Exhibit 10.19

COMPOSITE CONFORMED RATE SCHEDULE 2004

REFLECTING OPERATIVE PROVISIONS OF

I.

ADDITIONAL POWER CONTRACT (SUPPLEMENT No. 26 To FPC No.1) (AS AMENDED BY 1997
AMENDATORY AGREEMENT)

II.

1997 AMENDATORY AGREEMENT (SUPPLEMENT No. 27 TO FPC No.1)

III.

SETTLEMENT AGREEMENT DOCKET No. ER98-570-000 (SUPPLEMENT No. 28 TO FPC No.1)

IV.

SETTLEMENT AGREEMENT DOCKET No. ER04-55-000

V.

FORMULA RATE

I.

ADDITIONAL POWER CONTRACT (February 1,1984)

ADDITIONAL POWER CONTRACT, dated as of February 1, 1984, between MAINE YANKEE
ATOMIC POWER COMPANY ("Maine Yankee"), a Maine corporation, and [the names of
the Purchasers appear in Paragraph 1, below] (the "Purchaser").

It is agreed as follows:

1.

Basic Understandings

Maine Yankee was organized in 1966 to provide for the supply of power to its
eleven sponsoring utility companies (including the Purchaser), which utilities
are hereinafter called the "sponsors". It constructed a nuclear electric
generating unit of the pressurized water type, having a maximum net capability
of approximately 830 megawatts electric, on Bailey Point in Wiscasset, Maine
(said unit being herein, together with the site and all related facilities owned
or to be owned by Maine Yankee, referred to as the "Unit"). On June 27, 1973
Maine Yankee was issued a full-term, operating license for the Unit from the
Atomic Energy Commission (now the Nuclear Regulatory Commission which, together
with any successor agency or agencies, is hereafter called the "NRC"), which
license expires on October 21, 2008, and the Unit commenced commercial operation
on January 1, 1973.

The Unit is operated to supply power to Maine Yankee's sponsors, each of which
by a Power Contract dated as of May 20, 1968, as amended and as may be further
amended from

time to time (collectively the "Initial Power Contracts"), has undertaken to
purchase a fixed percentage of the capacity and output of the Unit for a term
extending through January 1, 2003. The names of the sponsors and their
respective percentages ("entitlement percentages") of the capacity and output of
the Unit are as follows:

 

 

Entitlement

 

 

Sponsor

Percentage

 

 

Central Maine Power Company

38.0%

 

 

New England Power Company

20.0%

 

 

The Connecticut Light and Power Company

12.0%

 

 

Bangor Hydro-Electric Company

7.0%

 

 

Maine Public Service Company

5.0%

 

 

Public Service Company of New Hampshire

5.0%

 

 

Cambridge Electric Light Company

4.0%

 

 

Montaup Electric Company <FN1>

4.0%

 

 

Western Massachusetts Electric Company

3.0%

 

 

Central Vermont Public Service Corporation

2.0%

 

 

 

100.0%

 

[Paragraph Describing Sales to Secondary Purchasers Omitted to Comply with Order
No. 614.1

Maine Yankee and its sponsors desire to provide for the orderly continuation of
the sale and purchase of the capacity and output of the Unit during the useful
life of the Unit to the extent it continues beyond the termination date of the
Initial Power Contracts, and to provide appropriate provisions for the
collection of funds for and the payment of decommissioning and any other costs
with respect thereto both during and after the useful life of the Unit. Maine
Yankee and its other sponsors are entering into Additional Power Contracts which
are identical to this contract except for necessary changes in the names of the
parties.

2.

Effective Date, Term and Waiver

This contract shall become effective on such date as may be authorized by the
FERC after receipt by the Purchaser of notice that Maine Yankee has entered into
Additional power contracts, as contemplated by Section 1 above, with each of the
other sponsors. The operative term of this contract shall commence on the
earlier of (a) the termination, cancellation or expiration of the Power Contract
or (b) January 2, 2003, notwithstanding the fact that the useful service life of
the Unit terminated prior to that date and shall terminate on the date (the "End
of Term Date") which is the later to occur of (i) 30 days after the date on
which the last of the financial obligations of Maine Yankee which constitute
elements of the purchase price calculated pursuant to Section 7 of this contract
has been satisfied in its entirety by Maine Yankee, or (ii) 30 days after the
date on which Maine Yankee is finally relieved of any obligations under the last
of any licenses (operating and/or possessory) which it now holds from, or which
may hereafter be issued to it by, the NRC with respect to the Unit under
applicable provisions of the Atomic Energy Act of 1954, as amended from time to
time (the "Act").

Maine Yankee and the Purchaser acknowledge that if the useful service life of
the Unit is terminated prior to January 2, 2003, then only the provisions of
this contract applicable to decommissioning of the Unit will apply during the
operative term of this contract.

The Purchaser hereby irrevocably waives its right to extend the contract term of
its Initial Power Contract pursuant to subsections (a) or (b) of Section 8
thereof.

3.

Operation and Maintenance of the Unit

Maine Yankee will operate and maintain the Unit in accordance with good utility
practice under the circumstances and all applicable law, including the
applicable provisions of the Act and of any licenses issued thereunder to Maine
Yankee. [Remainder of Section Omitted to Comply with Order No. 614.]

4.

Decommissioning.

After commercial operation of the Unit. permanently ceases, Maine Yankee will
decommission the Unit in a manner authorized by Maine Yankee's board of
directors and approved by the NRC in accordance with the Act and the rules and
regulations thereunder then in effect and by any agency having jurisdiction over
decommissioning of the Unit.

It is understood that, pursuant to the Initial Power Contracts and the Resale
Contracts, the sponsors and secondary purchasers are currently being billed for
Total Decommissioning Costs which, as of the date of this contract, are being
accumulated in a separate trust fund (the "Maine Yankee Trust") which was
established for the purpose of reimbursing Maine Yankee for Decommissioning
Expenses incurred in the process of decommissioning the Unit and that such
billings are subject to change in accordance with the provisions of the Initial
Power Contracts, subject to the jurisdiction of the Federal Energy Regulatory
Commission ('TERC"), formerly the Federal Power Commission. It is contemplated
that sufficient funds will be accumulated pursuant to those contracts and
paragraph 7 hereof to reimburse Maine Yankee for the full cost of
decommissioning the Unit.

5.

Purchaser's Entitlement [Omitted to Comply with Order No. 614.]

6.

Deliveries and Metering [Omitted to Comply with Order No. 614.]

7.

Payment

With respect to each month commencing on or after the commencement of the
operative term of this contract, whether or not this contract continues fully or
partially in effect, the Purchaser will pay Maine Yankee as further deferred
payment for the capacity and output of the Unit provided to the Purchaser by
Maine Yankee prior to the permanent shutdown of the Unit on August 6, 1997, an
amount equal to the Purchaser's entitlement percentage of the sum of (a) Maine
Yankee's total fuel costs for the month with respect to the Unit, (b) the Total
Decommissioning Costs for the month with respect to the Unit, plus (c) Maine
Yankee's total operating expenses (as hereinafter defined) for the month with
respect to the Unit, plus (d) an amount equal to one-twelfth of the composite
percentage for such month of the net Unit investment as most recently determined
in accordance with this Section 7.

"Composite percentage" shall be computed as of the last day of each month during
the term hereof (the "computation date") and for any month the composite
percentage shall be that computed as of the last day of the previous month.
"Composite percentage" as of a computation date shall be the sum of (i) the
equity percentage as of such date multiplied by the percentage

which equity investment with respect to the Unit (other than equity investment
for the financing of fuel inventory, including nuclear materials and the cost of
fabrication thereof, for the Unit) as of such date is of the total capital as of
such date; plus (ii) the "effective interest rate" per annum of each principal
amount of indebtedness outstanding on such date for money borrowed with respect
to the Unit (other than for money borrowed for the financing of fuel inventory,
including nuclear materials and the cost of fabrication thereof, for the Unit),
multiplied by the percentage which such principal amount is of total capital as
of such date. The "effective interest rate" of each principal amount of
indebtedness referred to in clause (ii) of the next preceding sentence will
reflect the annual interest requirements and to the extent applicable,
amortization of issue expenses, discounts and premiums, sinking fund call
premiums, expenses and discounts, refunding and retirement expenses, discounts
and premiums, and all other expenses applicable to the issue.

"Equity investment" as of any date shall consist of the sum of (i) all amounts
theretofore paid to Maine Yankee for all capital stock theretofore issued, plus
all capital contributions, less the sum of any amounts paid by Maine Yankee in
the form of stock retirements, repurchases or redemptions or return of capital;
plus (ii) any credit balance in the capital surplus account not included under
(i) and in the earned surplus account on the books of Maine Yankee as of such
date.

"Equity percentage" as of any date after commencement of the operative term
hereof shall be that percentage which was the "equity percentage" in effect on
the last day of the term of the Initial Power Contracts or such other percentage
as may from time to time thereafter be approved by FERC.

"Total capital" as of any date shall be the equity investment with respect to
the Unit, plus the total of all other securities and indebtedness then
outstanding with respect to the Unit other than equity investment, securities,
indebtedness and other obligations issued in connection with the financing or
leasing of fuel inventory, including nuclear materials and the cost of
fabrication thereof, for the Unit.

"Uniform System" shall mean the Uniform System of Accounts prescribed by FERC
for Class A and Class B Public Utilities and Licensees as in effect on the date
of this Agreement and as said System may be hereafter amended to take account of
private ownership of special nuclear material.

Maine Yankee's "fuel costs" for any month shall include (i) amounts chargeable
in accordance with the Uniform System in such month as amortization of costs of
fuel assemblies and components and bum-up of nuclear materials for the Unit;
plus (ii) all other amounts properly chargeable in accordance with the Uniform
System to fuel costs for the Unit less any applicable credits thereto; plus
(iii) one-twelfth of the equity percentage as of such month multiplied by the
equity investment for the financing of fuel inventory, including nuclear
materials and the cost of fabrication thereof, for the Unit; plus (iv) to the
extent not provided for in any of the foregoing, all payments (or accruals
therefor or amortization thereof) with respect to obligations incurred in
connection with the financing or leasing of fuel inventory, including nuclear
materials and the cost of fabrication thereof, for the unit (provided that such
inventory is not included in the net Unit investment).

Maine Yankee's "operating expenses" shall include all amounts properly
chargeable to operating expense accounts (other than such amounts which are
included in Maine Yankee's fuel costs), less any applicable credits thereto, in
accordance with the Uniform System, but including for purposes of this contract:

(i)

with respect to each month until the commencement of decommissioning of the
Unit, the Purchaser's entitlement percentage of all expenses related to the
storage or disposal of nuclear fuel or other radioactive materials, and all
expenses related to protection and maintenance of the Unit during such period,
including to the extent applicable all of the various sorts of expenses included
in the definition of "Decommissioning Expenses", to the extent incurred during
the period prior to the commencement of decommissioning;

(ii)

with respect to each month until the amount due from Maine Yankee to the U.S.
Department of Energy ("DOE") for disposal of pre-April 7, 1983 spent nuclear
fuel and associated high level radioactive material has been paid in full, the
Purchaser's entitlement percentage of one-third (1/3) of the interest due to DOE
during that calendar quarter on such obligation; and

(iii)

with respect to each month until End of License Term, the Purchaser's
entitlement percentage of the monthly amortization of (a) the amount of any
unamortized deferred expenses, as permitted from time to time by the Federal
Energy Regulatory Commission or its successor agency, plus (b) the remaining
unamortized amount of Maine. Yankee's investment in plant, nuclear fuel and
materials and supplies and other assets, such amortization to be accrued at a
rate sufficient to amortize fully such unamortized deferred expenses and Maine
Yankee's investments in plant, nuclear fuel and materials and supplies or other
assets (the "total investment") over a period extending to October 21, 2008;
provided, that if during any calendar month ending on or before May 1, 2008
either of the following events shall occur: (a) Maine Yankee shall become
insolvent or (b) Maine Yankee shall be unable, from available cash or other
sources, to meet when due during such month its obligations to pay principal,
interest, premium (if any) or other fees with respect to any indebtedness for
money borrowed, then Maine Yankee may adjust upward the accrual for amortization
of unrecovered total investment for such month to an amount not exceeding the
applicable maximum level specified in Appendix A hereto, provided that
concurrently therewith the total investment shall be reduced by an amount equal
to the amount of such adjustment, it being understood that at the time of such
event, Maine Yankee will furnish the Purchaser with a schedule setting forth the
amount of such adjustment;

it being understood that for purposes of this contract "operating expenses"
shall include depreciation accrual and amortization at a rate at least
sufficient to fully amortize the non-salvageable plant investment over the
estimated remaining useful life of the plant. As used herein, "End of License
Term" means October 21, 2008 or such later date as may be fixed, by amendment to
the Facility Operating License for the Unit, as the end of the term of the
Facility Operating License.

