ML20206H948
| ML20206H948 | |
| Person / Time | |
|---|---|
| Site: | 05000000, Seabrook |
| Issue date: | 12/31/1985 |
| From: | Hovey G MAINE PUBLIC SERVICE CO. |
| To: | |
| Shared Package | |
| ML20206H943 | List: |
| References | |
| NUDOCS 8606260368 | |
| Download: ML20206H948 (28) | |
Text
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1985 ANNUAL REPORT t{
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8606260368 860624 PDR ADOCK 0500 3
I MA.INE PUBLIC SERVICE COMPANY
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-. :y, er tY BOARD OF DIRECTORS. Seated UR: C. Hazen Stetson, Donald F. Collins, Ralph A. Brown, and G. Melvin Hovey.
Standing UR: Irwin F. Porter, J. Gregory Freeman, Nathan L. Grass Walter M. Reed, Jr., J. Paul Levesque, i
D. James Daigle, and James H. Page.
Board of Directors RALPH A BROWN DON ALD F. COLLINS D. JAMES DAIGLE Chairman of the Board President President Ma ne Public Service Company S. W. Colhns Co.
David D. Daigle Farms, Inc.
Presque Isle. Maine Cantou, Maine Fort Kent, Maine and Chairmar,. Aroostook Trust Company Orlando, Flonda Canbou. Maine j
J GREGORY FREEMAN NATH AN L. GRASS G. MELVIN HOVEY j
President and Chief Executive Officer President and Owner President and Chief Executive Officer i
Pepsi-Cola Bottling Co. of Aroostook, Inc.
Belanger Farm Machinery, Inc.
Maine Public Service Company i
Presque Isle. Maine Canbou. Maine Presque Isle, Maine I
J. PAUL LEVESOUE JAMES H. PAGE IRWIN F. PORTER r
President Retired Vice President Honorary Director l
J. Paul Levesque & Sons. Inc.
James W. Sewall Co.
Casco Northern Bank, N A.
(Lumber Mill)
(Foresters and Engineers)
Portland, Maine Ashland Maine Old Town. Maine WALTER M. REED. JR.
C. HAZEN STETSON President Honorary Chairman of the Board Reed Farms. Inc.
Maine Public Service Company Fort Fairfield. Maine Presque Isle, Maine I
executive officers amtenn G. MELVIN HOVEY RALPH A. BROWN Five-Year Summary of President and Chairman of the Board Selected Financial Data 1
Chief Executive Officer President's Letter 2-3 FREDERICK C. BUSTARD PAUL R. CARIANI Vice President Vice President Engineering and Operations Finance and Treasurer Analysis of Financial Condition and Review of Operations 4-9 STEPHEN A. JOHNSON LARRY E. LaPLANTE General Counsel Assistant Secretary and Auditors' Report 9
Secretary and Clerk Assistant Treasurer Financial Statements and Notes 10-21 PETER C. LOURIDAS CHARLES A. KILBY Asst. Vice President Executive Assistant Consolidated Financial Statist.ics 22-23 Power Supply and Planning Personnel and Divisions Eleven. Year Operating Statistics inside TRANSFER AGENT: Manufacturers Hanover Trust Back Cover Company, New York ABOUT THE COVER STOCK REGISTRAR: Common Stock-Our 1985 Annual Report theme features interpersonal i
Manufacturers Hanover Trust Company, New York relations with customers.
ANNUAL MEETING: Second Tuesday in May.
Marian A. Ireland of Fort Fairfield, Maine, is shown PRINCIPAL OFFICE: 209 State Street discussing good service and the success of the water Presque Isle, Maine 04769 heater insulation program with Customer Representative Tel. No. (207) 768-5811 Gary Bell.
I five-year summary of l
selected financial data 1985*
1984*
1983*
1982 1981 Operating Revenues
$ 40,207,500 $ 34,334,282 $ 33,183,752
$31,144,070
$29,273,813 Income Before Extraordinary items
$ 7,117,655 $ 6,320,890 $ 6,333,486
$ 4,660,426
$ 3,297,458 Extraordinary items (13,390,999)
Net income (Loss)
(6,273,344) 6,320,890 6,333,486 4,660,426 3,297,458 Dividends on Preferred Stock 904,012 917,936 820,624 541,918 549,211 Not income (Loss) Available for Common Stock
$ (7,177,356) $ 5,402,954 1 5,512,862
$ 4,118,508 5 2,748,247 Earnings (Loss) Per Share of Common Stock l
Income Before Extraordinary items
$ 6.70
$5.85
$6.68
$5.95
$4.04 l
Extraordinary items....
(14.44) l Net income (Loss)...
$(7.74)
$5.85
$6.68
$5.95
$4.04
....~.
Dividends Per Share of Common Stock:
Declared Basis..
$2.09
$2.27
$2.12
$1.92 Paid Basis -
S.35
$2.32
$2.22
$2.07
$1.92 Tctal Assets...
$115,287,757 $115,797,475 $102,574,857
$88 639,629
$75,558,271 Ling Term Debt Outstanding.
$ 44,558,040 $ 46,843,656 $ 39,827,432
$40,280,040
$25,419,480 Less amount due within one year..
3,309,840 4,757,408 445,504 446,560 506,368 l
Lgng Term Debt
$ 41,248,200 $ 42,086,248 5 39,381,928
$39,833,480
$24,913,112 l
l Redeemable Cumulative Preferred Stock..........
$ 8,188,900 $ 8,543,900 $ 8,649,000
$ 5,754,000
$ 5,859,000
- See Auditors' Report on Page 9 which contains a qualification relating to the uncertainties as to recoverability of the Company's investment in the Seabrook Nuclear Power Project.
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President's Letter 2;r to our Stockholders and
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Employees f
This year your Company has made substan-tial progress in resolving the financial stress k'y
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i and uncertainty created by its involvement in
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1 the Seabrook Nuclear Project. It has been able 7;- '.
to do so despite the f act that a large portion of our time and resources have been devoted to participating in an investigation by the Maine g
Public Utilities Commission to determine if a merger of your Company would be in the public's best interest and, upon careful assess-ment of the interests of our stockholders, customers and employees, and the community which we serve, resisting a proposed merger as ill founded.
Some of our efforts over the last year have produced the following results:
creases, as well as increased load growth, our We have received an annual retail rate in-cash position is much improved from a year crease of $4.5 million ($3.0 million in per-ago.
manent rates and $1.5 million in tem-porary rates), effective May 20,1985, and Before reflecting an extraordinary one-time an annual wholesale rate increase of loss associated with our decision to write off
$814,500 effective December 1,1985.
30% ($13.5 million before taxes) of the retail An agreement with our Bank Consortium portion of the unrecovered investment in for a $22% million revolving credit line Seabrook Unit 1,1985 income before extraor-was successfully completed in October, dinary items is $7.1 million and earnings per 1985.
share are $6.70. Af ter the extraordinary items, A sale of $15 million in First Mortgage the Company had a net loss of $6.3 million and a Bonds was completed on March 18,1986 net loss per share of $7.74. The extraordinary items do not affect the cash flow of the Com-and the Company does not expect to pany. With th,s wnte-off, the Company believes i
need further long term financing until 1990, based upon current Seabrook con-it is now in a position of, improved fmancial struction estimates.
stability and strength.
A letter of intent has been signed with We expect to recover the remaining 70%
Eastern Utilities Associates (EUA) for the through rates to our customers, which would be proposed sale of our entire ownership in similar to the rate treatment already accorded Seabrook.
Bangor Hydro Electric Company and Central Negotiations are in progress with the Maine Power Company, the two other Maine Maine Public Utilities Commission Staff utilities with direct Seabrook ownership.
on a stipulation for the recovery in rates of the Seabrook costs not recovered in The Company's internal operation saw the sale to Eastern Utilities Associates.
growth and marked improvement in 1985 As of this writing, the merger issue has not because of hard working, loyal, and profes-been resolved and, in fact, the record has sional employees. Many contributed long hours recently been reopened. However, as each day and devotion to the demands of the merger in-passes the Company becomes financially more secure. We remain convinced the Company's Independence is in the long range best interest I
of our stockholders, customers, and employees. Because of our recent rate in.
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vestigation and Seabrook-related matters.
We will be purchasing approximately Despite these extra requirements, the Company 126,000,000 kilowatt-hours annually from one grew in sophistication and technical ability.
such small power producer starting in mid-1986.
Although our Company does not need addi-Emphasis was placed on developing, train-tional power from all potential local suppliers, ing, and adding highly qualified people, tools New England is predicting substantial deficien-and computer systems. We now have the capa-cies and we expect revenues from wheeling bility to develop comprehensive, quality long-power south to our neighbors. One such plant is range financial and power supply studies and already scheduled for operation in 1987 and is forecasts. Much of our legal, regulatory, and expected to provide the Company with approx-planning work can now be done in-house.
imately $500,000 annual wheeling revenue.
This year's Annual Report focuses on custo-The Company has turned the corner and is mer-employee interpersonal relations. Respon-well on the way to reaching the financial sound-ding to customer needs in an accepting and ness it once enjoyed. We hope to be able to positive manner for more than eighty years has resume dividends shortly.
created overall customer support. Action and concern for our independence has been Finally, I am most gratified and appreciative displayed throughout the merger investigation, of the large measure of support that our with many voicing appreciation of our reliable shareholders, our customers and our service.
employees have volunteered during this trying period.
Looking ahead, we seek to continue pro-viding the best possible service at the lowest Sincerely, possible cost consistent with due recognition of the 'nterest of our shareholders. Aiming at responuveness to our customer needs, we will 7g continue our efforts in providing information and assistance so customers can efficiently control and manage their electric bills.
G. Melvin Hovey President esque Isle, Maine Mad 21, %86 Programs to control load growth through ef-fective conservation and load management will be broadened and further developed. We will continue to control our expenditures in order to improve earnings and our position in the finan-cial community. And, we will continue to im-prove the skills of our employees through more ELECTRIC OUTPUT BY SOURCES training and education.
,,,, a,, n iin E
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.h R ' oit With an average of 45% of our energy coming H
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1 Yankee), and 25% from hydro facilities, we M
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22 k 24 5I He' W RCHASES presently have the lowest cost of power of any
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major utility in the State. We are adjacent to the
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Canadian border and are in an excellent posi-tion to continue to take advantage of Canadian q.
hUCLEAR
.e low-cost power. We also have large wood 7
resources and a great potential for small power U _j production and cogeneration with wood as a f uel source.
1998 1982 1999
- 994 496g 3
Analysis of Financial Condition and Review of Operations-1985 l
Revenues and Enerav Sales 985 *h**S 5"ch pu'ch*$'S totaled 438,789 MWh in 1984 and 435,854 MWh in 1963 The Maine Yankee Atomic Power w
Consolidated operating revenues for 1985 attained a new Company (Maine Yankee) Supplied the Company with high of $40,207,500 as compared to $34,334,282 in 1984 and 284,812 MWh of nuclear energy in 1985 compared to 273,087 MWh and 296,164 MWh in 1984 and 1983, respectively. On
$33,183,752 in 1983. Base rate revenues, excluding fuel cost I
revenues, increased by $3,969,040 (18.1%) over 1984 and June 1,1983, the Houlton Water Company (a wholesale I
$4,382,790 (20.3%) over 1983. The increase in base revenues customer) agreed to assign its entitlement in Maine Yankee t
is primarily attributable to retail rate increases of $570,000 theret,y increasing the Company's total entitlement in the effective November 21,1984, $140,392 effective April 1, plant's capacity from approximately 4.9% to 5.3%. The 1985, and $3,818,670 effective May 20,1985. Rate increases Company's purchases are contingent on the Plant's opera-tions and, as was the case in 1984, the Plant was down for granted in1985 will not be fully recognized until 1986. In ad.
dition to rate increases, gains in total energy sales have had refueling and maintenance for an extended period of time in 1985. On October 31,1985, the Company's entitlements to a positive impact on base revenues as discussed below.
power from the Maine Electric Power Company (MEPCO)
Fuel revenues were $14.268,423 for 1985, $12,364,245 for were terminated. MEPCO purchases decreased to 48,556 MWh in 1985 from 66,533 MWh in 1984 and 61,555 MWh in 1984, and $11,627,465 for 1983. Increased firm energy sales and the replacement power due to the shutdown in 1984 and 1983. The Company's steam generation facilities produced 50,691 MWh,51,253 MWh, and 44,564 MWh in 1985,1%4, 1985 of Maine Yankee for refueling and maintenance had a significant impact on the increase in fuel revenues from and 1983, respectively. Lower than normal hydro produc-1983 to 1984 and from 1984 to 1985. Maine Yankee was not tion, the shutdown of Maine Yankee for refueling and down for refueling in 1983, maintenance, the termination of entitlements in MEPCO and an increase in energy sales resulted in increased pur.
chases f rom The New Brunswick Electrical Power Commis-Total energy sales of 623,540 MWh in 1985 are 5.4% more than the 591,668 MWh sold in 1984, and 3.9% greater than sion (NBEPC) in 1985 of 175,098 MWh as compared to the 600.083 MWh sold in 1983. Firm sales have grown from 99,146 MWh in 1984 and 78,097 MWh in 1983.
