733,763 Miscellaneous . . . . . . . . . .. . . .. .. . ... . . . ..... 40,071 72.552 Total . . ..... .............. .. ... ..... ....... 4,298,154 3,256,083

$62,556,504 $54,528,481 Cea schedules of capitalization data.

7 q

L l.

statements of source of .

consolidatedfunds for plant

^

T/ (. T additions and replacements 1 Year Ended December 31, 1979 1978 Source of Funds Funds From Operations:

N e t i n co m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,829,158 $ 2,846,695 Charges (Credits) Not Affecting Working Capital:

Depreciation (Note 1) . . . . . . . . ... . . . ... . 1,702,651 1.494,171 Deferred income Taxes-Net... . .. ... . .. . 334,210 284,467 Deferred Investment Tax Credits . . . . . . . . . .. . ........ . 740,342 1,050,960 Allowance For Equity Funds Used During Construction (Note 1) (241,459) (312,264)

Foreign Exchange Loss (Gain) (Note 1). .. .... .. . 44,210 (103,652)

Other.................... ... . ... . ... . . (63,346) 95.795 Funds From Operations. . . . . 5,345,766 5,356,172 Less: Dividends on Preferred and Common Stock . . .. (1,492,315) (1,252.319)

Funds Retained in the Business . ... .. 3,853,451 4,103.853 Funds Frsm (For) Financing-Net:

Notes Payable to Banks (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . (6,800,000) 9,400,000 issuance of Redeamable Preferred Stock and Long-Term Debt.. 12,000,000 --

Reduction of Long-Term Debt and Capital Stock-Net . .. (480,390) (574,113)

Funds From Financing-Net . . . . . . .. . . 4,719,610 8,825.887 Net Funds Available . . .. . . .. .. . . 8,573,061 12,929,740 increase (Decrease) in Available Funds increase in Working Capital (see below) .. . .. .. (512,041) (1,593,391) l Other-Net . . .. .. .. .... .. . . . 57,810 27,436 1 Funds Used For Plant Additions and Replacements .. .. . S 8,118,830 $11,363,785 increase (Decrease) in Working Capital by Components (exc'uding long-term debt due within one year and notes payable to banks):

Ca sh . . . . . . . . . .. ....... .... ... . . . ... . .. $ 375,998 $ 128.432 Deposits for interest and Dividends . . . . . . . . . . . ........ .. 120,605 19,201 Accounts Receivable-Net and Refundable Income Taxes . (270,924) 1,176,434 Deferred Fuel and Parchased Energy Costs .. . ... . 875,165 831,741 Materials, Fuel, and Supplies . . . . . . .. .. .. . .. 267,484 183,946 P re payme n t s . . . . . . . . . . . . . . . . . . . . . . . . .. .... . .... . 29,002 (12,595)

Acco u n ts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (173,057) (273.024)

Deferred Income Taxes Related to Deferred Fuel Costs. . . (409,045) (429,510)

Taxes Accrued . . . . . . . . . . . . . . . . ............... . . (31,E88) 14,507 Interest Accrued and Other Current Liabilities-Net . .. (271,299) (45,741)

Increase in Working Capital . . . . . . . . . . . . . . . . . . . . .. . ... .. S 512,041 $ 1.593,391 1

1 See Notes to Consolidated Financial Statements.

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flOleS lO CollSO(((/a/C(/J((/la/ZC[U[ ing replacement of minor items of property, are charged to maintenance expenses as incurred.

S/a/c77tc73/3 The companies' properties, with minor excep-tions, are subject to a first mortgage lien.

1. ACCOUNTING POLICIES, ETC. Depreciation Depreciation is provided on com-posite bases using the straight-linc method for Regulations The Company is subject to the reg- financial reporting purposes and the declining ulatory authority of the Maine Public Utilities balance method for tax purposes.

Commission (PUC) and, in respect to wholesale rates, the Federal Energy Regulatory Commis- By order of the Maine Public Utilities Commis-sion (FERC). (See Note 10) sion, the Company records income tax reduc-tions, which result from the use of liberalized Consolidation _The accompanying consoli- depreciation, by the " normalization" method for dated financial statements include the accounts all property additions. Related deferred income of the Company and its wholly-owned Canadian taxes recorded in 1979 and 1978 amounted ta subsidiary, Maine and New Brunswick Electrical $370,995 and $300,440, respectively. The Sub-Pcwer Company, Limited. Intercompany items sidiary records income tax reductions by the have been eliminated in consolidation. Exchange " flow-through" method for all differences be-gains and losses are reflected in conse" dated tween book and tax depreciation.

carnings.

Investment Tax Credit The Company defers Deferred Fuel and Purchased Energy Costs investment tax credits ($847,409 and $1,178,500 The portions of fuel and purchased energy in 1979 and 1978, respectively) and amortizes the costs which are recoverable from customers credits over the estimated useful lives of the re-under the operation of fuel and purchased lated utility plant. In both years the available energy adjustment clauses are deferred until the investment tax credit exceeded the maximum periods in which the related revenues are billed. allowable to offset the tax liability. The excesses were carried back resulting in $590,022 and Utility Plant Utility plant, is stated at on. .ginal $276,792 of refundable federal income taxes for cost which, as to construction, includes all direct labor and material, as well as related indirect 1979 and 1978, respectively, constniction costs including general engineer- Investments The Company records its invest-ing. supervision and similar overhead items, and ments in the vammon Stock of Maine Yankee allowances for costs of funds used during con- Atomic Power Company (Maine Yankee) (5%

struction (AFUDC) at 12.48% during 1979 and at ownership), a jointly owned nuclear electric 9.98% during 1978. In accordance with an order power company, and the Common Stock of issued by the FERC in 1977, AFUDC applicable Maine Electric Power Company (MEPCO) (7.49%

to borrowed and equity funds are shown sepa- ownership), a jointly owned electric transmission rately in the accompanying statements of con- company, on the equity method. (See Note 3).

solidated income and the AFUDC associated with equity funds have been excluded from funds pro- The Common Stock of the Subsidiary is vided from operations in the statements of source pledged as additional collateral for the first of consolidated funds for plant additions and mortgage and collateral trust bonds of the Com-replacements. Maintenance and repairs, includ- pany.