The "net Unit investment" shall consist, in each case with respect to the Unit,
the net sum of (i) the aggregate amount properly chargeable at the time in
accordance with the Uniform System to Maine Yankee's electric plant accounts
(including construction work in progress); plus (ii) the amount of any
unamortized property losses; less (iii) the amount of any reserves for
depreciation and for amortization of property losses; plus (iv) such allowances
for inventories, materials and supplies (other than fuel assemblies and
components), prepaid items and cash working capital as may reasonably be
determined from time to time by Maine Yankee. The net Unit investment shall be
determined as of the commencement of each calendar year, or, if Maine Yankee
elects, at more frequent intervals.

"Total Decommissioning Costs" for any month shall mean the sum of (x) an amount
equal to all accruals in such month to any reserve, as from time to time
established by Maine Yankee and approved by its board of directors, to provide
for the ultimate payment of the Decommissioning Expenses of the Unit, plus (y),
during the Decommissioning Period, the Decommissioning Expenses for the month,
to the extent such Decommissioning Expenses are not paid with funds from such
reserve, plus (z) Decommissioning Tax Liability for such month. It is understood
(i) that funds received pursuant to clause (x) may be held by Maine Yankee or by
an independent trust or other separate fund, as determined by said board of
directors, (ii) that, upon compliance with applicable regulatory requirements,
the amount, custody and/or timing of such accruals may from time to time during
the term hereof be modified by said board of directors in its discretion or to
comply with applicable statutory or regulatory requirements or to reflect
changes in the amount, custody or timing of anticipated Decommissioning
Expenses, and (iii) that the use of the term "to decommission" herein
encompasses compliance with all requirements of the NRC, as in effect from time
to time, for permanent cessation of operation of a nuclear facility and any
other activities reasonably related thereto, including provision for disposal of
low level waste and the interim storage of spent nuclear fuel.

"Decommissioning Expenses" shall include all expenses of decommissioning the
Unit, and all expenses relating to ownership and protection of the Unit during
the Decommissioning Period, and shall also include the following:

(1)

All costs and expenses of any NRC-approved method of removing the Unit from
service, including without limitation: dismantling, mothballing and entombment
of the Unit; removing nuclear fuel and other radioactive material to temporary
and/or permanent storage sites; construction, operation, maintenance and
dismantling of a spent fuel storage facility; decontaminating, restoring and
supervising the site; and any costs and expenses incurred in connection with
proceedings before governmental authorities relating to any authorization to
decommission the Unit or remove the Unit from service;

(2)

All costs of labor and services, whether directly or indirectly incurred,
including without limitation, services of foremen, inspectors, supervisors,
surveyors, engineers, security personnel, counsel and accountants, performed or
rendered in connection with the decommissioning of the Unit and the removal of
the Unit from service, and all costs of materials, supplies, machinery,
construction equipment and apparatus acquired or used (including rental charges
for machinery, equipment or apparatus hired) for or in connection with the
decommissioning of the Unit and the removal of the Unit from service, and all

administrative costs, including services of counsel and financial advisers of
any applicable independent trust or other separate fund; it being understood
that any amount, exclusive of proceeds of insurance, realized by Maine Yankee as
salvage on any machinery, construction equipment and apparatus, the cost of
which was charged to Decommissioning Expense, shall be treated as a reduction of
the amounts otherwise chargeable on account of the costs of decommissioning of
the Unit; and

(3)

All overhead costs applicable to the Unit during the Decommissioning Period, or
accrued during such period, including without limiting the generality of the
foregoing, taxes (other than taxes on or in respect of income), charges, license
fees, excises and assessments, casualties, health care costs, pension benefits
and other employee benefits, surety bond premiums and insurance premiums.

"Decommissioning Tax Liability" for any month shall be an amount established by
Maine Yankee and approved by its board of directors to meet possible income tax
obligations, which amount shall not exceed: the amount to be included in the
clause (x) portion of Total Decommissioning Costs for such month multiplied by a
fraction whose numerator is equal to the combined highest statutory Federal and
state marginal income tax rate and whose denominator is equal to one minus the
combined highest statutory Federal and state marginal income tax rate.

"Decommissioning Period" shall mean the period commencing with the notification
by Maine Yankee to the NRC of the decision of the board of directors of Maine
Yankee to cease permanently the operation of the Unit for the purpose of
producing electric energy and ending with the date when Maine Yankee has
completed the decommissioning of the Unit and the restoration of the site and
has been relieved of all its obligations under the last of any licenses issued
to it by the NRC.

Without limiting the generality of the foregoing, any other amounts expended or
to be paid with respect to decommissioning of the Unit or removal of the Unit
from service shall constitute part of the Decommissioning Expenses if they are,
or when paid will be, either (i) properly chargeable to any account related to
decommissioning of a nuclear generating unit in accordance with the Uniform
System or generally accepted accounting principles as then in effect, or (ii)
properly chargeable to decommissioning of a nuclear generating unit in
accordance with then applicable regulations of the NRC or FERC or any other
regulatory agency having jurisdiction.

8.

Billing

Maine Yankee will bill the Purchaser, as soon as practicable after the end of
each month, for all amounts payable by the Purchaser with respect to the
particular month pursuant to Section 7 hereof. Such bills will be rendered in
such detail as the Purchaser may reasonably request and may be rendered on an
estimated basis subject to corrective adjustments in subsequent billing periods.
All bills shall be paid in full within 10 days after receipt thereof by the
Purchaser.

When all or any part of any bill shall remain unpaid for more than thirty (30)
days after the due date thereof, simple interest at an annual rate which is at
all times 2% in excess of the

prime rate for commercial loans in effect at The First National Bank of Boston
shall accrue to Maine Yankee from and after the thirtieth day from the due date
of said bill.

9.

Decommissioning Fund

Maine Yankee agrees to pay to, or cause to be paid to, the Maine Yankee Trust or
any successor trust approved by the board of directors of Maine Yankee all funds
collected hereunder for the express purpose of decommissioning the Unit or
removing the Unit from service and further agrees that, after the tax
consequences of decommissioning collections have been resolved, any funds
collected hereunder to meet Decommissioning Tax Liability which are not used for
that purpose will be refunded to the Purchaser to the extent required by FERC.

10.

Cancellation of Contract

If either

(i)

the Unit is damaged to the extent of being completely or substantially
completely destroyed, or

(ii)

the Unit is taken by exercise of the right of eminent domain or a similar right
or power,

then and in any such case, the Purchaser may cancel the provisions of this
contract, except that in all cases other than those described in clause (ii)
above, the Purchaser shall be obligated to continue to make the payments of
Total Decommissioning Costs and the other payments required by Section 7 hereof
and the provisions of said Section 7 and the related provisions of this contract
shall remain in full force and effect, it being recognized that the costs which
Purchaser is required to pay pursuant to Section 7 represent deferred payments
in connection with power heretofore delivered by Maine Yankee under its
contractual commitments to the Purchaser. Such cancellation shall be effected by
written notice given by the Purchaser to Maine Yankee. In the event of such
cancellation, all continuing obligations of the parties hereunder as to
subsequently incurred costs of Maine Yankee other than the obligations of the
Purchaser to continue to make the payments required by Section 7 shall cease
forthwith (it being understood that the continuing accrual of depreciation of
net Unit investment and of fees, interest and other payments under pre-existing
contracts subsequent to such cancellation shall not be deemed to be
"subsequently incurred costs" for purposes of this sentence). Notwithstanding
the preceding sentence, the applicable provisions of this contract shall
continue in effect after the cancellation hereof to the extent necessary to
permit final billings and adjustments hereunder with respect to obligations
incurred through the date of cancellation and the collection thereof. Any
dispute as to the Purchaser's right to cancel this contract pursuant to the
foregoing provisions shall be referred to arbitration in accordance with the
provisions of this contract.

Notwithstanding anything in this contract elsewhere contained, the Purchaser may
cancel this contract or be relieved of its obligations to make payments
hereunder only as provided in the next preceding paragraph of this Section.

11.

Insurance

Maine Yankee presently has in effect, and hereafter will at all times maintain
until the expiration of the term hereof, insurance to cover its "public
Liability" for personal injury and property damage resulting from a "nuclear
incident" (as those terms are defined in the Act), with limits not less than
Maine Yankee may be required to maintain to qualify for governmental indemnity
under the Act and shall execute and maintain an indemnification agreement with
the NRC as provided by the Act. Maine Yankee will also at all times maintain
such other types of liability insurance, including workmen's compensation
insurance, in such amounts as is customary in the case of other similar electric
utility companies or as may be required by law.

Maine Yankee will at all times keep insured such portions of the Unit (other
than the fuel assemblies and components, including nuclear materials) as are of
a character usually insured by electric utility companies similarly situated and
operating like properties, against the risk of a "nuclear incident" and such
other risks as electric utility companies, similarly situated and operating like
properties, usually insure against; and such insurance shall to the extent
available be carried in amounts sufficient to prevent Maine Yankee from becoming
a co-insurer. Maine Yankee will at all times keep its fuel assemblies and
components (including nuclear materials) insured against such risks and in such
amounts as shall, in the opinion of Maine Yankee, provide adequate protection.

12.

Additional Units [Omitted to Comply with Order No. 614].

13.

Audit

Maine Yankee's books and records (including metering records) shall be open to
reasonable inspection and audit by the Purchaser.

14.

Arbitration

In case any dispute shall arise as to the interpretation or performance of this
contract which cannot be settled by mutual agreement and which may be finally
determined by arbitration under the law of the State of Maine then in effect,
such dispute shall be submitted to arbitration, and arbitration of such dispute
shall be a condition precedent to any action at law or suit in equity that can
be brought. The parties shall if possible agree upon a single arbitrator. In
case of failure to agree upon an arbitrator within 15 days after the delivery by
either party to the other of a written notice requesting arbitration, either
party may request the American Arbitration Association to appoint the
arbitrator. The arbitrator, after opportunity for each of the parties to be
heard, shall consider and decide the dispute and notify the parties in writing
of his decision. The expenses of the arbitration shall be borne equally by the
parties.

15.

Regulation

This contract, and all rights, obligations and performance of the parties
hereunder, are subject to all applicable state and federal law and to all duly
promulgated orders and other duly authorized action of governmental authority
having jurisdiction in the premises.

16.