1 560,228 MWh in 1983 to 576,146 MWh in 1984 and to 607,819 MWh in 1985. Firm sales exclude sales to The New An increase in energy sales, lower than normal hydro pro-Brunswick Electric Pnwer Commission which are discussed duction, and increased costs for Maine Yankee power have below.
also increased purchased power expenses to $17,553,385 in 1985 compared to $15,699,256 in 1984 and $12,880,854 in Residential energy sales for 1985 were 1.2% and 4.3%
1983. Reflecting increased capacity charges, the cost of over 1%4 and 1983, respectively. Small commercial and in.
Maine Yankee's power in 1985 of $7,283,263 was higher than dustrial sales in 1985 increased 3.3% over 1984 and 6.9%
the $6,937,772 spent in 1984 and the $5,%7,679 spent in over 1983. Large commercial and industrial sales in 1985 in.
1983. As explained in the previous paragraph, increased pur-creased 18.4% and 19% over sales for 1984 and 1983, chases from the N BEPC has increased purchased power ex-respectively. The increase in 1985 sales is primarily at.
penses from $3,528,225 in 1%3 and $4,991,913 in 1984 to tributable to the increased production by Simplot Pro.
57,591,977 in 1985. Correspondingly, MEPCO purchased cessors, Inc. even though that customer has not reached power expenses decreased from $3,769,341 in 1984 and full production. Sales to Simplot were 27,474 MWh in 1985,
$3,382,851 in 1983 to $2,660,937 in 1985.
as compared to 1984 sales of 12,432 MWh and 1983 sales of 34,879 MWh to the previous owner (American Kitchen Other operation exp.enses for 1985 were $8,845,064 Foods, Inc.). Sales to other large commercial and industrial representing a 4.7% increase over 1984 expenses of customers have increased from 82,257 MWh in 1983 to
$8,444,446 but a 2.1% decrease over 1983 expenses of 105,631 MWh in 1984 and to 112,270 MWh in 1985.
59,035,905. Expenses of operating the Company's steam generation facilities, including Wyman Unit #4, decreased Sales to public authorities increased by only.8% over from $3,143,483 in 1984 and $2,746,786 in 1983 to $2,734,133 1984 but were 5.9% higher than sales for 1%3. Sales for in 1985 reflecting a decrease in fuel costs for comparable resale were 138.514 MWh in 1985 as compared to 134,537 production. Deferred fuel accounting produced a positive MWh in 1984 and 154,940 MWh in 1983. Included in sales for
$99,088 in 1%5 compared to a negative $479,178 in 1%4 and resale are sales to The New Brunswick Electric Power Com.
a positive $644,911 in 1983. A negative deferred fuel ex-mission (NBEPC) which were 15,721 MWh in 1985,15,522 pense indicates that uhcollected fuel costs have been MWh in 1984, and 39,849 MWh in 1983.
deferred, for matching purposes, to a future accounting period during which those costs will be collected. A Additional information on revenues, sales, and other positive deferred fuel expense indicates that previously statistical data may be found in the eleven-year con-deferred fuel costs have been ct'rrently collected and are solidated operating statistics that appears near the end of therefore included in operating revenues. Other generation this report.
expenses, including hydro, and power supply expenses in-curred in 1985 were $506,826 compared to $520,742 in 1984 and $507,518 in 1983.
Transmission and distnbution expenses in 1985 of
$1,577,629 were lower than 1984 expenses of $1,583,732 but Operating Expenses higher than the 1983 expenses of $1,520,424. Customer ac-counting and service expenses and general and ad-In 1985, hydro production was 78.8% of normal compared ministrative expenses were $3,927,388, $3,675,667, and with 104.2% in 1984 and 118.0% in 1983. As a result, hydro
$3,616,266 in 1985,1984, and 1983, respectively. The 1985 in-generation in 1985 dropped to 105,068 MWh in comparison crease in expenses is attritutable to an increase in ad-with 139,255 MWh in 1984 and 157,741 MWh in 1983. With in-ministrative and general expenses and regulatory expenses.
creased sales and lower than normal hydro generation, the Maintenance expenses of $1,153,303 in 1985 were 11.6%
Company purchased 508,892 MWh from outside sources in lower than 1984 expenses of $1,304,302 but 1.8% higher 4
than those expenses for 1983. Depreciation and amortiza-shire (PSNH). Despite the financial problems experienced I
tion expenses of $2,321,842 in 1985 includes amortization of by PSNH in 1984, PSNH has now been able to secure the 8
recoverable Seabrook Unit 2 abandonment costs of funding necessary to finance its ownership share of Unit 1
$732,675. See the Notes to Consolidated Financial through completion under the present schedule of con-Statements, Note 1, Contingencies, "Seabrook Unit 2" for struction. In June,1984,it issued $90 million of short-term further information. Depreciation and amortization ex-debt and in December,1984, issued $425 million of long-penses for 1984 and 1983 were $1,733,991 and $1,760,589, term debt. On January 31, 1986, the New Hampshire respectively. Taxes other than income taxes were Supreme Court affirmed an earlier order of the New Hamp-
$1,064,456, $1,050,471 and $999,401 in 1985,1984, and 1983, shire PUC authorizing PSNH to issue " deferred interest respectively. Due to an increase in income and the tax ef-bonds" and tax exempt pollution control bonds. This deci-fect of the allowance for borrowed funds used during con-sion allowed PSNH, on February 27,1986, to complete its struction, the provision for income taxes was $3,657,891 for final financing for supporting its share of Seabrook Unit 1, 1985 as compared to $472,551 in 1984 and $1,814,996 in under the present schedule of construction, with the sale of 1983. See the Notes to Consolidated Financial Statements,
$325 million in securities.
Note 3, income Taxes, for f urther information on the income tax provision.
The ability of many of the Joint Owners, including the r
Company, to obtain the necessary regulatory approvals is still in question. The MPUC has found that the three Maine utilities (including the Company) would be better off without the Seabrook Project so long as they can arrange Construction for a sale of their ownership share on " reasonable terms".
See the Regulatory Proceedings section of this report. In Expenditures on additions, replacements, and equipment July,1985, the Company s:gned a Letter of Intent with I
in 1985 amounted to $11,225,572, including allowances for Eastern Utilities Associates (EUA) to sell all of its owner-
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borrowed funds used during construction of $3,324,836.The ship share in the Seabrook Project to an EUA subsidiary for majority of these expenditures amounting to approximately
$8.5 million in January,1986, EUA informed the Company
$9,422,000 in 1985, related to the Company's continuing in-that it would increase the purchase price to $12.5 million vestment in the Seabrook Nuclear Project. Work on the new and the Company,in February,1986, signed a subsequent j
transmission line from Sherman to Island Falls required Letter of Intent to that effect. In addition, EUA would reim-i
$100,000. Approximately $202.300 was expended on a new burse the Company for all payments made by the Company transmission line from Mapleton to Ashland. Meters, ser-to support Seabrook Unit 1 after June 1,1%5. This propos-vices, transformers and other customer-related f acilities re-ed sale and purchase is subject to the negotiation and ex-j quired expenditures of $342,400. Distribution line exten-ecution of a definitive purchase agreement and must be ap-sions, rebuilds and highway relocations amounted to proved by the MPUC, the New Hampshire PUC and the
$752,500. Voltage conversions and substation im-FERC and requires the release by the respective Trustees l
provements required $71,500. Street lighting, general equip-under the Company's Trust Indenture and Second Mor-ment, and miscellaneous items accounted for the remain-tgage. The offer to purchase will expire on June 30,1986.
ing $334,900. The amounts included in this paragraph do The other two Maine Utilities have already signed Purchase not include the allowance for equity funds used during con-and Sale Agreements with EUA. The Company is currently struction, amounting to $3,677,004 in 1985 and relating negotiating with the MPUC Staff and the Public Advocate to primarily to the Company's investment in Seabrook.
obtain approval of this sale. Central Vermont Pubhc Service Corporation has also signed a Letter of Intent to sell its As more fully explained in the Note 1 to the Notes to Con-Seabrook interest to the EUA subsidiary.
solidated Financial Statements, the Company anticipates 1
that $13.5 million of its investment in Seabrook Unit 1 will in May,1985, the Vermont Public Service Board (VPSB) be disallowed by the MPUC and has charged this amount to ordered its utilities to pursue all reasonable steps to i
income as an extraordinary item. The Company's invest-achieve cancellation of the Seabrook Project and to an-ment in Seabrook Unit 2 previously classified as construc-nounce that their respective interests are for sale. The 4
j tion work-in progress on December 31, 1984, has been VPSB also denied the request of Vermont Electric Genera-reclassified as investment in Abandoned Project. The Com-tion and Transmission Corporation for long-term financing
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pany has charged to income as an extraordinary loss ap-authority for Seabrook Unit 1. The VPSB has also ordered proximately $1.9 million of Seabrook Unit 2 costs disallow-the Vermont utilities to show cause why the VPSB should j
ed in regulatory rate proceedings.
not issue an order requiring them to cease payments in sup-port of the Project.
if the Company continues to participate in Seabrook, con-struction expenditures in 1986 are expected to total approx-In April,1985, the Massachusetts Department of Public j
imately $8,897,600, including an estimated $2,694.000 for Utilities found that four Massachusetts utilities had failed i
allowance for borrowed funds used during construction, if to demonstrate the reasonableness of the Seabrook Project the Company sells its Seabrook investment, it will be reim-and stated that if the three investor owned utilities wished bursed for 1986 Seabrook Unit 1 and nuclear fuel expen-to obtain DPU approval for any Seabrook related financings, ditures. Please refer to the Seabrook Project section of this they had to present reasonable assurances that the risks of report for further discussion. In 1986, the Company an-that investment would not be borne by ratepayers. For the i
ticipates spending $2.324,300 for local facilities. Transmis-Massachusetts Municipal Wholesale Electric Cooperative j
sion improvements will require $333,500, while distribution (MMWEC), the fourth utility, the DPU stated that it would l
expenditures will approximate $1,433,700. The remaining deny MMWEC's financings for any future construction i
$557,100 is budgeted for numerous miscellaneous im-costs for the Seabrook Project. MMWEC subsequently ob-provements and needed equip.nent throughout the con-tained additional short-term securities sufficient to pay for j
solidated system.
its share of the Seabrook Project under the present schedule of construction. One of the three investor owned a
j utilities, Fitchburg Gas & Electric Company, ceased making its payments to the Seabrook Project in May,1985, as a result of this order. Other Joint Owners (not including the
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j The Seabrook Project Company > have <nade advance payrnents on ineir obiiga-tions to tt Seabrook Project, which has the effect of com-The Company owns a 1.46056% interest in the Seabrook pensating
,r the loss of Fitchburg payments. Fitchburg is Nuclear Generating Project being constructed in Seabrook-presently negotiating with EUA to sell its interest in the j
New Hampshire by Public Service Company of New Hamp-Seabrook Project.