2. GEOGRAPHIC BUSINESS SEGMENTS The following table summarizes the companies' operations in the two countries in which they operate (000 omitted):

Company Subsidiary Adjustments and United States Canada Eliminations Consolidated For the Year Ended December 31,1979:  !

Sales to Unaffiliated Customers $21,090 $ ?50 $21,240 Intercompany Revenues 81 900 $ (981)

Total $21,171 - $1,050 $ (981) $21.240 Operating Profit Before income Taxes S 4,536 $ 427 $ 6 $ 4,969

~ lncome Taxes 1,034 158 --

1,192 Operating income $ 3.502 $ 269 $ 6 $ 3.777 Id:ntifiable Assets at December 31,1979 $57,560 $4,996 $62,556 (Note 2 contmued on page 10) 9 s

r l

i l

!. I For the Year Ended December 31,1978:

Sales to Unaffiliated Customers - $19,717 $ 152 $19,869 Intercompany Revenues- 81 757 $ (838)

Total $19,798 $ 909 $ (838) $19,869 Operating Profit Before income Taxes $ 5,176 $ 276 -- S 5,452 Income Taxes 1,976 78 2,054 l Operating income - $ 3.200 $ 198 $ 3,398 Identifiable Assets at December 31,1978 $49,486 $5,042 $54,528 l The identifiable assets, by com pany, are those assets used in each company's operations, excluding intercompany receivables and investments.

l

3. INVESTMENTS IN JOINTLY-OWNED COMPANIES )

Dividends received during 1979 and 1978 from Maine Yankee were approximatw/ $333,000 and j j $335,000, respectively, and f rom MEPCO approximately $12,000 each year.

Condensed financialinformation for Maine Yankee and MEPCO is as folicws:

Maine Yankee MEPCO l (Dollars in Thousands) 1979 1978 1979 1978 Y Earnings Operating revenues $ 68,867 $ 70,373 $ 98,122 $ 59,860 Earnings applicable to Common Stock $ 6,650 $ 6,702 $ 155 $ 164 Company's equity share of net earnings $ 333 $ 335 $ 12 $ 12 Investment Total assets $287,105 $265,955 $ 22,804 $ 20,812 Less:

Preferred Stock 13,070 13,696 --

Long-term debt 139,373 128,818 11,220 11,880 Other liabilities and deferred credits 67,805 56,657 10,337 7,607 Net assets $ 66,857 $ 66,784 $ 1,247 $ 1,325 Company's equity in net assets $ 3,341 $ 3,339 $ 93 $ 99 l 4. INVESTMENTS ' IN Each participant must provide its own financing.

! JOINTLY-OWNED The Company's share in each of the two jointly-UTILITY PLANTS owned plants at December 31,1979 is as fo!-

lows:

The Company is a participant in three jointly- Wyman Seabrook owned utility plants: W. F. Wyman Unit No. 4 (Wyman), Seabrook Units No.1 & 2 (Seabrook), Electric Plant in Service $6,843,725 and the.New England Power Company Units Accumulated No.1 & 2 (NEPCO). Depreciation 210,084 Construction In December of 1979, New England Power Com. Work-in-Progress $14,535,591 pany cancelled the construction of Units No. Total $6,633,641 $14,535,591 1 & 2. Accordingly, approximately $204,000 of Company,s Ownersh,p i

' construction ' work-in-progress related to those units has been transferred to deferred debits, Percentage 3.3455 % 1.4006%

pending final disposition by NEPCO and the state regulatory authority.

The Company's proportionate share of the di. 5. FEDERAL INCOME TAXES e rect expenses of Wyman are included in the corresponding operating expenses in the in- The consolidated provisions for federal in-come statement, come taxes differ from amounts computed by

'10 L

l l

applying the statutory rate as follows: panies' policy is to fund pension cost accrued.

1979 1978 At December 31,1978, the date of the most re-I cent actuarial valuation, vested benefits for th Statutory Rate 46.0 % 48.096 n n-union p nsion plan exceeded that fund,es Tax Benefits of Lower Effective assF 3 by approximately $282,000.

Tax Rate Attributable to Dividends Received (3.5) (3.0)

Foreign Tax Credit (1.5)

Allowance for Funds Used 8. CLMMON SHAREHOLDERS' EOUlTY During Construction (17.1 ) (5.4)

Other 3.4 1.6 Under the most restrictive provisions of the Effective Rate 28.8 % 39.7 % Company's long-term dtbt indentures, retaine,d earnings available for the payment of cash divi-d "d " n Stock were $7,078,346 at The federal tax returns for 1977 and 1976 are December 79*

currently under examination by the Internal ,

Revenue Service. Management anticipates no significant adjustments as a result. Paid-in capital increased by approximately

$83,000 and $34,000 in 1979 and 1978, respect-ively, representing the excess of the proceeds

6. NOTES PAYABLE TO BANKS AND received over the par value of common stock SHORT-TERM CREDIT ARRANGEMENTS issued to the employees' stock ownership plan (5987 and 1304 shares in 1979 and 1978, re-The Company has had three credit arrange. spectively) (see Not,e,12), and the excess of par value over reacquisition cost of Preferred Stock rrLia with two banks. The first, which was ter.

minated it' 1979, was a short-term arrangement (see Note 1).

up to $10,000,000 with interest at 110% of the lender's prime rate. The second is an open 9. REDEEMABLE CUMULATIVE credit arrangement up to $1,200,000 with interest PREFERRED STOCK at the lender's prime rate. The third is a line of credit up to $3,000.000 (increased to $5,500,000 The Preferred Stock is redeemable, with certain subsequent to December 31,1979) with interest mtrictions, at the option of the Company, or at 108% of the lender's prime rate, plus a com- ie case of voluntary liquidation at $51.00 per mitment fee of 5% of the prime rate, and a ure for the 4.75% Series, $53.30 for the 97/a 6 compensating balance averaging $100,000. Series, and $54.81 for the 9% % Series (all plus Certain information relating to these arrange- accumulated dividends). No shares were re-ments is as follows: deemed during 1979 or 1978.