Assignment

This contract shall be binding upon and shall inure to the benefit of, and may
be performed by, the successors and assigns of the parties, except that no
assignment, pledge or

other transfer of this contract by either party shall operate to release the
assignor, pledgor or transferor from any of its obligations under this contract
unless consent to the release is given in writing by the other party, or, if the
other party has theretofore assigned, pledged or otherwise transferred its
interest in this contract, by the other party's assignee, pledgee or transferee,
or unless such transfer is incident to a merger or consolidation with, or
transfer of all or substantially all of the assets of the transferor to, another
sponsor which shall, as a part of such succession, assume all the obligations of
the transferor under this contract.

17.

Right of Setoff

The Purchaser shall not be entitled to set off against the payments required to
be made by it under this contract (i) any amounts owed to it by Maine Yankee or
(ii) the amount of any claim by it against Maine Yankee. However, the foregoing
shall not affect in any other way the Purchaser's right and remedies with
respect to any such amounts owed to it by Maine Yankee or any such claim by it
against Maine Yankee.

18.

Amendments

Upon authorization by Maine Yankee's board of directors of uniform amendments to
all the Additional Power Contracts with sponsors, Maine Yankee shall have the
right to amend the provisions of Section 7 hereof insofar as they relate to the
amounts collectible by Maine Yankee pursuant to clause (b) of the first
paragraph of Section 7 hereof or to the timing of such collections by serving an
appropriate statement of such amendment upon the Purchaser and filing the same
with FERC (or such other regulatory agency as may have jurisdiction in the
premises) in accordance with the provisions of applicable laws and any rules and
regulations thereunder, and the amendment shall thereupon become effective on
the date specified therein, subject to any suspension order issued by such
agency. All other amendments to this contract shall be by mutual agreement,
evidenced by a written amendment signed by the parties hereto.

19.

Interpretation

The interpretation and performance of this contract shall be in accordance with
and controlled by the law of the State of Maine.

20.

Addresses

Except as the parties may otherwise agree, any notice, request, bill or other
communication from one party to the other, relating to this contract, or the
rights, obligations or performance of the parties hereunder, shall be in writing
and shall be effective upon delivery to the other party. Any such communication
shall be considered as duly delivered when delivered in person or mailed by
registered or certified mail, postage prepaid, to the post office address of the
other party shown following the signature of such other party hereto,. or such
other address as may be designated by written notice given as provided in this
Section 20.

21.

Corporate Obligations

This contract is the corporate act and obligation of the parties hereto, and any
claim hereunder against any stockholder (other than the Purchaser), director or
officer of either party, as such, is expressly waived.

22.

All Prior Agreements Superseded

This contract represents the entire agreement between the parties relating to
the subject matter hereof during the operative term hereof i.e., post-January 1,
2003), and all previous agreements, discussions, communications and
correspondence with respect to the subject matter are hereby superseded and are
of no further force and effect.

IN WITNESS WHEREOF, the parties have executed this contract by their respective
officers thereunto duly authorized as of the date first above written.

Issued by

Michael E. Thomas

Effective: January 2, 2004

 

Vice President and Chief Financial Officer

 

Issued on:

October 20, 2003

 

Revised on:

July 8, 2004

 

II.

1997 AMENDATORY AGREEMENT

This 1997 Amendatory Agreement, dated as of August 6, 1997, is entered into by
and between MAINE YANKEE ATOMIC POWER COMPANY, a Maine Corporation ("Maine
Yankee" or "Seller") and [insert name of each purchaser] ("Purchaser").

For good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as follows:

1.

Basic Understandings

Maine Yankee was organized in 1966 to provide a supply of power to its
sponsoring utility companies, including the Purchaser (collectively the
"Purchasers"). It constructed a nuclear electric generating unit, having a net
capability of approximately 830 megawatts electric (the "Unit") at a site on
tidewater in the town of Wiscasset, Maine. On June 27, 1973, Maine Yankee was
issued a full-term, Facility Operating License for the Unit by the Atomic Energy
Commission (predecessor to the Nuclear Regulatory Commission which, together
with any successor agencies, is hereafter called the "NRC"), which license is
now stated to expire on October 21, 2008. The Unit has been in commercial
operation since January 1, 1973.

The Unit was conceived to supply economic power on a cost of service formula
basis to the Purchasers. Maine Yankee and the Purchaser are parties to a Power
Contract dated as of May 20, 1968 (as herefore amended, the "Power Contract").
Pursuant to the Power Contract and other identical contracts (collectively, the
"Power Contracts") between Maine Yankee and the other Purchasers, Maine Yankee
contracted to supply to the Purchasers all of the capacity and electric energy
available from the Unit for a term of thirty (30) years following January 1,
1973.

Maine Yankee and the Purchaser are also parties to an Additional Power Contract,
dated as of February 1, 1984 ("Additional Power Contract"). The Additional power
contract and other similar contracts (collectively, the "Additional Power
Contracts") between Maine Yankee and the other Purchasers provide for an
operative term stated to commence on January 2, 2003 (when the Power Contracts
terminate) and extending until a date which is the later to occur of (i) 30 days
after the date on which the last of the financial obligations of Maine Yankee
which constitute elements of the purchase price thereunder has been extinguished
by Maine Yankee or (ii) 30 days after the date on which Maine Yankee is finally
relieved of any obligations under the last of the licenses (operating and/or
possessory) which it holds from, or which may hereafter be issued to it by, the
NRC with respect to the Unit under applicable provisions of the Atomic Energy
Act of 1954, as amended from time to time (the "Act").

Pursuant to the Power Contract and the Additional Power Contract, the Purchaser
is entitled and obligated to take its entitlement percentage of the capacity and
net electrical output of the unit during the service life of the Unit and is
obligated to pay therefor monthly its entitlement percentage of Maine Yankee's
cost of service, including decommissioning costs, whether or not the Unit is
operated or whether or not net electrical output is delivered. The Power
Contracts and the Additional Power Contracts also provide, in the event of their
earlier cancellation, for the survival of the decommissioning cost obligation
and for the applicable

provisions thereof to remain in effect to permit final billings of costs
incurred prior to such cancellation.

On August 6, 1997, the board of directors of Maine Yankee, after conducting a
thorough review of the economics of continued operation of the Unit for the
remainder of the term of the Facility Operating License for the Unit in light of
other alternatives available to Maine Yankee and the Purchasers, determined that
the Unit should be permanently shut down effective August 6, 1997. The Purchaser
concurs in that decision.

As a consequence of the shutdown decision, Maine Yankee and the Purchaser
propose at this time to amend the Power Contract and the Additional Power
Contract in various respects in order to clarify and confirm provisions for the
recovery under said contracts of the full costs previously incurred by Maine
Yankee in providing power from the Unit during its useful life and of all costs
of decommissioning the Unit, including the costs of maintaining the Unit in a
safe condition following the shutdown and prior to its decontamination and
dismantlement.

Maine Yankee and each of the other Purchasers are entering into agreements which
are identical to this Agreement except for necessary changes in the names of the
parties.

2.

Parties' Contractual Commitments

Maine Yankee reconfirms its existing contractual obligations to protect the
Unit, to maintain in effect certain insurance and to prepare for and implement
the decommissioning of the Unit in accordance with applicable laws and
regulations. Consistent with public safety, Maine Yankee shall use its best
efforts to accomplish the shutdown of the Unit, the protection and any necessary
maintenance of the Unit after shutdown and the decommissioning of the Unit in a
cost-effective manner and in compliance with the regulations of the NRC and
other agencies having jurisdiction, and shall use its best efforts to ensure
that any required storage and disposal of the nuclear fuel remaining in the
reactor at shutdown and all spent nuclear fuel or other radioactive materials
resulting from operating of the Unit are accomplished consistent with public
health and safety considerations and at the lowest practicable cost. The
Purchaser reconfirms its obligations under the Power Contract and Additional
Power Contract to pay its entitlement percentage of Maine Yankee's costs as
deferred payment in connection with the capacity and net electrical output of
the Unit previously delivered by Maine Yankee and agrees that the decision to
shut down the Unit described in Section 1 hereof does not give rise to any
 cancellation right under Section 9 of the Power Contract or Section 10 of the
Additional Power Contract.

Except as expressly modified by this Agreement, the provisions of the Power
Contract and the Additional Power Contract remain in full force and effect,
recognizing that the mutually accepted decision to shut down the Unit renders
moot those provisions which by their terms relate solely to continuing operation
of the Unit.

3-4.

[Paragraphs 3 and 4 of the 1997 Amendatory Agreement contain amendments to
Sections 2, 7 and 8 of the Additional Power Contract, and have been incorporated
into the Additional Power Contract section above.]

5.

Effective Date

This 1997 Amendatory Agreement shall become effective upon receipt by the
Purchaser of notice that Maine Yankee has entered into 1997 Amendatory
Agreements, as contemplated by Section 1 hereof, with each of the other
Purchasers and receipt of requisite authorization from the FERC.

6.

Interpretation

The interpretation and performance of this 1997 Amendatory Agreement shall be in
accordance with and controlled by the laws of the State of Maine.

7.

Addresses

Except as the parties may otherwise agree, any notice, request, bill or other
communication from one party to the other relating to this 1997 Amendatory
Agreement, or the rights, obligations or performance of the parties hereunder,
shall be in writing and shall be effective upon delivery to the other party. Any
such communication shall be considered as duly delivered when mailed to the
respective post office address of the other party shown following the signatures
of such other party hereto, or such other post office address as may be
designated by written notice given in the manner as provided in this Section.

8.

Corporate Obligations

This 1997 Amendatory Agreement is the corporate act and obligation of the
parties hereto.

9.

Counterparts

This 1997 Amendatory Agreement may be executed in any number of counterparts and
each executed counterpart shall have the same force and effect as an original
instrument and as if all the parties to all of the counterparts had signed the
same instrument. Any signature page of this 1997 Amendatory Agreement may be
detached from any counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another counterpart of this 1997
Amendatory Agreement identical in form hereto but having attached to it one or
more signature pages.

IN WITNESS WHEREOF, the parties have executed this 1997 Amendatory Agreement by
their respective duly authorized officers as of the day and year first named
above.

III.

1998 SETTLEMENT AGREEMENT DOCKET ER98-570-000

I.  BACKGROUND

[Omitted to Comply with Order 614.]

II.  TERMS OF SETTLEMENT

[Prefatory Paragraphs Omitted to Comply with Order No. 614.]

A.

Non-Decommissioning Issues and ISFSI-Related Collection Rates.

(1)

Return on Equity. Commencing as of January 15, 1998, and until October 31, 2008,
Maine Yankee's allowed return on equity for its remaining equity balances shall
be 6.50%, on all equity balances up to the amounts set forth in Table 1. To the
extent that Maine Yankee's equity balances exceed the values set forth in Table
1, the allowed return on such excess equity balances shall be 0.0%. In no event
shall the return on equity revenue requirement exceed 6.50% of the amounts set
forth in Table 1.

(2)

Gain On Sale, Lease Or Other Disposal Of Land. The Settling Parties acknowledge
that, as part of Maine Yankee's efforts to mitigate shutdown and decommissioning
costs, Maine Yankee is seeking to' sell, lease or otherwise dispose of all or a
portion of its land located in Wiscasset, Maine. Maine Yankee and the Settling
Parties agree that, if at any time between (1) January 15, 1998, and (2) October
31, 2008, or the corporate windup and dissolution of Maine Yankee, whichever
shall last occur, Maine Yankee shall sell, lease or otherwise dispose of all or
a portion of its land in Wiscasset, Maine, Maine Yankee shall flow through to
its ratepayers, in accordance with its formula rate, any net-of-tax gains in
excess of book value for such land, for the benefit of ratepayers, and that none
of the gain in excess of book value from such sale, lease or other disposition
shall inure to the benefit of the shareholders of Maine Yankee. Such
flow-through of gain from the sale, lease or other .disposition of land shall be
effective whether the sale, lease or other disposition is for the purpose of
repowering at the Maine Yankee site in Wiscasset or for any other purpose.
[Omitted to Comply with Order No. 614]. In the event Maine Yankee makes any
donation of land to an organization exempt under §501(c)(3) of the Internal
Revenue Code, Maine Yankee agrees to flow through to ratepayers any tax benefits
received as a result of such donation.