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On March 18,1986, the Company completed the issuance Maine Yankee owns and operates an 850,000 kilowatt and sale of $15 million of First Mortgage and Collateral nuclear generating plant in Wiscasset, Maine. The Company Trust Bonds. The sale of these bonds permits the Company is entitled to purchase approximately 5.3% of the very to complete the funding of its share of the Seabrook Project economical nuclear energy produced by this plant, in-under the present schedule of construction.
cluding the assignment of the entitlement of approximately
.4%, effective June 1,1983, by Houlton Water Company, a The Company cannot predict whether certain of the Joint wholesale customer of the Company. On September 25.
Owners will be able to obtain the financing necessary to 1985, Houlton Water Company notified the Company of its complete the Seabrook Project or whether the proposed intention to terminate the assignment of Maine Yankee to sale by various companies of their respective interests in the Company effective September 25,1990.
the Seabrook Project to EUA will receive the necessary ap-provals and releases.
The Company also owns 7.49% of the Common Stock of Maine Electric Power Company, Inc. (MEPCO). MEPCO On March 19,1985, the Joint Owners adopted a Resolu-owns and operates a 345 KV (kilovolt) transmission line tion that precluded any Owner from being required to par-about 180 miles long which connects The New Brunswick ticipate in the resumed construction of Seabrook Unit 2 Electric Power Commission (NBEPC) system with The New unless that Owner wished to do so. Based upon this Resolu-England Power Pool. Under agreements with NBEPC, MEP-tion, the MPUC determined that Seabrook Unit 2 was effec-CO is presently purchasing Canadian energy and reselling it tively cancelled or abandoned as far as the Maine utilities to various New England utilities. The MEPCO transmission were concerned. See Regulatory Proceedings section.
line is also the path by which Maine Yankee and Wyman #4 energy is delivered northerly into the NBEPC system and Spending for Seabrook Unit 1 continued at the level of $5 then wheeled to the Parent Company through its intercon-million per week throughout a large portion of 1%5 (full con-nections with NBEPC at the international border. The Com-struction is estimated at approximately $10 million per pany's entitlements in MEPCO of 10.6 megawatts were ter-week). On September 20,1985, the Joint Owners voted to in-minated on October 31,1985.
crease funding retroactive to September 1,1985, to $8 million per week, to authorize full funding at the level of $10 The Company has pledged its common stock of Maine
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million per week beginning October 1, 1985, and to Yankee and MEPCO for the benefit of its commercial banks authorize full construction. The Company voted in favor of under the terms of its Credit Agreement. See Financial Con-these resolutions. On October 11,1985, the Joint Owners dition section of this report.
were presented with a report that Seabrook Unit 1 was ap-proximately 92*/ complete. On January 14,1986, the Joint Owners voted to reduce funding to $5 million per week for Regulatory Proceedings t
the month of February, in the absence of any resolution of i
PSNH's court proceeding noted above. The Joint Owners On July 20,1984, the Company filed with the MPUC under were also informed that Seabrook Unit 1 was 95% com-Docket 84-80 a request for a general increase in retail rates plete. Construction funding for March is proceeding at the of approximately $7.35 million. The MPUC issued an full $10 million per week.
" Interim Order" based on a Stipulation of selected issues entered into by the parties. As a result of this Stipulation, an Hot functional testing of Seabrook Unit 1 was completed increase in annual revenues of $570,000 became effective on November 30,1985. Because a minimum number of prob-on November 21,1984. On January 11,1985, the Company lems were encountered in this procedure, Project manage-revised its rate request to $5.5 million (including the ment believes that Unit 1 will be able to achieve the last
$570,000 Stipulation) primarily based on the reallocation of significant construction milestone, core loading, in June, costs from Seabrook Unit 2 to Seabrook Unit 1. On May 10, 1986, and that the Unit could become commercially 1%5, the MPUC issued its final order permitting the Com-operable by October,1%6, if the Unit can obtain an pany a retail rate increase in annual revenues of $4,529,060 operating heense and an approved Emergency Evacuation (consisting of $3,019,380 in permanent rates and $1,509,680 Plan.The status of this Plan is currently undecided. Twenty-in temporary rates). The principal issues in this proceeding three towns in New Hampshire and Massachusetts must concerned the recovery of costs associated with the participate in preparing an evacuation plan for their respec-cancellation of Seabrook Unit 2 and further extraordinary tive communities and certain of the Massachusetts towns tax-normalization. As a result of its investigation in MPUC have not indicated that they will participate. A plan will be Docket 84-113, which was incorporated into this pro-proposed for those communities and it is hoped that the ceeding, the MPUC ultimately concluded that 37.6% of the State of Massachusetts will participate on their behalf. In Company's investment in Seabrook 2 attributable to retail New Hampshire, the plans are complete and have been sub-customers was imprudently incurred under Maine law and mitted for review to the appropriate federal agency by the would have to be borne by the Company's shareholders.
Governor. A test of the New Hampshire Emergency Evacua-Because of a concern about the Comptny's financial condi-tion Plan was run on February 26,1986.
tion, the MPUC allowed the Company to recover the remain-ing 62.4% over 56 months and would allow the Company to Affiliated Companies piace tne unamortized amount in rate base. This would tem-1 porarily increase the Company's revenues by $1,509,680.
The Company owns 100% of the Common Stock (with the These temporary rates were conditioned upon:(1) the Com-exception of directors' qualifying shares) of Maine and New pany's executing its Revolving Credit Agreement (see Brunswick Electrical Power Company, Limited, hereinaf ter below),(2) avoiding bankruptcy and;(3) the resolution of the referred to as the Subsidiary. The Subsidiary owns and Commission's investigation into a merger or some other operates Tinker Station, a hydro generating facility, located form of reorganization. The MPUC recently issued an order on the Aroostook River in the Province of New Brunswick, to show cause with respect to the temporary rates. See Pro-Canada. The Tinker Station has a hydro plant of five units posed Acquisition By Central Maine Power section, with 34,000 kilowatts of capacity and a 1,000 kilowatt diesel unit. The Subsidiary serves the community of Perth-The MPUC lssued a Notice of Investigation of Seabrook Andover in New Brunswick, with the remaining energy ex-involvements by Maine utilities (MPUC Docket No. 84113) ported to the Parent Company in Maine underlicense of the on June 8,1984. On December 13,1984, the MPUC issued an 1
National Energy Board of Canada. The Subsidiary's export order that essentially ordered the three Maine utilities to of-license is subject to renewal in 1988.
fer to sell their complete ownership shares of Seabrook Unit
- 1. When no offers to purchase were forthcoming, the MPUC The Parent Company owns 5% of the Common Stock of ordered the three utilities to present plans to disengage the Maine Yankee Atomic Power Company (Maine Yankee).
6 l
2 i
from the Seabrook Project. On February 8,1985, the Com-ratepayers of neither company would realize any significant pany tiled its plan of disengagement, which indicated that it advantage from the merger. A revised analysis was would continue its attempts to market its share of the presented to the MPUC during December,1985, and showed Seabrook Project.
that the Company's rates would be somewhat higher than that of the initial study. The Company, however, continues 4
On July 24,1985, the Company signed a Letter of intent to maintain that this projected differential is not adequate with EUA to sell its entire interest in the Seabrook Project to support a merger of the two companies. CMP and the (see The Seabrook Project section). The MPUC has subse-MPUC Staff support the proposed merger, claiming that it quently declined to order any disengagement from the would benefit the Company's ratepayers. The Company's Seabrook Project because it found that its May 31,1985, ap-wholesale customers oppose the merger. On February 19, l
proval of a stipulated resolution to Central Maine Power 1986, the Hearing Examiner issued a recommended devi-Company's (CMP) proposed rate increase "substantially sion that concluded that the merger would be in the public limited" the risks to that company's customers presented interest. The Company filed exceptions disputing this find-by Seabrook Unit 1. The Commission was referring to those ing.
provisions of CMP's Stipulation that limited the amount of On March 14,1986, the Commission issued a Procedural CMP's investment in the Seabrook Project that will be Order reopening the record to take additional evidence on recovered from ratepayers. The MPUC further noted that the effect on the Company of: (1) more recent oil price l
Bangor Hydro-Electric Company and the Company could forecasts; (2) the sale of the Maine utilities
- share of j
similarly eliminate the risks associated with the Seabrook Seabrook to EUA; (3) more recent capital costs; and (4) a Project if they could obtain similar stipulations. The Com-hypothetical permanent shutdown of Maine Yankee as of pany is currently negotiating with the MPUC Staff and the January 1,1988. On the same date in this proceeding, the Public Advocate to obtain a similar result.
Commission also issued a Show Cause Order reciting that in the Company's last general rate case, the Commission On May 25,1985, the Company filed with the MPUC for granted $1,509.680 in temporary rates in order to avoid the j
approval of a $22.5 million Credit Agreement with a syn-Company's insolvency. The Commission stated that it now dicate of four banks (MPUC Docket 85-91). This Agreement appeared there were alternatives less costly to ratepayers is secured by a pledge of the Company's ownership interest than the continuation of temporary rates and ordered the e
in the common shares of Maine Yankee and the Maine Elec-Company to show cause why the temporary rate increase tric Power Company. The interest rate is 105% of the should not be revoked. The Company cannot predict the Manufacturers Hanover Trust Company's reference rate.
timing or the nature of the MPUC's decision in this matter.
The Commission approved the Agreement on August 7, 1985, and the Company executed the Agreement on Oc-On May 24,1985, CMP, the Public Advocate and the tober 24,1985. As executed, the Agreement will terminate MPUC Staff filed with the MPUC a Stipulation intended to on January 31,1987.
resolve CMP's request for an increase in rates. Under one provision of this Stipulation, CMP has agreed to pursue the On December 9,1985, the Company filed with the MPUC acquisition of the Company. According to this Stipulation, 4
an application for the approval for the issuance and sale of CMP agreed that it would not pay more than (and would be j
First Mortgage and Collateral Trust Bonds in the principal free to offer and pay less than) the book value of any of the amount of $10 million (MPUC Docket No.85-237). Af ter Company's stock or assets purchased "af ter full reflection negotiations with the prospective purchasers, the Company of the regu'atory treatment accorded to MPSCo's in-amended its Application to seek approva! of $15 million in vestments in the Seabrook Project discounting to present Bonds, due 1996, at an interest rate of 11%. On March 12, value any MPSCo assets which are being amortized without 1986, the MPUC approved the application, and the Company carrying charges at a rate equal to CMP's overall allowed completed the issuance and sale of the bonds on March 18, rate of return (but not less than 13%)." CMP also agreed 1986.
that it would not be required to pay for any acquisition of the Company other than in its own common stock. In ap-On November 20, 1985, the Company filed with the proving the Stipulation, the MPUC noted that it was not en-4 Federal Energy Regulatory Commission (FERC) an applica-dorsing any possible acquisition and stated that no acquisi-tion for an S814,500 annual increase in its wholesale rates tion could be consummated without its approval.
(FERC Docket No.86-180). As part of this increase, the Com-pany sought to recover the wholesale portion of its invest-On August 29, 1985, the Company began discussions 1
ment in Seabrook Unit 2 over tive years. The Company's with CMP concerning the consolidation of the two com-three wholesale customers all filed statements of concur-panies. The Company terminated the discussions on rence to this increase. On January 29,1986, the FERC ap-August 31 because of the inability of the parties to agree on proved the proposed increase, which it allowed to become basic terms.
effective retroactively for all wholesale service rendered af ter December 1,1985.