1979 1978 Total Lines of Credit The 9% % Series has a s.inking fund require-at year end $ 4,200,000 $14,000,000 ment whereby the Company must redeem 5,333 Maximum amount of shares at $50 per share and accrued dividends borrowings outstand- on October 1 of each year commencing in the ing at any month-end 12,600,000 9,400,000 Borrowings outstanding year 1985. In addition, the Company has a,non-at year end 2,600,000 9,400,000 cumulative option to redeem,up to an additional 5,333 shares at the same price and date as the Unused lines of credit sinking fund shares.

at year end 1,600,000 4,600,000 Average outstanding bor-rowings for the year 8,320,000 219,726 Purchase funds for the 4.75% and 9%% Series Average interest rate for provide that the Company will annually offer the year 13.63 % 11.69 % to purchase on July 1, at prices not to exceed Effective interest rate at $50 per share and accrued dividends,3% of the year end 15.91 % 12.83 % maximum number of shares issued prior to May 15 of such year,less any shares theretofore pur-chased and surrendered by the Company to the

7. PENSION PLAN transfer agent as a purchased fund credit for such year. Any shares so purchased and sur-The Company and its Subsidiary have insured rendered are retired. There were 1,200 sh, ares of 4.75% Series purchased under th,s i offer in both non-contributory pension plans (terminable at 1979 and 1978.

any time) for the benefit of all union and non-union employees, based on age and period of employment conditions. Pension expense, The Preferred Stockholders are entitled to spe-which includes amortization of prior service cial voting rights in respect to certain corporate costs over a period of twenty years, was $286,- action and are entitled to elect a majority of the 594 in 1979 and $249,372 in 1978. The com- Board of Directors in the event of a default in 11

the payment of four acierly dividends on the 1975) plus interest of $175,871. The Company Preferred Stock, continues to appeal the order, but should the Court ultimately rule against the appeal, the refund would be recorded as a prior period

10. RATE PROCEEDINGS adjustment.

After the Maine Yankee nuclear plant went into 11. CONSTRUCTION PROGRAM service in 1972, the Company became subject to Federal Power Commissico (now FERC) juris- See Construction Section on page two.

diction, and at that time filed its wholesale rate schedule with the Commission which became effective in 1973. In 1975 the Company, in 12. EMPLOYEES' STOCK OWNERSHIP PLAN accordance with the initial requirements of the FPC, filed a revised fuct cost adjustment clause. The Company has an employee stock ownership The Commission permitted this revised clause plan that provides eligible employees with the to take effect in May 1975 subject to refund and opportunity of becoming stockholders of the ordered a hearing to be held to determine its Company and, at the same time, achieves cor-lawfulness. In September 1976, a judicial deci- tain tax benefits for the Company. All employees sion was reached, subject to an FPC rulemaking with one or more years of service are eligible proceeding, which found two provisions of the to participate in the plan; each year the Com-clause to be not just and reasonable. The Com- pany contributes to the plan shares of common pany appealed this decision, but in 1977 the stock (or an equivalent amount of cash to be FERC agreed therewith. The Company then fur- used to purchase common stock) with a value, ther appealed this decisiori to the United States as defined, equal to 1% of the Company's quali-Court of Appeals for the First Circuit. The Court fied investments in property for that year. The vacated the Commission's order to refund the contribution to the plan amounted to $77,036 in fuel adjustment and remanded the case back to 1979 and $107,140 in 1978. Amounts contrib-the FERC for reconsideration. In October 1979, uted are accumulated in individual member FERC reordered the refund, and due to the accounts and are availa'le for distribution upon Court's decision to lif t a previously granted stay, termination of employment after an appropriate on January 14,1980 the Company refunded to waiting period required by federal statute.

customers the $456,743 of deferred fuel costs Amounts in individual member accounts are collected ($164,496 in 1976 and $292,247 in 100% vested at all times.

13. QUARTERLY INFORMATION (unaudited)

Presented below are financial data showing results for each quarter in the two years ended December 31, 1979.

(Dollars in Thousands Except Per Share Amounts) 1979 By Quarter l 1st 2nd 3rd 4th Operating Revenues $5,900 $5,137 $4,274 $5,929 Operating Expenses (4,745) (4,219) (3,554) f 4.945)

Operating income 1,155 918 720 984 Interest Charges (465) (447) (475) (128)

Other Income-Net 157 155 147 108 Net incorne S 847 $ 626 S 392 S 964

' Earnings Per Common Share: S 1.20 $ .87 $ .52 S 1.25 1978 By Quarter 1st 2nd 3rd 4th Operating Revenues $4,826 $4,808 S4,208 $6,026 Operating " nses (3,870) (3,953) (3,688) (4,960)

Operating income 956 855 520 1,066 Interest Charges (295) (326) (309) (315)

Other income-Net 162 161 210 162 Net income S 823 $ 690 S 421 S 913 Earnings Per Common Share: $ 1.17 $ .97 $ .56 S 1.30 12

certain revenues under the provisions of a re-GU(/[ LOTS'O[NH[On vised wholesale fuel cost adjustment clause which contained provisions subsequently disal-lowed by a federal regulatory authority. The MAINE PUBLIC SERVICE COMPANY: Company continues to appeal this disallowance.