(3)

Recovery of Unamortized Investment. Subject to adjustment pursuant to the terms
and conditions of Part II-B(5)(C) dealing with site repowering and recovery of
so-called D&D Refunds, Maine Yankee shall be able to recover, pursuant to its
revised rate schedules, all unamortized investment (including fuel) in the Maine
Yankee plant, together with a return on equity in accordance with the terms and
conditions of Part II-A(1) above.

(4)

Amendatory Agreements. The Settling Parties do not contest the effectiveness of
the Amendatory Agreements submitted for approval in Docket No. ER98-570-000;
provided that, (1) Maine Yankee shall make an informational filing with the
Commission in advance of any acceleration of recovery of unamortized investment
pursuant to the terms and conditions of Section 3, Part C(iii) of the Amendatory
Agreements; (2) the Settling Parties do not hereby waive their rights to
challenge such accelerated collection and any such filing made by Maine Yankee;
(3) notwithstanding the provisions of Section 3, Parts C(a)(i) and D of the
Amendatory Agreements, Maine Yankee agrees that it will collect rates associated
with spent fuel costs only in accordance with Part II-A(7) and Part II-A(10) of
this Offer of Settlement; and (4) without limiting any other provision of this
Offer of Settlement, the uncontested effectiveness of the Amendatory Agreements
is without prejudice to, and cannot be used as precedent against, the position
of any party in any future proceeding as to whether spent fuel storage costs are
or are not part of Maine Yankee's total decommissioning costs or decommissioning
expenses.

(5)

Maine Retail Settlement. [Omitted to Comply with Order No. 614.]

(6)

Formula Rate Specificity. [Omitted to Comply with Order No. 614].

(7)

Spent Fuel Storage Cost Collection. [Omitted to Comply with Order No.  614.]

(8)

ISFSI Costs; Maine Spent Fuel Disposal Trust Fund.

(A)

The decommissioning expenses described in Part II-B below, for purposes of this
Settlement Agreement only, do not include expenses to be incurred as a result of
the federal government's failure to perform its contractual obligation to remove
spent nuclear fuel from the Maine Yankee site, including but not limited to the
costs associated with constructing, purchasing, operating, maintaining and
terminating the ISFSI. All costs related to operation and maintenance of the
ISFSI after December 31, 2004, and all other costs related to spent fuel, except
the costs of constructing the ISFSI, will be determined in the proceeding
described in Part II-A(10) and collected in a manner determined by the
Commission. Maine Yankee and the Settling Parties agree that the storage and
disposal of spent nuclear fuel and high level waste, including
Greater-Than-Class-C ("GTCC") waste, are properly the responsibility of the U.S.
Department of Energy ("DOE") and that Maine Yankee shall use its best efforts to
recover all costs associated with such storage and disposal from the DOE, in
accordance with the terms and conditions of Part II-A(9) below. Maine Yankee and
the Settling Parties further agree that a portion of the funds already held in
trust under Maine law for the- express purpose of meeting Maine Yankee's DOE
payment obligation should be utilized to reduce rates to current ratepayers, in
the manner set forth in this Part II-A(8).

(B)

[Agreement to Support Change in Maine State Legislation Omitted to Comply with
Order No. 614 - Referenced Legislation Enacted (See 1999 Me. Law C. 173).]

(C)

Provided that the Maine Legislature has adopted such legislative changes
referred to in this Part II-A(8), and that such legislative changes are
effective as a matter of Maine law and have not been stayed pursuant to any
legal challenge, then commencing on the first day of the month immediately
following the effective date of such legislation, the annual $6.8 million
collection associated with the spent fuel storage costs, as set forth in Part
II-A(7), shall be eliminated as provided in Part II-D(4).

(D)

The Settling Parties recognize that Maine Yankee ultimately may be liable to the
DOE for the payment of the funds currently held in the Spent Fuel Disposal Trust
Fund and further agree that, in the event the DOE in the future demands payment
of such funds and Maine Yankee is legally required to make such payment, after
Maine Yankee has prudently pursued its legal and equitable remedies against the
DOE, Maine Yankee's ratepayers are solely responsible for those costs. The
Settling Parties agree, therefore, that in such event, Maine Yankee shall be
entitled to bill and collect from ratepayers pursuant to its formula rate such
amounts as are necessary to replenish the Spent Fuel Disposal Trust Fund. The
Settling Parties recognize that the liability for pre-1983 obligations may rise
faster than the ability of the Spent Fuel Disposal Trust Fund, after reduction,
to generate income and capital appreciation and that, if that occurs, Maine
Yankee also shall be permitted to bill and collect this difference in liability
pursuant to its formula rate. The Settling Parties also agree that Maine Yankee
shall be permitted to bill and collect funds sufficient to replenish the Spent
Fuel Disposal Trust Fund pursuant to its formula rate, even if DOE has not
actually made demand and presentment for such funds, provided there is a legal
obligation to pay such funds and after Maine Yankee has prudently pursued its
legal and equitable remedies against the DOE. The Settling Parties agree that,
prior to the proceeding described in Part II-A(10), they will not object to
future Maine Yankee billings designed to

collect amounts from ratepayers to replenish the Spent Fuel Disposal Trust Fund
and to cover growth in liability, consistent with Maine Yankee's formula rate
and the terms and conditions of this Part II-A(8); provided, however, that
nothing in this provision shall preclude any Settling Party from challenging the
methodology by which Maine Yankee has replenished the Spent Fuel Disposal Trust
Fund and covered growth in liability, or from challenging the prudence of Maine
Yankee's expenditures from the Spent Fuel Trust Fund, in the proceeding
described in Part II-A(l0). Should Maine Yankee's obligation to pay such sums
become due, and not be stayed, during the pendency of litigation, Maine Yankee
shall be permitted to recover such funds from ratepayers during the pendency of
such litigation, in accordance with this Part II-A(8). Maine Yankee and the
Settling Parties further agree that, if any such amounts exceed the sum of $10
million, then in order to smooth the rate impact of such recoveries on
ratepayers, Maine Yankee shall amortize such amounts, together with any carrying
charges thereon, over two or more years, provided, however, that in any event
all such amounts, together with any carrying charges thereon, shall be collected
no later than October 31, 2008. The Settling Parties recognize and agree that
both the amounts collected and the time over which such collections are
amortized are dependent upon when the collections commence and the amounts
ultimately due DOE, and that, therefore, specific levelization amounts cannot be
stated at this time. Maine Yankee and the Settling Parties agree that any
collections implemented under this paragraph (for amounts greater than $10
million) shall be at the greater of the following rates: (1) $10 million per
year or (2) the annual amortization amount required to replenish the fund by
October 31, 2008. Maine Yankee will file a compliance filing with the Commission
detailing such amortization or payment schedule not later than sixty (60) days
after implementing any collections to replenish the Spent Fuel Disposal Trust
Fund under this paragraph.

(9)

DOE Litigation. [Omitted top Comply with Order No. 614.]

(10)

Filing for January 1, 2004 Effective Date; ISFSI Operation, Maintenance and
Termination Costs. [Omitted to Comply with Order No. 614.]

B.

Decommissioning Cost Collection Rates; Other Issues.

(1)

Decommissioning Cost Collection. [Omitted to Comply with Order No. 614.]

(2)

Estimates. [Omitted to Comply with Order No. 614.]

(3)

 Escalation Rate. [Omitted to Comply with Order No. 614.]

(4)

Texas Compact/State Planning Office Fund.

(A)

[Omitted to Comply with Order No. 614.]

(B)

[Agreement to Support Change in Maine State Legislation Omitted to Comply with
Order No. 614 - Referenced Legislation Enacted (See 1999 Me. Law C. 173).]

(C)

The Settling Parties recognize that Maine Yankee may ultimately be billed by the
State of Maine under existing law, 38 M.R.S.A. Section 545, for an assessment
for its proportionate share of Texas Compact costs. The Settling Parties further
agree that in

the event that Maine Yankee becomes obligated to pay the State for such costs,
Maine Yankee's ratepayers are solely responsible for those costs. The Settling
Parties agree, therefore, that Maine Yankee shall be entitled to recover from
ratepayers such amounts as may be necessary to pay for the Maine Yankee portion
of any Texas Compact assessment by the State of Maine. Such Texas Compact costs
will be billed to and recovered from Maine Yankee ratepayers as an Operations
and Maintenance expense pursuant to Maine Yankee's formula rate and no further
regulatory approvals for collection of such Texas Compact costs will be
required. Maine Yankee and the Settling Parties further agree that, in order to
smooth the rate impact of such Texas Compact costs, Maine Yankee shall amortize
such costs from the date they are incurred through October 31, 2008, together
with any carrying costs thereon.

(5)

Budget Incentives. Maine Yankee and the Settling Parties agree that budget
incentives, properly structured, can play an effective role in limiting
decommissioning and other shutdown-related expenditures, without impairing
safety. To provide such incentives to Maine Yankee's Board of Directors and
management, and to reduce the likelihood of future rate increases, Maine Yankee
and the Settling Parties agree to the following incentive terms and conditions.

(A)

For purposes of implementing an incentive-based settlement, Maine Yankee and the
Settling Parties agree that Maine Yankee's revised decommissioning and ISFSI
budget, through December 31, 2004, estimated in mid-1998 dollars, is $446.3
million ("Incentive Budget"). This amount includes the Stone & Webster DOC
contract (including ISFSI-related costs), and ENI annual incentive bonuses, but
excludes the ENI final incentive bonus and Operation and Maintenance costs for
the ISFSI commencing January 1, 2005, and also excludes decommissioning and
license termination costs for the ISFSI. The Incentive Budget also assumes that
such amount will be spent by December 31, 2004, and that all major
decommissioning activities will have been completed by that date, but excludes
costs associated with terminating any Nuclear Regulatory Commission ("NRC")
license required for spent fuel storage under either the wet or dry storage
option.

(B)

The Settling Parties agree that, subject to the terms and conditions set forth
below, if Maine Yankee is able to complete all major decommissioning and other
dismantlement of the plant for less than the Incentive Budget, Maine Yankee
shall be entitled to retain 10% of any net savings (after payment of all other
incentive fees or bonuses), with Maine Yankee's share of such savings capped at
$10 million, and with the balance of such net savings flowing through to the
benefit of ratepayers. The Settling Parties further agree that if Maine Yankee's
actual decommissioning costs exceed the Incentive Budget, Maine Yankee, subject
to the terms and conditions of this Part II-B(5), shall be required to fund 10%
of any such net overage (calculated after recovery by Maine Yankee of all other
damage or penalty payments from third parties, including Stone & Webster and
ENI), and 90% of such net overage shall be recovered from ratepayers (provided
such overages are prudently incurred), with Maine Yankee's share of such overage
capped at $10 million, and any additional prudently incurred overages shall be
for the full account of ratepayers. The foregoing incentive payments shall be
subject to a $10 million "bandwidth" around the $446.3 million Incentive Budget,
such that Maine Yankee's sharing in savings does not begin until costs are less
than $436.3 million and Maine Yankee's sharing in overages does not begin until
costs exceed $456.3 million.

