UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 
 Washington,
        D. C. 20549
 
 
 FORM
        10-Q
 
 xQUARTERLY
        REPORT
        PURSUANT TO SECTION 13 or 15(d) OF THE
 
 SECURITIES
        EXCHANGE ACT OF 1934
 
 FOR
        THE
        QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
 
 -
        OR
        -
 
 oTRANSITION
        REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE
 
 SECURITIES
        EXCHANGE ACT OF 1934
 
 
 Commission
        File No. 333-103749
 
 MAINE
        & MARITIMES CORPORATION
 
 A
        Maine
        Corporation
 
 I.R.S.
        Employer Identification No. 30-0155348
 
 209
        STATE
        STREET, PRESQUE ISLE, MAINE 04769
 
 (207)
        760-2499
 
 
 Indicate
        by check mark whether the registrant (1) has filed all reports
 required
        to be filed by Section 13 or 15(d) of the Securities Exchange Act
        of
 1934
        during the preceding 12 months (or for such shorter period that the
 registrant
        was required to file such reports), and (2) has been subject to
        such
 filing
        requirements for the past 90 days. Yes x. No o .
 
 Indicate
        by check mark whether the registrant is an accelerated filer (as
 defined
        in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o .
        No
x .
 
 Indicate
        by check mark whether the registrant is a shell company (as
 defined
        in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o .
        No
x .
 
 Indicate
        the number of shares outstanding of each of the issuer's classes
 of
        common
        stock, as of the close of the period covered by this report.
 
 Common
        Stock, $7.00 par value - 1,636,437 shares
 
  
 1
  **Glossary
                of
                Terms**AMEX
              American
                  Stock ExchangeBHE
              Bangor
                  Hydro-Electric CompanyCES
              Competitive
                  Energy SupplierCMLTD
              Current
                  Maturities Long-Term DebtEA
              Energy
                  Atlantic, LLCEastcan
              Eastcan
                  Consulting EngineersFAME
              Finance
                  Authority of MaineFAS
              Financial
                  Accounting StandardsFASB
              Financial
                  Accounting Standards BoardFERC
              Federal
                  Energy Regulatory CommissionFIN
              FASB
                  Interpretation NumberLEED
              Leadership
                  in Energy and Environmental DesignLIBOR
              London
                  InterBank Offering RateLOC
              Letter
                  of CreditMAM
              Maine
                  & Maritimes CorporationM&R
              Morris
                  & Richards Consulting EngineersMe&NB
              Maine
                  & New Brunswick Electrical Power Company, LtdMEPCO
              Maine
                  Electric Power Company, Inc.MPS
              Maine
                  Public Service CompanyMPUC
              Maine
                  Public Utilities CommissionMPUFB
              Maine
                  Public Utility Financing BankMTI
              Maricor
                  Technologies, Inc.MW
              MegawattMWH
              Megawatt
                  hourNMISA
              Northern
                  Maine Independent System AdministratorNUG
              Non-Utility
                  GeneratorOATT
              Open
                  Access Transmission TariffPCB
              Poly
                  Chlorinated Bi-phenolPPA
              Power
                  Purchase AgreementPURPA
              Public
                  Utilities Regulatory Policy ActRES
              RES
                  Engineering, Inc.SFAS
              Statement
                  of Financial Accounting StandardsSOS
              Standard
                  Offer ServiceSWA
              Steven
                  Winter Associates, Inc.TMG
              The
                  Maricor GroupWPS-PDI
              WPS-Power
                  Development, Inc.TMGNE
              The
                  Maricor Group, New EnglandWS
              Wheelabrator-Sherman
  2
 
 **PART
        1. FINANCIAL INFORMATION**
 
 ***Item
        1. Financial Statements***
 
 This
        item
        contains Consolidated Financial Statements for Maine & Maritimes Corporation
        ("MAM" or the "Company") and its Subsidiaries, including (1) an unaudited
        statement of consolidated operations for the quarter and nine months ended
        September 30, 2005, and for the corresponding periods of the preceding year;
        (2)
        an unaudited consolidated balance sheet as of September 30, 2005; (3) an
        audited
        consolidated balance sheet as of December 31, 2004, the end of MAM’s preceding
        fiscal year; (4) an unaudited statement of consolidated cash flows for the
        period January 1 (beginning of the fiscal year) through September 30, 2005,
        and
        for the corresponding period of the preceding year; and (5) an unaudited
        statement of consolidated shareholders’ equity for the period January 1
        (beginning of the fiscal year) through September 30, 2005.
 
 In
        the
        opinion of Management, the accompanying unaudited consolidated financial
        statements present fairly the financial position of the Company and its
        Subsidiaries at September 30, 2005, and December 31, 2004; the results of
        their
        operations for the three and nine months ended September 30, 2005 and 2004;
        and
        their cash flows for the nine months ended September 30, 2005, and
        2004.
 
 **MAM
        is the parent holding company for the following wholly-owned subsidiaries:**
  1.
              Maine
                  Public Service Company (“MPS”) and its wholly-owned inactive Canadian
                  subsidiary Maine & New Brunswick Electrical Power Company, Ltd
                  (“Me&NB”);
  2.
              Energy
                  Atlantic, LLC (“EA”), an inactive subsidiary;
  3.
              The
                  Maricor Group (“TMG”, formerly known as Maine & Maritimes Energy
                  Services) and its wholly-owned United States subsidiary The Maricor
                  Group,
                  New England (“TMGNE”, formerly known as RES Engineering, Inc.) and TMG’s
                  wholly-owned Canadian subsidiary The Maricor Group, Canada Ltd
                  (“The
                  Maricor Group, Canada,” formerly Maricor Ltd);
  4.
              Maricor
                  Properties Ltd, (“Maricor Properties”), a Canadian subsidiary and its
                  wholly-owned Canadian subsidiaries, Cornwallis Court Developments
                  Ltd and
                  Mecel Properties Ltd (“Mecel”), as well as a 50% owner of Maricor Ashford
                  Ltd;
  5.
              Maricor
                  Technologies, Inc. (“MTI”), a U.S. wholly-owned subsidiary.
 
 ***Maine
        & Maritimes Corporation and Subsidiaries***
 
 *
          Maricor
          Ashford Ltd is owned 50% by Maricor Properties Ltd
  3
  **General
          Descriptions of the Parent Company and its Subsidiaries:**
  •
                Maine
                    & Maritimes Corporation is the ultimate parent holding company
                    for all
                    business segments. MAM maintains investments in (a) a regulated
                    electric
                    transmission and distribution utility operating within the State
                    of Maine,
                    United States of America, (b) mechanical, electrical and plumbing/fire
                    protection engineering, facility asset lifecycle management,
                    energy
                    efficiency, and asset development companies within the United
                    States and
                    Canada, (c) real estate investment and development companies
                    in Canada,
                    and (d) a facilities asset lifecycle management and sustainability
                    software development company in the United States. MAM is headquartered
                    in
                    Presque Isle, Maine.
  •
                Maine
                    Public Service Company (“MPS”) is a regulated electric transmission and
                    distribution utility serving all of Aroostook County and a portion
                    of
                    Penobscot County in northern Maine. It does not provide electric
                    supply to
                    consumers, but rather provides the transportation through its
                    transmission
                    and distribution wires infrastructure. The utility is regulated
                    by the
                    Federal Energy Regulatory Commission (“FERC”) and the Maine Public
                    Utilities Commission (“MPUC”). MPS is headquartered in Presque Isle,
                    Maine.
  •
                Maine
                    & New Brunswick Electrical Power Company, Ltd is an inactive Canadian
                    subsidiary of MPS, which, prior to deregulation and generation
                    divestiture, owned MPS’s Canadian electric generation assets.
  •
                Energy
                    Atlantic, LLC is a licensed, but currently inactive, Competitive
                    Energy
                    Supplier (“CES”) of retail electricity and formerly competed for electric
                    supply customers within the northern and southern regions of
                    the State of
                    Maine. EA is classified as a discontinued operation.
  •
                The
                    Maricor Group is an energy asset development and mechanical,
                    electrical
                    and plumbing/fire protection engineering consulting firm providing
                    energy
                    efficiency, facilities lifecycle asset management, facility condition
                    assessment, fee-for-service engineering design and emissions
                    reduction
                    services focusing on sustainability and Leadership in Energy
                    and
                    Environmental Design (“LEED”). The Maricor Group operates primarily within
                    the New England region of the United States and the eastern Canadian
                    provinces, particularly Atlantic Canada. Its energy asset development
                    activities include efforts to plan, develop, own and/or operate
                    customer-hosted energy assets (sometimes referred to as “inside the fence”
                    energy assets), such as central utility and co-generation plants.
                    It is
                    not engaged in development of merchant generation assets nor
                    energy
                    trading. The Maricor Group is headquartered in Presque Isle,
                    Maine with
                    offices in Portland, Maine; Boston, Massachusetts; Moncton and
                    Saint John,
                    New Brunswick; and Halifax, Nova Scotia.
  •
                The
                    Maricor Group, New England (formerly known as RES Engineering,
                    Inc.) is a
                    mechanical and electrical engineering subsidiary of The Maricor
                    Group with
                    offices in Boston and Hudson, Massachusetts, offering the services
                    of The
                    Maricor Group within New England, particularly the Commonwealth
                    of
                    Massachusetts and the greater Boston area.
  •
                The
                    Maricor Group, Canada Ltd is the Canadian subsidiary of The Maricor
                    Group
                    offering its parent company’s defined services primarily within the
                    eastern Canadian provinces, particularly Atlantic Canada. Headquartered
                    in
                    Moncton, New Brunswick, it maintains offices in Saint John, New
                    Brunswick,
                    as well as Halifax, Nova Scotia.
  •
                Maricor
                    Properties Ltd is a Canadian real estate development, redevelopment
                    and
                    investment company focused on sustainable development and “smart growth”
                    principles within second and third tier Canadian markets emphasizing
                    the
                    development and revitalization of downtowns and existing suburbs.
                    It seeks
                    to develop or invest in public and private facility projects
                    involving the
                    renewal or development of building infrastructure within revitalization
                    districts promoting renewal of existing areas, thus negating
                    the need for
                    extension of additional infrastructure and promotion of sprawl.
                    It
                    utilizes the services of The Maricor Group in its development
                    and
                    redevelopment projects. Maricor Properties Ltd was organized
                    on May 28,
                    2004, in Nova Scotia, Canada.
  •
                Mecel
                    Properties Ltd is a Canadian subsidiary of Maricor Properties
                    Ltd and
                    currently owns the office building housing the Halifax, Nova
                    Scotia
                    operating division of The Maricor Group, Canada Ltd.
  •
                Maricor
                    Ashord Ltd is a joint venture real estate development/redevelopment
                    company owned in equal shares by Maricor Properties Ltd and Ashford
                    Investments, Inc., an unaffiliated real estate management company
                    based in
                    Moncton, New Brunswick, Canada, operating primarily within New
                    Brunswick
                    and Nova Scotia, Canada.
  •
                Cornwallis
                    Court Developments, Ltd. (“Cornwallis”) is a wholly-owned Canadian
                    subsidiary of Maricor Properties, acquired on October 7, 2005.Cornwallis
                    currently owns and operates the J. Angus MacDonald Building located
                    in
                    Halifax, Nova Scotia, Canada.
  4
  •
                Maricor
                    Technologies, Inc., formed on February 14, 2005, is a software
                    technology
                    firm that develops and maintains information-based technologies,
                    which
                    support lifecycle asset management and capital budget planning
                    with an
                    increasing emphasis on capital performance management and asset
                    governance. On February 14, 2005, it purchased, through a three-way
                    transaction, the “Strategic Asset Management” software technology assets
                    of Delinea Corporation of Dallas, Texas, which were formerly
                    owned by
                    HCI Systems. The Maricor Group utilizes the software in the delivery
                    of its lifecycle asset management services and will market its
                    products
                    throughout North America. Maricor Technologies is headquartered
                    in Presque
                    Isle, Maine, with an office in Portland, Maine.
   5
  **MAINE
          & MARITIMES CORPORATION AND SUBSIDIARIES**
 **Statements
          of Consolidated Operations** (Unaudited)
 
 ***(In
                    thousands of dollars except shares and per share amounts)***
                
                **Three
                    Months Ended**
                  **September
                    30,**
                
                **Nine
                    Months Ended**
                  **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004****Operating
                    Revenues**Regulated
                
                $
                7,445
                
                $
                7,215
                
                $
                24,833
                
                $
                24,305Unregulated
                
                
                1,322
                
                
                1,284
                
                
                4,164
                
                
                2,199**Total
                    Revenues**
                
                
                8,767
                
                
                8,499
                
                
                28,997
                
                
                26,504**Operating
                    Expenses**Regulated
                    Operation & Maintenance
                
                
                3,682
                
                
                3,452
                
                
                10,786
                
                
                10,161Unregulated
                    Operation & Maintenance
                
                
                2,251
                
                
                1,608
                
                
                6,257
                
                
                3,017Depreciation
                
                
                718
                
                
                673
                
                
                2,141
                
                
                1,963Amortization
                    of Stranded Costs
                
                
                2,584
                
                
                2,458
                
                
                7,732
                
                
                7,105Amortization
                
                
                91
                
                
                37
                
                
                321
                
                
                75Taxes
                    Other Than Income
                
                
                428
                
                
                431
                
                
                1,356
                
                
                1,228Provision
                    for Income Taxes—Regulated
                
                
                38
                
                
                38
                
                
                1,031
                
                
                1,245Benefit
                    of Income Taxes—Unregulated
                
                
                (447
                )
                
                (116
                )
                
                (1,032
                )
                
                (340
                )**Total
                    Operating Expenses**
                
                
                9,345
                
                
                8,581
                
                
                28,592
                
                
                24,454**Operating
                    (Loss) Income**
                
                
                (578
                )
                
                (82
                )
                
                405
                
                
                2,050**Other
                    Income (Deductions)**Equity
                    in Income of Associated Companies
                
                
                45
                
                
                54
                
                
                133
                
                
                158Interest
                    Income
                
                
                —
                
                
                —
                
                
                13
                
                
                15Allowance
                    for Equity Funds Used During Construction
                
                
                7
                
                
                14
                
                
                16
                
                
                29Benefit
                    of (Provision for) Income Taxes
                
                
                1
                
                
                (30
                )
                
                —
                
                
                (32
                )Other—Net
                
                
                (55
                )
                
                (123
                )
                
                (55
                )
                
                (259
                )**Total**
                
                
                (2
                )
                
                (85
                )
                
                107
                
                
                (89
                )**(Loss)
                    Income Before Interest Charges**
                
                
                (580
                )
                
                (167
                )
                
                512
                
                
                1,961**Interest
                    Charges**Long-Term
                    Debt and Notes Payable
                
                
                709
                
                
                590
                
                
                2,021
                
                
                1,720Less
                    Stranded Costs Carrying Charge
                
                
                (361
                )
                
                (328
                )
                
                (1,052
                )
                
                (963
                )Less
                    Allowance for Borrowed Funds Used During Construction
                
                
                (2
                )
                
                (5
                )
                
                (5
                )
                
                (10
                )**Total**
                
                
                346
                
                
                257
                
                
                964
                
                
                747**Net
                    (Loss) Income from Continuing Operations**
                
                
                (926
                )
                
                (424
                )
                
                (452
                )
                
                1,214**Discontinued
                    Operations****(Loss)
                    Income from Discontinued Operations**
                
                
                (3
                )
                
                (16
                )
                
                5
                
                
                (684
                )**Income
                    Tax Benefit (Provision)**
                
                
                3
                
                
                8
                
                
                —
                
                
                271**(Loss)
                    Income from Discontinued Operations**
                
                
                —
                
                
                (8
                )
                
                5
                
                
                (413
                )**Net
                    (Loss) Income Available for Common Stockholders**
                
                $
                (926
                )
                $
                (432
                )
                $
                (447
                )
                $
                801**Average
                    Shares of Common Stock Outstanding**
                
                
                1,636,437
                
                
                1,635,429
                
                
                1,636,170
                
                
                1,605,044**Basic
                    (Loss) Earnings Per Share of Common Stock From Continuing
                    Operations**
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.75**Basic
                    Loss Per Share of Common Stock From Discontinued
                    Operations**
                
                
                —
                
                
                —
                
                
                —
                
                
                (0.25
                )**Basic
                    (Loss) Earnings Per Share of Common Stock From Net
                    Income**
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.50**Diluted
                    (Loss) Earnings Per Share of Common Stock From Continuing
                    Operations**
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.75**Diluted
                    Loss Per Share of Common Stock From Discontinued
                    Operations**
                
                
                —
                
                
                —
                
                
                —
                
                
                (0.25
                )**Diluted
                    (Loss) Earnings Per Share of Common Stock From Net
                    Income**
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.50
  See
          Notes
          to Consolidated Financial Statements
  6
  **MAINE
          & MARITIMES CORPORATION AND SUBSIDIARIES**
 **Statements
          of Consolidated Cash Flows** (Unaudited)
  **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004****Cash
                    Flow From Operating Activities**Net
                    (Loss) Income
                