The ultimate outcome of these proceedings can-We have examined the consolidated balance not presently be determined.

sheets of Maine Public Service Company and its subsidiary, Maine and New Brunswick Electrical in our opinion, subject to the effect,if any, of the Power Company, Limited,and the related sched- outcome of the proceedings referred to in the ules of capitalization data, as of December 31, preceding paragraph, the financial statements 1979 and 1978, and the related statements of and supplemental schedules referred to above consoddated income and retained earnings, and present fairly the financial position of the com-of source of consolidated funds for plant addi- panies at December 31,1979 and 1978 and the lions and replacements for the years then ended. results of their operations and their source of Our examinations were made in accordance with funds for plant additions and replacements for generally accepted auditing standards and, ac- the years then ended, in conformity with gen-cordingly, included such tests of the accounting erally accepted accounting principles applied records and such other auditing procedures as on a consistent basis.

We considered necessary in the circumstances.

As described in Note 10 to the financial state. DELOITTE HASKINS & SELLS monts, in 197G and 1975, the Company collected Boston, February 29,1980 Review of I979 Operations (Contmued from page 4) agreement on a two-year contract calling for an General 8% increase in base pay rates ef fective October 1, Engaging in the production, transmission, and 1979 and a 7% base pay increase on the same dat,e distribution of electric energy, the Parent Com-the following year. There,were also some modifi- pany serves retail and wholesale customers in a cations in f ringe benefits included in the bargain- largely rural area of Northern Maine, covering all mg agreement. Beginnmg with the first pay peri- of Aroostook County and a small portion of Pe-od in December, increases in the pay scales of nobscot County.

non-union employees approximating 8% were instituted. We repeat the reference to the Indian land-During 1979,5,987 shares of previously author-claims case which has appeared in annual re-ized but unissued Common Stock were issued to p ris for the last few years. The suit was brought fulfill the requirements of the Employees' Stock by the Federal government in 1972 on behalf of Ownership Plan, a TRASOP Plan qualified under the Passamaquoddy and Penobscot tribes. The the Tax Reduction Act of 1975, as amended- suit seeks the return of 12.5 million acres of Maine land to the Indians, with the claims apparently based upon a 1790 law prohibiting land transac-Financing tions with tribes without the express approval of Congress. The issues involve complex historical On October 11, 1979, the Company issued and legal questions ar'd it is dif ficult to assess the 80,000 shares of 9%% Preferred Sto,ck, $50 par full import of the Indian claims, or to determine value, in a negotiated sale to two institutional the extent to which the Company or any of its inYestors at 100% of par. Cash proceeds af ter the properties may be involved. The Company is not cost of issuance were $3,947,016. On the same a party to the litigation nor has any of its property date, the Company also issued $8,000,000 princi- become the direct subject of the litigation. The pal amount of 10%% First Mortgage and Collateral Company will make every reasonable effort to Trust Bonds, due 2004, to four insurance com- oppose any claims that may be made by or on l

panies with net proceeds to the Company of behalf of the tribes against the Company or its l $7,912.120, after financing costs. The net pro- property. According to recent reports in the ceeds from the two financings were applied to public press there has been substantial agree-short-term bank notes which previously had been ment with regard to the settlement of the claims, incurred to finance the Company's continuing but necessary legislation has not been presented construction program. After note repayment, to Congress, nor has the matter been finally 5700,000 of bank loans remained outstandmg. settled. If the matter cannot be finally settled and in 1980, the Company expects to finance its th,e Congress does not act, presumably the case construction program through short-term bank d is n' borrowings and internally generated cash. (Continued on page f 4) 13

(Contmuod from page r3)

Af ter several years of uncertainty in regard to a investors, and the 80.000 shares of 9Mo Preferred drastic reduction in the functions of Loring Air Stock were in the hands of two insurance com-Force Base proposed by the Defense Depart- panies. The Annual Meeting of Stockholders is ment, the government has announced that not held each year on the second Tuesday in May at only will the base remain at full strength but a the Company's headquarters in Presque Isle.

rehabihtation of the facilities will be undertaken at a cost of several milhon dollars. t)ivided data and market price related to the Common Stock are tabulated as follows for the The Company and its Subsidiary continue to two most recent calendar years:

1 avail themselves of advisory and other services l t of Stone & Webster Management Consultants, l Inc., subject to the direction and control of the - - - - - - - - - - - - - - - - 1 Board of Directors Sales Price Dividends 3

The Company's Common Stock is listed and High Low Paid per Share traded on the American Stock Exchange. Com- 1978 -

i mon stockholders are the only share 1olders en- First Quarter 19 - 17% $0.38 titled to vote at the annual meeting. cxcept in the Second Quarter 19% - 17% 0.38 case of default (considered unlikely) under the Third Quarter 20'/ - 18% 0.41 I provisions of the Articles of Incorporation relat- Fourth Quarter 19% - 17% 0.41 ing to the Preferred Stock, or as may be required by applicable law. At December 31,1979 there 1979 were 3,522 holders of the 673.025 shares of Com. First Quarter 19% - 17% 0.41 mon Stock then outstanding. The 11,380 shares Second Quarter 19 - 17% 0.46 l were held Third Quarter 19 % - 18% 0.46 l

of by 4.75'o Preferred 138 owners, the Stock 30,000outstanding'f shares o 9%o Pre- Fourth Quarter 18% - 16% 0.46 ferred Stock were owned by three institutional . _ _ _ _ _ _ _ _ .