(C)

Maine Yankee and the Settling Parties agree that Maine Yankee savings and Maine
Yankee overages, as the case may be, will not be subject to windfalls or force
majeure events. That is, any windfalls that lower the cost of decommissioning
below the Incentive Budget and that are beyond the control or direction of Maine
Yankee shall be deducted from the Incentive Budget, and the savings flowed
through to ratepayers, without Maine Yankee sharing in any such savings. For
purposes of this Part II-B(5): (1) any DOE recoveries that reduce the Incentive
Budget shall be considered windfalls and shall not entitle Maine Yankee to earn
any incentive payments pursuant to this Part II-B(5); and (2) in the event that
Maine Yankee, after the date of this Offer of Settlement, is able to negotiate a
reduction in the price of its contract with Stone & Webster to reflect
synergistic savings resulting from Stone & Webster providing similar services to
another utility, then such reduction in contract price shall not be considered a
windfall. Similarly, the Settling Parties agree that any force majeure events
(i.e., events that are beyond the control or direction of Maine Yankee) which
result in unexpected and unanticipated increases in the Incentive Budget shall
be flowed through for reimbursement by ratepayers, without Maine Yankee's
sharing in the cost of any such overages. Maine Yankee agrees that any
additional payments or sums received for re-powering of the site, or payments,
damages recovery or other funds received from DOE for so-called D&D Refunds,
shall not be treated as windfalls for purposes of this Part II-B(5) but shall be
utilized to reduce unamortized investment (in the case of re-powering of the
site) or unamortized fuel (in the case of D&D Refunds) and shall be flowed
through for the benefit of ratepayers.

(D)

In the event that decommissioning is completed at a cost below the $436.3
million savings target in Part II-B(5)(B), above, but the Generic Environmental
Impact Statement ("GEIS") total site dose for the project is exceeded, Maine
Yankee's net incentive provided in this Part 11-B(5) shall be reduced by 10%. In
the event that decommissioning is completed at a cost above the $456.3 million
overage target in Part II-B(5)(B), above, but the GEIS site dose is exceeded,
then Maine Yankee shall be required to pay to ratepayers $ 10,000 per person/rem
over the GEIS dose.

In the event that decommissioning is completed at a cost below the $436.3
million savings target in Part II-B(5)(B), but the Occupational Safety and
Health Administration lost time accident rate exceeds 2 per 200,000 hours of
work by all on-site personnel, then Maine Yankee's net incentive shall be
reduced by an additional 10%. In the event that decommissioning is completed at
a cost above the $456.3 million overage target in Part II-B(5)(B), above, but
the OSHA lost time accident rate exceeds 2 per 200,000 hours of work by all
on-site personnel, then Maine Yankee shall be required to pay to ratepayers
$25,000, and an additional $25,000 for each 50% increase in rate.

The reduction in incentive and the payment to ratepayers, as the case may be,
shall be decreased by the amount Maine Yankee is able to recover in any
penalties for such excess site dose or accident rate from third parties
(including Stone & Webster). In no event shall Maine Yankee's payments to
ratepayers under this paragraph (D), taken together with any overages funded by
Maine Yankee under Part II-B(5)(B), exceed a total of $10 million.

(E)

For purposes of this Part II-B(5), except as otherwise noted, all numbers shall
be calculated in mid-1998 dollars (unless, in the alternative, the Settling
Parties agree to nominal dollar calculations; for such purposes, the Incentive
Budget is $ 488.8 million, utilizing a 3.8% escalation rate). Reconciliation of
any amounts to, or to be paid by, Maine Yankee or ratepayers shall be calculated
within sixty (60) days of the NRC license termination or site release date (i,
e., the date the NRC approves license termination or release of the site
applicable to the balance of the plant site other than the ISFSI), regardless of
whether such date occurs before, on, or after December 31, 2004. The terms and
timing of flow-through of any such benefits or additional payments shall be
determined by the Commission pursuant to proceedings commenced by Maine Yankee,
and Maine Yankee shall commence such proceedings as promptly as possible after
calculating such reconciliation.

C.

Site Restoration Issues. [Omitted to Comply with Order No. 614.]

D.

Effective Date; Refunds.

(1)

This Offer of Settlement shall become effective the first day of the calendar
month immediately following Commission approval of the Offer of Settlement
("Effective Date") by final and non-appealable order.

(2)

[Refund Provision Omitted to Comply with Order No. 614.] Bills rendered under
the Power Contracts on and after the Effective Date shall reflect the 6.50%
allowed return on common equity, consistent with the terms and conditions of
this Offer of Settlement. [Compliance Report Provision Omitted to Comply with
Order No. 614.]

(3)

The rates established in Part II-A(7) & B(l) shall be reflected in Maine
Yankee's bills to its ratepayers commencing on the Effective Date. Maine Yankee
will not refund decommissioning amounts or estimated ISFSI costs collected in
excess of $33.6 million for the time period commencing January 15, 1998.
Instead, Maine Yankee shall credit ratepayers through an equal reduction in
future billings for such excess decommissioning and ISFSI cost collections that
occurred prior to the Effective Date. [Compliance Report Provision Omitted to
Comply with Order No. 614.]

(4)

[Refund and Compliance Report Provision Omitted to Comply with Order No. 614.]

Table 1 to 1998 Settlement

Agreement Docket ER98-570-000

MAINE YANKEE

Average Equity Balances

TABLE 1

Dollars in Thousands

Year

Amount @ 100%

[1998-2003 Omitted to Comply With Order No. 614.1

2004

52,056

2005

45,282

2006

38,582

2007

33,793

2008

21,160

IV.

 2004 SETTLEMENT AGREEMENT DOCKET NO. ER04-55-000

A.

Decommissioning and ISFSI Cost Collections and Replenishment of Spent Fuel
Trust.

(1)

Annual Collections. Maine Yankee and the Settling Parties agree that Maine
Yankee shall collect a total amount of approximately $27 million on an annual
basis, effective January 1, 2004, through October 31, 2008, for the estimated
costs associated with decommissioning, including long-term storage of spent fuel
through 2023. A schedule of annual collections by customer is provided at
Attachment A.

(2)

Estimates. For purposes of obtaining a schedule of ruling amounts under Section
468A of the Internal Revenue Code, the decommissioning cost estimate (including
ISFSI) for Maine Yankee assumed in this Offer of Settlement, in 2003 dollars, is
$ 752.2 million (consisting of $525.7 million of actual expenditures for the
period 1997-2003 in 2003 dollars assuming escalation of 3.25%, and projected
expenditures for 2004-2023 of $226.5 million in 2003 dollars), with Maine
Yankee's collections based on the following economic assumptions: (1) after tax
earned interest on accumulated fund amounts of 5.5% for the years 2004-2019,
3.0% for 2020, 2.8% for 2021, 2.5% for 2022 and 2.2% for 2023; (2) inflation
adjustment of 2.5% for 2004 with respect to ISFSI operations-related costs, and
0% for 2004 with respect to all other costs, (3) inflation adjustment of 3.06%
for 2005 with respect to ISFSI-related costs and 0% for 2005 with respect to all
other costs; (4) annual inflation adjustment of 3.25% for 2006-2023; (5) the
assumed method of decommissioning is the DECON method; and (6) the assumed year
in which substantial decommissioning costs were first incurred is 1998.

(3)

Escalation Rates. Maine Yankee and the Settling Parties agree that, for purposes
of this Offer of Settlement, the escalation rates are as set forth in clauses
(2), (3) and (4) of the preceding paragraph.

(4)

Replenishment of Spent Fuel Trust. As part of the 1998 Settlement Agreement in
Docket No. ER98-570-000 (the "1998 Settlement Agreement"), Maine Yankee and the
parties to that agreement agreed that the storage and disposal of spent nuclear
fuel and high-level waste, including Greater-Than-Class-C ("GTCC") waste, are
properly the responsibility of the U.S. Department of Energy ("DOE") and that
Maine Yankee would use its best efforts to recover all costs associated with
such storage and disposal from the DOE. Maine Yankee and the parties to the 1998
Settlement Agreement further agreed that a portion of the funds already held in
trust under Maine law for the express purpose of meeting Maine Yankee's DOE
pre-1983 spent fuel disposal obligation should be utilized to reduce rates to
current ratepayers. Accordingly, Maine Yankee and the Maine Agencies worked
together to effectuate a change in Maine law to, inter alia, allow Maine Yankee
to withdraw funds from the Spent Fuel Disposal Trust ("SFDT") Fund in order to
meet expenditures for ISFSI-related costs. Maine Yankee has been and is
withdrawing funds from the SFDT Fund for that purpose. The present estimate of
total withdrawals from the fund to meet expenditures to date and the projected
future ISFSI-related expenditures through the completion of physical
decommissioning in early 2005 is approximately $80.3 million.

The Settling Parties recognize that Maine Yankee ultimately may be liable to the
DOE for payment of the funds currently held in the SFDT Fund as well as the
funds that were withdrawn

for ISFSI-related expenditures. Maine Yankee and the Settling Parties agree
that, unless otherwise agreed to by the parties, Maine Yankee shall not seek to
collect amounts from ratepayers to replenish the SFDT Fund until November 1,
2008.

Maine Yankee will file a Section 205 proceeding prior to seeking to collect any
amounts to replenish the SFDT Fund and no later than August 1, 2008. The
Settling Parties agree that the only aspect of the Section 205 filing related to
replenishment of the SFDT Fund that may be challenged is the method of
collecting the funds, including the period over which they will be collected. At
least 90 days prior to the commencement of these proposed collections, Maine
Yankee will file updated information on the trust balances and collection
levels. During the 90-day period, Maine Yankee and the Settling Parties will
negotiate in good faith to agree upon a mutually acceptable method for
collecting the funds. If the Settling Parties and Maine Yankee are able to reach
a mutually acceptable solution, Maine Yankee will submit the Section 205 filing
incorporating that agreement. In determining the methodology for replenishing
the SFDT Fund, Maine Yankee and the Settling Parties agree to the following
principles: In no event shall the rate recovery period for replenishment of the
SFDT Fund be shorter than two years (unless otherwise agreed by the parties) nor
longer than a period commencing with the start of collections and ending with
the then most current official date when DOE says that it will begin performance
of its obligations to remove Maine Yankee's spent fuel; provided, however, in no
event shall the rate recovery period extend beyond December 31, 2013. By way of
example only, if the DOE is officially scheduled to begin performance in June
2010, and Maine Yankee commences collection of amounts to replenish the SFDT
Fund in November 2008, the period of collection shall not be less than two years
and thus would go through October 2010; if Maine Yankee commences collection of
such amounts in November 2008, but the official date for DOE performance is
revised to June 2012, the collection period shall be not less than two years and
not greater than three years, eight months. The foregoing limitation is intended
to place parameters around the future collection period for replenishment of the
SFDT Fund and is without prejudice to Maine Yankee's position that a two-year
recovery period is just and reasonable and in the public interest.

(5)

 DOE Litigation. The Settling Parties agree that to date Maine Yankee has used
its best efforts to secure DOE funding or reimbursement for storage and disposal
of spent nuclear fuel and high-level waste, including GTCC waste, through Maine
Yankee's current involvement in litigation with the DOE to recover costs
associated with the DOE's delay in taking possession of Maine Yankee's spent
nuclear fuel. Maine Yankee agrees to continue to pursue aggressively and to the
extent practical all remedies available against the DOE, including, without
limitation, orders requiring the DOE to assume its obligations and take prompt
possession of and title to Maine Yankee's spent nuclear fuel and high-level
waste, including GTCC waste; recovery of damages caused by the DOE's delay;
other remedy or remedies, legal, equitable or administrative; or reasonable
settlement of such claims. Maine Yankee further agrees that any funds recovered
from the DOE or any savings resulting from the DOE's performance of its
obligations shall flow through to the benefit of Maine Yankee's ratepayers, as
follows:

(i)

Maine Yankee will first apply the proceeds to pay any tax liabilities associated
with the damage award; and

(ii)

Maine Yankee will then deposit the remaining funds in the SFDT Fund up to the
amount necessary to replenish the Fund, with any excess amounts deposited in the
decommissioning trust fund.