                $
                (447
                )
                $
                801Adjustments
                    to Reconcile Net (Loss) Income to Net Cash Provided by
                    Operations:Depreciation
                
                
                2,141
                
                
                1,963Amortization
                
                
                1,113
                
                
                950Deferred
                    Income Taxes—Net
                
                
                1,518
                
                
                993Loss
                    on Disposal of Fixed Assets
                
                
                —
                
                
                69Change
                    in Deferred Regulatory and Debt Issuance Costs
                
                
                (2,685
                )
                
                (3,699
                )Amortization
                    of W/S Upfront Payment
                
                
                1,123
                
                
                1,088Change
                    in Benefit Obligations
                
                
                95
                
                
                763Change
                    in Current Assets and Liabilities:Accounts
                    Receivable and Unbilled Revenue
                
                
                1,637
                
                
                1,520Other
                    Current Assets
                
                
                (544
                )
                
                4Accounts
                    Payable
                
                
                368
                
                
                (472
                )Other
                    Current Liabilities
                
                
                (366
                )
                
                164Other—Net
                
                
                (328
                )
                
                (441
                )**Net
                    Cash Flow Provided By Operating Activities**
                
                
                3,625
                
                
                3,703**Cash
                    Flow From Financing Activities**Dividend
                    Payments
                
                
                (1,227
                )
                
                (1,834
                )Retirements
                    of Long-Term Debt
                
                
                (1,240
                )
                
                (705
                )Additions
                    to Long-Term Debt
                
                
                —
                
                
                3,550Short-Term
                    Borrowings, Net
                
                
                2,887
                
                
                2,140**Net
                    Cash Provided By Financing Activities**
                
                
                420
                
                
                3,151**Cash
                    Flow From Investing Activities**Stock
                    Redemption from Associated Company
                
                
                350
                
                
                200Acquisitions,
                    Net of Cash Acquired
                
                
                (55
                )
                
                (3,529
                )Change
                    in Restricted Investments
                
                
                —
                
                
                (600
                )Investment
                    in Fixed Assets
                
                
                (4,977
                )
                
                (6,223
                )**Net
                    Cash Flow Used For Investing Activities**
                
                
                (4,682
                )
                
                (10,152
                )**Decrease
                    in Cash and Cash Equivalents**
                
                
                (637
                )
                
                (3,298
                )**Cash
                    and Cash Equivalents at Beginning of Period**
                
                
                1,193
                
                
                4,344**Cash
                    and Cash Equivalents at End of Period**
                
                $
                556
                
                $
                1,046**Supplemental
                    Disclosure of Cash Flow Information:****Cash
                    Paid (Received) During the Period for:**Interest
                
                $
                2,004
                
                $
                1,560Income
                    Taxes
                
                $
                4
                
                $
                (4
                )**Non-Cash
                    Investing Activities:**Value
                    of Preferred Stock Issued for Acquisition
                
                $
                950
                
                $
                —Value
                    of Common Stock Issued for Acquisition
                
                $
                —
                
                $
                1,677
  See
          Notes
          to Consolidated Financial Statements
  7
  **MAINE
          & MARITIMES CORPORATION AND SUBSIDIARIES**
 **Consolidated
          Balance Sheets** (Unaudited)
  **September
                    30,**
                
                **December
                    31,*****(In
                    thousands of dollars)***
                
                **2005**
                
                **2004****ASSETS****Plant:**Electric
                    Plant in Service
                
                $
                97,553
                
                $
                96,309Non-Utility
                    Plant
                
                
                4,822
                
                
                3,500Less
                    Accumulated Depreciation
                
                
                (41,606
                )
                
                (39,713
                )Net
                    Plant in Service
                
                
                60,769
                
                
                60,096Construction
                    Work-in-Progress
                
                
                3,254
                
                
                1,021Total
                
                
                64,023
                
                
                61,117**Investment
                    in Associated Companies**
                
                
                2,110
                
                
                2,383**Net
                    Plant and Investments in Associated Companies**
                
                
                66,133
                
                
                63,500**Current
                    Assets:**Cash
                    and Cash Equivalents
                
                
                556
                
                
                1,193Accounts
                    Receivable (less allowance for uncollectible accounts of $676
                    in 2005 and
                    $236 in 2004)
                
                
                5,845
                
                
                7,746Unbilled
                    Utility Revenue
                
                
                671
                
                
                1,044Inventory
                
                
                584
                
                
                604Prepaid
                    and Refundable Income Taxes
                
                
                1,342
                
                
                863Prepayments
                
                
                553
                
                
                469Unbilled
                    Contract Revenue
                
                
                1,036
                
                
                399Total
                
                
                10,587
                
                
                12,318**Regulatory
                    Assets:**Uncollected
                    Maine Yankee Decommissioning Costs
                
                
                11,907
                
                
                14,148Recoverable
                    Seabrook Costs
                
                
                11,946
                
                
                12,778Regulatory
                    Assets—Deferred Income Taxes
                
                
                6,229
                
                
                6,659Regulatory
                    Assets—Post-Retirement Medical Benefits
                
                
                147
                
                
                243Deferred
                    Fuel and Purchased Energy Costs
                
                
                28,378
                
                
                25,544Regulatory
                    Asset—Power Purchase Agreement Restructuring
                
                
                1,779
                
                
                2,902Unamortized
                    Premium on Early Retirement of Debt
                
                
                1,145
                
                
                1,290Other
                    Deferred Regulatory Costs
                
                
                1,440
                
                
                1,306Total
                
                
                62,971
                
                
                64,870**Other
                    Assets:**Intangible
                    Assets (net of accumulated amortization of $258 in 2005 and $60
                    in
                    2004)
                
                
                129
                
                
                78Goodwill
                
                
                6,343
                
                
                5,753Unamortized
                    Debt Issuance Costs
                
                
                577
                
                
                609Restricted
                    Investment (at cost, which approximates market)
                
                
                2,449
                
                
                2,980Miscellaneous
                
                
                1,317
                
                
                698Total
                
                
                10,815
                
                
                10,118**Total
                    Assets**
                
                $
                150,506
                
                $
                150,806
  See
          Notes
          to Consolidated Financial Statements
  8
  **MAINE
          & MARITIMES CORPORATION AND SUBSIDIARIES**
 **Capitalization
          and Liabilities** (Unaudited)
  ***(In
                    thousands of dollars)***
                
                **September
                    30,**
                
                **December
                    31,****2005**
                
                **2004****Capitalization:**Shareholders’
                    Equity*(see
                    accompanying statements)*
                
                $
                47,578
                
                $
                48,157Long-Term
                    Debt
                
                
                35,815
                
                
                37,155Total
                
                
                83,393
                
                
                85,312**Current
                    Liabilities:**Long-Term
                    Debt Due Within One Year
                
                
                2,325
                
                
                2,225Notes
                    Payable to Banks
                
                
                6,876
                
                
                3,989Accounts
                    Payable
                
                
                5,458
                
                
                4,978Accounts
                    Payable—Associated Companies
                
                
                250
                
                
                258Accrued
                    Employee Benefits
                
                
                1,152
                
                
                1,334Dividends
                    Payable
                
                
                —
                
                
                327Customer
                    Deposits
                
                
                39
                
                
                26Taxes
                    Accrued
                
                
                —
                
                
                21Interest
                    Accrued
                
                
                107
                
                
                75Deferred
                    Contract Revenue
                
                
                84
                
                
                109Total
                
                
                16,291
                
                
                13,342**Deferred
                    Credits and Other Liabilities:**Accrued
                    Removal Obligations
                
                
                4,313
                
                
                4,213Carrying
                    Value of Interest Rate Hedge
                
                
                1,452
                
                
                1,471Uncollected
                    Maine Yankee Decommissioning Costs
                
                
                11,907
                
                
                14,148Other
                    Regulatory Liabilities
                
                
                424
                
                
                318Deferred
                    Income Taxes
                
                
                27,352
                
                
                26,845Accrued
                    Post-retirement Benefits and Pension Costs
                
                
                4,480
                
                
                4,480Investment
                    Tax Credits
                
                
                112
                
                
                131Miscellaneous
                
                
                782
                
                
                546Total
                
                
                50,822
                
                
                52,152**Commitments,
                    Contingencies, and Regulatory Matters (Note 8)**
                
                
                —
                
                
                —**Total
                    Capitalization and Liabilities**
                
                $
                150,506
                
                $
                150,806
  See
          Notes
          to Consolidated Financial Statements
  9
  **MAINE
          & MARITIMES CORPORATION AND SUBSIDIARIES**
 **Statement
          of Consolidated Shareholders’ Equity**  (Unaudited)
 
 **Shares
                    Issued and Outstanding**
                
                **Common**
                
                **Preferred*****(In
                    thousands of dollars, except share
                    information)***
                
                **Common**
                
                **Preferred**
                
                **Par
                    Value Issued ($7/Share)**
                
                **Paid-In
                    Capital**
                
                **Par
                    Value Issued ($0.01/Share)**
                
                **Paid-In
                    Capital**
                
                **Retained
                    Earnings**
                
                **Accumulated
                    Other Comprehen-sive Income (Loss)**
                
                **Total****Balance,
                    December 31, 2004**
                
                
                1,635,654
                
                
                —
                
                $
                11,450
                
                $
                1,484
                
                $
                —
                
                $
                —
                
                $
                35,634
                
                $
                (411
                )
                $
                48,157Common
                    Stock Issued
                
                
                252
                
                
                
                
                
                2
                
                
                5
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7Preferred
                    Stock Issued
                
                
                
                
                
                9,500
                
                
                
                
                
                
                
                
                —
                
                
                950
                
                
                
                
                
                
                
                
                950Net
                    Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,277
                
                
                
                
                
                1,277Other
                    Comprehensive Income (Loss):Changes
                    in Value of Foreign Exchange Translation, Net of Tax Benefit
                    of
                    $89
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (133
                )
                
                (133
                )Interest
                    Rate Hedge, Net of Tax Provision of $159
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                239
                
                
                239Total
                    Other Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                106
                
                
                106Total
                    Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,383Dividend
                    ($.25 per share)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (409
                )
                
                
                
                
                (409
                )**Balance,
                    March 31, 2005**
                
                
                1,635,906
                
                
                9,500
                
                $
                11,452
                
                $
                1,489
                
                $
                —
                
                $
                950
                
                $
                36,502
                
                $
                (305
                )
                $
                50,088Common
                    Stock Issued
                
                
                261
                
                
                
                
                
                2
                
                
                (2
                )Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (798
                )
                
                
                
                
                (798
                )Other
                    Comprehensive Income (Loss):Changes
                    in Value of Foreign Exchange Translation, Net of Tax Benefit
                    of
                    $23
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (106
                )
                
                (106
                )Interest
                    Rate Hedge, Net of Tax Benefit of $477
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (715
                )
                
                (715
                )Total
                    Other Comprehensive Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (821
                )
                
                (821
                )Total
                    Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,619
                )Dividend
                    ($.25 per share)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (409
                )
                
                
                
                
                (409
                )**Balance,
                    June 30, 2005**
                
                
                1,636,167
                
                
                9,500
                
                $
                11,454
                
                $
                1,487
                
                
                —
                
                $
                950
                
                $
                35,295
                
                $
                (1,126
                )
                $
                48,060Common
                    Stock Issued
                
                
                270
                
                
                
                
                
                2
                
                
                3
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (926
                )
                
                
                
                
                (926
                )Other
                    Comprehensive Income:Changes
                    in Value of Foreign Exchange Translation, Net of Tax Provision
                    of
                    $125
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                348
                
                
                348Unrealized
                    gain on investments available for sale
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                11
                
                
                11Interest
                    Rate Hedge, Net of Tax Provision of $324
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                489
                
                
                489Total
                    Other Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                848
                
                
                848Total
                    Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (78
                )Dividend
                    ($.25 per share)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (409
                )
                
                
                
                
                (409
                )**Balance,
                    September 30, 2005**
                
                
                1,636,437
                
                
                9,500
                
                $
                11,456
                
                $
                1,490
                
                
                —
                
                $
                950
                
                $
                33,960
                
                $
                (278
                )
                $
                47,578
  MAM
          had
          five million shares of $7 per share common stock authorized, with 1,636,437
          and
          1,635,654 shares issued and outstanding as of September 30, 2005, and December
          31, 2004, respectively. At September 30, 2005, and December 31, 2004, MAM
          had
          500,000 shares of $.01 per share preferred stock authorized, with 9,500
          shares
          and zero shares issued and outstanding, respectively.
 