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Maine Public Service Company x and Subsidiary

-ie lx schedules of capitalization data December 31, lOng-lC1*11l Nehl:

1979 1978 Maine Public Service Company:

First Mortgage and Collateral Trust Bonds:

3% Series due 1980-interest Payable. March 1 and September 1 $ 720,000 $ 730,000 3.35% Series due 1985-Interest Payable, February 1 and August 1 1,540,000 1,560,000 5% % Series due 1990-Interest Payable, March 1 and Sept.1 1,620,000 1,640,000 4% % Series due 1995-Interest Payable, January 1 and July 1 2,150,000 2,175,000 7% % Series due 1998-Interest Payable, May 1 and November 1 3,600,000 3,640,000 7.95% Series due 2003-Interest Payable, March 1 and Sept.1 2,375,000 2,400,000 10% % Series due 1995-in;erest Payable, March 1 and Sept.1 3,760,000 3,880,000 10% % Series due 2004-interest Payable, April 1 and Oct.1 8,000,000 Debentures:

5%, due 1987-Interest Payable, May 1 and November 1 756,000 810,000 9% %, due 1995-Interest Payable, May 1 and November 1 1,188,000 1.242,000 M:ine & New Brunswick Electrical Power Company, Limited:

First Mortgage Bonds-5%% Series due 1989-interest Payable, June 1 and December 1 . .. . 1,460,336 1,593,472 Total Outstanding . . ......... . 27,169,336 19,670,472 Less-Amount Due Within One Year . . 1,228,128 516,544 Long-Term Debt . . . . . . $25,941,208 $19,153,928 Current Maturities of Long-Term Debt for the Succeeding Five Years Are:

1980 - $1,228,128; 1981 - $ 508,128; 1982 - $ 508,128; 1983 - $ 508,128; 1984 - $ 508,128.

capital stock:

Common Stock, $7 Par Value-Authorized, 1,000,000 Shares; issued and Outstanding, 673,025 Shares in 1979 and 667,038 Shares in

~

1978 . . .. .. . . . . . . ... . $ 4,711,175 $ 4,669,266 R:deemable Cumulative Preferred Stock, $50 ParValue-Authorized, l

~ 270,000 Shares in~ 1979, and 70,000 Shares in 1978 (issuable in series):

4.75% Series-Originally issued 40,000 Shares: Outstanding,

- 11,380 Shares in 1979 and 12,580 Shares in 1978 . ... $ 569,000 $ 629,000 9% % Series-Originally issued and Outstanding, 30,000 Shares _1,500,000 1,500,000 9% %' Series-Originally issued and Outstanding, 80,000 Shares 4,000,000 Total . . . . . . . . . . . . .. .. . $ 6,069,000 $ 2,129,000 15

I I

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l ik}3ille I'lll)lic berVice COmpaHV l consolidad and Suhsidiary i 1

I l 1979 1973 1, Capitalization (year end) l Long-term debt . ........... ........ .............. .. 52.48 % 50.40 % 531 Preferred Stock . . .. .............. ....... .... ..... 11.72 % 5.48 % 51 Common Stock Equity . . . . . . . . . .. .........,..... ...... 35.80 % 43.92 % 40l Times Interest Earned- l Before income Taxes . . . . . . . ... . ........ ..... .. . 2.52 4.39 4!

Af ter incomo Taxes . . . . . . . . . . . . . . . . . ... ... ....... . 2.05 2.96 2l Times Interest and Preferred Dividends Earned-Af ter income Taxes ... ....... . . ... ... . 1.87 2.63 2 .

Embedded Cost of Long-Term Debt (year end).... . ... . 8.10 % 7.16 % 7j Embedded Cost of Preferred Stock (year end) .. . . . 9.38 % 8.51 % 8)

Common Shares Outstanding (year end) . . . .... ... ... 673,025 667,038 665,J Earnings Per Share of Common Stock (average shares) . . . . $ 3.84 $ 4.00 $$

Dividends Per Share of Common Stock- 1 1

Declared Basis . . . . . . . . ........ . $ 1.84 $ 1.61 $ 11 Paid Basis . . . . . . . . . . . . . ... . . . .. .. . $ 1.79 $ 1.58 $ ll Common Stock Dividend Payout Ratio . . . ... 47.92 % 40.22 % 40 Book Value Per Share of Common Stock (year ead) .. .. . .. $27.54 $25.60 $23 Market Price Per Share of Common Stock l

, High . . . . . .. . . . $ 19% $ 20% $1 Low . . .. . .. . . . .. . $ 16% $ 17% $1 Close .. ......... .... . .. . . . $ 16% $ 17% $

Price Earnings natio (year end) .. . .... .. . . 4.36 4.38 Number of Comi on Shareholders (year end) .. . .. 3,522 3,577 3,1 4

1

- 1979 SOURCE OF REVENUE 1979 DISTRIBUTION OF REVENUE Millions of Dollars (Total $ 21.2)and percent of total Mallont of Dollors(Total $ 21.2)and percent of total CoIIIBERCl&L I

- , $ t.$ .-, _'

FutL Ass 0

- gy PURCH&5t0 Powf R

$ee es %

INDUlf Ri AL -

4sa 17 % ._

g STOCaMDLDERS esvieteet t'* es-

.e%

OPERATING -

gg AIS PER biTitt Se% $8J otMER IS% oPER ATilee iIPENSES

$ 3.3 is %

16

l lancial statistics 1976 1975 1974 1973 1972 1971 1970 1969 56.24 % 57.71 % 56.08 % 57.73 % 55.64 % 56.25 % 56.89 % 58.71 %

l 6.05% 6.26 % 6.76 % 7.00 % 7.56 % 7.84 % 7.95 % 3.91 %

37.71 % 36.03 % 37.16 % 35.27 % 36.80 % 35.91 % 35.16 % 37.38 %

3.20 3.04 3.53 3.14 2.70 2.61 2.72 2.79 2.19 2.13 2.35 2.21 1.99 2.01 2.10 2.11 1.95 1.86 2.02 1.90 1.70 1.70 1.87 2.00 7.12 % 7.10 % 5.88 % 5.88 % 5.57 % 5.57 % 5.57 % 5. i7%

8.32 % 8.24 % 8.16 % 8.09 % 8.01 % 7.94 % 7.88 % 5.09 %

5,734 665,734 665,734 665,734 665,734 665,734 665,734 665,734 2.40 $ 1.89 $ 2.41 S 1.87 $ 1.40 f, 1.34 $ 1.74 $ 1.66 1.34 S 1.31 $ 1.28 $ 1.26 $ 1.20 S 1.19 S 1.16 S 1.16 1.3? S 1.30 S 1.28 $ 1.24 S 1.20 S 1.18 S 1.16 $ 1.15 55.8 3 % 69.13 % 53.01 % 67.51 % 85.49 % 88.86 % 66.79 % 69.69 %