Maine Yankee agrees to advise the Maine Agencies in advance of any potential
settlements with the DOE, and Maine Yankee will use its best efforts to assure
that any settlement discussions with the DOE can be concurrently disclosed to
the Maine Agencies without waiver of applicable rules of confidentiality and
privilege. Maine Yankee also agrees to advise the Settling Parties periodically
as to the status of pending litigation with the DOE and to meet with such Maine
Agencies and Settling Parties for these purposes at their request.

B.

Non-Decommissioning Issues.

(1)

Continuation of Certain 1998 Settlement Agreement Provisions. Unless modified by
this Offer of Settlement, all other terms and provisions in the 1998 Settlement
Agreement remain in full force and effect.

(2)

Off Site Storage of Spent Fuel. Maine Yankee and the Settling Parties agree that
the presence of spent fuel and GTCC waste onsite is a liability and that it is
in the interests of ratepayers and shareholders that the DOE take final
acceptance of and remove Maine Yankee's spent fuel and GTCC waste at the
earliest feasible date and with no reasonably avoidable delay. Maine Yankee and
the Settling Parties acknowledge that instead of storing Maine Yankee's spent
nuclear fuel and GTCC nuclear waste at the Maine Yankee site, it may be
preferable from a homeland security and economic standpoint to explore
opportunities to store that spent nuclear fuel and GTCC waste at a licensed
facility outside New England until the DOE takes action to fulfill its
obligation to dispose of the spent fuel and GTCC waste at a permanent geological
repository. Maine Yankee and the Settling Parties also acknowledge that the
monies identified in the 2003 Estimate for maintenance and security of the spent
nuclear fuel and GTCC waste while it is stored at the Maine Yankee site after
2005 could alternatively be spent to pay for temporary storage at a licensed
facility outside New England, including at currently existing nuclear waste
storage sites owned by DOE, if such a feasible opportunity exists. In order to
further this objective, Maine Yankee and the Settling Parties agree as follows:

(i)

Maine Yankee, to the extent practicable, will continue to work with Yankee
Atomic and Connecticut Yankee on steps to facilitate moving each company's spent
nuclear fuel to a licensed facility outside New England, and on regularly
briefing the parties on the status of these efforts;

(ii)

In conjunction with collaborative efforts with Yankee Atomic and Connecticut
Yankee, Maine Yankee will undertake reasonable efforts to persuade relevant
state and federal legislators to support moving Maine Yankee's spent nuclear
fuel to a site outside New England and will, if the Settling Parties agree and
if funding is assured, engage professional lobbyists to assist in this effort;

(iii)

Among other lobbying efforts, Maine Yankee will continue to undertake reasonable
efforts, separately or collaboratively with other shutdown nuclear plants, to
support legislation for federal funding to develop and build a transport cask
that can be used to transport Maine Yankee's spent nuclear fuel;

(iv)

Although transportation of spent nuclear fuel from the Maine Yankee site is the
contractual responsibility of DOE, Maine Yankee will undertake reasonable
efforts to work with the other shutdown nuclear plants in New England to
investigate the utilization of a transport cask or casks to transport spent
nuclear fuel from those plants, provided that Maine Yankee shall not be
obligated by this provision to procure a transport cask;

(v)

 Maine Yankee and the other interested Settling Parties will work cooperatively
to identify all potentially viable alternatives, i.e., opportunities that are
legal, licensed or licensable under international, federal, state and/or local
statutes and regulations, for temporary storage of Maine Yankee's spent nuclear
fuel and GTCC waste outside New England, including at existing DOE-owned nuclear
waste storage sites, until DOE takes the spent nuclear fuel and GTCC for
permanent disposal; to identify any obstacles to utilizing any such alternatives
as well as possible means for overcoming those obstacles; and to evaluate the
feasibility and cost-effectiveness of any such alternatives.

(vi)

Maine Yankee and interested Settling Parties agree to work cooperatively to
support all of the efforts described above;

(vii)

Maine Yankee will continue to make reasonable efforts, including litigation, to
secure DOE funding, reimbursement, or damages for costs of activities that Maine
Yankee undertakes in furtherance of the efforts described above;

(viii)

 Maine Yankee will not expand the ISFSI or use it for storage of any nuclear
materials except the nuclear materials, spent fuel, and GTCC waste associated
with Maine Yankee's operations, including decommissioning;

(ix)

Maine Yankee has no present intention to transfer ownership, possession, or
control of the ISFSI to a third party; however, should a reasonable opportunity
for transfer consistent with federal law arise, Maine Yankee agrees to give
ninety (90) days' notice to the Maine Agencies prior to any regulatory filing
related to such transfer. By stating this agreement, neither Maine Yankee nor
the Maine Agencies are expressing an opinion as to whether or not any transfer
is feasible. This paragraph is without prejudice to, and cannot be used as
precedent against, the position of Maine Yankee in any future transfer
proceeding as to any issues that might be raised, including without limitation
the extent of jurisdiction of any regulatory body over the transfer of Maine
Yankee's facilities, the standing of any particular person to intervene in such
proceedings, or the merits of any objections to the transfer;

(x)

Nothing in this Offer of Settlement shall require Maine Yankee to take any
action that may jeopardize its position that the DOE is responsible for the
permanent disposal of spent nuclear fuel and GTCC waste or its claim for
compensation for the costs it has incurred or will incur for the interim storage
and/or transportation of spent nuclear fuel and GTCC waste, including, without
limitation, costs of transport casks;

(xi)

Nothing in the foregoing shall prevent Maine Yankee from also considering and
agreeing to fuel storage options in other New England states besides Maine; and

(xii)

All costs associated with implementation of this Part II.B(2) are
"decommissioning expenses" recoverable as such from Maine Yankee's wholesale
purchasers under the power contracts, unless the DOE has funded those efforts,
and provided that Maine Yankee shall credit any subsequent reimbursement or
damages received from DOE in accordance with Section II-A(5).

(3)

State of Maine Assessments. Maine Yankee and the Settling Parties agree that
Maine Yankee will pay a fixed annual amount to cover all present and reasonably
foreseeable future State of Maine fees, costs, and assessments with respect to
Maine Yankee, whether currently legally obligated or not, including, without
limitation, costs associated with the State Nuclear Inspector, State Nuclear
Safety Advisor, security costs, regulatory oversight of groundwater monitoring,
the Advisory Committee on Radioactive Waste, rate case or Nuclear Regulatory
Commission interventions, Health Environmental Test Lab, low-level waste
program, State Planning Office costs, the Maine OPA and Maine PUC costs, Maine
Department of Human Services costs, Maine DEP staff fees, insurance fees, State
efforts to relocate nuclear fuel, and all other State of Maine assessments
associated with Maine Yankee.

The annual assessment will continue at the levels presently mandated by State of
Maine legislation as of the date of this Offer of Settlement and will continue
at such level until the date that is ninety (90) days following adjournment of
the 122nd Maine Legislature ("2005 Date"). This current annual assessment is
estimated to be approximately $830,000 per year. On the 2005 Date, which is
estimated to occur in September 2005, assuming that legislation described in
subparagraph 3(i) below is adopted, the assessment will decline to $360,000 plus
any amounts due the State for actual shipments of low-level waste. This
assessment will continue until September 1, 2008, when the assessment will
decline to $170,000 per year, plus any amounts due the State for actual
shipments of low-level waste, until such time as the spent fuel is removed from
the plant or otherwise transferred to the DOE.

Maine Yankee and the Settling Parties agree and understand that the cost of the
actual groundwater monitoring and testing, other than the oversight or sample
analysis costs incurred by the State, shall not be part of the above-described
assessment but will be paid by Maine Yankee and not the State. Maine Yankee and
the Settling Parties agree that the costs Maine Yankee shall pay directly for
actual radiological groundwater monitoring and testing shall not exceed $500,000
in total, based on Maine Yankee's estimate of costs. Maine Yankee and the Maine
Department of Environmental Protection have agreed on the protocols that will be
followed by Maine Yankee for such monitoring and testing (attached and
incorporated hereto as Attachment C) and that in no event shall the costs
required to satisfy such protocols exceed Maine Yankee's estimate of $500,000 in
total except in the event the monitoring and testing results show
above-background dose equivalents for a given well in excess of 2 mrem/yr, based
on a 5-year monitoring and sampling plan and calculated on a well-by-well basis,
in which case Maine Yankee and the State will use best efforts to agree on
protocols and cost responsibility for further monitoring of the well. The Maine
Agencies acknowledge that the Maine Department of Environmental Protection has
represented that Maine Yankee's achievement of monitoring and testing results at
or below

the 2 mrem/yr level described in the preceding sentence will satisfy all Maine
Yankee obligations under 38 M.R.S.A. Section 1455 (if any).

The Settling Parties also agree that all such assessments and groundwater
monitoring and testing amounts, as well as costs associated with RCRA
compliance, are included in the annual decommissioning collection level
described in Part II.A(1) and are valid decommissioning expenses and recoverable
from ratepayers.

(i)

Maine Yankee and the Settling Parties acknowledge that the initial assessment,
estimated to be $830,000, reflects the current level of State assessments with
respect to Maine Yankee. Maine Yankee and the Maine Agencies further acknowledge
and agree that, in order to achieve the reductions in State assessments as
described above, actions by the Maine Legislature to repeal (or not renew)
existing legislation will be necessary. Accordingly, Maine Yankee and the Maine
Agencies agree to use their best efforts to achieve the results intended by this
Paragraph (3) and shall cooperate in the presentation of and jointly support
legislation before the Maine Legislature to repeal (or not seek renewal) of the
following legislation:

(a)

For effectiveness ninety (90) days following adjournment of the 122nd Maine
Legislature:

(i) -

repeal of Title 22 MRSA §663, establishing the position of State Nuclear Safety
Inspector, provided that Maine Yankee will not object to legislative provisions
that extend the term of the position no longer than six months after the
effective date of the repeal legislation, if such extension does not affect the
assessments to Maine Yankee as set forth in this Offer of Settlement or require
Maine Yankee to retain staff or provide office space for the Inspector; and

(ii)

amendment of Title 22 MSRA §565-A, to eliminate the statutory levy for the
annual Health and Environmental Testing Laboratory fee;

(b)

For effectiveness as of September 1, 2008, repeal of Title 25 MRSA § 52, the
position of the State Nuclear Safety Advisor, and any associated oversight by
the Office of the Public Advocate.