 See
          Notes
          to Consolidated Financial Statements .
  10
  **NOTES
          TO CONSOLIDATED**
  **FINANCIAL
          STATEMENTS**
  **1.    ACCOUNTING
          POLICIES**
  **Consolidation
          and Basis of Presentation**
  The
          accompanying consolidated financial statements include the accounts of
          Maine
& Maritimes Corporation (the “Company” or “MAM”) and the following
          wholly-owned subsidiaries and affiliates:
  •
                Maine
                    Public Service Company (“MPS”), a U.S. regulated transmission and
                    distribution company, serving all of Aroostook County and a portion
                    of
                    Penobscot County in northern Maine, and its wholly-owned inactive
                    Canadian
                    subsidiary, Maine & New Brunswick Electrical Power Company, Ltd.
                    (“Me&NB”);
  •
                Energy
                    Atlantic, LLC (“EA”), is an inactive unregulated competitive electricity
                    marketing subsidiary;
  •
                The
                    Maricor Group (“TMG”) and its wholly-owned U.S. subsidiary, The Maricor
                    Group, New England (“TMGNE”), formerly known as RES Engineering Inc., and
                    The Maricor Group’s Canadian subsidiary, The Maricor Group, Canada Ltd
                    provide energy asset development, energy efficiency, facility
                    asset
                    lifecycle management and mechanical, electrical and plumbing/fire
                    protection engineering and building sciences services with a
                    competency in
                    Leadership in Energy and Environmental Design (“LEED”) engineering
                    services;
  •
                Maricor
                    Properties Ltd (“Maricor Properties”), a Canadian real estate development
                    and investment subsidiary of MAM and its wholly-owned Canadian
                    subsidiaries, Mecel Properties Limited (“Mecel”) and Cornwallis Court
                    Developments Limited (“Cornwallis”) are focused on sustainable
                    development, redevelopment, and “smart growth” with a goal of owning and
                    managing facilities that meet or approach Leadership in Energy
                    and
                    Environmental Design (“LEED”) criteria; and Maricor Ashford Ltd is a
                    Canadian real estate development and redevelopment joint venture
                    owned in
                    equal parts by Maricor Properties Ltd and Ashford Investments
                    Inc. Ashford
                    Investments Inc. is a real estate management company based in
                    Moncton, New
                    Brunswick, Canada.
  •
                Maricor
                    Technologies, Inc (“MTI”), a U.S. wholly-owned, asset lifecycle management
                    and capital planning software technology-based subsidiary.
  MAM,
          a
          utility holding company exempt from the Public Utilities Holding Company
          Act
          (“PUCHA”) organized effective June 30, 2003, owns all of the common stock of the
          above primary subsidiaries. Primary subsidiaries, including MPS, TMG, and
          Maricor Properties Ltd own all the common stock of their secondary subsidiaries.
          MAM is listed on the American Stock Exchange (“AMEX”) under the symbol MAM.
  The
          Maricor Group and The Maricor Group, Canada Ltd were organized on November
          6,
          2003, and November 12, 2003, respectively. On June 15, 2004, The Maricor
          Group
          acquired RES Engineering Inc. (now The Maricor Group New England “TMGNE”), a
          Massachusetts corporation providing mechanical and electrical engineering
          services located in Boston, Massachusetts. In separate transactions, The
          Maricor
          Group, Canada Ltd acquired Eastcan Consultants, Inc. (“Eastcan”), a New
          Brunswick, Canada corporation and its subsidiaries and affiliates effective
          December 1, 2003; and Morris & Richard Consulting Engineers, Ltd.
          (“M&R”), a Nova Scotia, Canada corporation and its subsidiaries and
          affiliates effective June 1, 2004. Both companies are mechanical and electrical
          engineering firms with principal places of business located in New Brunswick
          and
          Nova Scotia, Canada respectively. Except for TMGNE, the subsidiaries and
          affiliates of each acquired company were amalgamated into a single entity,
          The
          Maricor Group, Canada Ltd (formerly Maricor, Ltd) which is a wholly-owned
          subsidiary of The Maricor Group.
  Maricor
          Properties Ltd was organized on June 1, 2004, in connection with the M&R
          acquisition, and was the entity that acquired, through the amalgamation
          of the
          M&R subsidiaries and affiliates, Mecel Properties Limited, a Nova Scotia,
          Canada corporation. The Mecel real estate (an office building located in
          Halifax, Nova Scotia) is currently occupied and used as the principal place
          of business of the Morris & Richard division of The Maricor Group, Canada
          Ltd. On August 13, 2004, Maricor Properties Ltd completed the acquisition
          of a
          multi-tenant mid-rise office facility at 77 Vaughan Harvey Boulevard in
          the
          downtown area of Moncton, New Brunswick, Canada (the “Vaughan Harvey Property”)
          from Sun Life Assurance Company of Canada (“Sun Life”). Maricor Properties Ltd
          has undertaken significant renovations of the office complex, particularly
          related to mechanical and electrical systems, as well as certain exterior
          and
          interior renovations. Mechanical and electrical engineering services in
          connection with the renovations were provided by The Maricor Group, Canada
          Ltd.
          The Maricor Group, Canada Ltd’s Moncton office relocated to the facility during
          the fourth quarter of 2004.
  On
          August
          12, 2005, Maricor Properties Ltd entered into an agreement with Ashford
          Investments, Inc. to form a joint venture named Maricor Ashford Ltd. Maricor
          Ashford Ltd will become the development and redevelopment arm of Maricor
          Properties, also with plans to migrate to the offering of facility management
          services, leveraging the current capabilities of Ashford Investments, Inc.,
          Maricor Technologies, and The Maricor Group Canada Ltd.
  11
  On
          October 7, 2005 Maricor Properties Ltd acquired Cornwallis Court Developments
          Ltd, the owner of the J. Angus MacDonald Building located in Halifax, Nova
          Scotia, Canada, a 60,000 square foot office facility constructed in or
          about
          1992 and currently leased to a number of various Canadian governmental
          agencies.
  On
          February 22, 2005, the Company announced the formation of Maricor Technologies,
          Inc. (“MTI”), a wholly-owned, software technology-based subsidiary.
          Concurrently, MTI acquired lifecycle asset management and capital budget
          planning software assets that complements MAM’s U.S. and Canadian engineering
          and facilities lifecycle asset management services companies. MTI is expanding
          its technology platform to address capital performance management and asset
          governance software needs. MTI is headquartered in Presque Isle, Maine,
          with an
          office in Portland, Maine.
  All
          inter-company transactions between MAM and its direct and indirect subsidiaries
          have been eliminated in consolidation.
  **New
          Accounting Pronouncements**
  In
          March
          2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
          Asset Retirement Obligations” (“FIN 47”), effective for fiscal years ending
          after December 15, 2005. FIN 47 clarifies the term “conditional asset retirement
          obligation”, used in FASB Statement No. 143, “Accounting for Asset Retirement
          Obligations”, as referring to a “legal obligation to perform an asset retirement
          activity in which the timing and/or method of settlement are conditional
          on a
          future event that may or may not be within the control of the entity.” Based on
          this interpretation, MPS will be required to recognize an asset retirement
          obligation associated with the Poly Chlorinated Bi-Phenol Transformer phase-out
          program, described more fully in Note 8 of these Consolidated Financial
          Statements. The amount of the impact of this liability on the Company’s
          financial statements has not yet been determined.
  FASB
          Statement No. 123 (Revised 2004), Share-Based Payment (SFAS 123(R)) was
          issued
          in December 2004. SFAS 123(R) replaces SFAS No. 123, Accounting for Stock-Based
          Compensation ** (SFAS
          123), and supersedes Accounting Principles Board (“APB”) Opinion No. 25,
          Accounting for Stock Issued to Employees. SFAS 123(R) requires companies
          to
          recognize the compensation cost related to share-based payment transactions
          with
          employees in the financial statements. The compensation cost is measured
          based
          upon the fair value of the instrument issued. Share-based compensation
          transactions with employees covered within SFAS 123(R) include stock options,
          restricted share plans, performance-based awards, share appreciation rights,
          and
          employee stock purchase plans. SFAS 123 included a fair-value-based method
          of
          accounting for share-based payment transactions with employees, but allowed
          companies to continue to apply the guidance in APB Opinion No. 25 provided
          that
          they disclose in the footnotes to the financial statements the pro forma
          net
          income if the fair-value-based method has been applied. The Company currently
          uses the fair-value-based method for recognition of compensation expense
          under
          SFAS 123 and does not anticipate the adoption of this statement to result
          in the
          recognition of material additional compensation cost.
  On
          October 13, 2004, the FASB ratified Emerging Issues Task Force (“EITF”) Issue
          No. 04-1 (“EITF 04-1”), effective for business combinations consummated,
          and goodwill impairment tests performed, in reporting periods beginning
          after
          that date. EITF 04-1 is applicable when two parties that have a pre-existing
          contractual relationship enter into a business combination. The business
          combination could also include settlement of this pre-existing contractual
          relationship. Such settlement would require accounting separate from the
          business combination. If it is determined that assets of the acquired entity
          that are related to a pre-existing contractual relationship with the acquiring
          entity should be recognized as part of the business combination, EITF 04-1
          also
          considers whether the acquiring entity should recognize those assets as
          intangible assets apart from goodwill. Adoption of EITF 04-1 did not have
          a
          material impact on the Company’s financial statements at September 30, 2005.
  12
  **2.    INCOME
          TAXES**
 
 A
          summary
          of Federal, Canadian and State income taxes charged (credited) to income
          is
          presented below. For accounting and ratemaking purposes, income tax provisions
          (benefits) included in “Operating Expenses” reflect taxes applicable to revenues
          and expenses allowable for ratemaking purposes on MPS regulated activities
          and
          unregulated activities for MAM, TMG, Me&NB, The Maricor Group Canada, Ltd,
          Maricor Propoerties Ltd, Mecel Properties Ltd and MTI. The tax effect of
          items
          not included in rate base or normal operating activities is allocated as
“Other
          Income (Deductions).”
  **Three
                    Months Ended**
                
                **Nine
                    Months Ended****September
                    30,**
                
                **September
                    30,*****(In
                    thousands of dollars)***
                
                **2005**
                
                **2004**
                
                **2005**
                
                **2004**Current
                    (benefit of) provision for income taxesFederal
                
                $
                (546
                )
                $
                (390
                )
                $
                (279
                )
                $
                (298
                )State
                
                
                (160
                )
                
                (92
                )
                
                (86
                )
                
                8Canadian
                
                
                (239
                )
                
                15
                
                
                (402
                )
                
                88Total
                    current (benefit of) provision for income taxes
                
                
                (945
                )
                
                (467
                )
                
                (767
                )
                
                (202
                )Deferred
                    (benefit of) provision for income taxesFederal
                
                $
                489
                
                $
                381
                
                $
                714
                
                $
                810State
                
                
                49
                
                
                37
                
                
                71
                
                
                79Total
                    deferred (benefit of) provision for income taxes
                
                
                538
                
                
                418
                
                
                785
                
                
                889Investment
                    credits, net
                
                
                (6
                )
                
                (7
                )
                
                (19
                )
                
                (21
                )Total
                    (benefit of) provision for income taxes
                
                $
                (413
                )
                $
                (56
                )
                $
                (1
                )
                $
                666Allocated
                    to:Operating
                    income-  Regulated
                
                $
                38
                
                $
                38
                
                $
                1,031
                
                $
                1,245-  Unregulated
                
                
                (447
                )
                
                (116
                )
                
                (1,032
                )
                
                (340
                )Subtotal
                
                
                (409
                )
                
                (78
                )
                
                (1
                )
                
                905Discontinued
                    Operations
                
                
                (3
                )
                
                (8
                )
                
                —
                
                
                (271
                )Total
                    Income Tax on Operating Income
                
                
                (412
                )
                
                (86
                )
                
                (1
                )
                
                634Other
                    income
                
                
                (1
                )
                
                30
                
                
                —
                
                
                32Total
                
                $
                (413
                )
                $
                (56
                )
                $
                (1
                )
                $
                666
  For
          the
          nine months ended September 30, 2005, the effective income tax rate for
          the
          regulated utility was 48%.  The principal reason for the effective rate
          differing from the US federal and state income tax rates is the amortization
          of
          recoverable Seabrook costs.  For the nine months ended September 30, 2005,
          the effective income tax rate for the unregulated segments of the company
          is
          40%.  The tax expense for the regulated utility and the tax benefits from
          the unregulated companies net to a combined effective income tax rate of
          1%.  For the nine months ended September 30, 2004, the effective income tax
          rate was 45%.
  The
          Company has not accrued U.S. income taxes on the undistributed earnings
          of
          Me&NB, as the withholding taxes due on the distribution of any remaining
          amount would be principally offset by foreign tax credits. No dividends
          were
          received from Me&NB in 2005 or 2004.
  As
          required by SFAS No. 109, Management of the Company has evaluated the positive
          and negative evidence bearing upon the realizability of the Company’s deferred
          tax assets, which consist principally of pension and post-retirement benefits
          and accumulated Other Comprehensive Income (“OCI”) — interest rate hedge. For
          the quarter ended September 30, 2005, and the year ended December 31, 2004,
          Management evaluated the need for a deferred tax asset valuation allowance
          and
          determined that no adjustment was needed.
  13
  The
          following summarizes accumulated deferred income tax (assets) and liabilities
          established on temporary differences under SFAS 109 as of September 30,
          2005,
          and December 31, 2004:
  ***(In
                    thousands of dollars)***
                
                **September
                    30,**
                  **2005**
                
                **December
                    31,**
                  **2004**Seabrook
                
                $
                6,824
                
                $
                6,964Property
                
                
                8,894
                
                
                9,068Flexible
                    pricing revenue
                
                
                978
                
                
                925Deferred
                    fuel
                
                
                10,930
                
                
                9,832Wheelabrator-Sherman
                    up-front payment
                
                
                723
                
                
                1,158Pension
                    and post-retirement benefits
                
                
                (880
                )
                
                (945
                )Other
                    Comprehensive Income
                
                
                (118
                )
                
                (272
                )Other
                
                
                1
                
                
                115Net
                    accumulated deferred income taxes
                
                $
                27,352
                
                $
                26,845
 
 **3.    DISCONTINUED
          OPERATIONS — ENERGY ATLANTIC**
  On
          March
          1, 2004, EA suspended all active operations and has been classified as
          a
          discontinued operation in accordance with FASB No. 144, as discussed in
          more
          detail below. EA participated in the wholesale power market beginning in
          1999,
          and continuing until March 1, 2000, when it began selling energy in the
          retail
          electricity market within the State of Maine. Maine’s retail electric market
          consists of two sectors, Standard Offer Service (“SOS”) and Competitive Energy
          Supply (“CES”). The MPUC requests bids from CES providers for SOS in each
          utility service territory.
  On
          February 21, 2003, EA announced its withdrawal from the retail electricity
          markets in northern Maine, and ceased all of its energy marketing activities
          in
          MPS’s service territory, as well as the balance of the State, effective March
          1,
          2004, with the intent to stay inactive until market conditions, the availability
          of supply, the mandate for stringent credit requirements and the risk
          environment improve. EA continued to serve its existing contracts in Maine
          through their expiration on February 27, 2004. CES sales, primarily in
          northern
          Maine, were approximately $6.1 million in 2003.
  Although
          Management will continue to monitor both U.S. and Canadian deregulated
          markets
          to evaluate the merits of possible re-entry into the deregulated electric
          energy
          retail market, it is doubtful that market conditions, credit requirements
          and
          risks will become favorable for re-entry. EA has no employees and its operations
          have been discontinued. The Company is not aware of any contingent liabilities
          related to this discontinued operation which would materially impact financial
          results.
  The
          Company recognized income (loss) from discontinued operations of $5,000
          and
          $(413,000) for the nine months ended September 30, 2005, and 2004, respectively,
          classified as discontinued operations in the Statement of Consolidated
          Operations. The 2005 year-to-date net income represents the final settlement
          of
          software and equipment lease obligations and miscellaneous other small
          transactions. The 2004 net loss includes additional software lease expense
          of
          $181,000, recognized on the buy-out of a software lease by EA, $172,000
          for
          employee severance payments, and a loss on disposal of fixed assets of
          $69,000.
          The following table summarizes the statement of operations for EA:
  ***(In
                    thousands of dollars)***
                
                **Three
                    Months Ended**
                  **September
                    30,**
                
                **Nine
                    Months Ended**
                  **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004**Revenue
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                572Expenses
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,186
                )Other
                    income, deductions and interest
                
                
                (3
                )
                
                (16
                )
                
                5
                
                
                (70
                )Pretax
                    (loss) income from discontinued operations
                
                
                (3
                )
                
                (16
                )
                
                5
                
                
                (684
                )Income
                    tax benefit (provision)
                
                
                3
                
                
                8
                
                
                —
                
                
                271(Loss)
                    income from discontinued operations
                
                $
                —
                
                $
                (8
                )
                $
                5
                
                $
                (413
                )Loss
                    per share from discontinued operations (basic and diluted)
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                (0.25
                )
  14
  The
          major
          classes of assets and liabilities of the discontinued operations included
          in the
          Company’s consolidated balance sheets as of September 30, 2005, are as follows:
  ***(In
                    thousands of dollars)***
                
                **September
                    30, 2005****Assets**Income
                    tax benefit - parent
                
                $
                263Total
                    Assets
                
                $
                263**Liabilities**Accounts
                    payable
                
                $
                9Intercompany
                    payable
                
                
                23Total
                    Liabilities
                
                $
                32
 
 **4.    SEGMENT
          INFORMATION**
  The
          Company is organized based on products and services. Management monitors
          the
          operations of the Company in the following operating segments:
  •
                Regulated
                    electric utility: MPS and its inactive wholly-owned Canadian
                    subsidiary,
                    Me&NB;
  •
                Unregulated
                    engineering services: The Maricor Group and all of its subsidiaries
                    and
                    product and service lines;
  •
                Unregulated
                    real estate development and investments: Maricor Properties Ltd
                    and its
                    subsidiaries Mecel Properties Ltd and Cornwallis Court Developments
                    Ltd,
                    as well as their real estate holdings; and Maricor Ashford Ltd.,
                    a joint
                    venture of Maricor Properties Ltd and Ashford Investments, Inc.
  •
                Unregulated
                    software technology: MTI.
  •
                  Unregulated
                      energy marketing: EA, an inactive subsidiary.
  The
          “Other” column presented in the table below summarizes unallocable expenses for
          the holding company, MAM, and inter-company eliminations. The segment
          information for 2004 has been reclassified to conform to the 2005 presentation.
  MAM
          provides certain administrative support services to MPS and its inactive
          subsidiary, Me&NB; The Maricor Group and its subsidiaries; Maricor
          Properties Ltd and its subsidiaries; and Maricor Technologies, Inc. MAM
          also
          provides minimal administrative services to its inactive subsidiary, EA.
          MPS
          provides certain support services to MAM and its unregulated subsidiaries,
          which
          include The Maricor Group and its subsidiaries; Maricor Properties and
          its
          subsidiaries; and Maricor Technologies. Service costs are billed to the
          respective entities at cost through inter-company transactions based on
          a
          combination of direct charges and allocations.
  15
  ***(In
                      thousands of dollars)*****Three
                      Months Ended September 30, 2005****Regulated
                      Electric Utility**
                  
                  **Unregulated
                      Engineering Services**
                  
                  **Unregulated
                      Real Estate Holdings**
                  
                  **Unregulated
                      Energy Marketing**
                  
                  **Unregulated
                      Software Technology**
                  
                  **Other**
                  
                  **Total**Revenue
                      from External CustomersRegulated
                  
                  $
                  7,445
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  7,445Unregulated
                  
                  
                  —
                  
                  
                  1,267
                  
                  
                  77
                  
                  
                  —
                  
                  
                  29
                  
                  
                  (51
                  )
                  
                  1,322Total
                      Operating Revenues
                  
                  
                  7,445
                  
                  
                  1,267
                  
                  
                  77
                  
                  
                  —
                  
                  
                  29
                  
                  
                  (51
                  )
                  
                  8,767Operating
                      ExpensesRegulated
                      Operation & Maintenance
                  
                  
                  3,682
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  3,682Unregulated
                      Operation & Maintenance
                  
                  
                  —
                  
                  
                  2,131
                  
                  
                  81
                  
                  
                  —
                  
                  
                  171
                  
                  
                  (132
                  )
                  
                  2,251Depreciation
                  
                  
                  698
                  
                  
                  5
                  
                  
                  15
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  718Amortization
                      of Stranded Cost
                  
                  
                  2,584
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  2,584Amortization
                  
                  
                  73
                  
                  
                  17
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  1
                  
                  
                  91Taxes
                      Other than Income
                  
                  
                  417
                  
                  
                  (5
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  7
                  
                  
                  9
                  
                  
                  428Income
                      Taxes
                  
                  
                  38
                  
                  
                  (397
                  )
                  
                  (20
                  )
                  
                  —
                  
                  
                  (60
                  )
                  