CMP's President has ;nformed the MPUC that the MPUC's failure to find substantial advantages to the merger would make it impossible for CMP to obtain the political support necessary to accomplish it. He has also stated that his " proposal" to purchase the Company would be l
Prcposed Acqu. ition by witndrawn if not accepted within ten days af ter the Commis-is
"d*'"'"
chet s5a2. He subseqanny stated Contral Maine Power Company that his " proposal" would be withdrawn if not accepted by On May 22,1985, the MPUC, in Docket No. 85-92, issued a ay M, M l
Notice of Investigation for the purpose of determining j
whether the pubhc interest required a merger of the Com-The Public Advocate has informed the Company that he pany with one or more other Maine utilities, some other believes CMP's "propoLal" to be " extremely generous" to form of reorganization, or other action. Despite the breadth the Company's shareholders and that if the Company's of the MPUC's Notice, the principal focus in this matter has Board of Directors continues to oppose the merger, he would take the position that the price to be paid for the been a prnposed merger of the Company with Central Maine Power Company (CMP). The Company hired the consulting Company's Common Stock should be "significantly less" firm of Booz Allen & Hamilton,Inc. to assist it in evaluating than that suggested by CMP.
the effects of a merger on the Company's ratepayers. The initial results of this analysis, which were presented to the The Company has engaged the firm of Merrill Lynch Capital Markets to advlse it as to the fairness of any merger MPUC during October, 1985, demonstrated that the 7
_ - - - _ - ~ ~ _ _, _ _ _.-_- _ _
offer. The report prepared by Merrill Lynch does not pro-
$13,500,000 of its investment in Seabrook unit 1 attributable l
pose a specific price as representing the present fair value to retail customers should be written off in 1985. This ex-of the Company's Common Stock, but does describe a traordinary loss does not reflect any tax benefits that will number of methods by which that value could be reduce the Company's income tax liabilities in future years determined.
if revenues are suf ficient to generate taxable income. There has not been any write-off of the wholesale portion of the Based in part upon the studies by Booz Allen & Hamilton Company's investment in Seabrook Unit 1, as there is no l
and Merrilt Lynch and upon the best interests of the Com-precedent in this matter currently set by the Federal Energy pany and its shareholders, and considering the effect of any Regulatory Commission.
proposed merger upon the employees, suppliers and customers of the Company, and the communities in which A portion of Seabrook Unit 2 was written off during the the Company's offices and facilities are located, the Com-year as a result of the rate cases concluded in 1985. The pany's Board of Directors has voted to maintain the Com-total resulting impact of the Seabrook Units 1 and 2 write-pany's independence and to pursue all appropriate means offs has been to reduce 1985 earnings by $13,939,912. Earn-to do so.
ings per share before extraordinary items were $6.70 and
$(7.74) after extraordinary items. AFUDC represented ap-proximately 98% of income before extraordinary items for 1%5 compared to 109% in 1%4.
Financial Condition The Company's Dividend Reinvestment and Stock Pur-chase Plan was suspended in May,1984, and subsequently The Company's involvement in the Seabrook Nuclear Pro-terminated in 1985. Under the Employees Stock Ownership ject continued to strain the Company's financial resources Plan,2,175 shares were issued, thereby increasing Common in 1985. However, some positive developments have occur-Equity $27,947.
1 red during the year which have improved the Company's cash position. Much needed rate increases of $4,529,060 Funds provided by financings were approximately $3 3
retail and $814.500 wholesale were granted during the year.
million dollars less than 1984, and funds retained in the l
See Regulatory Proceedings section of this report for fur-business were approximately $6 million dollars more than j
ther details. The Company also executed a $22,500,000 1984. Thus the Company's cash position has been Credit Agreement with a consortium of banks led by improving.
Manufacturers Hanover Trust Company. This Credit Agree.
y ment is secured by $14.5 million dollars of Second Mort-With the completion of its $15 million First Mortgage gage and Collateral Trust Bonds, and the Company's owner-Bonds financing, the Company should meet its Seabrook ship interest in the common stock of Maine Yankee Atomic obligations based upon present estimates for completion of l
Power Company and Maine Electric Power Company, Inc.
the project. A completion of the Seabrook sale would i
As of December 31,1985, $19,900,000 was outstanding reduce short-term borrowings for 1986 and in manage-
}
under the Credit Agreement-ment's opinion would be in the best interest of ratepayers and shareholders.
In July,1985, the Company issued $2.5 million of Floating Series B First Mortgage Bonds due July,1986. The pro-Employees ceeds of this issue were used to retire the $2.5 million of Series A Bonds due July,1985.
The Parent Company had 157 full-time employees at the On March 18,1986, the Company issued $15,000,000 of end of 1985 while the Subsidiary had 10 employees. Con-First Mortgage Bonds at an interest rate of 11% with an solidated payroll costs for 1985 amounted to $4,144,834 as I
average life of 7.5 years. The proceeds we : used to reduce compared to $4,129,444 for 1984.
i the outstanding amount under the Credit agreement.
The Parent Company's contract with Local 1837 of the in-I The Company has signed a Letter of Intent to sell its ternational Brotherhood of Electrical Workers was extended Seabrook investment to Eastern Utilities Associate EUA).
to September 30,1986, without changes in the terms of the 3
Under the terms of the proposed sale, EUA wculd ray $12.5 agreement. Wages of the non union employees were in-million for Seabrook Unit 1 and related nuclear fuel plus all creased by approximately 5% on December 1,1985, the first construction expenditures for Seabrook Unit 1 and nuclear general increase in two years.
fuel expenditures incurred since June 1,1985, through the date of sale. In addition, t'arrying charges will be paid on the The Subsidiary's employees, represented by Local 1733 aforementioned as well as certain penalty payments begin-of the International Brotherhood of Electrical Workers, ning in November,1985. If the sale had been completed on agreed to a new two-year contract of fective January 1,1985.
December 31,1985, the Company would have received ap-As a result of the new contract, the Subsidiary's employees proximately $17,600,000 for its Seabrook investment in-received an increase of approximately 5% in the first year ciuding nuclear fuel. The proposed sale is subject to the and will receive an increase of approximately 3% in the se-negotiation and execution of a definitive purchase agree-cond year of the contract.
ment and requires the approvals of the applicable regulatory authorities and the Trustees under the Com-pany's Indenture of Mortgage and Deed of Trust and the Company's Indenture of Second Mortgage and Deed of Trust. One of the conditions of the proposed sale is that the General Company receive satisfactory rate treatment from the Maine Public Utilities Commission (MPUC). The Company is The Company provides electric service to Aroostook negotiating a rate stipulation with the MPUC and the Public County and a small area of Penobscot County in Northern Advocate and management feels a satisfactory stipulation Maine. An area of approximately 3,600 square miles is serv-is likely.
ed, with a relatively sparse population.
Central Maine Power Company and Bangor Hydro.
The Company's Common Stock is listed and traded on Electric Company have stipulated to rate treatment of the American Stock Exchange.Only Common Stockholders Seabrook 1, whereby each company has written of f 30% of are entitled to vote at the annual meeting, except as re-their Seabrook investment at December 31,1984. Based quired under the provisions of the Articles of incorporation upon these rate decisions, the Company has estimated that relating to Preferred Stock, or as may be required by ap-i 8
plicable law. As of Deczmber 31,1985 and 1984, Common Stock shares outstanding were 927,884 and 925,709, respec-Market tively. Shares were held by 2,718 stockholders in all fif ty Price Dividends states, the District of Columbia and Canada. There were 50 holders of the 4,511 shares of 4.75% Preferred Stock, three 1984 High Low Paid Per Share holders of the 24,600 shares of 9-7/8% Preferred Stock, two holders of the 74,667 shares of 968% Preferred Stock and First Quarter 26 22-3/8 0.58 two holders of the 60,000 shares of 13% Preferred Stock.
Second Quarter 23-1/2 14 0,58 Due to the uncertainties surrounding the Seabrook Pr ~
Third Quarter 18-1/4 16 0.58 ject and the need to conserve cash, Common Stock quarter-ly dividends were reduced in the fiist quarter of 1985 from Fourth Quarter 16-3/4 12-1/4 0.58
$.58 to $.35 a share and were omitted for the remaining 1985 quarters for 1985. The Board of Directors, at a regular First Quarter 16-3/8 10-7/8 0.35 meeting held on February 25,1986, omitted the quarterly Second Quarter 14-3/8 11-5/8 div end on the Company's Common Stock normally paid Third Quarter 213/813-3/8 Fourth Quarter 21-3/8 18-3/8 The annual meeting of stockholders is held each year on the second Tuesday in May at the Company's headquarters in Presque Isle. Market price and dividend information relative to the Common Stock for the two most recent calen-dar years are shown in the following tabulation:
Juditor's TLport MAINE PUBLIC SERVICE COMPANY:
We have examined the consolidated balance dingly, our present opinion on the 1984 consolidated sheets and statements of capitalization of Maine financial statements, as expressed herein, is differ.
Public Service Company and its Subsidiary, Maine ent from that expressed in our previous report.
and New Brunswick Electrical Power Company, Limited, as of December 31,1985 and 1984, and the As discussed in Note 1, the Company has adjusted related consolidated statements of income, prefer-its investment in Seabrook Nuclear Power Project red stock and common shareholders' equity, and Unit 1 to the amount it has estimated to be recov-sources of funds for plant additions and replace-erable. The ultimate recoverability of the remaining ments for each of the three years in the period ended investment in the Project is uncertain at this time, as December 31,1985. Our examinations were made in the Company has not yet received rate orders from accordance with generally accepted auditing stan-regulatory authorities.
dards and, accordingly, included such tests of the accounting records and such other auditing pro-In our opinion, subject to the effects on the con-cedures as we considered necessary in the solidated financial statements of such adjustments, circumstances.
if any, as might have been required had the outcome of the uncertainties referred to in the preceding para-In our report dated March 4,1985, our opinion on graph been known, the accompanying consolidated the 1984 consolidated financial statements was qual-financial statements present f airly the financial posi-ified as being subject to the effects of such ad-tion of the companies at December 31,1985 and 1984 justments,if any, as might have been required if the and the results of their operations and the sources of Company had been unable to continue as a going funds for plant additions and replacements for each concern. As discussed in Note 1, during 1985, uncer-of the three years in the period ended December 31, tainties concerning the Company's ability to con-1985, in conformity with generally accepted accoun-tinue as a going concern have been resolved. Accor-ting principles applied on a consistent basis.
i DELOITTE HASKINS & SELLS Boston, Massachusetts l
February 21,1986 9
7
/ s MICHAEL A.
ROBINSON of Signal-Sherman Energy Company (left) discusses construction progress with MPS Chief Engineer Joseph H.
5 i;
}'-
Nadeau, Jr.
The 17 MW cogeneration facility will burn approx-
-~
imately 260.000 tons of mill wastes and forest residues each year and is expected to be opera-U tional in May,1986.
n.
Signal-Sherman will supply up to 130 million kilowatt hours of electricity to Maine Public Ser-
)
.Y vice Company and 20,000 lblhr. of steam to Sher-i man Lumber Company.
j re Maine Public Service Company statements of consolidated preternu and Subsidiary Redeemable Cumulative Preferred Stock Shares Amount Balance, January 1,1983.-
115,080
$5,754,000 Net income..
Dividends:
l Preferred Stock..
i Common Stock ($2.27 per share)..
I Stock issued Common Stock..
Stock issued Preferred Stock..
60,000 3,000,000 Stock issuance Expenses..
Stock Repurchased Preferred Stock..
(2,100)
(105,000)
Balance, December 31, 1983.:
172,980 8,649,000 Net Income..
Dividends:
Preferred Stock..
{
Common Stock ($2.09 per share)..
Stock issued - Common Stock..
l Stock Repurchased - Preferred Stock..
(2,102)
(105,100) l Balance, December 31,1984-170,878 8,543,900 l
Net Loss..
Dividends:
Preferred Stock..
Stock issued Common Stock..
Stock Repurchased Preferred Stock..
(7,100)
(355,000) j Balance, December 31, 1985..
163,778
$81_88 900 t
1 See Notes to Consolidated Financial Statements.
10 I
f^r.
rw ry
% 'e 4-04'
[+
J~
x
~
e s'
L.
f:
y*
/
G. ARNOLD ROACH, (lef t) a medium size commercial customer who has
)
grown potatoes for more than twenty-five years in Smyrna Mills, discusses J,
farming and this year's crop with Customer Representative Burns Grant.
r
'y
>'~e_s
/
A i
stock and common sharehoklers' equity Common Shareholders' Equity Common Stock Pald In Retained Shirss Amount Capital Earnings 699.807
$4,898.649
$2,021,157
$16,490,514 6,333,486 (820,624)
(1,957,721) 216,253 1,513,771 4,441,570 (551,084) 8,825 916,060 6,412,420 6,471,552 19,494,571 6,320,890 (917,936)
(1,930,424) 9,649 67,543 154,113 5,958 925,709 6,479,963 6,631,623 22,% 7,101 (6,273,344)
(904,012) 2,175 15,225 12,722 7,754 927,884
$6d95,188
$6,652 0_99
$1_5 789,745 1
11
Maine Public Service Company 2(OIc
~
x and Subiliary statements of consolidttalincome Year Ended December 31, 1985 1984 1983 Operating Revenues _
$40,207,500
$34,334,282
$33,183,752 Operating Expenses Operation:
Power Purchased..