?1.06 S20.16 S19.54 $18.37 $17.76 S17.51 $17.33 $16.77 l16% $ 14% $ 15% $ 167/8 $17% S19 S 18 $ 20%

l13% S 9% $ 8% $ 13 $ 15% $ 16% $ 15 $ 16%

15 % S 13 % $9 $ 14 S 16 $ 16% $ 17% $ 16%

6.61 6.69 3.73 7.49 11.43 12.50 10.06 9.94

),683 3,753 3,807 3,835 3,821 3,801 3,832 3,809 l

ANNUAL RESIDENTIAL CONSUMPTION

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1963 1964 196 5 8966 1967 19Fe 1969 19 70 1971 1972 1973 1974 1975 1974 1977 1978 1979 vf A4 E NDING DECEUBE R Sist Moine Public Service Company-Residential Service Unit Revenue vs Average Annual Consumption per Customer.

17

~~ on its income statement, the Company defers ex-

. C" As ,g ., cess unbilled fuel expenses to the period during NgA .

,,U ..ll ' JMqgh which such costs are billed through the fuel ad-m.

w wA qp A justment. The net amounts deferred during the

_4 y 7 t ve year period were: $875,165 in 1979, $831.741 W

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.; j in 1978, ($125,930) in 1977, ($941,833) in 1976 and $180,201 in 1975. This method of accounting i%< hwe a^ d has been used since 1974. Income taxes pertain- I p(%;

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> 51 ing to the deferred fuel expenses have also been deferred to future accounting periods.

l

] l Operating income

p. - Operating income increased $1,401,917 or 59.0% since 1975, after taxes and other operating expenses. The gain of $379,671, or 11.2%, over 1978 is primarily due to favorable water condi-

, n tions in the year just completed. The improve-ment of $187,368 (5.8%) in 1978, though smaller, h" is still considered to be healthy. Increases of

$501,939 and $332,939 in 1976 and 1977, respec-Aroostook County potato field ready for planting tively, can be attributed to rate schedule changes in 1976 and very favorable water conditions in analYSis offive-year SuminarY \

, Allowance for Funds Used During of operallons Construction l Operating Revenues Allowance for Funu Used Durin Construc- l tior (AFUDC) increased from $63, O in 1975 to An increase in operating revenues of $4,302,947- $1,420,349 in 1979. The Company's participation

approximate!y 25%, has occurred from 1975 to in Seabrook Units 1 and 2, a nuclear plant under I 1979. Most of the increase is in base rate rev- construction by Public Service Company of New enues, which Orew from $11,876,922 in 1975 to l Hampshire, accounted for the major portion of

$15,769,101 in 1979. Current year ba.se rate rev- AFUDC in 1979. In addition to the Compar'/s enues showed a slight increase of $42,031 over participation in Seabrook, interest rates have in-1978, which apparently reflects the impact of l

t ie interest por-energy conservation. Annual increases of such creased tion of AFUDCdra.natically, causing'rre'spondingly.

to inflate co In-revenues were 8.6%,17.4%, and 3.9% for 1976, creases from 1975 throtgh 1978 are directly at-1977, and 1978 respectively, but oniv 0.3% in tributable to the Company's share of the con- l 1979. An increase in base rates in the latter part struction costs of William F. Wyman Unit #4 l of 1976 contributed to the improved revenues in which was placed in service on December 1,1978.

1976 and 1977. A portion of AFUDC appears in Other income as Fuel adjustment revenues increased slightly ,

during the five-year period by $410,768 or 8.1%

Fuel revenues had reached $5,059,860 in 1973 s *

which wan the highest year up to that time. Since 1975, fuel revenues declined to $4,270,376 in M
  • 1976, $2,854,835 in 1977, but increased to

$4,141,695 in 1978. The decline in fuel revenues

in 1976 and 1977 is primarily due to the low fuel .g cost of nuclear power which became a major ~ ~

source of energ/ in late 1976. In 1979, fuel rev- '

em 4 - - - - - -

enues increased 32.1% ove" 1978, or by $1,328,933. m p i ';

This can be attnbuted to the tremendous increase in fuel costs as well as the unscheduled 1979 shutdowns of Maine Yankee Plant f 7r ten weeks in the spring and four weeks in the fall. The lose of nuclear power during tnose periods resulted in the need to produce replacement energy with a much higher fuel cost.

Deferred Fuel Expense P P ' d "' '" P*'""

! s.1 order to properly match revenues and costs 18

l l

- - wrm y ... . " j debt had peaked in 1976 rc $1,478,277 and de-creased to $1,444,001 in # 377 and to $1,407.205 y ,b .

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in 1978 because various , inking fund payments  ;

decreased the principal amour,ts outstanding.  ;

t Other interest charges, excluding AFUDC cred-ited to interest expenses, have gone up with the l 9 amount of short-term bank loans. Thus, other l ,

gg a interest expenses of $1,146,184 in 1979 were due to short-term borrowings ranging from $9,400,000 Gi to $12,600,000 between December 1978 and i

October 1979. On October 11,1979 $11,900,000 i l of those bank loans were paid as a result of long-term financing ($8,000,000 in Bonds and

$4,000,000 in Preferred Stock). On December 31, 1979 $2,600,000 of such loans were outstanding, whereas at the end of the years 1975,1976,and 1977 there were none.

Net income Net income for 1979 showed a slight decline of l

cultivating growing crop. $17.537 compared to 1978. Contributing to the decline was the foreign exchange accounting, a return on Equity Funds Used During Construc- mentioned previously, which is a non-cash item.

tion, and a portion is credited to Interest Charges It should be noted that AFUDC which is also a in accordance with an accounting order issued non-cash item continues to increase, although a

, by the Federal Energy Regulatory Commission large portion has been offset by the additional (FERC) in 1977. For comparative purposes, years interest charges related to short-term borrowing prior to 1977 have been restated on the five-year and the $8,000,000 bond issue.

i summary.