                  30
                  
                  
                  (409
                  )Total
                      Operating Expenses
                  
                  
                  7,492
                  
                  
                  1,751
                  
                  
                  76
                  
                  
                  —
                  
                  
                  118
                  
                  
                  (92
                  )
                  
                  9,345Operating
                      (Loss) Income
                  
                  
                  (47
                  )
                  
                  (484
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  (89
                  )
                  
                  41
                  
                  
                  (578
                  )Other
                      Income (Deductions)Equity
                      in Income of Associated Companies
                  
                  
                  45
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  45Interest
                      Income
                  
                  
                  17
                  
                  
                  22
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (39
                  )
                  
                  —Other
                      Income (Deductions)
                  
                  
                  (36
                  )
                  
                  2
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (13
                  )
                  
                  (47
                  )Total
                      Other Income (Deductions)
                  
                  
                  26
                  
                  
                  24
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (52
                  )
                  
                  (2
                  )(Loss)
                      Income Before Interest Charges
                  
                  
                  (21
                  )
                  
                  (460
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  (89
                  )
                  
                  (11
                  )
                  
                  (580
                  )Interest
                      Charges
                  
                  
                  254
                  
                  
                  80
                  
                  
                  31
                  
                  
                  —
                  
                  
                  1
                  
                  
                  (20
                  )
                  
                  346Income
                      from Continuing Operations
                  
                  
                  (275
                  )
                  
                  (540
                  )
                  
                  (30
                  )
                  
                  —
                  
                  
                  (90
                  )
                  
                  9
                  
                  
                  (926
                  )Loss
                      from Discontinued Operations
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Net
                      Loss
                  
                  $
                  (275
                  )
                  $
                  (540
                  )
                  $
                  (30
                  )
                  $
                  —
                  
                  $
                  (90)
                  
                  $
                  9
                  
                  $
                  (926
                  )
  16
 ***(In
                      thousands of dollars)*****Three
                      Months Ended September 30, 2004****Regulated
                      Electric Utility**
                  
                  **Unregulated
                      Engineering Services**
                  
                  **Unregulated
                      Real Estate Holdings**
                  
                  **Unregulated
                      Energy Marketing**
                  
                  **Unregulated
                      Software Technology**
                  
                  **Other**
                  
                  **Total**Revenue
                      from External CustomersRegulated
                  
                  $
                  7,215
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  7,215Unregulated
                  
                  
                  —
                  
                  
                  1,292
                  
                  
                  17
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (25
                  )
                  
                  1,284Total
                      Operating Revenues
                  
                  
                  7,215
                  
                  
                  1,292
                  
                  
                  17
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (25
                  )
                  
                  8,499Operating
                      ExpensesRegulated
                      Operation & Maintenance
                  
                  
                  3,452
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  3,452Unregulated
                      Operation & Maintenance
                  
                  
                  —
                  
                  
                  1,613
                  
                  
                  22
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (27
                  )
                  
                  1,608Depreciation
                  
                  
                  670
                  
                  
                  3
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  673Amortization
                      of Stranded Cost
                  
                  
                  2,458
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  2,458Amortization
                  
                  
                  22
                  
                  
                  15
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  37Taxes
                      Other than Income
                  
                  
                  412
                  
                  
                  8
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  11
                  
                  
                  431Income
                      Taxes
                  
                  
                  38
                  
                  
                  (110
                  )
                  
                  (6
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (78
                  )Total
                      Operating Expenses
                  
                  
                  7,052
                  
                  
                  1,529
                  
                  
                  16
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (16
                  )
                  
                  8,581Operating
                      Income (Loss)
                  
                  
                  163
                  
                  
                  (237
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (9
                  )
                  
                  (82
                  )Other
                      Income (Deductions)Equity
                      in Income of Associated Companies
                  
                  
                  54
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  54Interest
                      Income
                  
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (1
                  )
                  
                  —Other
                      Income (Deductions)
                  
                  
                  (61
                  )
                  
                  (29
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (49
                  )
                  
                  (139
                  )Total
                      Other Deductions
                  
                  
                  (6
                  )
                  
                  (29
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (50
                  )
                  
                  (85
                  )Income
                      (Loss) Before Interest Charges
                  
                  
                  157
                  
                  
                  (266
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (59
                  )
                  
                  (167
                  )Interest
                      Charges
                  
                  
                  235
                  
                  
                  19
                  
                  
                  9
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (6
                  )
                  
                  257Loss
                      from Continuing Operations
                  
                  
                  (78
                  )
                  
                  (285
                  )
                  
                  (8
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (53
                  )
                  
                  (424
                  )Loss
                      from Discontinued Operations
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (8
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (8
                  )Net
                      Loss
                  
                  $
                  (78
                  )
                  $
                  (285
                  )
                  $
                  (8
                  )
                  $
                  (8
                  )
                  $
                  —
                  
                  $
                  (53
                  )
                  $
                  (432
                  )
  17
  ***(In
                      thousands of dollars)*****Nine
                      Months Ended September 30, 2005****Regulated**
                    **Electric**
                    **Utility**
                  
                  **Unregulated**
                    **Engineering**
                    **Services**
                  
                  **Unregulated**
                    **Real
                      Estate**
                    **Holdings**
                  
                  **Unregulated**
                    **Energy**
                    **Marketing**
                  
                  **Unregulated**
                    **Software**
                    **Technology**
                  
                  **Other**
                  
                  **Total**Revenue
                      from External CustomersRegulated
                  
                  $
                  24,833
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  24,833Unregulated
                  
                  
                  —
                  
                  
                  4,036
                  
                  
                  221
                  
                  
                  —
                  
                  
                  67
                  
                  
                  (160
                  )
                  
                  4,164Total
                      Operating Revenues
                  
                  
                  24,833
                  
                  
                  4,036
                  
                  
                  221
                  
                  
                  —
                  
                  
                  67
                  
                  
                  (160
                  )
                  
                  28,997Operating
                      ExpensesRegulated
                      Operation & Maintenance
                  
                  
                  10,786
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  10,786Unregulated
                      Operation & Maintenance
                  
                  
                  —
                  
                  
                  5,877
                  
                  
                  267
                  
                  
                  —
                  
                  
                  413
                  
                  
                  (300
                  )
                  
                  6,257Depreciation
                  
                  
                  2,084
                  
                  
                  14
                  
                  
                  43
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  2,141Amortization
                      of Stranded Cost
                  
                  
                  7,732
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  7,732Amortization
                  
                  
                  220
                  
                  
                  101
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  321Taxes
                      Other than Income
                  
                  
                  1,277
                  
                  
                  34
                  
                  
                  —
                  
                  
                  —
                  
                  
                  15
                  
                  
                  30
                  
                  
                  1,356Income
                      Taxes
                  
                  
                  1,031
                  
                  
                  (915
                  )
                  
                  (66
                  )
                  
                  —
                  
                  
                  (145
                  )
                  
                  94
                  
                  
                  (1
                  )Total
                      Operating Expenses
                  
                  
                  23,130
                  
                  
                  5,111
                  
                  
                  244
                  
                  
                  —
                  
                  
                  283
                  
                  
                  (176
                  )
                  
                  28,592Operating
                      Income (Loss)
                  
                  
                  1,703
                  
                  
                  (1,075
                  )
                  
                  (23
                  )
                  
                  —
                  
                  
                  (216
                  )
                  
                  16
                  
                  
                  405Other
                      Income (Deductions)Equity
                      in Income of Associated Companies
                  
                  
                  133
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  133Interest
                      Income
                  
                  
                  40
                  
                  
                  33
                  
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (61
                  )
                  
                  13Other
                      Income (Deductions)
                  
                  
                  (22
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (17
                  )
                  
                  (39
                  )Total
                      Other Income (Deductions)
                  
                  
                  151
                  
                  
                  33
                  
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (78
                  )
                  
                  107Income
                      (Loss) Before Interest Charges
                  
                  
                  1,854
                  
                  
                  (1,042
                  )
                  
                  (22
                  )
                  
                  —
                  
                  
                  (216
                  )
                  
                  (62
                  )
                  
                  512Interest
                      Charges
                  
                  
                  739
                  
                  
                  268
                  
                  
                  83
                  
                  
                  —
                  
                  
                  2
                  
                  
                  (128
                  )
                  
                  964Income
                      (Loss) from Continuing Operations
                  
                  
                  1,115
                  
                  
                  (1,310
                  )
                  
                  (105
                  )
                  
                  —
                  
                  
                  (218
                  )
                  
                  66
                  
                  
                  (452
                  )Income
                      from Discontinued Operations
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  5
                  
                  
                  —
                  
                  
                  —
                  
                  
                  5Net
                      Income (Loss)
                  
                  $
                  1,115
                  
                  $
                  (1,310
                  )
                  $
                  (105
                  )
                  $
                  5
                  
                  $
                  (218
                  )
                  $
                  66
                  
                  $
                  (447
                  )Total
                      Assets
                  
                  $
                  131,519
                  
                  $
                  11,652
                  
                  $
                  2,869
                  
                  $
                  263
                  
                  $
                  1,712
                  
                  $
                  2,491
                  
                  $
                  150,506
  18
  ***(In
                      thousands of dollars)*****Nine
                      Months Ended September 30, 2004****Regulated**
                    **Electric**
                    **Utility**
                  
                  **Unregulated**
                    **Engineering**
                    **Services**
                  
                  **Unregulated**
                    **Real
                      Estate**
                    **Holdings**
                  
                  **Unregulated**
                    **Energy**
                    **Marketing**
                  
                  **Unregulated**
                    **Software**
                    **Technology**
                  
                  **Other**
                  
                  **Total**Revenue
                      from External CustomersRegulated
                  
                  $
                  24,305
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  24,305Unregulated
                  
                  
                  —
                  
                  
                  2,207
                  
                  
                  24
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (32
                  )
                  
                  2,199Total
                      Operating Revenues
                  
                  
                  24,305
                  
                  
                  2,207
                  
                  
                  24
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (32
                  )
                  
                  26,504Operating
                      ExpensesRegulated
                      Operation & Maintenance
                  
                  
                  10,161
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  10,161Unregulated
                      Operation & Maintenance
                  
                  
                  —
                  
                  
                  3,035
                  
                  
                  23
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (41
                  )
                  
                  3,017Depreciation
                  
                  
                  1,960
                  
                  
                  2
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  1
                  
                  
                  1,963Amortization
                      of Stranded Cost
                  
                  
                  7,105
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  7,105Amortization
                  
                  
                  60
                  
                  
                  15
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  75Taxes
                      Other than Income
                  
                  
                  1,165
                  
                  
                  42
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  21
                  
                  
                  1,228Income
                      Taxes
                  
                  
                  1,245
                  
                  
                  (334
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (6
                  )
                  
                  905Total
                      Operating Expenses
                  
                  
                  21,696
                  
                  
                  2,760
                  
                  
                  23
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (25
                  )
                  
                  24,454Operating
                      Income (Loss)
                  
                  
                  2,609
                  
                  
                  (553
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (7
                  )
                  
                  2,050Other
                      Income (Deductions)Equity
                      in Income of Associated Companies
                  
                  
                  158
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  158Interest
                      Income
                  
                  
                  2
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  13
                  
                  
                  15Other
                      Income (Deductions)
                  
                  
                  (150
                  )
                  
                  (29
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (83
                  )
                  
                  (262
                  )Total
                      Other Income (Deductions)
                  
                  
                  10
                  
                  
                  (29
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (70
                  )
                  
                  (89
                  )Income
                      (Loss) Before Interest Charges
                  
                  
                  2,619
                  
                  
                  (582
                  )
                  
                  1
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (77
                  )
                  
                  1,961Interest
                      Charges
                  
                  
                  724
                  
                  
                  33
                  
                  
                  9
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (19
                  )
                  
                  747Income
                      (Loss) from Continuing Operations
                  
                  
                  1,895
                  
                  
                  (615
                  )
                  
                  (8
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (58
                  )
                  
                  1,214Loss
                      from Discontinued Operations
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (413
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (413
                  )Net
                      Income (Loss)
                  
                  $
                  1,895
                  
                  $
                  (615
                  )
                  $
                  (8
                  )
                  $
                  (413
                  )
                  $
                  —
                  
                  $
                  (58
                  )
                  $
                  801Total
                      Assets
                  
                  $
                  136,170
                  
                  $
                  7,007
                  
                  $
                  1,883
                  
                  $
                  220
                  
                  $
                  —
                  
                  $
                  1,962
                  
                  $
                  147,242
 19
 
 **5.    MPS
          INVESTMENTS IN ASSOCIATED COMPANIES**
  MPS
          owns
          5% of the common stock of Maine Yankee Atomic Power Company (“Maine Yankee”), a
          jointly-owned nuclear electric power company. MPS records this investment
          using
          the equity method. Maine Yankee also bills MPS and the other investor companies
          monthly to help fund decommissioning. MPS paid $750,000 and $754,000 to
          Maine
          Yankee during the third quarter of 2005 and 2004, respectively. Year-to-date,
          MPS has paid Maine Yankee $2.43 million in 2005, compared to $2.06 million
          in
          2004. Substantially all earnings of Maine Yankee are distributed to investor
          companies. Maine Yankee declared a dividend payable to MPS of $25,000 and
          MPS
          received in cash a dividend of $25,000 from Maine Yankee during the third
          quarter of 2005. For the third quarter of 2004, Maine Yankee declared a
          dividend
          payable to MPS of $120,000, and MPS received a dividend of $125,000 in
          cash from
          Maine Yankee.
  MPS
          also
          owns 7.49% of the common stock of Maine Electric Power Company (“MEPCO,”) a
          jointly-owned electric transmission company. MPS records its investment
          in MEPCO
          using the equity method. Substantially all earnings of MEPCO are distributed
          to
          investor companies. MEPCO declared a dividend payable to MPS of $1,800
          and MPS
          received in cash a dividend of $3,600 from MEPCO during the third quarter
          of
          2005. For the third quarter of 2004, MEPCO declared a dividend payable
          to MPS of
          $1,800, and MPS received a dividend of $1,800 in cash from MEPCO.
  **6.    STOCK
          COMPENSATION PLAN**
  Upon
          approval by MPS’s shareholders in June 2002, MPS adopted the 2002 Stock Option
          Plan (the “Plan”). The Plan was subsequently adopted by the Company after its
          formation. The Plan provides designated employees of the Company and its
          Subsidiaries with stock ownership opportunities and additional incentives
          to
          contribute to the success of the Company, and to attract, reward and retain
          employees of outstanding ability. The Plan is administered by the members
          of the
          Performance and Compensation Committee of the Board of Directors, who are
          not
          employees of the Company or its subsidiaries. The Company may grant options
          to
          its employees for up to 150,000 shares of common stock, provided that the
          maximum aggregate number of shares which may be issued under the Plan pursuant
          to incentive stock options shall be 120,000 shares. The exercise price
          for
          shares to be issued under any incentive stock option shall not be less
          than
          one-hundred percent (100%) of the fair market value of such shares on the
          date
          the option is granted. An option’s maximum term is ten years. As of September
          30, 2005, the CEO has been the only employee to receive stock options.
  The
          Company accounts for the fair value of its grants under the Plan in accordance
          with the expense provisions of Statement of Financial Accounting Standards
          No.
          123, “Accounting for Stock-Based Compensation.”
  The
          fair
          value of each option grant is estimated on the date of grant using the
          Black-Scholes option-pricing model with the following weighted-average
          assumptions used for the grants:
  Year
                    of Issuance
                
                2005
                
                2004
                
                2003
                
                2002Number
                    of Options Granted
                
                
                5,250
                
                
                5,250
                
                
                5,250
                
                
                5,250Vesting
                    Period
                
                
                3
                    years
                
                
                3
                    years
                
                
                3
                    years
                
                
                3
                    yearsNumber
                    of Options Vested and Exercisable
                
                
                —
                
                
                —
                
                
                —
                
                
                5,250Dividend
                    Yield
                
                
                4.08
                %
                
                4.75
                %
                
                4.60
                %
                
                4.70
                %Volatility
                
                
                20.0
                %
                
                20.0
                %
                
                20.0
                %
                
                20.0
                %Risk-Free
                    Interest Rate
                
                
                3.80
                %
                
                4.33
                %
                
                3.00
                %
                
                4.60
                %Expected
                    Life
                
                
                7
                    years
                
                
                7
                    years
                
                
                7
                    years
                
                
                7
                    years
  A
          summary
          of the status of the Company’s stock option plan as of September 30, 2005, and
          changes during the nine months then ended is presented below:
  ***(In
                    thousands of dollars)***
                
                **Shares**
                
                **Average
                    Exercise Price****Options**
                
                **2005**
                
                **2005**Outstanding
                    at December 31, 2004
                
                
                15,750
                
                $
                30.85Granted
                
                
                5,250
                
                
                26.65Exercised
                
                
                0
                
                
                0Forfeited
                
                
                0
                
                
                0Outstanding
                    at September 30, 2005
                
                
                21,000
                
                $
                29.80Options
                    exercisable at September 30, 2005
                