17,553,385 15,699,256 12,880,854 Other..
8,845,064 8,444,446 9,035,905 Maintenance..
1,153,303 1,304,302 1,133,146 Depreciation and Amortization (Note 2)..
2,321,842 1,733,991 1,760,589 Taxes Other Than income..
1,064,456 1,050,471 999,401 Provision for income Taxes (Notes 2 and 3)..
3,657,891 472,551 1,814,996 Total Operating Expenses..
34,595,941 28,705,017 27,624,891 Operating income __
5,611,559 5,629,265 5,558,861 Other Income (Deductions)
Equity in Income of Associated Companies (Notes 2 and 4).
506,740 339,739 330.864 Allowance for Equity Funds Use.d During Construction (Note 2)..
3,677,004 3,880,708 2,661,612 Tax Effect of the Allowance for Borrowed Funds Used Dunng Construction (Notes 2 and 3)..
1,179,791 Foreign Exchange Gain..
15,078 36,649 611 Other Net..
(43 562) 111,335 (81,531) 1 Tot al..
5,335,051 4,368,431 2,911,556 income Before Interest Charges and Extraordinary items.......
10,946,610 9,997,696 8,470,417 Interest Charges Long Term Debt and Notes Payable..
7,153,791 6.663.987 5,299,415 Less Allowance for Borrowed Funds Used During Construction (Note 2)..
(3 324 836)
(2,987,181)
(3,162,484) 2 1
Tot al..
3 828,955 3,676,806 2,136,931 1
income Before Extraordinary items..
7,117,655 6,320& _90 6,333,486 Extraordinary items Loss on Partial Write-Off of Seabrook (less applicable income taxes of $1,550.352)(Notes 1 and 3)..
(13,939,912)
Utilization of Tax Loss Carryforward (Note 3)..
548 913 1
Total..
(13,390 999) 1 Net income (Loss)..
(6,273,344) 6,320,860 6,333,486 Dividends on Preferred Stock..
904,012 917 936 820 624 1
1 Net income (Loss) Available for Common Stock......
_$.(7d.77,356)
$J402 954
$ 5,512,862 3
Earnings (Loss) Per Share of Common Stock income Before Extraordinary items..
6.70 5.85 6.68 Extraordinary items..
(14.44)
Not income (Loss)_.
(7.74) 5.85 6J8 Average Shares Outstanding....
.927,758 923,608 825,254 l
Sco Notes to Consolidated Financial Statements.
12
(
statements of sources of w
) _-
consolidated funds for plant s
x additions and replacements Year Ended December 31, 1985 1984 1983 Sources of Funds Funds Provided by Operations income Before Extraordinary items..
$ 7,117,655
$ 6,320,890
$ 6,333,486 Principal Non-Cash Charges (Credits) to ;ncome:
Depreciation and Amortization (Note 2)..
2,321,842 1,733,991 1,760,589 Deferred Income Taxes Net (Note 3)..
3,642,210 922,179 1,375,971 Deferred Investment Tax Credits (Note 3)..
(50,677)
(567,315) 458,482 Allowance for Equity Funds Used During Construction (Note 2)..
(3,677,004)
(3,880,708)
(2,661,612)
Foreign Exchange Gain (Note 2)..
(15,078)
(36,649)
(611)
Other - Net..
(698,346) 27,090 303,174 Funds Provided by Operations Before Extraordinary items..
8,640,602 4,519,478 7,569,479 Extraordinary items..
(13,390,999)
Extraordinary items Not Using Funds..
13,300,999 Funds Provided by Operations..
8,640,602 4,519,478 7,569,479 Less: Dividends on Preferred and Common Stock..
(904 012)
(2,848,360)
(2,778,345) 1 Funds Retained in the Business..
7,736,590 1,671,118 4,791,134 Funds Provided by (Used For) Financing Net Notes Payable to Banks..
8,820,000 2,019,200 239,300 issuance of Long Term Debt..
2,500,000 7,500,000 Long Term Debt Retirements..
(4,770,538)
(447,127)
(451,997)
Preferred Stock Redemptions..
(347,246)
(99,142)
(96,175)
Issuance of Common Stock and Redeemable Cumulative Preferred Stock..
27,947 221,656 8yLO4,257 Funds Provided by Financing Net..
6 230 163 9,194,587 8 095,385 1
1 1
Funds Provided by (Used For)
Deferred Regulatory and Debt Issuance Costs..
(1 696,489)
(742,376)
(343,258)
(230,323)
Seabrook Unit 2 Costs..
181J1369) 232,698 1,187 953 Decrease (Increase) in Working Capital (see below)..
1 Total..
_ (2,741,181)
[509,678) 8443 95 Funds Used For Plant Additions and Replacements (Net of Allowance for Equity Funds Used During Cons truction).,
_ $11,225,572
_$ 10,356 027
_ $13,731,214 1
increase (Decrease) in Working Capital by Components (excluding long term debt due within one year and notes payable to banks):
Cash..
$ 336,088 (38,242)
$ (235,759)
Deposits for interest and Dividends..
(276,762) 141,470 255,500 Accounts Receivable Net and Retundable income Taxes..
1,072,443 (7,859)
(575,386)
Deferred Income Taxes Related to Deferred Fuel Costs Net..
59,171 (267,684) 392.203 Materials, Fuel and Supplies..
(297,852) 141,546 (192,500)
Prepayments..
94,798 35,032 (48,888)
Accounts Payable and Accounts Payable Associated Companies..
(653,062)
(344,767) 961,171 Deferred Fuel and Purchased Energy Costs Net..
(99,088) 479,178 (722,008)
(10,520) 148,020 (168,558)
Taxes Accrued..
589,153 (519,392)
(853 728)
Interest Accrued and Other Current Llabilities Net..
1 s _ 814,369
$ J232&98)
$3187,953)
Increase (Decrease)in Working Capital.__
m See Notes to Consolidated Financial Statements.
13
Maine Public Service Company and Subsidiary consolidated assets December 31, 1985 1984 Utility Plant (Notes 2 and 5):
Electric Plant in Service..
$62,072,036
$60,929,655 Less Accumulated Depreciation..
26,853,011 25,604,647 Net Electric Plant in Service..
35,219,025 35,325,008 Construction Work.In. Progress (Notes 1 and 10)..
59,587,948 59,785,596 Total..
94,806,973 95,110,604 Investments in Associated Companies (Notes 2 and 4)...
3,409,482 3,428,150 Net Utility Plant and Investments in Associated Companies......
98,216,455 98,538,754 Current Assets:
Cash..
723,917 387,829 Deposits for Interest and Dividends..
677,325 954,087 Accounts Receivable:
Customer (less allowance for uncollectible accounts.
1985. $183.254; 1984, $141,904)..
3,724,854 2.815,186 Other..
339,767 122,946 Refundable income Taxes (Note 3)..
54.046 Deferred Fuel and Purchased Energy Costs (Note 2)..
57,954 Deferred Income Taxes Related to Deferred Fuel Costs (Note 2)..
34,074 Materials. Fuel, and Supplies..
1,292,165 1,590,017 Prepayments..
192,774 97,976 Total..
6,984,876 6,080,041 Deferred Debits:
Unamortized Debt Expense (less accumulate 1 amortization.
1985, $352,784; 1984, $315.749)(Note 2)..
1,335,069 578,677 Net Investment in Abandoned Project (less accumulated amortizat!on -
1985, $732,675; 1984, $0)(Notes 1 and 2)..
6,849,979 9,342,595 Deferred Regulatory Costs (less accumulated amortization.
1985 $198,863; 1984, $14,961) (Note 2)..
1,027,548 523,371 Miscellaneous..
873,830 734,037 Total..
10,086,426 11,178,680
$115 287,757
$115,797,475 3
See Notes to Consolidated Financial Statements.
14
/
N bil$ilDCC S$1CClS CilJ15till5Zilt500 ilDd $5db5l5 tics December 31, 1985 1984 Capitalization (see accompanying statements):
Common Shareholders' Equity (Note 8)..
$ 28,937,032
$ 36,078,687 Redeemable Cumulative Preferred Stock (Note 9)..
8,188,900 8,543,900 Long. Term Debt...
41,248,200 42,086,248 Total.
78,374,132 86,708,835 Current Liabilities:
Long. Term Debt Due Within One Year..
3,309,840 4,757,408 Notes Payable to Banks (Note 6) 19,900,000 11,080,000 Accounts Payable..
2,644,467 1,687,753 Accounts Payable Associated Companies..
686,739 990,391 Deferred Fuel and Purchased Energy Costs (Note 2)..
41,134 Deferred Income Taxes Related to Deferred Fuel Costs (Note 2)..
25,097 Dividends Declared..
220,378 552,418 Customer Deposits..
106,297 62,804 Taxes Accrued..
66,980 56,460 Interest Accrued..
1,632,090 1,932,696 Total..
28,607,925 21,145,027 Deferred Credits:
Income Taxes (Note 2)..
5,463,147 5,101,414 investment Tax Credits (Note 2)..
2,600,541 2,651,218 Miscellaneous..
242,012 190,981 Tot al...
8,305,700 7,943,fL13 Contingencies (Note 1)
$115 287,757
$115,797,475 t
15
notes to consolidated financial statements
- 1. CONTINGENCIES Seabrook Nuclear Power Project Seabrook Unit 2 Maine Public Service Company (the Company) is an in.
The Company believes that Unit 2 is ef fectively cancelled.
vestor in the Seabrook Nuclear Power Project Units 1 and 2 Construction on Unit 2 was suspended in March 1984. The (the Project) with a 1.46056 % ownership interest. The New resumption of construction requires an affirmative vote by Hampshire Yankee Division (NHY) of Public Service Com-at least 51% of the joint ownership interest. Management pany of New Hampshire (PSNH), the lead participant, has believes that an affirmative vote is extremely unlikely. Dur-construction responsibilities for the Project.
ing 1985, the Company received an MPUC order disallowing During July 1985, NHY released a revised cost and in-recovery on approximately $1.9 million of Unit 2 costs. Ac-service date estimate, which indicates that Unit 1 will begin cordingly, this amount has been charged to income as an operating by October 31,1986, at a cost of approximately extraordinary loss. The Company's remaining retail jurisdic.
$4.6 billion. This cost estimate includes an allowance for tional investment of approximately $5.5 million is to be the cost of f t,.1ds used during construction (AFUDC) of $1.7 recovered, with a rate of return, over a period of 56 months.
billion and a management reserve for contingencies of On January 29,1986, FERC issued an order which allows
$149 6 million, but excludes nuclear fuel. PSNH has in-recoverability of 100% of the Company's wholesale jurisdic-dicated that the Unit 1 cost and in-service date estimate can tional investment in Unit 2 over a five year period, but does be met if project expenditures are maintained at the level not allow a return on investment. The Company's invest-that the project schedule requires. In January 1986, PSNH ment in Unit 2 as of December 31,1985 and 1984 has been notified the Secunties and Exchange Commission that classified as investment in Abandoned Project.
de!ays in obtaining approved evacuation plans may The Financial Accounting Standards Board has issued an postpone the in-service date. Construction of Unit 2 has exposure draft which would,if adopted, change the accoun-been suspended indefinitely.
t ng for plant abandonments and disall owed plant costs. If Construction costs and completion milestones have re-the exposure draf t were to be issued as a statement in its mained substantially the same as those set forth in PSNH's current form, the Company would be required to charge to previous estimate of March 1984. The March 1984 estimate income approximately $650.000 to reflect FERC disallo-represented a 75% cost increase and an 18-month delay wance of a return on investment in Unit 2.
over the PSNH November 1982 estimate. Cost overruns and Cancellation costs for Unit 2 are estimated at approx-completion date delays to date have significantly increased imately $1.2 million. If, as discussed below, the Company AFUDC (a credit to mcome). For the years ended December sells its investment in the Project, it will not be liable for 31,1985,1984 and 1983 AFUDC has represented 98%,
such cancellation costs.