Preferred Stock Requirements Other income (Deductions) Dividends on preferred stock have increased l

Increases in Other income during the five-year due to the issuance of 80,000 shares of 9%% Pre-period are primarily attributable to Allowance for ferred Stock, $50 par value, in October 1979.This Equity Funds Used During Construction. Returns increase was offset slightly through the annual on Equity Investments (Maine Yankee Atomic retirement of 1,200 shares of 4%% Preferred Stock l

Power Company and Maine Electric Power Com- through the Preferred Stock Purchase Fund.

pany, Inc.) have remained stable. Foreign ex-change gairs and losses from the translation of Earnings Ava,lable i For Common the financial statements of the Canadian subsi- After consistent improvements from 1975 to diary in accordance with Statement of Financial 1978, of $2.00, $2.40, $3.57 and $4.00 per share, Accounting Standards No. 8 have shown consid- respectively, earnings per share have dropped erable fluctuations. These amounts are included moderately to $3.84 per common share in 1979.

in Other-Net, in the five-year summary. The loss from 1978 to 1979 is the result of the Canadian .;e dollar increasing from .8435 of U.S. dollar at s ~.' '

December 31,1978 to .8530 t t December 31,1979. :4 Should the upward trend of the Canadian dollar .

continue, the foreign exchange adjustment will .

.~

continue to appear as losses. '

Interest Charges ,

j Two issues of long-term debt occurred during )

the five-year period. On October 1, 1975 .

$4,000,000 of 10%% First Mortgage and Collateral ,

Trust Bonds were issued, with part of the pro-ceeds being used to refinance $2,088,000 of 2%% i bonds which had matured. On October 11,1979

$8,000,000 of 10% First Mortgage and Collateral -

Trust Bonds were issued, the proceeds from l which repaid bank loans incurred to finance con-l struction, including Seabrook Nuclear Units 1 and 2. Interest on long-term debt has increased to

$1,548,857 in 1979 due to the most recent issue of bonds. Prior to this year, interest on long-term Smaller farms still use manual harvesting methods.

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, -Xy; .'l L l 1979 T1978; 11977. J 1976.' $(Restated)'
1975- i Operating Revenues . . $21,239,729 $19,868,765[$17,998,660 ' - $17,166,458 n $16,936,782 i y

^ ' '

Operating Expenses -

Operation: , .

Power Purchased . . 8,881,077 ,7,638,595'. ' 6,227,121 L 15,768,339 " M 6,884,091 . 4 Other . 4,170,629 13,850,652- ' 3,971,212 . ;4,431,059 13,993,314-..

Maimenance 723,936 764,282 ( , .625,846. :645,659.

Depreciation .. 1,702,651 1,494,171 :1,424,715'

678,8111 <' 1,286,843 >
1,331,670 -

~ '

'n Taxes:

Other Than income . 792,025 l 669,456 ' ' 647,268- . 630,185: )603,141 ,

State income . ......... 46,963 173,500, e 203,9584 204.509 - 1118,154L s U.S. & Canadian Federal Income  ; ; .; _ f. .;

Current . 188,246 285,1711 1,231,484. 1,369,811- 661,895' o Deferred . ...... 743,255 !713,977 ~ 1188,086:  :(263,456)- .236,389i investment Tax Credits 213,695 881,380" 268,757 138,256 .' :131,9S1-: ..

Total Operating Expenses 17,462,477 416,471,i84L 414,788,447 ' -14,289,1843 14,561;447 T l a

Operating income . 3,777,252 ' 3,397,581 > 3,210,213- 2,877,274; 2,375,3351 j Other income (Deductions) .. .

Return on Equity investments 344,123 ;347,403 ?348,006-  : 348,365:- ~

-348,5933 Allowance for Equity Funds .

Used During Construction 241,459 ..2312,264-- l 242,829 ' 87,997:.  ; 21,449 - '

Other-Net . . (17,525) 34,627: :68,940- ~~ (86,916)l 16,846-Total . 568,057  : 694,294 ' E659,775  : 349,446/ I386',888 "

income Before Interest Charges 4,345,309 :4,091,875 - 3,869,988 13,226,720 I ~ 2,762,223 5 '

Interest Charges .

Long-Term Debt, etc. . ... . 2,695,041 .1,453,3561 .-1,473,704- 1,494,442' 41,282,563 -

Less Allowance for Borrowed J' . . .

Funds Used During Construction (1,178,890) (208,176): . (160,872) ? .(50,598)~ -(41,881) _

V Totat . 1,516,151 E1,245,1804 1,312,832 a 1,443,844 1'240,682?

Net Ir.evme . . .... .. . 2,829,158 ' 2.846,695 L f 2,557,156:- :1,782,876-. :1',521,541.

Elvidends on Preferred Stock... 262,124 '179,428 m182,257; i185,128:- .187,898 Not income Available for .