                
                5,250
                
                $
                30.45Weighted-average
                    fair value of options granted
                
                $
                4.31
  20
  The
          following table summarizes information about fixed stock options outstanding
          at
          September 30, 2005:
  **Options
                    Outstanding**
                
                **Options
                    Exercisable****Range
                    of Exercise**
                  **Prices**
                
                **Number**
                  **Outstanding at**
                  **9/30/05**
                
                **Weighted-**
                  **Average**
                  **Remaining**
                  **Contractual Life**
                
                **Weighted-**
                  **Average**
                  **Exercise Price**
                
                **Number**
                  **Exercisable at**
                  **9/30/05**
                
                **Weighted-**
                  **Average**
                  **Exercise Price**$26.65 - $32.00
                
                
                21,000
                
                
                8.17
                    yrs
                
                $
                29.80
                
                
                5,250
                
                $
                30.45
  Dilutive
          earnings per share impact of outstanding stock options:
  ***(In
                    thousands of dollars)***
                
                **Three
                    Months Ended**
                
                **Nine
                    Months Ended****September
                    30,**
                
                **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004**Net
                    (Loss) Income
                
                $
                (926
                )
                $
                (432
                )
                $
                (447
                )
                $
                801Shares
                    used in computation:Weighted-Average
                    common sharesoutstanding
                    in Computation of basicearnings
                    per share
                
                
                1,636,437
                
                
                1,635,429
                
                
                1,636,170
                
                
                1,605,044Dilutive
                    effect of common stock options
                
                
                21,000
                
                
                15,750
                
                
                18,375
                
                
                13,125Dilutive
                    effect of preferred stock
                
                
                11,910
                
                
                —
                
                
                5,955
                
                
                —Shares
                    used in computation of earningsper
                    common share assuming dilution
                
                
                1,669,347
                
                
                1,651,179
                
                
                1,660,500
                
                
                1,618,169Net
                    (loss) income per share basic
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.50Net
                    (loss) income per common share diluted
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.27
                )
                $
                0.50
 
 **7.    BENEFIT
          PROGRAMS**
  The
          Company provides certain pension, post-retirement and welfare benefit programs
          to its employees. Benefit programs are an integral part of the Company’s
          commitment to hiring and retaining top grade employees, providing market-based
          compensation that rewards individual and corporate performance. The Company
          continues to offer market-based total compensation to its employees that
          include
          varying funded benefit programs, salary, bonuses, incentives, and commissions,
          depending upon an individual’s particular job classification. The Company offers
          welfare benefit plans to all employees, consisting of healthcare, life
          insurance, long-term disability, and accidental disability insurance. The
          Company also offers retirement savings programs to most employees in the
          form of
          401(k) plans in the United States or Canadian Pension Plans in Canada.
          These
          plans allow voluntary contributions by the employee and may contain a
          contribution by the Company.
  Beginning
          October 1, 2005, newly hired MPS employees are no longer eligible for the
          postretirement medical plan. New MPS employees hired on or after January
          1,
          2006, will not be eligible to participate in the defined benefit pension
          plan.
          Recent labor negotiations increased the Company match for the defined
          contribution (401k) plan from up to 2% to up to 4% for union employees
          hired on
          or after January 1, 2006.
  **U.
          S. Defined Benefit Pension Plan**
  The
          Company has a non-contributory defined benefit pension plan covering Maine
          Public Service and certain MAM employees. Most unregulated employees are
          not
          eligible for this benefit plan. Benefits under the plan are based on employees’
years of service and compensation prior to retirement. The Company’s policy has
          been to fund pension costs accrued. In accordance with that policy, the
          Company
          contributed approximately $441,000 to the pension plan for 2004 in 2005,
          prior
          to the filing of its 2004 corporate income tax return. In addition, the
          Company
          is currently making quarterly payments for the 2005 plan year, in accordance
          with IRS requirements, due to the plan’s market value dropping below the fully
          funded level. These quarterly payments for 2005 are approximately $173,000
          each
          and affect the plan funding level, but not the amount of expense to be
          recognized. Expenses by quarter are summarized in the table below. Lower
          than
          required investment returns, combined with the increasing life expectancy
          of
          retirees, have and will continue to impact liabilities related to pension
          benefits. Management and the Board of Directors are evaluating options
          to
          control such costs and risks associated with MPS’s defined benefit pension plan
          and recognize that actions must be taken to address challenges associated
          with
          retiree benefits.
 
 **Health
          Care Benefits**
  The
          Company provides certain health care benefits to eligible employees. Eligible
          employees share in the cost of their medical benefits, in addition to plan
          deductibles and coinsurance payments. The plan also covers retiree medical
          coverage for employees of Maine Public Service Company, the regulated utility.
          In 2002, certain amendments were made to the plan, including the following:
          Effective with retirements after January 1, 1995, and employees hired before
          January 1, 2003, retirees will be eligible for retiree medical coverage
          after
          completing twenty years of service, subject to a contribution schedule.
          Employees hired after January 1, 2003, are eligible for retiree medical
          coverage
          after completing twenty-five years of service; however, their spouse will
          not be
          eligible for coverage. For employees hired after December 31, 1999, and
          prior to
          January 1, 2003, spousal retiree medical coverage ceases upon the spouse’s
          attainment of age 65. Retirees who were hired before January 1, 2003, contribute
          to the cost of their coverage starting at 60% for retirees with twenty
          years of
          service with the contribution declining to $69.33 per month until age 65
          and
          $21.62 per month thereafter for thirty or more years of service. Retirees
          who
          were hired after January 1, 2003, contribute to the cost of their coverage
          starting at 70% for retirees with twenty-five years of service and declining
          to
          the above-mentioned monthly amounts for thirty or more years of service.
          The
          above amendments in plan provisions have been incorporated into the calculation
          of the related actuarial benefit obligation. The Company continues to evaluate
          the increasing financial liabilities associated with health care benefits
          and is
          considering options that ensure competitive employee benefits and control
          costs.
  21
  Based
          on
          prior MPUC accounting orders, MPS established a regulatory asset of
          approximately $1,061,000 in 1993, representing deferred post-retirement
          benefits. As an element of its four-year rate plan, MPS began recovering
          these
          deferred expenses over a ten-year period, along with the annual expenses
          in
          excess of pay-as-you-go expenses, starting in 1996. For purposes of determining
          the accrued post-retirement benefit cost as of September 30, 2005, and
          December
          31, 2004, the health care cost trend rate used was 8.0% in 2005 and 2004
          and
          graded down to 4% in 2012, remaining at that level thereafter. These rates
          have
          a significant effect on the amounts reported for the health care
          plan.
  One
          of
          the actuarial assumptions incorporated in the calculation of net periodic
          benefit cost for the pension plan is the assumed salary increase. This
          assumption was reviewed during 2005, and revised down from 5% to 4%, based
          on
          MPS’s actual experience. This change resulted in a reduction of $71,000 to
          the
          net periodic benefit cost for 2004. This reduction in expense was recorded
          as a
          change in estimate in the third quarter of 2005, and is included in the
          Statement of Consolidated Income in the “Regulated Operation and Maintenance”
line. The following table sets forth the plans’ net periodic benefit cost, based
          on the original valuation for 2004:
  **Pension
                    Benefits**
                
                **Other
                    Benefits*****(In
                    thousands of dollars)***
                
                **Three
                    Months Ended**
                  **September
                    30,**
                
                **Nine
                    Months Ended**
                  **September
                    30,**
                
                **Three
                    Months Ended**
                  **September
                    30,**
                
                **Nine
                    Months Ended**
                  **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004**
                
                **2005**
                
                **2004**
                
                **2005**
                
                **2004**Service
                    cost
                
                $
                122
                
                $
                120
                
                $
                366
                
                $
                356
                
                $
                45
                
                $
                55
                
                $
                136
                
                $
                165Interest
                    cost
                
                
                283
                
                
                294
                
                
                850
                
                
                872
                
                
                126
                
                
                146
                
                
                378
                
                
                438Expected
                    return on plan assets
                
                
                (269
                )
                
                (301
                )
                
                (808
                )
                
                (909
                )
                
                (54
                )
                
                (51
                )
                
                (161
                )
                
                (153
                )Amortization
                    of transition obligation
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                36
                
                
                36
                
                
                107
                
                
                108Amortization
                    of prior service cost
                
                
                23
                
                
                23
                
                
                68
                
                
                69
                
                
                (15
                )
                
                (15
                )
                
                (45
                )
                
                (45
                )Recognized
                    net actuarial gain
                
                
                26
                
                
                —
                
                
                78
                
                
                —
                
                
                42
                
                
                53
                
                
                127
                
                
                159Net
                    periodic benefit cost
                
                $
                185
                
                $
                136
                
                $
                554
                
                $
                388
                
                $
                180
                
                $
                224
                
                $
                542
                
                $
                672
  **8.
          COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS**
  **Federal
          Energy Regulatory Commission 2005 Open Access Transmission Tariff Formula
          Rate
          filing, FERC Docket ER05- (formula change filing) and ER00-1053-... (calculation
          of the revenue requirement filing)**
  On
          May
          31, 2005, pursuant to Section 205 of the Federal Power Act, 16 U.S.C. Section
          824d, and Title 18 CFR Sections 35.11 and 35.13 of the regulations of
          the FERC, MPS submitted for filing its proposed revisions to its FERC Open
          Access Transmission Tariff in Docket No. ER 05 (the “2005 OATT”) to modify its
          transmission rate formula. MPS filed its updated rates under the 2005 OATT
          formula on June 15, 2005, pursuant to Docket ER00-1053 with an effective
          date of
          June 1, 2005, for both wholesale and retail customers, subject to a customer
          refund that may occur as a result of the proceeding and potential settlement
          negotiations. The retail transmission revenue requirement was increased
          by
          $288,670 on June 1, 2005, under the 2005 OATT. This represented an increase
          of
          8% to the transmission component of retail delivery rates or an overall
          impact
          on total retail delivery rates of 0.7%. The primary reason for the increase
          was
          the increase to costs due to mandated Sarbanes-Oxley requirements, and
          the
          purchase of a new Oracle-based accounting system.
  As
          part
          of the settlement data request process, the Company identified several
          adjustments to its FERC Form 1 filing for 2004, which flow through the
          Company’s
          transmission rate formula. The approximate net impact of these corrections,
          once
          implemented, will be to reduce the overall increase to the projected retail
          transmission revenue requirement and result in a revised projected net
          increase
          to the retail transmission revenue requirement of $178,933 instead of the
          previously projected increase of $288,670. This adjustment will flow through
          Schedule 1.1.2 of the MPS OATT to be effective June 1, 2006, and will be
          passed
          through retail rates on July 1, 2006, when the retail rates are next adjusted.
          The Company has reported to FERC as scheduled that the parties are proceeding
          with the settlement process and will report back in one month. Because
          the
          Company is currently in the midst of a settlement process and continues
          to
          respond to data requests by the interveners, it cannot predict the exact
          dollar
          outcome of this proceeding at this time.
  22
  **MPUC
          Approves the Pass-Thru of Retail Transmission Rates to MPS Retail Jurisdictional
          Customers, and the Increase to DSM Mil Rate, MPUC Docket No.
          2003-516**
  Per
          agreement with the Maine Public Utilities Commission (“MPUC”), the new
          transmission rates for retail customers (above) were put into retail rates
          on
          July 1, 2005, to coincide with MPS’s related State jurisdictional compliance
          filing in MPUC Docket No. 2003-516 to increase the DSM Mil Rate. These
          rates
          were approved by the MPUC on June 20, 2005. Per this filing, total retail
          delivery rates increased by 1.1%.
  **Requests
          for Issuance of Certificates of Public Convenience and Necessity in Connection
          With the Construction of a Proposed Transmission Line and Various Transmission
          Service Reservations.**
  On
          October 4, 2004, MPS filed a Petition with the MPUC requesting the issuance
          of
          Certificate of Public Convenience and Necessity pursuant to 35-A M.R.S.A.
          Section 3132 to construct a 138 kV transmission line originating at an
          existing
          substation in Limestone, Maine and extending to the Canadian Border near
          Hamlin,
          Maine.
  The
          project was proposed in order to ensure the reliability and integrity of
          the MPS
          transmission grid under scenarios of reduced on-system generator availability
          and peak load growth. MPS submitted that the available firm transfer capability
          of the transmission system when added to the remaining on-system hydro
          generation was not sufficient to meet peak load conditions, should existing
          on-system wood-fired generation become unavailable. The proposed line would
          address this by significantly increasing the load-serving capability of
          the
          northern Maine region and would serve to reinforce the vital transmission
          ties
          between northern Maine and the New Brunswick transmission grid. Additional
          benefits of the proposed line include the potential for increasing the
          number of
          competitive retail electric suppliers and increasing the attractiveness
          of the
          region for development of additional generation, such as wind farms, by
          providing increased transmission export capacity.
  The
          MPUC
          Commissioners deliberated the Docket on August 29, 2005, and denied the
          petition, determining that there was no immediate reliability risk in northern
          Maine. The Commission concluded that the risk of losing on-system wood-fired
          generation was not sufficient to warrant the new transmission line. The
          Commission issued the Order on October 21, 2005, that described actions
          to be
          taken by MPS and the Northern Maine ISA to reduce certain risks identified
          by
          MPS. The Company is currently reviewing the Order with regard to the specific
          requirements and is considering whether to seek reconsideration and/or
          appeal of
          the Order. Through September 30, 2005, approximately $829,000 was spent
          in this
          transmission line. MPS expects to seek recovery of these costs in its
          transmission rates and is currently pursuing other recovery options. MPS
          believes it is probable the amounts deferred can be recovered, either through
          future rate cases or through sale of the assets to a third party.
  In
          September 2004, MPS entered into a Commitment Agreement with NB Power.
          Under
          this Agreement, which is subject to MPS obtaining all necessary regulatory
          approvals, MPS will reserve 35 MW of transmission capacity on the NB Power
          system in conjunction with the construction of a new 345 kV transmission
          line to
          be constructed from Point Lepreau near Saint John, NB to Orrington, Maine.
          NB
          Power will own and operate the portion of the line on its side of the border,
          while Bangor Hydro-Electric Company (“BHE”) will own and operate the portion of
          the line on the U.S. side of the border known as the Northeast Reliability
          Interconnect (“NRI”). BHE filed for a Certificate of Public Convenience and
          Necessity for this line on November 5, 2004, in MPUC Docket No. 2004-771.
          MPS
          filed a petition with the MPUC seeking approval to make the reservation
          required
          under the Commitment Agreement on December 13, 2004, in MPUC Docket No.
          2004-775
          which was subsequently changed to MPUC Docket No. 2004-538 Phase II. On
          October
          7, 2005 MPS proposed several changes to the Commitment Agreement, which
          will be
          followed by a formal litigation schedule. As noted above, MPS’s obligations
          under the Commitment Agreement are dependent upon securing regulatory approval.
          MPS cannot predict the outcome of Phase II of this case at this
          time.
  **Wheelabrator-Sherman**
  MPS
          was
          ordered into a Power Purchase Agreement (“PPA”) with Wheelabrator-Sherman (“WS”)
          in 1986, which required the purchase of the entire output (up to 126,582
          MWH per
          year) of a 17.6 MW biomass plant through December 31, 2006. The PPA was
          subsequently amended in 1997, with WS agreeing to price reductions of $10.0
          million through the end of the original term in exchange for an up-front
          payment
          of $8.7 million in May 1998. The MPUC’s December 1997 approval of the amended
          PPA included a determination that the up-front payment would be treated
          as
          stranded cost and, therefore, recovered in rates of the transmission and
          distribution company. Total stranded cost included as a regulatory asset
          under
          the caption “deferred fuel and purchased energy cost and regulatory asset -
          Power Purchase Agreement Restructuring” in the accompanying balance sheet
          related to this contract is $30.2 million at September 30, 2005, and $27.4
          million at December 31, 2004.
  MPS
          and
          WS also agreed to renew the PPA for an additional six years at agreed-upon
          prices and an increase of output to 136,982 MW beginning in 2001. Energy
          supply
          purchases under this contract through February 29, 2000, were $2.6 million.
          Purchases from WS after March 1, 2000, are reflected as stranded costs.
          MPS
          estimates its remaining commitment to purchase power under this contract
          to be
          $14.8 million from October 1, 2005 through 2006.
  23
  MPS
          currently sells 100% of WS’s output to WPS-PDI. From March 1, 2002, through
          February 29, 2004, Energy Atlantic, the Company’s wholly-owned marketing
          subsidiary, took delivery of 40% of WS’s output and WPS-PDI took the remainder.
  Although
          MPS’s earnings associated with stranded costs will be reduced during the period
          from 2004 through 2012, it should not impact the collection of “stranded cost
          freed-up cash flows” post-2006 that are a result of levelization of stranded
          costs and the deferring of total collections of stranded costs associated
          with
          its Wheelabrator-Sherman NUG Contract during the years 1999 through 2006.
          In the
          1998-99 timeframe, in order to reduce the rate impact of stranded cost
          recovery,
          MPS chose to collect its stranded costs on a levelized recovery basis over
          a
          longer term versus collecting stranded costs equaling annualized payouts
          of its
          NUG generation contract with Wheelabrator-Sherman. In so doing, MPS has
          and will
          pay the full contract costs of the Wheelabrator-Sherman NUG Contract until
          it
          expires in 2006. However, during this term MPS has and will only collect
          a
          percentage of the total costs from its consumers. From 2007 until approximately
          2012, MPS will collect the balance due from its ratepayers, but will no
          longer
          have the liability of the Wheelabrator-Sherman NUG Contract. Those monies
          that
          were deferred will be collected during the referenced period and are referred
          to
          as “stranded cost freed-up cash flows.” MPS has received and continues to
          receive varying rates of return on its stranded cost regulatory assets.
  **Maine
          Yankee Decommissioning**
  On
          October 3, 2005, the Nuclear Regulatory Commission announced it had amended
          the
          operating license of the Maine Yankee Atomic Power Co. to release the majority
          of land from the old Maine Yankee power plant site for unrestricted public
          use.
          The Maine Yankee facility included 179 acres, of which 167 acres have been
          released for public use. The remaining 12 acres includes the site’s dry cask
          storage facility, where the spent nuclear fuel is stored, plus a parcel
          of land
          used for a loading area for excavated soil awaiting offsite shipment and
          disposal during the decommissioning process. Maine Yankee is still responsible
          for the security and protection of this land.
  **Poly
          Chlorinated Bi-Phenol Transformers**
  In
          response to a Maine environmental regulation to phase out Poly Chlorinated
          Bi-phenol (“PCB”) transformers, MPS has implemented a program to eliminate all
          transformers on its system that do not meet the new State environmental
          guidelines. The MPS program is in the process of evaluating almost 13,000
          distribution transformers over a ten-year period. Approximately 25% of
          the
          transformers evaluated require “in service” PCB oil sampling. To date,
          approximately 18% of the tested transformers have tested at above the legal
          standard of 50 ppm; all of which have been disposed of according to current
          environmental regulations. MPS is currently in its fifth year of this ten-year
          program. In addition, transformers that pass the inspection criteria will
          be
          refitted with lightning arrestors and wildlife protection. The initial
          cost of
          the ten-year program was estimated to be $5.0 million and, as of September
          30,
          2005, $1.33 million has been spent on this effort. The Company is currently
          re-evaluating the estimate of remaining costs in conjunction with the
          application of FIN 47.
  **Contingent
          Obligations under Purchase Agreements**
  The
          Maricor Group and its subsidiaries incurred equity price risk when The
          Maricor
          Group bought the stock of certain of its subsidiaries. Part of the consideration
          was MAM stock. In the event that the price of MAM common stock was below
          a
          specified price when the seller wished to sell it, The Maricor Group (or
          the
          applicable subsidiary) agreed to pay the difference. Forty-nine thousand
          eight-hundred ninety-nine (49,899) shares are currently outstanding pursuant
          to
          these agreements. At the market price of $19.70 per share at September
          30, 2005,
          the total exposure is approximately $578,000. The true-up periods for these
          restricted shares ends between June 1, 2006 and July 1, 2007.
 