109% and 92% of the Company's income before extraor-dinary items, respectively.
Pro osed Sale of Seabrook On December 13,1984, the MPUC issued an interim order Seabrook Unit 1 stating that ".. Maine's three utilities may continue to par-The Maine Public Utilities Commission (MPUC) has com.
ticipate in the construction of Seabrook 1,if, by January 11, menced an investigation of the allowable recovery of the ey ave receNed cre@e h OUers M M men Company's Unit 1 costs. In 1985, the two other utilities complete ownerst9p shares upon completion or by date cer-under MPUC jurisdiction with investments in the Project received orders which allow recovery, including a rate of ain y@ever is soone4. In me absence d sud oks, the nsks associated with further participation in Seabrook 1 return, on 70% of their respective investments in Unit 1 in.
may well outweigh the benefits to Maine consumers, and curred as of December 31, 1984. The orders also allow further expenditures by Maine utilities under such cir-recovery of all costs incurred subsequent to December 31, cumstances wouM be an casonaNe ad unk Maine 1984, subject to an established maximum rate per kilowatt State laws.,
hour, and full recovery of investments in nuclear f uel. Based n July 24,1985, the Company signed a letter of intent upon these orders and other information, management relating to the proposed sale of its _nterest in Seabrook to a i
believes it is probable that approximately $13.5 million subsidiary of Eastern Utilities Associates (EUA). The pro-(before income taxes) of its MPUC junsdictionalinvestment posed sale is subject to the execution of a definitive pur.
in Unit 1 will be disallowed and has therefore charged this chase and sale agreement. Under the terms of the offer, as amount to income as an extraordinary loss. This loss does modified in February 1986,if the sale is consummated, the not reflect any tax benefits that will reduce the Company's Company would receive approximately $17.6 million for its income tax liabilities in future years if revenues are suffi-investment, including nuclear fuel, as of December 31,1985.
cient to generate taxable income.
For the period January 1,1986, through the date of sale, the The Company has not received any orders f rom the MPUC Company would also receive: 1) payments of $625,000 mon-as to recovery on its investment in Unit 1. If the MPUC deter.
thly through March 31, 1986, 2) reimbursement of all 1986 mines that Unit 1 costs in excess of those already charged expenditures for Unit 1 construction and nuclear fuel and 3) to income are not recoverable through electric rates, an ad-carrying charges based on 12.8% of $8.5 million plus the ditional charge to income will be required. The Federal 1986 construction expenditures. As of December 31,1985, Energy Regulatory Commission (FERC) has not issued any the Company's investment in Seabrook Unit 1 (after the stipulations as to the recoverability of the Company's wr te-off of the anticipated disallowed investment) and wholesale jurisdictional investment in Unit 1 which approx-nuclear fuel is approximately $59.2 million.
imates $12 million. The Company's remaining investment in Unit i exceeds Common Shareholders' Equity.
16 i
l
Management believes that the sale proceeds would be sion and similar overhead items and allowances for the cost treated by the MPUC and FERC as a reduction of rate base of equity and borrowed funds used during construction and not reduce any disallowed costs of Unit 1 or Unit 2, and (AFUDC). The cost of utility plant which is retired, including that the Company's allowable investment in excess of the the cost of removat less salvage,is charged to accumulated sale proceeds would remain in rate base. The Company has depreciation. Maintenance and repairs, including replace-received no such orders from the MPUC or FERC, however.
ment of minor items of property, are charged to mainten-ance expense as incurred. The companies' properties, with Regulatory Investigation of Merger minor exceptions, are subject to a first and second mor-The MPUC is formally investigating whether the Company tgage lien.
i should be merged with one or more Maine Utilities or undergo some other form of corporate reorganization. The Depreciation and Amortization MPUC is currently coasidering a proposed merger of the Utility plant depreciation is provided on composite bases Company with Central Maine Power Company (CMP). In using the straight-line method. The composite depreciation response to an order issued by the MPUC, CMP has agreed rate, expressed as a percentage of average depreciable to pursue the acquisition of the Company at a price not in plant in service, was approximately 3.3% in 1985,1984 and excess of book value. A February 1986 report issued by the 1983.
MPUC Hearing Examiner concludes that a merger between Bond issuance costs are amortized over the terms of the CMP and MPS would be in the public interest. If the MPUC related debt. Deferred regulatory expenses are amortized finds that a merger is in the public interest, CMP may make over the number of years allowed by regulatory authorities
{
an offer to the Company's shareholders. Management is not in the corresponding rate orders.
j able to evaluate the outcome of the MPUC investigatron at i
this time.
Allowance for Cost of Funds Used During Construction
- 2. ACCOUNTING POLICIES, ETC.
The debt and equity costs of funds applicable to con-struction are capitalized. The composite AFUDC rates used Regulations for construction during 1985,1984 and 1983 were 13.24%
The Company is subject to the regulatory authority of the (9.57% commencing May 1985). 13.16 % and 12.57 %,
Maine Public Utilities Commission (MPUC) and, with respectively. In May 1985, the Company changed to a net.of.
respect to wholesale rates, the Federal Energy Regulatory tax rate as required by the MPUC order for retail rates.
Commission (FERC). As a result of the rate making process, the applications of accounting principles by the Company Income Taxes differ in certain respects from applications oy non.
Deferred income taxes are provided on timing dif ferences regulated businesses.
that are allowed for rate making purposes. Such taxes relate primarily to differences between methods of recording de-Consolidation and Foreign preciation for financial reporting and income tax purposes Currency Translation and to certain components of the allowance for borrowed j
The accompanying consolidated financial statements to-funds used during construction during the years 1982 clude the accounts of the Company and its wholly-owned through 1985.
Canadian subsidiary, Maine and New Brunswick Electrical Under regulatory practices to which the Company is sub-Power Company, Limited. All intercompany balances and ject,it is expected that deferred income taxes not provided transactions have been eliminated in consolidation. The will be recovered through future rates.
functional currency of the subsidiary is the U.S. dollar. Ac-The Company defers investment tax credits utilized and cordingly, translation gains and losses are included in other amortizes the credits over the remaining estimated useful income. Income from and expenses of the subsidiary are life of the related utility plant.
translated at rates of exchange prevailing at the time the in-come is earned or the expenses are incurred, except for investments depreciation which is translated at rates existing on the ap-The Company records its investments in Associated plicable in-service dates. Assets and liabilities are Companies (See Note 4) on the equity method.
translated at year-end exchange rates, except for property, plant, and equipment which is translated at rates existing Pledged Assets on the applicable in. service dates.
The Common Stock of the Subsidiary is pledged as addi-tional collateral for the first and second mortgage and col-Deferred Fuel and Purchased Energy Costs lateral trust bonds of the Company, and the common stock Electric rates include adjustment clauses for fuel and of Maine Yankee and MEPCO ls pledged as collateral for the purchased energy costs, through which costs above or revolving credit notes.
below base rate levels are recoverable f rom or refundable to customers. Fluctuations between current base rates and ac-Inventory tual costs are deferred until recovered or refunded through inventory is stated at average cost.
subsequent adjustment clauses,in order to property match costs with the related revenues.
Reclassifications Certain reclassifications have been made to the 1984 and Revenue Recognition 1983 financial statements in order to conform to the 1985 Operating revenues are recorded on a cycle billing basis.
presentation.
Utility Plant Utility Plant is stated at original cost of contracted ser-vices, direct labor and material, as well as related indirect construction costs including general engineering, supervi.
17
- 3. INCOME TAXES The provisions for income taxes for the years ended December 31,1985,1964 and 1983 are as follows:
1985 1984 1983 On Operations:
I U.S. Federal income:
Current S 540,798
$ (237,366)
$ 101,125 Deferred 3,014,461 1,189.863 983,768 j
Investment Tax Credits (50,677)
(567,315) 458,482 Canadian income 167,244 211,400 138,436 State income (13,935)
(124,031) 133,185
?
Total on Operations 3,657,891 472,551 1,814,996 l
On Other income (Deductions):
I Tax Effect of the Allowance for Borrowed Funds Used During Construction (1,179,791)
Total 5 2,478,100
$ 472,551
$ 1,814,996 Provisions for U.S. Federal income Taxes for the years ended December 31,1985,1984 and 1983 differ from the U.S.
statutory income tax rate as follows:
1985 1984 1983 i
Stttutory rate 46.0 %
46.0 %
46.0 %
t AFUDC-equity (17.6)
(25.3)
(15.3)
AFUDC-borrowed funds (Net)(See Note 2)
(2.1)
(11.0)
(9.4)
{
Other
(.5) 2.1
(.3) f Effective rate (before extraordinary items) 25.8 %
11.8 %
21.0 %
j The provisions for deferred income taxes on timing differences for the years ended December 31,1985,1984 and 1983 are as follows:
(Dollars in Thousands) 1985 1984 1983 Satbrook Unit 2 (See Note 1)
(255) 3,844 Liberalized depreciation 425 441 434 AFUDC-borrowed funds (See Note 2) 610 658 704 i
Dz.ferred fuel expense (50) 268 (392)
Ozferred regulatory expense 256 266 Rainstatement for utilization of operating loss carryforward (see below) 549 RIgulatory adjustment 335 Other (35)
(27)
(51) l Nst operating loss (see below)
(4,260) 289 Total 1,835 1,190 984 in 1984, the Company incurred operating losses for tax purposes of approximately $9.8 million.The carryback of a portion of this loss to prior years resulted in refunds receivable of approximately $55,000. The Company reduced net deferred income tax credits in 1984 by approximately $4,260,000 as these liabilities will become due in periods in which tax operating losses will be available to offset taxable income. In 1985, the Company utilized $1,1 million of the tax loss carryforward, for which the tax btnefit has been recorded as an extraordinary item. At December 31,1985, the tax loss remaining for carryforward approx-imates $7.3 million and expirr in 2000.
In 1984, as a result of tax loss.;arrybacks, the Company reversed previously-recorded investment tax credits of approximate-j ly $512,000. The Company has not utilized any investment tax credits in 1985,1984 or 1983, and at December 31,1985, has unused and unrecorded investment tax credits of approximately $2,876,000 which expire during the period 1996 through 2000.
j if the Company's investment in Seabrook is sold (see Note 1), investment tax credits of approximately $1.2 million utilized in prior years wodd be recaptured, and unused investment tax credits available for carryforward would be reduced by $2.6
)
million.
i By order of the MPUC, the income tax ef feet of certain costs are not includable in the determination of the Company's elec-tric rates. Accordingly, the Company has not provided deferred taxes for net cumulative timing differences of approximately
$11.4 million through 1985.
- 4. INVESTMENTS IN ASSOCIATED COMPANIES l
The Company owns 5% of the common stock of Maine Yankee Atomic Power C<.mpany (Maine Yankee), a jointly-owned I
nuclear electric power company, and 7.49% of the common stock of the Maine Elect,Jc Power Company (MEPCO), a jointly-j owned electric transmission company.
Dividends received during 1985,1984 and 1983 from Maine Yankee were approximat =ly $447,500, $334,000 and $327,500, respectively, and from MEPCO approximately $7,900, $8,500 and $9,100. Substantially all earnings of Maine Yankee and MEP.
CO are distributed to investor companies.
Condensed financial information (unaudited) for Maine Yankee and MEPCO is as follows:
Maine Yankee MEPCO I
(Dollars in Thousands) 1985 1984 1983 1985 1984 1983 Eamings Operating revenues
$134.785
$128,080
$120,471
$85.839
$114,178
_ $129,717 18
Earnings applicable to common stock
$ 9.879
$ 6,730
$ 6.437
$ 106 111 120 Company's equity share of net earnings 494 337 322 8
5 8
9 investment l
Total assets
$370,427
$371,075
$388,105
$18,995
$ 18,521
$ 23.265 Less:
Preferred stock 9.055 10,069 10,2 %
l Long-term debt 76,750 81,924 86,294 5,004 7,199 7,777 l
Other liabilities and
(
deferred credits 216,765 210,947 223,945 13,111 10.442 14,535 Net assets S 67,857
$ 68,135 5 67,570
$ 880 880 953 Company's equity in net assets S 3.393
$ 3,407
$ 3.379 66 5
66 71
- 5. INVESTMENTS IN JOINTLY OWNED UTILITY PLANTS The Company is a participant in two jointly-owned
$14.5 million in Second Mortgage and Collateral Trust utility plants; W.F. Wyman Unit No. 4 (Wyman) and Bonds.