Common Stock . . . . . $ 2,567,024 $ 2,667,267a $ 2,374,899 i: $ 1,597,748 J $1 1,333,6434 Earnings Per Share of Common Stock $3.84 J $4.00 4

$3.57/ $2.40 ' $U00 e ,

g $

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e Maine Public Service Company consolidated I

1979 More Average or (Less) Annual Than 1969 increase Operating Revenues Amount Percent 1979 1978 1977 Residential . . . . . . . . . . . . . . ....... $ 4,976,403 10.1 $ 8,033,191 $ 7,531,515 $ 7,073,874 Commercial and industrial-small . . 2,831,093 8.9 4,950,151 4,770,989 4,148,247 l Commercial and Industrial-large . . 2,558.915 13.4 3,578,710 3,220,676 2,765,238 i Municipal Street Lighting . . . . . .. 154,057 7.7 293,577 282,505 213,590 Area Lighting . . . . . . . . . . ... . . 127,167 9.5 213,744 208,765 207,990 Other Municipal and Other Public Authorities . . .. ... 899,321 12.3 1,309,218 1,186,878 1,045,997 Other Electric Utilities ...... . 1,801,699 11.4 2,722,707 2,535,654 2,334,404 Other Operating Revenues . . .. 77,092 8.5 138,431 131,783 149,008 Total Operating Revenues $13,425,747 10.5 $21,239,729 $19,868,765 $17,998.660 Number of Customers (average)

R:sidential . . . . . . . . . . . . .... 3,406 1.4 25,537 25,470 25,272 Commercial and Industrial-small 41 .1 4,671 4,689 4,731 Commercial and Industrial-large 5 3.8 16 17 17.

Municipal Street Lighting - -

36 36 35' Area Lighting . . . . . . . . . . . . . .. 542 3.8 1,751 1,753 1,824 Other Municipal and Other Public Authorities . .. 1 1.3 8 8 8 Other Electric Utilities . - -

7 7 6 Total Customers ..

3,995 1.3 32,026 31,980 31,893 Net Generation, Purchases and Sales (thousands of kilowatt hours)

Net Generation:

Steam . .. .. . ... (26,440) (8.0) 20,373 26,913 Hydro . 6.193

..... .. 18,666 1.2 162,107 116,894 167,874 Diesel . ... . .. . (1,653) (18.6) 243 627 Purchases: (1751 Nuclear Generated .. . 220,218 -

220,218 263,137 252,829 Fossil Fuel Generated (7,528) (.5) 158.699 157,854 127,109 Total . . . ... ... . 203,263 4.6 561,640 565,425 553,830 Losses and Unaccounted for . 11,038 3.4 38,706 30,040 34,536 Company Use . .

(385) (2.6) 1,277 1,296 1,229 Electricity Sold . .... 192.610 4.7 521,657 534,089 518,065 Sales:

Resideritial . . . . . . . . . . . . . . . .

. .... . 56,998 4.6 156,399 158,820 154,420 Commercial and Industrial-small . . 40,999 5.1 105,055 111,002 98,999 Commercial and Industrial-large 47,049 5.7 110,452 106,757 100,122 Municipal Street Lightin 562 2.1 2,981 2,944 2,952 Area Lighting . . . . . . . . .g.... ......... ....... 827 4.7 2,233 2,236 2,269 Other Municipal and Other Public Authorities ..... ..... . 620 .2 38,762 42,438 42,493 Other Electric Utilities . . . . . . . . 45,555 5.8 105,775 109,892 116,810 Total Sales . .. ......... 192,610 4.7 521,657 534,089 518,065 Average Use and Revenue Per

' Residential Customer Kilowatt-hours .... ............ 1,633 3.1 6,124 6,236 6,110 Revenue . ...... .. ... .... $176.45 8.6 $314.57 $295.70 $279.91 Revenue per Kilowatt-hour . . . . . . . 2.06c 5.3 5.14c 4.74c 4.58c

__ _ U

operating statistics 1976 1975 1974 1973 1971 1970 1969

$ 6,617,492 S 6,498,277 $ 5,241,793 $ 4,306,306 $3,u,6,884 $3,586,685 $3,238,097 $3,056,788 4,258,303 -4,153,889 3,317,147 2,870,766 2,647,987 2,452,033 2,252,285 2,119,058 2,859,436 , 2,752,432 1,874,967 1,434,155 1,330,711 1,215,867 1,043,711 1,019,795 213,590 197,190 189,980 -174,618 153,962 153,138 143,484 139,520 161,924 _147,531 140,239 128,587 113,472 104,475 94,761 86,577

' 926,200 889,789 744,038 538,689 490,793 424,343 448,720 409,807 1,984.171 2,147,984 1,415,135 1,191,488 1,169,430 1,005,892 878,855 921,008 145,342 149,690 145,385 103,841 91,086 82,691 69,751 61,339 017,166,458 $16,936,782 $13,068,684 $10,748,450 $9,874,325 $9,025,124 $8,169,664 $7,813,982 24,990 24,709 24,421 23,805 23,238 22,654 22,423 22,.31 4,756 4,778 4,710 4,691 4,715 4,672 4,647 4,630 15 14 13 13 12 12 11 11 34 34 34 34 34 34 36 36 1,825 1,763 1,723 1,681 1,546 1,386 1,306 1,209 8 8 8 8 8 8 7 7 6 6 6 6 7 6 6 7 31,634 31,312 30,915 30,238 29,560 28,772 28,436 28,031 14,791 50,748 32,385 33,263 55,617 84,437 14,346 46,813 173,421 105,726 140,362 153,898 157,488 102,275 144,480 143,441 (80) 78 (209) 875 10,741 6,854 (472) 1,896 52,978 275,731 319,334 296,649 262,210 214,708 200,079 225,673 166,227 516,841 475,886 459,187 450,246 438,554 393,645 384,027 358,377 33,462 32,313 32,401 27,391 30,033 24,012 29,306 27,668 1,281 1,312 1,396 1,537 1,712 1,591 1,715 1,662 482,098 442,261 425,390 421,318 406,809 368,042 353,006 329,047 154,060 145,361 140,702 . 134,747 127,834 117,460 107,010 99,401 96,910 90,211 86,304 86,464 81,411 75,063 69,431 64,056 96,499 67,712 79,504 78,414 80,284 74,057 68,183 63,403 2,889 2,804 2,706 2,744 2,707 2,775 2,535 2,419 2,305 2,182 2,085 1,992 1,835 1,647 1,541 1,406 41,157 34,752 35,617 39,754 35,820 29,121 41,767 38,142 88.278 79,239 78,472 77,203 76,918 67,919 62,539 60,220 482,098 442,261 _

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