 Market
          price
          protection of a different sort was given by Maricor Technologies when it
          acquired the HCI assets. Part of the consideration there was MAM preferred
          stock
          which is convertible into 26,000 shares of MAM common stock on February
          15,
          2008, subject to some other conditions. To the extent that the market price
          of
          MAM common stock is then below $25 per share, the number of shares issuable
          on
          conversion is ratably increased, which could result in further dilution
          of MAM’s
          common stock. Refer to Note 6 of this Form 10-Q, “Stock Compensation Plan” for
          dilutive effect of preferred shares.
  **Off-Balance
          Sheet Arrangements**
  The
          Company is currently evaluating the treatment of Maricor Ashford under
          Financial
          Accounting Standards Board Interpretation No. 46(R), “Consolidation of Variable
          Interest Entities,” (“FIN 46(R)”). Maricor Ashford had no assets or transactions
          during the third quarter of 2005. Except for operating leases used for
          office
          and field equipment, vehicles and computer hardware and software, accounted
          for
          in accordance with Financial Accounting Standards No. 13, “Accounting for
          Leases,” (“FAS 13”) the Company has no other form of off-balance sheet
          arrangements. The following summarizes payments for leases for a period
          in
          excess of one year for the nine months ended September 30, 2005, and 2004:
  24
  **September
                    30,*****(dollars
                    in thousands)***
                
                **2005**
                
                **2004**Office
                    Equipment
                
                $
                40
                
                $
                59Building
                
                
                151
                
                
                16Vehicles
                
                
                12
                
                
                1Rights
                    of Way
                
                
                1
                
                
                90Field
                    Equipment
                
                
                20
                
                
                41Total
                
                $
                224
                
                $
                207
 
 The
          future minimum lease payments for the items listed above for the next five
          years
          are as follows:
  **Future
          Minimum Lease Payments By Year For All Items**
 
 **Years**
                
                **Minimum
                    Lease**
                  **Payments*****(In
                    thousands of dollars)***2005
                
                $2732006
                
                $2172007
                
                $2152008
                
                $2212009
                
                $174
 
 **Maricor
          Properties’ Leases**
  Maricor
          Properties and its subsidiary, Mecel Properties, lease office space to
          The
          Maricor Group, Canada Ltd in Moncton, New Brunswick and Halifax, Nova Scotia,
          respectively. All other net operating leases are to outside third parties.
          The
          minimum lease revenue expected from the only existing third-party lease
          arrangement does not include its proportional usage of utilities, maintenance
          and tax expenses that will be paid by the third party under its single-net
          lease. This table shows the net operating lease revenue as of September
          30,
          2005, and therefore does not include the minimum lease revenue from the
          MacDonald Building (see Note 11 of this Form 10-Q, “Subsequent
          Events”).
  ***5-Year
          Minimum Lease Revenue for External Party Lease (in
          thousands)***
  2005
                
                $
                512006
                
                $
                512007
                
                $
                512008
                
                $
                512009
                
                $
                51
  **Financial
          Information System Hosting Agreement**
  In
          December 2003, the Company entered into a ten-year agreement with Delinea
          Corporation to host and provide technical and functional support for the
          integrated Oracle Financial Information System. Hosting fees are $510,000
          for
          2005, and $575,000 per year for years 2006-2013.
  **9.
          MARICOR ASHFORD LTD**
  On
          August
          12, 2005, Maricor Properties Ltd entered into a joint venture agreement
          with
          Ashford Investments, Inc., a real estate development and management company.
          Both companies have operations in Moncton, New Brunswick, and Halifax,
          Nova
          Scotia, Canada. The joint venture is called Maricor Ashford Ltd., and is
          headquartered in Moncton, New Brunswick. Maricor Ashford Ltd is a real
          estate
          development and investment company focused on opportunities primarily within
          Atlantic Canada with proposed growth including facilities management services
          of
          owned and non-owned properties. Maricor Ashford had no assets or financial
          transactions during the third quarter of 2005.
  25
 
 **10.
          STEVEN WINTER ASSOCIATES, INC.**
 
 MAM
          has
          signed a non-binding letter of intent to purchase Steven Winter Associates,
          Inc.
          (“SWA”), a leadin g architecture,
          engineering, and building systems research, design, and technology consulting
          firm in North America. SWA, headquartered in Norwalk, Connecticut, with
          offices
          in New York City, Washington, D.C., Albany, New York and Asheville, North
          Carolina, is considered to be a leader in energy efficiency and “green”
architectural services, providing a broad array of sustainable architectural
          and
          engineering services to government and private sector markets. This purchase
          is
          expected to close either during late fourth quarter of 2005 or early in
          the
          first quarter of 2006. However, the acquisition is subject to a number
          of
          issues, including but not necessarily limited to (a) acceptable findings
          from
          due diligence, (b) MAM’s ability to raise the necessary growth and acquisition
          capital, and (c) approval by MAM’s Board of Directors.
  **11.
          SUBSEQUENT EVENTS**
 
 **New
          Financing**
  On
          October 7, 2005, MPS arranged a new three-year $10 million revolving, working
          capital line of credit with Bank of America as Agent, secured by $6.0 million
          of
          first mortgage bonds. This line of credit replaces the former $6 million
          line of
          credit with Bank of New York as Agent. Interest rates on the new Bank of
          America
          facility are at Bank of America’s prime rate, unless fixed for 30, 60, or 90
          days at LIBOR plus 1.375%. Also, MAM, on October 21, 2005, arranged a new
          three-year $4 million revolving, working capital line of credit which provides
          for the repayment of the $750,000 Katahdin Trust Company ninety-day line
          of
          credit and for additional working capital borrowings. As discussed below,
          $1.73
          million of the $4 million revolving line of credit is in the form of a
          letter of
          credit to secure a portion of the MacDonald Building acquisition. The MAM
          line
          of credit is secured by a general security interest in the business assets
          of
          MAM, excluding the assets of MPS. The interest rates on MAM’s new facility are
          at Bank of America’s prime rate or LIBOR plus 2.0% for 30, 60 or 90 days. These
          new credit facilities improve the Company’s ability to fund its on-going working
          capital requirements. These lines of credit are subject to certain financial
          covenants, measured quarterly beginning December 31, 2005. These covenants
          include a minimum tangible net worth, a minimum debt service coverage ratio
          and
          a maximum debt-to-equity ratio.
  On
          October 31, 2005, Maricor Properties Ltd arranged a $2.3 million CDN revolving
          term facility with Royal Bank of Canada (“RBC”), the proceeds of which were used
          to pay the $2.0 million USD term note for the Vaughan Harvey property at
          Katahdin Trust Company. The term of the new RBC note is one-year at a rate
          of
          Royal Bank prime plus 0.50%.  This
          facility is secured in the amount of $2.30 million CDN by a collateral
          mortgage
          covering the Vaughan Harvey Boulevard property in Moncton, New Brunswick,
          and by
          a $570,000 CDN guarantee and a collateral mortgage covering the Mecel Holdings
          property in Halifax, Nova Scotia.
  New
          financing for the MacDonald Building acquisition is referenced
          below.
  **MacDonald
          Building Acquisition**
 On
            October 31, 2005, Maricor Properties Ltd arranged a $2.3 million CDN
            revolving
            term facility with Royal Bank of Canada (“RBC”), the proceeds of which were used
            to pay the $2.0 million USD term note for the Vaughan Harvey property
            at
            Katahdin Trust Company. The term of the new RBC note is one-year at a
            rate of
            Royal Bank prime plus 0.50%. This facility is secured in the amount of
            $2.30
            million CDN by a collateral mortgage covering the Vaughan Harvey Boulevard
            property in Moncton, New Brunswick, and by a $570,000 CDN guarantee and
            a
            collateral mortgage covering the Mecel Holdings property in Halifax,
            Nova
            Scotia.
 **Collective
            Bargaining Agreement**
 
 On
            September 22, 2005, the local IBEW 1837 Union approved a four year collective
            bargaining agreement for the term of October 1, 2005, through September
            30,
            2009. The key provisions of this contract include wage increases of 4%
            for the
            first year and 3.25% for each year thereafter, increases in health insurance
            premiums, deductibles and co-payments to be paid by the employees, and
            termination of pension and postretirement benefits for new union employees
            hired
            on or after January 1, 2006, and October 1, 2005, respectively. This
            contract is
            expected to be signed by the union representative during November
            2005.
 26
  **PART
          1. FINANCIAL INFORMATION**
  ***Item
          2. Management's Discussion and Analysis of Financial Condition and Results
          of
          Operations***
 
 **Forward-Looking
          Statements**
  The
          discussion below may contain "forward-looking statements" as defined in
          the
          Private Securities Litigation Reform Act of 1995, related to the expected
          future
          performance of our plans and objectives, such as expected future earnings
          from
          The Maricor Group. There can be no assurance that actual results will not
          materially differ from expectations. Factors that could cause actual results
          to
          differ materially from our projections include, among other matters, electric
          utility restructuring; future economic conditions; changes in tax rates;
          interest rates or rates of inflation; developments in our legislative,
          regulatory, and competitive environment; our ability to find suitable tenants
          in
          the markets in which subsidiaries have space available; our ability to
          sell
          engineering services in the markets served; technology displacement; consumer
          decisions; and the decommissioning cost of Maine Yankee.
  **Accounting
          Policies**
  Critical
          accounting policies are disclosed in the Company’s 2004 Annual Report on Form
          10-K and the Company’s March 31, 2005, and June 30, 2005, Forms
          10-Q.
  ***Quarterly
          Performance Summary***
 
 MAM’s
          overall
          financial performance during the third quarter under-performed expectations
          as a
          result of a number of factors, including seasonal, market, operational,
          growth-investment, and regulatory factors. As MAM’s overall business platform
          becomes increasingly focused on non-utility and non-regulated business
          models,
          its revenues and earnings may be less consistent on a quarter-on-quarter
          basis.
          As described herein, MAM’s efforts to diversify and grow its unregulated
          segments are believed to be essential in order to replace the reduced revenues
          and earnings of MPS resulting from disaggregation and generation divestiture
          due
          to electric utility deregulation within the State of Maine. MAM believes
          its
          investments in its new unregulated business lines are essential for the
          maintenance and creation of long-term shareholder value, although MAM has
          reported losses for its unregulated subsidiaries during the last eighteen
          months. Management believes that during at least the initial phases of
          its
          expansion into unregulated businesses, required investments and start-up
          costs
          are likely to reduce overall net income. While we cannot give any assurances
          as
          to when such negative impact will end, we believe that it is critical to
          achieve
          both operational synergies with the new businesses and critical scale and
          market
          penetration.
  Investing
          in and building new growth businesses for MAM has necessitated the investment
          of
          operating dollars in new market-based products and services, a s well as
          in initiatives to bring such products and services to the market. While
          Management believes the growth strategy will result in improved long-term
          financial performance for MAM, the outcome will be impacted by a number
          of
          internal and external factors and we cannot predict with certainty future
          growth
          and earnings. We acknowledge that some level of losses is not unusual when
          a
          company enters into new business lines, and we are seeking to minimize
          losses as
          quickly as possible through cost controls and increased focus on revenue
          generation. A description of Management and operational actions to advance
          the
          profitability of MAM’s unregulated subsidiaries is included in this section. MAM
          continues to believe its portfolio and value-chain approach to growth has
          promising prospects for future profitability, however it can give no assurances
          as to when MAM’s investment in such businesses will become profitable.
          Management does undertake an annual test to determine if any impairment
          to the
          purchase price of acquired businesses has occurred. Interim impairment
          testing
          is also performed following a triggering event. The next impairment tests
          will
          be based on an October 31, 2005, valuation date. While Management believes
          its
          acquisitions to date have been sound investments, it cannot warrant that
          impairment has or has not occurred until such tests are undertaken. Should
          impairment be recognized, it will impact earnings as a non-cash
          adjustment.
  As
          a
          result of a combination of factors, including but not necessarily limited
          to (a)
          MPS’s decision to levelize and stretch the term of stranded cost recovery,
          (b)
          the reduction in the rate of return on MPS’s stranded cost regulatory assets,
          and (c) the costs associated with the acquisitions and/or start-up of MAM’s
          unregulated businesses, overall corporate financial liquidity will require
          close
          Management attention, particularly during the next five quarters. MAM’s overall
          liquidity should improve significantly post-2006 when MPS begins net recovery
          of
          stranded costs. Management has taken steps to improve and increase its
          financial
          relationships and short-term borrowing capacities, including shifting to
          a new
          lead bank. Additionally, Management has taken steps to enhance its overall
          treasury operations with improved cash flow reporting.
  As
          a
          result of MPS’s rate design authorized by the MPUC, the regulated utility’s
          earnings lag during the second and third quarter of each year, thus creating
          seasonal volatility in earnings. As shown
          in the following chart, MPS’s second and third quarter earnings are impacted by
          its rate design that provides for a higher price during peak usage periods
          versus lower prices during off-peak periods. Such a rate design is intended
          to
          encourage energy conservation through price signals. While MPS cannot predict
          with certainty future changes in rate designs, its current rate structure
          does
          create quarter-to-quarter volatility.
  27
  
  MPS’s
          earnings will continue to be impacted by the reduced allowable rate of
          return on
          MPS’s stranded cost regulatory assets. Further, once the majority of MPS’s
          stranded costs have been recovered between 2007 and 2012, the utility’s overall
          rate base will decline, resulting in lower earnings. Additional factors
          impacting MPS’s net income contribution to MAM include, but are not necessarily
          limited to:
  ·
                Costs
                    associated with Sarbanes-Oxley Act
                    compliance.
 ·
                Increased
                    fuel costs associated with fleet transportation and facilities
                    space
                    heating and cooling.
 ·
                Increased
                    stranded costs amortization due to the Maine Yankee true-up
                    provision.
 ·
                Increased
                    pension-related expenses for MPS.
 ·
                Organization
                    restructuring costs.
 ·
                Increased
                    amortization expenses for MPS’s financial
                    system.
  Unregulated
          segment earnings were impacted by a number of issues, including but not
          necessarily limited to: (a) costs associated with the acquisition of Cornwallis
          Court Developments Ltd; (b) continued investments in The Maricor Group’s
“start-ups” product and service lines associated with sustainable asset
          management and energy-related asset development, which tend to have longer
          sales
          cycles; (c) lower than anticipated utilization rates for consulting engineering
          divisions; (d) increased marketing and sales costs associated with new
          product
          and service introductions; and (e) increased interest rate expenses associated
          with variable interest rate notes for MAM’s unregulated
          investments.
  While
          third quarter results under-performed, Management believes a number of
          improvements and overall business initiatives during the quarter hold the
          potential for improving future results. On October 7, 2005, Maricor Properties
          Ltd acquired Cornwallis Court Developments Ltd, the owner of a 60,000 square
          foot office facility near the center of downtown Halifax, Nova Scotia.
          The
          facility is fully leased, primarily to provincial and Canadian federal
          government tenants under long-term leases. In addition, a number of leasing
          proposals were submitted to potential tenants considering the Maricor
          Properties’ office facility in Moncton, New Brunswick, reflecting an improving
          market within Moncton. While there is no certainty that additional tenants
          will
          sign leases in the near-term, Management is encouraged by the increased
          interest
          in long-term leases within the Moncton market.
  During
          the third quarter, Maricor Technologies completed development of new versions
          of
          its Building BlocksTM software program and began upgrades of its iPlanTM software.
          Maricor Technologies is making positive strides to expand its software
          value
          proposition to include capital performance management, facility energy
          efficiency planning and management, and asset governance offerings, including
          systemic solutions for integrating demand side management into a utility’s
          overall integrated resources planning programs. Management believes these
          offerings are aligned with the major macro-economic trends facing North
          America,
          particularly related to energy, emissions and sustainable asset governance.
          During the quarter, increased marketing emphasis was placed on the marketing
          of
          these intellectual property assets, focusing primarily on a “private labeling”
versus a mass market or retail strategy.
 