Seabrook Unit 1 (deabrook)(Note 1).
Unused borrowings of $2.600,000 remain available to The Company's proportionate share of the direct ex-the Company at December 31,1985.
penses of Wyman are included in the corresponding At December 31,1984, notes payable of $11,080,000 operating expenses in the statements of consolidated represent borrowings under prior bank line of credit income.
agreements aggregating $21,800,000.
Each participant must provide its own financing. The The Canadian subsidiary has a $200,000 (Canadian)
Company's share in each of the two jointly-owned plants bank line of credit agreement providing for interest at at December 31,1985 and 1984 is as follows:
the bank's prime rate (10% at December 31,1985). At Wyman Seabrook December 31,1985 and 1984, there are no borrowings (Dollars in Thousands) 1985 outstanding.
Electric plant in service
$6,911
- 7. PENSION PLAN Accumulated depreciation (1,508)
Construction The Company and its Subsidiary have insurtd non-work-in. progress
$59,238 contributory defined benefit pension plans covering Total
$5.403
$59.238 substantially all employees. Pension expense, including amortization of prior service costs over a period of twen.
1984 ty years, was approximately $240,000 in 1985, $256,000 in Electric plant in service
$6,895 1984 and $275,000 in 1983. The companies' policy is to Accumulated depreciation (1,291) fund pension costs accrued. Information relating to Construction these plans at January 1,1985 and 1984, the dates of the work-in-progress
$59.641 most recent actuarial valuations, follows:
Total
$5,604
$59.641 (Dollars in Thousands) 1985 1984 Company's ownership Actuarial present value of percentage at accumulated plan December 31,1985 benefits:
and 1984 3.3455 %
1.4606 %
Vested
$5,912
$5,400 As explained in Note 1, the Company has charged to Total
$6.236
$5,700 income the estimated disallowed investment in Unit 1 of
$13.5 million during 1985, and has classified Unit 2 costs Net assets available for as Investment in Abandoned Project.
benefits
$7,165
$6,580
- 6. NOTES PAYABLE TO BANKS AND The assumed rate of return used in determining the SHORT TERM CREDIT ARRANGEMENTS actuarial present value of accumulated plan benefits was 6%.
On October 24, 1985, the Company entered into a revolving credit arrangement with a consortium of
- 8. COMMON SHAREHOLDERS' EQUITY banks; this arrangement replaced several prior credit Under the most restrictive provisions of the Com-agreements. The arrangement provides for borrowings pany's long-term and short-term debt indentures, retain-up to $22,500,000 through January 31,1987, and bears m-ed earnings (plus dividends declared on Common Stock) terest at 105% of the lead bank's reference rate (9.975%
ava lable for the distribution of cash dividends on Com-at December 31,1985) plus the following fees: 1) a com-mon Stock were approximately $15,800,000 at December mitment fee of %% of unused borrowings,2) a facility 31,1985. Additionally, under the terms of the Company's fee of 5% of the lead bank's reference rate, and 3) an an-Credit Agreement of October 24,1985, the Company's nual agency fee of $100,000. Interest is payable common stock dividends are limited to $1.308,400 in quarterly.
1986.
Borrowings under this credit arrangement are secured Paid in capital increased by approximately $20,000, by the common stock of Maine Yankee and MEPCO, and
$160,000 and $4,450,000 in 1985,1984 and 1983, respec-19
tively, representing the excess of the proceeds received per share plus accrued dividends on April 1 of each year, over the par value of common stock issued as follows:
commencing in 1991. In addition, the Company shall public offering (200,000 shares in 1983); employees' have a noncumulative option to redeem up to 20,000 ad-stock ownership plan (2,175,3,420 and 5.170 shares in ditional shares at the same price and dates as the sink-1985, 1984 and 1983, respectively) (see Note 11);
ing fund sharss.
dividends reinvested under the Company's dividend Purchase funds for the 4.75% and 9-7/8% Series pro-reinvestment plan (6,229 and 11,083 shares in 1984 and vide that the Company will annually of fer to purchase on 1983, respectively); and the excess of par value over reac-July 1, at prices not to exceed $50 per share plus accrued quisition costs of Preferred Stock (see Note 9).
dividends,3% of the maximum number of shares issued Effective August 27,1985, the Board of Directors ter.
prior to May 15 of such year,less any shares previously minated the Dividend Reinvestment Plan.
purchased and surrendered by the Company to the transfer agent as a purchase fund credit for such year.
- 9. REDEEM ABLE CUMULATIVE Any shares so purchased and surrendered are retired.
PREFERRED STOCK Under this offer, 867 shares,1,202 shares and 1,200 The Preferred Stock is redeemable, with certain shares of the 4.75% Series were purchased in 1985,1984 restrictions, at the option of the Company,or,in the case and 1983, respectively, and 900 shares of the 9 7/8%
of voluntary liquidation, at $51.00 per share for the 4.75%
Series were purchased in 1985,1984 and 1983.
Series, $51.65 for the 9 7/8% Series, and $54.81 for the
- 10. CONSTRUCTION PROGRAM 9-5/8% Series (all plus accumulated dnidends). The 13%
Series may bs redeemed at the option of the Company See Construction and The Seabrook Project sections beginning April 2,1988 as follows:
on page 5.
Prior to April 2 Redemption Price 1989
$52.44
- 11. EMPLOYEES' STOCK OWNERSHIP PLAN 1990
$51.63 The Company has an employee stock ownership plan 1991
$50.81 under which eligible employees may purchase common The voluntary liquidation price of the 13% Series la stock of the Company. Each year the Company con-
$50.50 plus accumulated dividends.
tributes to the plan shares of common stock (or cash re-The 9-5/8% Series has a sinking fund provision requir-quired to purchase such stock) with a value equal to % %
ing the Company to redeem 5.333 shares at $50 per share of the Company's qualifying payroll for that year. Con.
plus accrued dividends on October 1 of each year com-tributions to the plan were approximately $20,100, mencing in 1985. In add: tion, the Company has a non-
$19,900, and $19,300 for the years ended December 31, cumulative option to redeem up to 5,333 additional 1985,1984 and 1983, respectively. Amounts contributed shares at the same price and dates as the sinking fund are accumulated in individual participant accounts and shares.
are available for distribution upon termination of employ.
The 13% Series has a sinking fund requirement ment. Amounts in individual participant accounts are whereby the Company must redeem 20,000 shares at $50 100% vected at all times.
- 12. QU ARTERLY INFORM ATION (unaudited)
Quarterly financial data for the two years ended December 31,1985 are as follows:
(Dollars in Thousands Except Per Share Amounts) 1985 by Quarter 1st 2nd 3rd 4th Operating revenues
$9,938
$9,572
$9,700
$ 10,998 Operating expenses (7,936)
(8,153)
(8,355)
(10,152)
Operating income 2,002 1,419 1,345 846 Interest charges (714)
(842)
(1,081)
(1,192)
Otherincome net 1,054 1,286 1,570 1,425 income before extraordinary items 2,342 1,863 1,834 1,079 Extraordinary items (806)
(12,585)
Net income (loss)
$2,342
$1,057
$1,834
$(11,506)
Earnings per common share:
Income before extraordinary items S 2.28
$ 1.76
$ 1.73
.93 Extraordinary items
(.87)
(13.57)
Net income (loss)
$ 2.28
$.89
$ 1.73
$ (12.64) 1984 by Quarter 1st 2nd 3rd 4_tly Operating revenues
$9,061
$8,540
$7,899
$ 8,834 Operating expenses (7,561)
(7,550)
(6,541)
(7,053)
Operating income 1,500 990 1,358 1,781 Interest charges (334)
(1,085)
(1,135)
(1,122)
Otherincome net 889 1,176 1,051 1,252 Net income
$2,055
$1,081
$1,274
$ 1,911 Earnings per common share
$ 1.98
$.92
$ 1.13
$ 1.82 20
Maine Public Service Company and Subsidiary consolidated statements of capitalization o,,,,,,,,,,
Common sbarchOlders' equity:
,ggg 39g4 Common Stock, $7 Par Value - Authorized 2,000,000 Shares; Outstanding 927,884 and 925,709 Shares in 1985 and 1984, respectively
$6,495,188
$6,479,963 Paid in-Capital.
C,652,099 6,631,623 Retained Earnings..
15,789,745 22,967,101 Total --
$28,937,032
$36,078,687 redeemable cumulative preferred stock:
Redeemable Cumulative Preferred Stock, $50 Par Value - Authorized 270,000 Shares (issuable in series):
4.75% Series - Originally Issued 40,000 Shares; Outstanding, 4,511 and 5,378 Shares in 1985 and 1984, respectively.
$225,550
$268,900 9-7/8% Series - Originally Issued 30,000 Shares; Outstanding, 24.600 and 25,500 Shares in 1985 and 1984, respectively..
1,230,000 1,275,000 9-5/8% Series Originally Issued 80,000 Shares; Outstanding 74,667 and 80,000 Shares in 1985 and 1984, respectively:-
3,733,350 4,000,000 13% Series Originally issued and Outstanding,60,000 Shares..
3,000,000 3,000,000 Total..
$8,188,900
$8,543,900 long-tenn debt:
Maine Public Service Company:
First Mortgage and Collateral Trust Bonds:
3.35% Due serially through 1985 -Interest Payable, February 1 and Aug.1..
$1,440,000 5-1/2% Due serially through 1990 -Interest Payable, March 1 and Sept.1..
1,500,000 1,520,000 4 3/4% Due serially through 1995 -Interest Payable, January 1 and July 1..
2,000,000 2,025,000 71/8% Due serially through 1998 -Interest Payable, May 1 and November 1..
3,360,000 3,400,000 7.95% Due serially through 2003 -Interest Payable, March 1 and Sept.1..
2,225,000 2,250,000 10-5/8% Due serially through 1995 -Interest Payable, March 1 and Sept.1--
3,04s 0
3,160,000 10-1/4% Due serially through 2004 -Interest Payable, April 1 and Oct.1..
7,600,000 8,000,000 13-7/8% Due serially through 1992 Interest Payable, June 1 and Dec.1..
7,000,000 7,000,000 Floating Rate Series A due 1985 -Interest Payable, Jan. 26 and July 26..
2,500,000 Floating Rate Series B due 1986 - Interest Payable, Jan. 25 and July 25 (103% of prime rate)- 9.785%.-
2,500,000 16.3% Due serially through 1989 - Interest Payable, Jan.1 and July 1 -
5,000,000 5,000,000 Debentures (Secured by Second Mortgage and Collateral Trust Bonds):
9-7/8% Due serially through 1995 - Interest Payable, May 1 and November 1..
864,000 918,000 14% Due 1990 Interest Payable, February 1 and August 1 -
9,000,000 9,000,000 Maine & New Brunswick Electrical Power Company, Limited:
First Mortgage Bonds 3/4% Due Serially through 1989 -Interest Payable June 1 and December 1.
469,040 630,656 Total Outstanding..
44,558,040 46,843,656 Less - Amount due Within One Year..
3,309,840 4,757,408 Total..
$41,248,200
$42,086,248 Current Maturities and Redemption Requirements for the Succeeding Five Years Are as Follows:
Long Term Debt:
1986 - $3,309,840 1988 - $2,809,840 1990 - $13,417,333 1987 - $2,809,840 1989 - $1,775,520 Redeemable Cumulative Preferred Stock:
1986 $371,650 1988 $371,650 1990 $340,550 1987 - $371,650 1989 - $371,650 See Notes to Consolidated Financial Statements.
21
Maine Public Service Company and Subsidiarv 1
1 1985 1984 1983 Capitalization (year end)
Long-Term Debt..
54.55 %
51.21 %
49.26 %
Preferred Stock..
10.02 %
9.34 %
10.70 %
l Common Shareholders' Equity..