(c)

For effectiveness as of June 30, 2006, as a result of the existing sunset
provisions with respect to Title 38 MRSA §1453-A(7), abolition of the Advisory
Committee on Radioactive Waste and Decommissioning; and

(ii)

Maine Yankee and the Maine Agencies agree to use their best efforts and act in
good faith to achieve the legislative changes contemplated in subparagraph (i)
above. In the event such legislation is not adopted or is adopted in a different
form or different amounts than outlined in this Paragraph (3), the Maine
Agencies agree to use their best efforts to limit State assessments to Maine
Yankee to no more than $360,000 annually for the period September 1, 2005,
through August 31,

2008, and $170,000 annually thereafter. The Settling Parties acknowledge and
agree that it is the intent of this paragraph and of this Offer of Settlement to
limit the total annual amounts paid by Maine Yankee to the State of Maine for
any purpose to the amounts specified in this Paragraph (3) and not to impose
double assessments on Maine Yankee. The Settling Parties further acknowledge and
agree that in the event the Maine Legislature does not adopt legislation of the
type and at the assessment levels contemplated in this Paragraph (3), or if new
legislation imposes additional assessments on Maine Yankee for purposes not
contemplated herein, then this Paragraph (3) shall have no force and effect,
provided, however, that Maine Yankee and the Maine Agencies will meet and use
their best efforts to renegotiate another series of assessments consistent with
then-existing legislation. The Maine Agencies represent that they have notified
and consulted with authorized representatives from the Governor's Office, the
Maine Department of Environmental Protection, the Maine Department of Human
Services, and other State agencies having oversight over Maine Yankee's
activities prior to execution of this Offer of Settlement and that such
representatives have indicated they are fully cognizant of and have not objected
to the provisions of this Paragraph (3).

(iii)

The State of Maine shall have the sole discretion to allocate the proceeds of
the annual assessments paid under this paragraph. The assessments shall be
invoiced by the State and paid quarterly by Maine Yankee, beginning with the
2005 Date.

(iv)

It is the intent of Maine Yankee and the Maine Agencies that the terms of this
Paragraph (3) are comprehensive and address any and all State assessments with
respect to Maine Yankee. To assure that all such assessments are addressed,
Maine Yankee and the Maine Agencies also agree to use their best efforts to
identify any other assessments not identified in this paragraph, evaluate the
continuing need for such other assessments and to support legislation to
eliminate any unnecessary assessments.

(4)

Decommissioning Trust Fund Administration. Maine Yankee agrees to give the Maine
Agencies annual briefings on the performance of the decommissioning trust fund.
Such briefings shall occur within 30 days of the date Maine Yankee receives its
year-end statement regarding the trust fund's performance and will cover, inter
alia, the fund's year-end balance, yearly performance, investment criteria, and
fees.

In the event that Maine Yankee is dissolved or enters bankruptcy without a
qualified successor under the provisions of the Decommissioning Trust Agreement,
pursuant to Section 4.02 of the Decommissioning Trust Agreement, Maine Yankee
will transfer its interests in the decommissioning fund to a duly authorized
Maine state agency to be determined by the State of Maine. Maine Yankee agrees
that it will not oppose any legislation that will allow a Maine state agency to
become authorized by applicable statutes or regulations to assume responsibility
for the decommissioning of nuclear facilities and, therefore, capable of
assuming Maine Yankee's responsibilities under the Decommissioning Trust
Agreement in the event of Maine Yankee's dissolution or bankruptcy without a
qualified successor. The Maine Agencies and Maine Yankee agree that nothing in
this paragraph is intended to displace, circumvent, or waive the application of
any laws, including the Federal Power Act or bankruptcy laws, governing the

Decommissioning Trust Fund or Maine Yankee's or any successor's rights and
responsibilities under the Decommissioning Trust Fund.

(5)

Earnings on Spent Fuel Disposal Trust. Effective January 1, 2004, Maine Yankee
will no longer credit net-of-tax earnings of the SFDT in its billing formula and
will instead credit income to the fund and may withdraw taxes from the fund.
Consistent with this treatment, Maine Yankee will not credit customers the
amount of deferred SFDT earnings not previously credited to cost of service as
of December 31, 2003.

(6)

Recovery of Basis in Land. The parties acknowledge and agree that the book value
of Maine Yankee's land as of the date of this Offer of Settlement is $652,269
for purposes of determining the gain on the sale, lease, or disposition of land
under Part II.A(2) of the 1998 Settlement Agreement.

(7)

Prudence of Prior Decommissioning Expenditures. Maine Yankee and the Maine
Agencies acknowledge that, as part of this proceeding, the Maine Agencies
conducted an extensive review and examination of Maine Yankee's decommissioning
operations and expenditures and that, as a result of this investigation, the
Maine Agencies have determined that Maine Yankee's decommissioning expenditures
through the date of this Offer of Settlement have been prudently incurred.

(8)

Formula Rate Specificity. The specification of the manner in which Maine Yankee
calculates its formula rates to its ratepayers is attached as Attachment B [See
Sheet Nos. 35- ].

Effective Date. This Offer of Settlement shall become effective the first day of
the calendar month immediately following Commission approval of the Offer of
Settlement ("Effective Date") by final and nonappealable order.

Refunds. The rates established in Attachment A shall be reflected in Maine
Yankee's bills to its ratepayers commencing on the Effective Date. Maine Yankee
will not refund decommissioning amounts or estimated ISFSI costs collected in
excess of $27 million on an annual basis for the time period commencing January
2, 2004, through the Effective Date. Instead, Maine Yankee shall credit
ratepayers through an equal reduction in future billings for such excess
decommissioning collections that occurred prior to the Effective Date. Maine
Yankee agrees to make a compliance filing with the Commission not later than
sixty (60) days after the Effective Date to reflect implementation of such
rates.

V.   FORMULA RATES

Schedule A

 

Page 1 of 3

In general, costs subject to formula rate treatment include amortization of
unrecovered assets, fuel expense, decommissioning collections, income taxes, and
operating income. The attached detailed schedules support the proposed billing
method. The major components of the formula rate treatment, which will be
provided for through the Cost of Service rates within the power contracts for
Maine Yankee Atomic Power Company are:

(a) Fuel

Fuel expense includes the Department of Energy (DOE) Decontamination and
Decommissioning Fund special assessment for domestic utilities assessed over a
15-year period beginning in 1992. This assessment is scheduled to be paid
annually each October, when invoiced by the DOE, and is amortized over the 12
month period including the month of payment. This assessment obligation is
expected to continue through 2007.

(b) Amortization of Unrecovered Assets

The remaining net investment in utility plant (excluding the book value of
land), fuel, and materials and supplies is classified as Net Unrecovered Assets.
Any salvage of unrecovered assets, less cost of removal, was credited to this
account through December 31, 2001. Effective January 1, 2002, as salvage
proceeds decreased and the activity became more related to decommissioning, the
proceeds were credited to decommissioning. The amortization of net unrecovered
assets is calculated on a straight-line basis over the remaining period ending
October, 2008 and credited to this account.

(c) Decommissioning Collections

Decommissioning collections represent billings to customers to fund the
Decommissioning Trust for the remaining estimated costs of decommissioning the
Maine Yankee plant. The decommissioning collections are billed on a
straight-line basis over the remaining period through October, 2008.

(d) Income Taxes

Income taxes are accounted for in accordance with federal, state and regulatory
regulations as they relate to the taxable income of the Company, including the
Decommissioning and Spent Fuel Trusts, which determine the charges and credits
to customers. Investment tax credits, which were previously deferred, are
amortized and credited to customers through the period October, 2008. The tax
effect of temporary differences (differences between the periods in which
transactions affect revenues and the periods in which they affect the
determination of income subject to tax) is accounted for in accordance with
current regulations. The Company recognizes adjustments to deferred income taxes
and a corresponding regulatory asset or liability to customers to reflect the
future revenues or reduction in revenues that will be required when the
temporary differences reverse and are recovered/(credited) in rates.

(e) Operating Income

Operating Income or Return on Investment is the sum of Return on Equity (ROE),
Debt Interest and Related Costs, Spent Fuel Interest and Other, Net.

•

ROE is calculated by using the approved ROE rate times the remaining balance of
equity as of the end of the prior month.

•

Debt Interest and Related Costs are the sum of the actual interest expense and
related costs associated with the issuance of short and long-term debt. These
costs are included in the Cost of Service as incurred, similar to the Operating
Expenses described in the above items (a) through (d); however, they are
included in the calculation of Operating Income. This simplified calculation
results in the same Cost of Service expense which was formerly calculated using
the weighted cost of capital to recover Debt Interest and Related Costs as a
component of Operating Income.

•

Spent Fuel Interest is the interest expense of the Prior Spent Fuel Obligation
to the DOE.

•

Other, Net is the sum of all other investment income, interest charges, related
income taxes, etc.

Schedule A

Page 3 of 3

1

2

Maine Yankee Atomic Power Company

Cost of Service

 

Reference

Schedule

3

Current Month

 

 

4

 

 

 

5

 

 

 

6

Operating Costs

 

 

 

 

 

 

 

 

7

    Operation Expenses:

 

 

 

 

 

 

 

 

8

         Fuel Expense

 

$

Sch. B Pg. 1

 

 

 

 

 

9

            Other Operation Expenses

 

 

Sch. B Pg. 1

 

 

 

 

 

10

Maintenance Expenses

 

 

Sch. B Pg. 2

 

 

 

 

 

11

Amortization of Unrecovered Assets

 

 

Sch. B Pg. 2

 

 

 

 

 

12

Decommissioning Collections

 

 

Sch. B Pg. 2

 

 

 

 

 

13

Taxes - Income

 

 

Sch. B Pg. 2

 

 

 

 

 

14

                       Total Operating Costs

Add Lines 8 thru 13

 

____________

 

 

 

 

 

15

Adjustment of Prior Month Billing

 

 

 

 

 

 

 

 

16

    Operating Expenses - Actual

 

 

Sch. B Pg. 3

 

 

 

 

 

17

    Operating Expenses As - Billed

 

 

Sch. B Pg. 3

 

 

 

 

 

18

     Total Adj of Prior Month Billing

Line 16 less Line 17

 

____________

 

 

 

 

 

19

Return on Investment

 

 

 

 

 

 

 

 

20

     Return on Equity

 

 

Sch. D Pg. 1

 

 

 

 

 

21

     Debt Interest & Related Costs

 

 

Sch. D Pg. 2

 

 

 

 

 

22

     Spent Fuel Interest

 

 

Sch. D Pg. 3

 

 

 

 

 

23

     Other, Net

 

 

Sch. D Pg. 4

 

 

 

 

 

24.

      Total Return On Investment

Add Lines 20 thru 23

 

____________

 

 

 

 

 

25

                 TOTAL COST OF SERVICE

Add Lines 14, 18 and 24

 

$____________

26 Note

27

Accounts listed on this schedule and all supporting schedules are subject to
change, without the need

28

to file pursuant to Section 205 of the Federal Power Act, due to renumbering or
redesignation by FERC;

29

and provided that the description of the costs included under any new account
number is not materially

30

different from the description of the costs which would have been included under
the account numbers

31

listed here.

Schedule B

Page 1 of 3

1

MAINE YANKEE ATOMIC POWER COMPANY

 

2

OPERATING COSTS BY

 

3

FERC ACCOUNT SERIES

 

4

Operating Costs

FERC Account

Title

Current Month

5

Fuel Expense

518

  Nuclear Fuel Expense

$  ___________

6

 

518

  DOE D&D Expense

 

7

 

 

(1)

$  ___________

8

   Total Fuel Expense

 

 

 

9

Other Operation Expenses

 

 

 

10

 

517

Supervision and Engineering

$

11

 

523

Electric Expense

 

12

 

524

Misc. Power Expenses

 

13

 

525

Rents

 

14

 

920

Admin. & Gen. Salaries

 

15

 

921

Office Supplies & Expenses

 

16

 

923

Outside Services Employed

 

17

 

924

Property Insurance

 

18

 

925

Injuries and Damages

 

19

 

926

Employee Pensions & Benefits

 

20

 

928

Regulatory Commission Exp.

 

21

 

930.1

Gen. Advertising Expenses

 

22

 

930.2

Miscellaneous General Expenses

 

23

 

931

Rents

 

24

 

 

 

   ___________

25

Total Other Operating Expenses

 

(2)

$  ___________

26

Note

27

Accounts listed on this schedule and all supporting schedules are subject to
change, without the need

27

to file pursuant to Section 205 of the Federal Power Act, due to renumbering or
redesignation by FERC;

28

and provided that the description of the costs included under any new account
number is not materially

28

different from the description of the costs which would have been included under
the account numbers

29

listed here.