 Similar
          to the second quarter, The Maricor Group’s mechanical, electrical and
          plumbing/fire protection design engineering operations were profitable
          prior to
          corporate allocations and costs associated with its new start-up product
          and
          service lines involving lifecycle asset management and “hosted” energy asset
          development, which have longer sales cycles than design engineering. The
          future
          profitability of The Maricor Group requires increased scale and increased
          emphasis on its higher value offerings, versus design engineering services.
          While design engineering services will continue to be part of The Maricor
          Group’s offerings, it is increasing its focus on energy efficiency-related
          offerings and other higher value services. As part of the continuing
          implementation of its growth strategy, The Maricor Group announced during
          the
          third quarter its intent to acquire Steven Winter Associates, Inc.,
          headquartered in Norwalk, Connecticut with offices in New York City, New
          York,
          Washington, D.C., Albany, New York and Asheville, North Carolina. Steven
          Winter
          Associates, Inc. is one of North America’s leading building sciences firms
          focused on sustainable architectural and engineering services, energy efficiency
          and related services. The acquisition of Steven Winter Associates, Inc.
          is
          dependent upon successful completion of due diligence, financing and Board
          approval. Management believes the acquisition of Steven Winter Associates,
          Inc.
          will improve the overall scale of The Maricor Group, as well as assist
          in the
          expansion of higher value product and service line offerings within both
          the
          United States and Canada.
 
 28
 On
            September 22, 2005, the local IBEW 1837 Union approved a four year collective
            bargaining agreement for the term of October 1, 2005, through September
            30,
            2009. Management believes this contract is fair, but favorable. Some
            of the key
            provisions of this contract are wage increases of 4% for the first year
            and
            3.25% for each year thereafter, increases in health insurance premiums,
            deductibles and co-payments to be paid by the employees, and termination
            of
            pension and postretirement benefits for new union employees hired on
            or after
            January 1, 2006, and October 1, 2005, respectively. This contract is
            expected to
            be signed by an authorized union representative during November 2005.
            In
            addition, the Union agreed to undertake future discussions during the
            term of
            the contract that could lead to a freeze in their defined pension plan
            and
            migration to a 401(K), with the understanding that such discussions would
            ensure
            a make whole provision.
  As
          a
          small publicly traded company, costs associated with governance and compliance
          tend to disproportionately impact the Company as opposed to larger firms.
          While
          MAM is undertaking necessary steps to comply with the Sarbanes-Oxley Act,
          especially Section 404, the costs have had a significant impact on the
          Company.
          While the Company is committed to full financial transparency and compliance
          with Section 404, Management is encouraged that the SEC’s Advisory Committee on
          Smaller Public Companies is considering proposals to moderate the requirements
          for smaller publicly traded firms. Through the end of October, 2005
          approximately $800,000 had been spent directly on efforts to comply with
          the
          requirements of Section 404.
 
 In
          addition, as a result of migration to MAM’s holding company status, a number of
          costs that would have historically been borne by MPS are now partially
          borne by
          the MAM’s unregulated operations. These corporate allocations and direct
          corporate charges for costs related to Sarbanes-Oxley compliance, Board
          of
          Director costs, insurance, and audit services, to name a few, impact segment
          information. Given that many of these costs tend to be fixed, increasing
          the
          scale of unregulated operations is one of the possible routes for offsetting
          the
          impact of such allocated costs.
 
 To
          facilitate improvement of MAM’s overall financial performance, Management is
          taking additional steps to enhance revenue production and control costs
          through
          decentralization of corporate services. While Management is focused on
          cost
          controls, it does not believe that cost controls alone can achieve the
          desired
          earnings goals of the Company in the near or long-term. Management has
          undertaken a number of staffing changes intended to reduce costs and bring
          greater commercial focus to operations. These planned actions include staffing
          reductions in some areas, as well as changes in certain management positions.
          Staffing changes and alignment are intended to increase the organization’s focus
          on commercial skill sets, while reducing costs. Essential to improved
          performance is changes in both the sales and marketing methods currently
          employed by The Maricor Group. While The Maricor Group has historically
          focused
          on a “seller-doer” model, an increasing emphasis is now being placed on a
          full-time business development program. Such efforts will continue to include
          increased executive and senior management involvement in enterprise-wide
          sales
          efforts. In addition, while The Maricor Group has served as the marketing
          and
          sales channel for Maricor Technologies, changes are being undertaken to
          expand
          the marketing and sales efforts of Maricor Technologies with less reliance
          on
          software sales through The Maricor Group.
 
 In
          order
          to continue implementation of MAM’s growth strategy, Management is focused on
          capital formation to fully implement its portfolio growth strategy. Capital
          formation may take the form of equity offerings and/or debt. In addition,
          Management has established new and expanded banking relationships with
          Bank of
          America, N.A. as the lead agent and primary lender to MAM and MPS to facilitate
          the Company’s growth and operating strategy. While Bank of America, N.A. is
          serving as the primary financial institution for MAM and MPS, financial
          relations have also been established or continued with Katahdin Trust Company,
          Key Bank and the Royal Bank of Canada.
 