35.43 %
39.45 %
40.04 %
Times Interest Earned "
Before income Taxes..
2.35 2.05 2.53 After Income Taxes..
1.99 1.95 2.20 Times interest and Preferred Dividends Earned "
After income Taxes..
1.77 1.71 1.90 Embedded Cost of Long Term Debt (year end) 11.67 %
11.44 %
10.74 %
Embedded Cost of Preferred Stock (year end)-
11.02 %
10.95 %
10.90 %
Common Shares Outstanding (year end)....
927,884 925,709 916,060 Earnings Per Share of Common Stock (average shares)
Income Before Extraordinary items..
6.70 5.85 6.68 Extraordinary items..
(14.44)
Net income (Loss)..
$ (7.74) 5.85 6.68 Dividends Per Share of Common Stock-Declared Basis..
2.09 2.27 Paid Basis..
.35 2.32 2.22 Common Stock Dividend Payout Ratio 35.73 %
33.98 %
Book Value Per Share of Common Stock (year end).
$ 31.19
$ 38.97
$ 35.35 Market Price Per Share of Common Stock High..
212/'
26 27'l' Low..
10'/*
12'/*
$ 21 Close..
195/'
12'/*
25'/*
Price Earnings Ratio (year end) 2.09 3.87 Number of Common Shareholders (year end)_
2,718 3,365 3,503
' Consolidated income before extraordinary items and including AFUDC.
1985 SOURCE OF INCOME 1985 DISTRIBUTION OF INCOME Millions of Dollars (Total $44.4) and percent of total Millions of Dollars (Total $44.4) and percent of total 2 4
.)
7kE,LE TRtc O
COYYERCIAL
$ 9 2 (20 7 N
$ 9 7 09 6 v ES N i
PER7JISIT E S A1.L OTHER FUEL AND
$ 44 00 O N PUR HA D ER
\\
fM'7sh
'Stra^S 16 2 04 0N
\\
I4 3
I IN T EREST g gg
\\
PREFERRED N'
$ 4nm.,
22 e Net Ir.carr,e A.sdaUs far Common Stock Before Estraortnory Items
consolidated financial statistics 1982 1981 1980 1979 1978 1977 1976 1975 45.43 %
49.14 %
51.02 %
52.50 %
50.63 %
53.59 %
56.39 %
57.94 %
10.77 %
11.33 %
11.74 %
11.73 %
5.48 %
5.77 %
6.07 %
6.29 %
43.80 %
39.53 %
37.24 %
35.77 %
43.89 %
40.64 %
37.54 %
35.77 %
1.86 1.73 1.83 2.48 4.27 3.92 3.01 2.80 1.91 1.76 1.76 2.02 2.89 2.67 2.10 2.01 1.73 1.56 1.51 1.84 2.58 2.39 1.87 1.76 8.37 %
8.28 %
8.27 %
8.10 %
7.16 %
7.15 %
7.12 %
7.10 %
9.50 %
9.46 %
9.42 %
9.38 %
8.51 %
8.41 %
8.32 %
8.24 %
699,807 683,210 678,307 673,025 667,038 665,734 665,734 665,734
$ 5.95
$ 4.04
$ 2.86 5 3.80
$ 3.97
$ 3.54
$ 2.25
$ 1.79
$ 5.95
$ 4.04
$ 2.86 5 3.80
$ 3.97
$ 3.54
$ 2.25
$ 1.79
$ 2.12
$ 1.92
$ 1.92
$ 1.84
$ 1.61
$ 1.46
$ 1.34
$ 1.31
$ 2.07
$ 1.92 5 1.90
$ 1.79
$ 1.58
$ 1.43
$ 1.32
$ 1.30 35.63 %
47.53 %
67.13 %
48.42 %
40.55 %
41.24 %
59.56 %
73.18 %
$33.45
$29.93
$27.90
$27.50
$25.57
$23.16
$20.91
$19.74
$ 235/'
$ 15'/*
$ 18'/'
$ 192/*
$ 20'/2 5 19'/'
$ 16'/'
$ 14'/*
$ 14'I' S 13'l'
$ 13'/*
$ 16'/'
$ 17'/'
$ 15'/'
$ 13'l*
9'/*
$ 21'/*
$ 14'l*
$ 15'/*
$ 16'/*
$ 17'/'
$ 18'/*
$ 15'/*
$ 13'/*
3.57 3.53 5.38 4.41
~4.41 5.12 7.06 7.47 3,297 3,351 3,482 3,522 3,577 3,616 3,683 3,753 SO4 704 F.000
-~
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Pte0-444 446-8949 470-674 897S 4 79 pee 0-ee64 see5 8960-9964 spet.eet
$80-974 475-479 4080 8954 met euerege W Weep Per W Cue'op4r 3,g.donteet 5erece Lmat Revenue l
l i
23
\\
Maine Public ServiceCompany 1985 More Average or (Less)
Annual Than 1975 increase Amount Percent 1985 1984 1983 Operating Revenues Residential..
57,933,935 8.3
$14,432,212
$12,610,182
$11,992,201 Commercial and Industrial Small..
5,040,449 8.3 9,194,338 7,795,721 7,430,571 Commercial and Industrial - Large..
4,947,557 10.8 7,699,989 5,676,877 5.604,098 Municipa! Street Lighting..
291,239 9.5 488,429 417,060 405,131 Area Lighting..
137,506 6.8 285,037 261,630 262,111 Other Municipal and Other Public Authorities..
1,692,501 11.2 2,582,290 2,244,309 2,062,688 Other Electric Utilities..
3,490,419 11.2 5,345,673 5,186,633 5,277,715 Other Operating Revenues..
29,842 1.8 179,532 141,870 149,237 Total Operating Revenues..
$23,563,448 9.2
$40,207,500
$34,334,282
$33,183,752 Number of Customers (average)
Residentia!..
1,907
.7 26,616 26,313 26,013 Commercial and Industrial - Small..
(62)
(.1) 4,710 4,676 4,643 Commercial and Industrial - Large..
3 1.2 17 18 18 Municipal Street Lighting..
3
.8 37 37 36 Area Lighting..
(334)
(2.1) 1,429 1,480 1,516 Other Municipal and Other Public Authorities..
8 8
8 Other Electric Utilities..
6 7
7 Total Customers..
1,517
.5 32,829 32,539 32.241 Net Generation, Purchases and Sales (thousands of kilowatt. hours)
Net Generation:
Steam..
(57) 50,691 51,253 44,564 H yd ro..
(658)
(.1) 105,068 139,255 157,741 Diesel..
(976)
(898)
(956)
(876)
Purchases:
l Nuclear Generated..
284,812 20.5 284,812 273,087 296,164 Fossil Fuel Generated..
(95,254)
(3.5) 224,080 165,702 139,690 Inadvertent Received (Delivered)..
29 29 (334) 411 Tctal..
187,896 3.4 663,782 628,007 637,694 Losses and Unaccounted for..
6,545 1.9 38,858 34,993 36,338 Company Use..
72
.5 1,384 1,346 1,273 Electricity Sold..
181,279 3.5 623,540 591,668 600,083 Sales:
Residential..
25,463 1.6 170,824 168,754 163,742 Commercial and Industrial - Small..
29,440 2.9 119,651 115,852 111,910 Commercial and Industrial - Large..
52,032 4.8 139,744 118,063 117,436 Municipal Street Lighting..
(64)
(.2) 2,740 2,720 2,707 Area Lighting..
(304)
(1.5) 1,878 1,952 1,976 Other Municipal and Public Authorities..
15,437 3.7 50,189 49,790 47,372 Other Electric Utilities..
59,275 5.7 138,514 134,537 154,940 Total Sales..
181,279 3.5 623,540 591,668 600,083 Ave. rage Use and Revenue Per Residential Customer Kilowatt-hours..
535
.9 6,418 6,413 6,295 Revenue..
$279.25 7.5
$542.24
$479.24
$461.01 Revenue per Kilowatt. hour..
3.98c 6.6 8.45c 7.47c 7.32c 24
consolidated operating statistics 1982 1981 1980 1979 1978 1977 1976 1975
$11,291,761
$10,298,542
$10,113,502 5 8,033,191 5 7,531,515
$ 7,073,874
$ 6,617,492
$ 6,498,277 7,034,425 6,551,906 6,422,076 4,950,151 4,770,989 4,148,247 4,258,303 4,153,889 5,308,631 5.181,950 5,156,489 3,578,710 3,220,676 2,765,238 2,859,436 2,752,432 380,628 350,279 339,557 293,577 282,505 273,902 213,590 197,190 254,072 243,592 240,991 213,744 208,765 207,990 161,924 147,531 2,047,700 2,051,833 1,668,506 1,309.218 1,186,878 1,045,997 926,200 889,789 4,672,924
- 4,435,389 3,722,945 2,722,707 2,535,654 2.334,404 1,820,158 1,855,254 153,929 160,322 125,574 138,431 131,783 149,008 145,342 149,690
$31,144,070
$29.273.813
$27,789.640
$21,239,729
$19,868,765 517,998,660
$17,002,445
$16,644,052 25,725 25,593 25,516 25,537 25,470 25,272 24,990 24,709 4,584 4,599 4,611 4,671 4,689 4,731 4,756 4,778 18 16 16 16 17 17 15 14 36 36 36 36 36 35 34 34 1,594 1,680 1,733 1,751 1,753 1,824 1,825 1,763 9
10 10 8
8 8
8 8
7 7
7 7
7 6
6 6
31,973 31,941 31,929 32,026 31,980 31,893 31,634 31,312 38,165 48,645 46,849 20,373 26,913 6,193 14,791 50,748 128,101 191,698 127,630 162,107 116,894 167,874 173,421 105,726 (868)
(676) 200 243 627 (175)
(80) 78 222,297 256,068 216,252 220,218 263,137 252,829 52,978 209,178 109,879 182,382 158,699 157,854 127,109 275,731 319,334 99 56 (90)
(376) 324 23 (70) 596,972 605,670 573,223 561,264 565,749 553,853 516,771 475,886 37,591 33,503 32,357 38,330 30,364 34,559 33,392 32,313 1,324 1,445 1,384 1,277 1,296 1,229 1,281 1,312 558,057 570,722 539,482 521,657 534,089 518,065 482,098 442,261 160,061 158,734 156,403 156,399 158,820 154,420 154,060 145,361 108,376 107,607 107,275 105,055 111,002 98,999 96,910 90,211 109,985 112,026 111,519 110,452 106,757 100,122 96,499 87,712 2,733 2,809 3,012 2,981 2,944 2,952 2,889 2,804 2,036 2,150 2,194 2,233 2,236 2,269 2,305 2,182 46,792 43,190 36,942 38,762 42,438 42,493 41,157 34,752 128,074 144,206 122,137 105,775 109,892 116,810 88,278 79,239 558,057 570,722 539,482 521,657 534,089 518,065 482,098 442,261 6,222 6,202 6,130 6,124 6,236 6,110 6,165 5,883
$438.94
$402.40
$396.36
$314.57
$295.70
$279.91
$264.81
$262.99 7.05c 6.49c 6.47c 5.14c 4.74c 4.58c 4.30c 4.47c
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ABOUT THE COMPANY 4
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' P'fL Maine Public Service Company is an investorowned electric utility
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- isi serving about 33,000 retail customers in northern Maine. Its M A IN E
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subsidiary, Maine and New
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Brunswick Electrical Power Com-
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pany, Ltd., is located at Tinker, New
"'.~.i, Q '3EF" Brunswick.
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miles, the Company provided elec-tricity at a reliability rate of 99.97%
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in 1985.
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s The major business activities in
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.i' the service area center around pro-pi duction of agricultural and forest J
products.
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A favorable power supply mix for l
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the company includes a large
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percentage of nuclear, fossil fuel, l
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Maine Public Service Company is ua a
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regulated by the Maine Public r
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Utilities Commission for retail ser-u..
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Regulatory Commission for
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sidiary is regulated by the New "A
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2-Brunswick Board of Commissioners -
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...s. ss c csu gusxd of Public Utilities and tho Canadian
- - - - 44 sf V E o sT ser, Sc.(t op.(gs Cm
- s. s o n,s..._j National Energy Board.