30

In general, costs are charged to decommissioning; however, certain costs
incurred relating to the

31

pre-decommissioning liability continue to be charged to operations and included
in Schedule B.

32

Examples of these costs include: DOE D&D Assessment, Amortization of Unrecovered
Assets, Income

33

Taxes, etc.

34

(1) Deleted account(s):

35

408 - Taxes other than income taxes- nuclear fuel

36

419 - Allowance for other funds used during construction

37

432 - Allowance for borrowed funds used during construction

38

(2) Deleted account(s):

39

519 - Coolants and Water

40

520 - Steam expenses

41

521 – Steam from other sources

42

522 - Steam transfer - credit

43

922 – Admin. Exp. Transfer - Credit

44

929 – Duplicate Changes - Credit

45

933 – Transportation expenses

Schedule B

Page 2 of 3

1

MAINE YANKEE ATOMIC POWER COMPANY

 

2

OPERATING COSTS BY

 

3

FERC ACCOUNT SERIES

 

 

4

Maintenance Expense

 

 

Current Month

5

 

528

Supervision and Engineering

 

6

 

529

Structures

 

7

 

 

 

 

8

 

935

General Plant

$_____________

 

  Total Maintenance Expense

 

(1)

$______________

9

Amortization of Unrecovered Assets

 

 

 

10

 

403

Depreciation Expense-Plant

$

11

 

407-407.4

Amortization of Property Losses

 

12

 

 

Unrecovered Plant and

 

13

 

 

Regulatory Study Costs

______________

14

Total Amortization of Unrecovered Assets

 

(2)

$______________

15

Decommissioning Collections

 

 

 

16

 

403

Depreciation Expense-

 

17

 

 

Decommissioning

$

18

SFT Replenishment

 

 

 

19

 

403

ISFSI Related Expense-

$_____________

20

 

 

Decommissioning

$ ____________

21

  Total Decommissioning Collections

 

 

 

22

Taxes-Income

 

 

 

23

 

409.1

Local, State and Federal Income

$

24

 

 

Taxes Related to Operating Income

 

25

 

410 and 411.1

Deferred Local. State and Federal

 

26

 

 

Inc. Taxes Related to Oper. Income

 

27

 

41.4

Investment Tax Credit Adjustments

______________

28

 

 

Related to Operating Income

 

29

Total Taxes-Income

 

(3)

$                          

 

 

 

 

 

30

(1) Deleted account(s):

31

530 - Reactor plant

32

531 - Electric plant

33

532 - Miscellaneous nuclear plant

34

(2) Deleted account(s):

35

404 Amortization of Electric Plant

36

405 - Amortization of other electric plant

37

(3) Deleted account(s):

38

408.1 - All appropriate taxes assessed by special assessments by federal, state,
county, municipal or

39

other govt authorities, except income taxes and property taxes.

Schedule B

Page 3 of 3

1

Maine Yankee Atomic Power Company

2

Cost Of Service

3

Adjustment of Prior Month Billing

4

 

5

 

 

Prior Month

Prior Month

6

Operating Costs

 

Billing

Actual

7

    Operation Expenses:

 

$

$

8

        Fuel Expense

 

 

 

9

        Other Operation Expenses

 

 

 

10

     Maintenance Expenses

 

 

 

11

     Amortization of Unrecovered Assets

 

 

 

12

     Decommissioning Collections

 

 

 

13

Taxes - Income

 

______________

_____________

14

                     Total Operating Costs

Add Lines 8 thru 13

                      -

                  -

 

 

 

_____________

_____________

15

Adjustment of Prior Month

 

 

 

16

      Operating Expenses - Actual

 

 

 

17

      Operating Expenses As - Billed

 

 

 

18

      Total Adj of Prior Month Billing

Line 16 less Line 17

______________

_____________

 

 

 

                      -

                  -

19

Return on Investment

 

_____________

_____________

 

 

 

 

 

20

      Return on Equity

 

 

 

21

      Debt Interest & Related Costs

 

 

 

22

      Spent Fuel Interest

 

 

 

23

      Other, Net

 

 

 

 

 

 

______________

_____________

24

       Total Return On Investment

Add Lines 20 thru 23

                      -

                  -

 

 

 

_____________

_____________

25

                TOTAL COST OF SERVICE

Add Lines 14, 18 and 24

$_____________

$____________

Schedule C

Page 1 of 1

1

MAINE YANKEE ATOMIC POWER COMPANY

2

BILLING METHOD FOR

3

INCOME TAXES

4

Calculation of Composite State and Federal Income Tax Rate (2)

 

 

 

5

Start with Pretax at 100%

 

%

100.00

6

Current State Rate

 

(1)

8.93

7

State Taxes as A Percentage of Pretax Income

 

 

8.93

8

Income Subject to Federal Income Tax

Line 5 - Line 8

 

91.07

9

Current Federal Rate

 

(1)

34.00

10

Federal Taxes as A Percentage of Pretax Income

 

 

30.96

11

Combined Federal and State Income Tax Rate

Line 7 + Line 10

 

39.89

 

 

 

 

_________

12

Start with Pretax at 100%

 

%

100.00

13

Less the Combined Federal and State Income Tax Rate

 

 

39.89

14

Rate for Determining Required Net Income

 

%

60.11

 

 

 

 

 

15

Required Net Income Calculation. Example (2)

 

 

_________

 

 

 

 

 

16

Net Income Required

 

$

100.00

17

Divided by One Minus the Combined Rate

Line 14

%

60.11

18

Equals Grossed Up Income

 

$

166.36

19

Combined Federal and State Income Tax Rate

Line 11

%

39.89

20

Combined Federal and State Income Tax Dollars

 

$

66.36

21

Net Income Required

Line 18 - Line 20

 

100.00

 

 

 

 

_________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

Notes

 

23

(1)

Changes in the applicable tax rates are to be reflected in the actual
calculations.

 

 

 

24

(2)

The Calculation of State and Federal Income Taxes for Operating Costs is based
upon the above

25

 

billing methods. Actual calculations vary based upon unique circumstances such
as, certain

26

 

items are taxable for Federal and State, others just for Federal, others just
for State, etc.

Schedule D

Page 1 of 4

1

MAINE YANKEE ATOMIC POWER COMPANY

2

RETURN ON INVESTMENT

3

RETURN OF EQUITY CALCULATED

4

RETURN ON INVESTMENT

FERC Account

(2)

Title

(1)

Prior  Month

 

 

 

 

 

 

 

5

Equity

201

 

Common Stock Issued

$

 

6

 

210

 

Gain on Cancellation of Preferred Stock

 

 

7

 

 

 

 

 

 

8

 

211

 

Misc. Paid in Capital

 

 

9

 

216

 

Retained Earnings

 

_________

10

Total Equity Investment

 

(3)

 

 

$

 

 

 

 

 

 

 

11

Authorized Rate of

Not

 

 

 

 

12

Return on Equity

Applicable

 

Per FERC Order

%

________

13

 

 

 

Docket ER98-570-000

 

 

 

 

 

 

 

 

 

14

Total Current Month Return On Equity

 

 

Line 10 X Line 12 / 12

$

_________

15

Notes

 

16

(1)

Prior month equity balances are used to determine the current month return.

 

 

 

17

(2)

Accounts listed on this schedule and all supporting schedules are subject to
change, without the need

18

 

to file pursuant to Section 205 of the Federal Power Act, due to renumbering or
redesignation by FERC;

19

 

and provided that the description of the costs included under any new account
number is not materially

20

 

different from the description of the costs which would have been included under
the account numbers

21

 

listed here.

22

 

Not to exceed the equity balances for each year provided in Table 1 to the
Settlement Agreement in

23

 

Docket ER98-570-000; see now Revised FERC Rate Schedule 1, page 24.)

 

 

 

24

(3)

Deleted account(s):

25

 

204- Preferred Stock Issued

26

 

207 – Premium on Capital Stock

27

 

217- Reacquired Capital Stock

Schedule D

Page 2 of 4

1

MAINE YANKEE ATOMIC POWER COMPANY'

2

RETURN ON INVESTMENT

3

DEBT INTEREST AND RELATED COSTS (1)

4

Return on Investment

 

 

 

 

5

Debt Interest

FERC Account

Title

 

Current Month

6

Interest Expense - - LT Debt

 

 

 

 

7

 

427

Interest Expense - LT Debt

$

 

8

Interest Expense - ST Debt

 

 

 

 

9

 

431

Interest Expense - ST Debt

 

 

10

Debt Expense

 

 

 

 

 

 

428

Debt Expense Amortization

 

 

11

 

428.1

Amortization of Loss on

 

 

12

 

 

Reacquired Debt

 

 

13

 

 

 

 

 

 

 

 

 

 

 

14

Total Debt Interest & Related Costs

 

 

 

 

 

 

 

 

$

_________

15

Note

16

(1) Debt Interest and Related Costs are included in the Cost of Service as
actual expenses incurred

17

to be billed to customers just as other Operating Costs as shown in Attachment
A, Schedule A Page

18

3 of 3. However, they are reported under Return on Investment.

Schedule D

Page 3 of 4

1

MAINE YANKEE ATOMIC POWER COMPANY'

2

RETURN ON INVESTMENT

3

SPENT FUEL INTEREST)

4

Return on Investment

 

 

 

 

5

Spent Fuel Interest, FERC Account

 

Title

 

Current Month

6

Spent Fuel Obligation Interest Expense

 

 

 

 

7

 

 

Interest Expense

$

 

8

431

 

 

 

 

9

Spent Fuel Interest, Net

 

 

 

____________

 

 

 

 

 

$___________

Schedule D

Page 4 of 4

1

MAINE YANKEE ATOMIC POWER COMPANY'

2

RETURN ON INVESTMENT

3

OTHER, NET)

4

Return on Investment

 

 

 

 

5

  Other -  Net

FERC Account

Title

 

Current Month

 

 

 

 

 

 

6

Other Income

 

 

 

 

7

 

419

Interest & Dividend Income

$

(                  )

8

 

411.6

Gains from Disposition of

Utility Plant

 

 

9

 

 

 

 

__________

10

Total Other Income

 

 

 

$(__________)

 

 

 

 

 

 

11

Other Expense

 

 

 

 

12

 

427-431

Interest Expense and

$

 

13

 

 

Related Costs

 

 

 

 

 

 

 

 

14

 

408.2

(1) Taxes Other Than Income Taxes

 

 

15

 

 

Which Relate To Non – Utility

 

 

16

 

 

Operating Income

 

 

 

 

 

 

 

 

17

 

409.2

(1) Local, State and Federal Income

 

 

18

 

 

Taxes Related to Non-Operating

 

 

19

 

 

Income

 

 

 

 

 

 

 

 

20

 

410.2 & 411.2

(1) Deferred Local, State and Federal

 

 

21

 

 

Income Taxes Related to Non

 

 

22

 

 

Operating Income

 

__________

23

Total Other Expense

 

 

 

$_________

 

 

 

 

 

 

24

Total Return on Investment - Other, Net

 

Line 10 + Line 23

 

$_________

25

Note

26

To the extent that the tax relates to Other Income and Expense, taxes are
included in the cost of service.

-----------------------------------------------------------------------------------------------------

<FN>

<FN1>  Effective May 1, 2000, Montaup Electric Company (Montaup) merged with and
into New England Power Company, and thereby became successor in interest to
Montaup's rights, interests and obligations.

</FN>

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