 ***Discussion
          and Description of the Company’s Business Model and Growth Strategy***
  In
          2003,
          MPS sought approval from the Maine Public Utilities Commission and its
          shareholders to form a holding company. MPS’s decision to convert to a holding
          company structure and begin implementation of a diversification and growth
          strategy was a result of a combination of regulatory and economic factors
          including, but not limited to: (a) the negative economic impacts of deregulation
          and generation divestiture on MPS’s revenue model, (b) flat to declining
          demographic and economic conditions within MPS’s service area; (c) regulatory
          constraints or barriers to implementation of a growth strategy under MPS’s
          organizational structure; (d) a declining rate base as a result of reductions
          in
          stranded costs as regulatory assets; and (e) the strategic objective to
          implement an effective risk management structure associated with the Company’s
          overall growth strategy.
  As
          a
          result of Maine’s deregulation and MPS’s generation divestiture, MPS no longer
          serves as a vertically integrated electric utility and has divested itself
          of
          its electric generation assets. With the exception of stranded cost recovery,
          MPS’s revenues come almost exclusively from regulated transmission and
          distribution services associated with transporting electric supply. MPS
          receives
          varying returns on its stranded regulatory assets, as well as varying returns
          on
          its regulated transmission and distribution rate bases. Generally, stranded
          cost
          represents the difference in value or contract value of generation assets
          in a
          regulated environment, as compared with market values of these same assets
          or
          contracts for purchased power. In a regulated regime, investor-owned public
          utilities are allowed to make a “fair” rate of return on their prudently
          invested capital. In practice, regulators set the price of electricity
          so that
          the utility receives enough income to pay its financial obligations plus
          a
          reasonable return on its fixed investments. In effect, historical or accounting
          costs of asset installations determine the current market value of capital.
          Regulators adjust the revenue stream up or down to allow a public utility
          to
          earn the approved rate of return on the book value of its capital, which
          is also
          known in a regulatory context as its “rate base.” MPS continues to earn
          regulated rates of return on its transmission and distribution assets.
          MPS’s
          distribution services are regulated by the MPUC and its transmission services
          are regulated by the FERC.
  29
 As
            a
            result of Maine’s deregulation and MPS’s generation divestiture, MPS no longer
            serves as a vertically integrated electric utility and has divested itself
            of
            its electric generation assets. With the exception of stranded cost recovery,
            MPS’s revenues come almost exclusively from regulated transmission and
            distribution services associated with transporting electric supply. MPS
            receives
            varying returns on its stranded regulatory assets, as well as varying
            returns on
            its regulated transmission and distribution rate bases. Generally, stranded
            cost
            represents the difference in value or contract value of generation assets
            in a
            regulated environment, as compared with market values of these same assets
            or
            contracts for purchased power. In a regulated regime, investor-owned
            public
            utilities are allowed to earn a “fair” rate of return on their prudently
            invested capital. In practice, regulators set the price of electricity
            so that
            the utility receives enough income to pay its financial obligations plus
            a
            reasonable return on its fixed investments. In effect, historical or
            accounting
            costs of asset installations determine the current market value of capital.
            Regulators adjust the revenue stream up or down to allow a public utility
            to
            earn the approved rate of return on the book value of its capital, which
            is also
            known in a regulatory context as its “rate base.” MPS continues to earn
            regulated rates of return on its transmission and distribution assets.
            MPS’s
            distribution services are regulated by the MPUC and its transmission
            services
            are regulated by the FERC. MPS’s current actual rate of return for distribution
            services is lower than the rate of return authorized in their most recent
            rate
            case, due to several factors, including Sarbanes-Oxley compliance costs
            and the
            Company’s investment in a new financial information system.
  Based
          on
          MPS’s current amortization of stranded costs and approved stranded cost rates
          of
          return approved by the MPUC, and subject to a number of variables embedded
          in
          the calculation of those stranded costs, the majority of MPS’s stranded cost
          should be recovered by the end of 2012. The most significant portion of
          MPS’s
          stranded costs are associated with an existing non-utility generator (“NUG”)
          supply contract referred to in this document as the “Wheelabrator-Sherman NUG
          Contract.” The Wheelabrator-Sherman NUG Contract resulted from the passage by
          the U.S. Congress of the 1978 Public Utilities Regulatory Policy Act (“PURPA”)
          and is summarized more fully below. The facility itself is a small bio-mass
          (principally wood chip) electric generation facility. Over approximately
          the
          next seven years, MPS’s rate base will decline as these and other stranded costs
          are reduced or eliminated. Management and the Board of Directors believe
          that
          MPS’s rate base and total revenues will continue to decline as a result of
          the
          ultimate elimination of stranded costs as a regulatory asset and potentially
          due
          to: (a) the economic impact of deregulation and generation divestiture
          on MPS’s
          core revenue model; (b) MPS’s economically lagging service area; and (c)
          regulatory and legislative risks in connection with rate making, service
          requirements or other mandated actions. Based on Management’s and the Board of
          Directors’ assessment of MPS’s declining rate base, in 2003 a decision was made
          to create a holding company and to implement a diversified growth strategy.
  After
          formation of MAM, in MPS’s 2004 stranded cost case before the MPUC, it was
          determined that MPS had not previously recognized accumulated deferred
          income
          taxes with respect to the carrying charges on its stranded cost deferred
          fuel
          account. As a result, during the period from 1999-2002, MPS over-collected
          its
          earnings on its stranded cost recovery. Consequently, the MPUC agreed that
          MPS’s
          return component on the deferred stranded cost fuel balance should be reduced
          in
          such a manner that ratepayers would not pay on a net present value basis
          an
          amount greater than the total owed to MPS. As a result, MPS’s net income was
          impacted in 2004 by $679,000 and will continue to be impacted through 2012.
          The
          projected and estimated impact on MPS’s annual earnings will range from
          approximately $1.0 million in 2005, increasing to $1.2 million in 2007,
          and then
          gradually decreasing to $17,000 in 2012. MAM and MPS cannot warrant that
          these
          estimates will be the exact impact, and cannot forecast possible impacts
          of
          potential future MPUC and legislative decisions or acts.
  Although
          MPS’s earnings associated with stranded costs will be reduced during the period
          from 2004 through 2012, it should not impact the collection of “stranded cost
          freed-up cash flows” post 2006 that are a result of levelization of stranded
          costs and the deferring of total collections of stranded costs associated
          with
          its Wheelabrator-Sherman NUG Contract during the years 1999 through 2006.
          In the
          1998-99 timeframe, in order to reduce the rate impact of stranded cost
          recovery,
          MPS chose to collect its stranded costs on a levelized recovery basis over
          a
          longer term versus collecting stranded costs equaling annualized payouts
          of its
          NUG generation contract with Wheelabrator-Sherman. In so doing, MPS has
          and will
          pay the full contract costs of the Wheelabrator-Sherman NUG Contract until
          it
          expires in 2006. However, during this term MPS has and will only collect
          a
          percentage of the total costs from its consumers. From 2007 until approximately
          2012, MPS will collect the balance due from its ratepayers, but will no
          longer
          have the liability of the Wheelabrator-Sherman NUG Contract. Those monies
          that
          were deferred will be collected during the referenced period and are referred
          to
          as “stranded cost freed-up cash flows.” MPS has received and continues to
          receive varying rates of return on its stranded cost regulatory assets.
  The
          gross
          deferred stranded cost freed-up cash flows are estimated to be between
          $31.0 and
          $36.0 million over the 2007 through 2012 timeframe. These deferred stranded
          cost
          freed-up cash flows will not impact net income. Current plans for the
          anticipated stranded cost freed-up cash flows include: (a) utilizing such
          funds
          to reduce MPS debt to maintain an optimum regulatory capital structure
          for MPS;
          (b) reinvestment in the MPS transmission and distribution system; and (c)
          to
          dividend a portion of the stranded cost freed-up cash flows to the parent
          MAM
          within MPUC restrictions, for the purpose of financing in part or in whole,
          potential acquisitions, growth, and start-up operating costs of subsidiaries
          consistent with the Company’s growth strategy. While MPS believes it will
          receive full stranded cost recovery and recovery of deferred collections,
          it
          cannot predict with certainty future regulatory and/or legislative actions.
          Regulatory and legislative risks may exist relative to full stranded cost
          recovery. In addition, there are a number of variables discussed in more
          detail
          below that may affect the timing and magnitude of MPS’s stranded cost recovery.
  Management
          and the Board of Directors have adopted what they believe to be a market-based,
          realistic, and conservative growth and diversification strategy. While
          the
          overall strategy is deemed conservative, it should be recognized that as
          the
          Company transitions from a “regulated” return on equity revenue model to a
“deregulated” and more market-based revenue model, earnings are subject to
          greater variability and risks. In addition, due to the Company’s limited
          investment capital, investments in new product lines, new office locations,
          increased staffing and other non-acquisition growth costs must be funded
          from
          ongoing earnings of the Company and such investments may impact earnings
          during
          implementation of the Company’s growth strategy.
  30
  As
          part
          of the Company’s business strategy, MPS, as a regulated entity, is continuing to
          focus on business process improvements and technology and infrastructure
          investments to improve the overall performance, system reliability, economics,
          and efficiencies of MPS’s transmission and distribution systems. These
          strategies include, but are not necessarily limited to, the adoption of
          new
          productivity enhancing technologies, such as automated meter reading, changes
          in
          core business processes, adoption of integrated asset management strategies,
          including transmission inspection programs, and development and implementation
          of long-term transmission and distribution plans. These plans included
          the
          proposed construction of additional 138 KV regulated transmission assets,
          subject to approval by the MPUC. The MPUC has denied MPS’s petition to construct
          the proposed line, which MPS feels is important to ensure system security
          and
          reliability. MPS is currently evaluating its options and intends to bring
          a
          motion for reconsideration and/or modification of the order. As of the
          end of
          the third quarter, approximately $829,000 had been expended on labor and
          legal
          efforts related to the research and approval filing of this project, and
          is
          currently reported in construction work-in-progress on the Consolidated
          Balance
          Sheet. Management expects to seek recovery of these costs in whole in its
          transmission rates and/or continue to pursue other avenues of recovery.
          The
          goals of these collective efforts are to allow for efficient long-term
          control
          of MPS’s annual capital, operating, and maintenance expenditures, while
          improving system and customer service performance. MAM and MPS cannot predict
          with certainty the outcome of its filing(s) with regulatory bodies, including
          the MPUC or FERC.
  MAM’s
          unregulated growth strategy centers on a diversification and value-chain
          approach that expands the Company’s business and revenue model to include,
          without limitation, building sciences, mechanical and electrical engineering
          services, energy efficiency solutions, air emissions reductions, facility
          lifecycle asset management services, facility lifecycle asset management
          software technologies, facilities management, and asset/facility ownership.
          In
          addition, through The Maricor Group, efforts continue to identify and
          potentially execute opportunities to design, build, own and/or operate
          customer-hosted energy-related assets, such as central utility steam plants,
          customer-hosted non-merchant alternative fuel projects and customer-hosted
          co-generation assets. As an affiliated company of MPS, The Maricor Group
          may
          have certain limitations with respect to ownership of co-generation assets
          within the MPS service area and the State of Maine.
  One
          of
          the challenges to MAM’s growth strategy is the need for capital formation to
          allow for meaningful growth through acquisitions. Given the limited earnings
          and
          cash flow characteristics of the Company, growing the company internally,
          often
          referred to as organic growth, is deemed to be more expensive than acquisitions.
          Cash flow challenges are exacerbated by MPS’s levelization of its stranded cost
          recovery, as well as the long accounts receivable collection lead times
          typical
          of mechanical, electrical and plumbing design engineering businesses. The
          availability of growth capital and operating cash flows are critical to
          the
          overall success of the Company’s growth and operations strategies. Given MAM’s
          organizational structure as a holding company, each operating subsidiary,
          which
          serves as a profit and loss center, must make certain contributions to
          the
          overall operations of the holding company. These costs, which are referred
          to as
          corporate allocations, are generally costs that existed within MPS prior
          to its
          reorganization into a holding company. Thus, to varying degrees, the Company’s
          unregulated subsidiaries offset costs that would have been borne by MPS.
          Such
          internal corporate allocations can and will have an impact on the unregulated
          subsidiaries until they achieve a certain critical mass in terms of operating
          and financial scale.
  MAM’s
          unregulated engineering, sustainable asset management, energy efficiency
          and
          asset development subsidiaries will need to become more profitable to offset
          corporate overhead and administrative costs (corporate allocations). One
          way to
          reduce the impact of this overhead is with increased scale of operations
          and
          revenues. Corporate governance, enterprise-wide insurances, accounting,
          human
          resources services and information technology services require a minimum
          scale
          that has the ability to serve a larger organization, thus lowering the
          per
          employee costs for such services. Management believes the near and long-term
          profitability of its unregulated subsidiaries is dependent upon continuing
          efforts to increase the scale or size of the organizations through increased
          hiring of engineers and/or acquisition of additional engineering-related
          firms
          in the U.S and/or Canada, increased sales of the various services, acquisition
          of additional real estate, and the development of customer-hosted energy
          assets.
          As a result, MAM has announced its intent to acquire Steven Winter Associates,
          Inc., one of North America’s leading building sciences firms with an emphasis on
“green” or sustainable services. The acquisition is subject to (a) successful
          due diligence, (b) capital formation, and (c) Board approval. Management
          recognizes that scale alone is not the solution, and that each material
          part of
          the whole must be contributing to profitability.
  Management
          also recognizes that the overhead allocation does not affect the profitability
          of the Company as a whole, since the overhead is ultimately covered by
          all
          pieces of the Company. The overhead allocation just affects the measurement
          of
          the profitability of the Company’s expansion into new unregulated
          businesses.
  MAM’s
          overall unregulated growth strategy is guided by a set of principles and
          values
          that promote sustainability, energy efficiency, improved asset governance,
          capital performance management, and Leadership in Energy and Environmental
          Design. The Company believes that within its and its subsidiaries’ market
          regions, sustainable initiatives, investments, products, and services involving
          energy efficiency, alternative fuels, natural resources conservation,
          sustainable engineering designs, facility lifecycle asset management, asset
          governance, and reductions of air emissions are (a) economically viable;
          (b) can
          create increased and long-term shareholder value; and (c) are aligned with
          core
          social and public policy values, particularly within New England and Atlantic
          Canada.
  31
  Although
          the Company, through its unregulated subsidiaries, provides fee-for-service
          mechanical, electrical and plumbing/fire protection engineering design
          services,
          asset development, software tools, and other services outside the realm
          of
          sustainability, it continues to migrate toward business processes, investments,
          initiatives, products and services that are defined as sustainable. Sustainable
          engineering and development involves the planning, design, construction,
          operation and renewal of facility assets in a manner that will assure the
          availability of resources for future generations. In order to achieve this
          goal,
          we believe it is necessary to adopt engineering practices and design goals
          that
          focus on efficiency, conservation of materials and energy, and reduction
          of
          environmental pollutants. Sustainable engineering is essentially the application
          of all technical disciplines and arts toward greater efficiency and conservation
          of materials and energy resources, with emphasis on eliminating the use
          of
          non-renewable and hazardous substances. Consequently, The Maricor Group
          and its
          subsidiaries are focused on building a leading North American team of LEED
          certified engineers that support customers’ efforts to achieve facility
          sustainability.
  The
          LEED
          Green Building Rating System ® is a
          voluntary, consensus-based U.S. and Canadian standard for developing
          high-performance, sustainable buildings. Members of the U.S. and Canadian
          Green
          Building Council, representing all segments of the building industry, developed
          LEED and continue to contribute to its evolution. The U.S. and Canadian
          Green
          Building Councils are North America’s foremost coalition of leaders from across
          the building-related industry working to promote facilities that are
          environmentally responsible, profitable and healthy places to live and
          work.
  LEED
          provides a complete framework for assessing building performance and meeting
          sustainability goals. Based on what we believe to be well-founded scientific
          standards, LEED emphasizes state-of-the-art strategies for sustainable
          site
          development, water savings, energy efficiency, materials selection and
          indoor
          environmental quality. LEED recognizes achievements and promotes expertise
          in
          green buildings through a comprehensive system offering project certification,
          professional accreditation, training and practical resources. There is
          a LEED
          certification exam, whose purpose is to ensure that successful candidates
          have
          the knowledge and skills necessary to participate in sustainable design
          processes, ensuring a high level of understanding of LEED requirements,
          resources, and processes.
  As
          a part
          of the Company’s overall business diversification and growth strategy, its real
          estate development and investment subsidiaries, Maricor Properties Ltd
          and Mecel
          Properties Ltd, also focus on sustainability and “smart growth” concepts, as
          defined below, and revitalization projects. It is the goal of the Company’s real
          estate investment and development groups to ultimately develop, revitalize,
          own
          and/or manage facility infrastructure that meet or approach certification
          as a
          LEED-certified building and/or contributes to smart growth initiatives.
  There
          is
          no single definition of smart growth; its meaning depends on context,
          perspective and timeframe. The common link among different views of smart
          growth
          is development that revitalizes central cities and older suburbs, supports
          and
          enhances mass transit, promotes walking and bicycling, and preserves open
          spaces
          and agricultural lands. Smart growth is not no growth; rather, it seeks
          to
          revitalize the already-built environment and, to the extent necessary,
          to foster
          efficient development at the edges of the region, in the process creating
          more
          livable and environmentally responsible communities. Smart growth developments
          attempt to meet the key goals of sustainable development through effective
          land
          use planning and the construction of facilities infrastructure that strive
          to
          preserve the natural environment to the extent possible, while enhancing
          communities and their overall quality of life.
  Currently,
          Maricor Properties Ltd and its subsidiaries Mecel Properties Ltd and Cornwallis
          Court Developments Ltd own three office complexes within Atlantic Canada.
          These
          properties include a five-story office complex in the downtown area of
          Moncton,
          New Brunswick that had fallen into disrepair. Using the engineering
          expertise of The Maricor Group, Canada Ltd, the building is being revitalized
          into a productive, architecturally attractive, and energy efficient facility,
          reusing building materials in manners that enhance sustainability, while
          providing for a quality work space. The Moncton building is a multi-tenant
          facility which houses The Maricor Group, Canada Ltd, as well as other tenants.
          Management is currently working to lease the balance of the facilities
          and
          continues to evaluate additional properties for acquisition and/or development.
          Facilities management and leasing are outsourced to strategic partners
          within
          Atlantic Canada -- Ashford Investments and Ashford Properties.
  On
          October 7, 2005, Maricor Properties Ltd acquired Cornwallis Court Developments
          Ltd, the owner of the J. Angus MacDonald
          Building located in Halifax, Nova Scotia, Canada, a 60,000 square foot
          office
          facility constructed in about 1992 and which is currently leased to a number
          of
          various governmental agencies. The modern brick and glass office facility
          has
          exclusive rights to certain parking facilities provided by the City of
          Halifax.
          The facility is located a few blocks from the historic Citadel in downtown
          Halifax within a revitalization district. Maricor Properties believes this
          property and surrounding areas has potential for significant upgrade and
          redevelopment using “smart growth” principles.
  Mecel
          Properties Ltd owns the office facility housing The Maricor Group, Canada
          Ltd’s
          Halifax office. The two-story, 10,000 square foot office complex is located
          within a downtown revitalization district of Halifax, approximately one
          block
          from the J. Angus MacDonald Building, and is part of Maricor Properties
          Ltd’s
          goal to revitalize a section of downtown Halifax near the core historic
          city.
          Currently, the facility is a single tenant occupied facility.
  32
  Maricor
          Technologies, Inc. was formed in February 2005, as a wholly-owned subsidiary
          of
          MAM. At the time of formation, Maricor Technologies acquired strategic
          asset
          management (“iPlan”) and maintenance management (“Building Blocks”) software
          products through a three-way transaction involving Delinea Corporation,
          a
          Dallas-based information technology services firm and HCI Systems, the
          original
          developers of the software. The software products provide most of the necessary
          underlying product platform components for enterprise-level and packaged
          software product lines. The iPlan and Building Blocks products have been
          marketed through a distribution agreement with its affiliated companies,
          The
          Maricor Group, The Maricor Group New England (formerly RES Engineering,
          Inc.)
          and The Maricor Group, Canada Ltd. Prior to the acquisition of the software
          assets, The Maricor Group and its subsidiaries had exclusive marketing
          rights to
          the products within certain industry and geographic sectors. Maricor
          Technologies will market its software product and service lines on a
          progressively expanding basis, with its target market region being North
          America. Maricor Technologies has started to implement direct marketing,
          focusing on the “private labeling” market versus a retail mass market
          strategy.
  Maricor
          Technologies develops information and software tools to support capital
          performance management as it relates to infrastructure assets, asset governance
          and reporting, and sustainable lifecycle management of infrastructure assets.
          Combining what Management believes to be leading strategic management methods
          with proven engineering, energy and economic models, Maricor Technologies’
products are designed to deliver required information to allow organizations
          to
          optimize capital, maintenance, and energy budgets, reduce emissions, and
          to
          comply with financial and environmental reporting requirements. Maricor
          Technologies supports existing software assets and develops additional
          software
          assets that support the evolving sustainability and facility asset lifecycle
          management, including asset governance, capital performance management,
          energy
          efficiency and emissions reductions.
  MAM’s
          overall strategy includes the continuing ownership and operation of its
          regulated electric transmission and distribution utility, as well as the
          potential acquisition of additional regulated utilities or assets. However,
          it
          is impossible to predict with certainty if and when MAM may acquire additional
          regulated utilities or assets. The decision to acquire additional regulated
          utilities or assets may be impacted by a number of issues, including but
          not
          necessarily limited to: (a) regulatory approvals; (b) the impact on MPS’s
          two-county tax-exempt financing; (c) the ability to raise capital; and
          (d) the
          identification of acquisition opportunities that are scale relevant and
          acquirable. Potential utility-related acquisitions are intended to seek
          to
          leverage MPS’s and other subsidiaries’ existing operating infrastructure,
          including without limitation, call center and collections operations,
          telecommunications technologies, billing and information technology
          applications, engineering capabilities, asset management systems, regulatory
          experience, and Management expertise. While Management has not eliminated
          potential options to acquire other regulated utility assets, they are less
          probable.
  MAM’s
          growth strategy consists of targeted acquisitions and non-acquisition growth.
          Key “platform” acquisitions in the engineering, real estate and software sectors
          have been executed and additional acquisitions may be considered. Acquisitions
          may involve either the acquisition of companies or assets. As an example,
          MAM
          acquired Eastcan Consulting Engineers (now part of The Maricor Group, Canada
          Ltd), a small, but well respected mechanical and electrical engineering
          firm
          operating primarily within New Brunswick, Canada. Through this platform
          acquisition, we are growing the subsidiary by expanding its service and
          product
          delivery capabilities, increasing staffing, and increasing its market
          penetration.
  Financing
          of the Company’s growth strategy, depending on the specific acquisition target,
          may take the form of a number of different financing structures involving
          cash,
          equities and/or debt. Financing may include, without limitation, the issuance
          of
          additional common or preferred stock, convertible debt, seller financing,
          senior
          debt, private mezzanine debt securities, tax-exempt government bonds, cash
          or
          acquisition earn-outs. In addition to its compatibility with the Company’s
          growth strategy, each acquisition target is also being evaluated based
          on its
          individual economic and strategic merits relative to the creation of long-term
          shareholder value.
  33
  ***Overall
          Results of Operations—Consolidated***
  *Net
          (Loss) Income and (Loss) Earnings per Share*
 
 **Three
                    Months Ended**
                  **September
                    30,*****(dollars
                    in thousands except per share amounts)***
                
                **2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**rLoss
                    from Continuing OperationsRegulated
                    Electric Utility
                
                $
                (275
                )
                $
                (78
                )
                $
                (197
                )
                
                253
                %Unregulated
                    Engineering Services
                
                
                (540
                )
                
                (285
                )
                
                (255
                )
                
                89
                %Unregulated
                    Real Estate Holdings
                
                
                (30
                )
                
                (8
                )
                
                (22
                )
                
                275
                %Unregulated
                    Software Technology
                
                
                (90
                )
                
                —
                
                
                (90
                )
                
                N/AOther
                
                
                9
                
                
                (53
                )
                
                62
                
                
                (117
                )%Loss
                    from Continuing Operations
                
                $
                (926
                )
                $
                (424
                )
                $
                (502
                )
                
                118
                %Loss
                    from Discontinued Operations
                
                
                —
                
                
                (8
                )
                
                8
                
                
                (100
                )%Net
                    Loss
                
                $
                (926
                )
                $
                (432
                )
                $
                (494
                )
                
                114
                %Basic
                    Loss Per Share for the Quarter
                
                $
                (0.57
                )
                $
                (0.26
                )
                $
                (0.31
                )
                
                119
                %
 
 **Nine
                    Months Ended**
                  **September
                    30,*****(dollars
                    in thousands except per share amounts)***
                
                **2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**r
                
                
                
                rIncome
                    (Loss) from Continuing OperationsRegulated
                    Electric Utility
                
                $
                1,115
                
                $
                1,895
                
                $
                (780
                )
                
                41
                %Unregulated
                    Engineering Services
                
                
                (1,310
                )
                
                (615
                )
                
                (695
                )
                
                113
                %Unregulated
                    Real Estate Holdings
                
                
                (105
                )
                
                (8
                )
                
                (97
                )
                
                1213
                %Unregulated
                    Software Technology
                
                
                (218
                )
                
                —
                
                
                (218
                )
                
                N/AOther
                
                
                66
                
                
                (58
                )
                
                124
                
                
                214
                %Income
                    (Loss) from Continuing Operations
                
                $
                (452
                )
                $
                1,214
                
                $
                (1,666
                )
                
                (137
                )%Income
                    (Loss) from Discontinued Operations
                
                
                5
                
                
                (413
                )
                
                418
                
                
                (101
                )%Net
                    (Loss) Income
                
                $
                (447
                )
                $
                801
                
                $
                (1,248
                )
                
                (156
                )%Basic
                    (Loss) Earnings Per Share for the Quarter
                
                $
                (0.27
                )
                $
                0.50
                
                $
                (0.77
                )
                
                (154
                )%
  Net
          income above is reported based upon the segments as presented in Note 4
          of the
          financial statements. Consolidated net income decreased by $494,000 from
          the
          third  quarter
          of 2004. As described more fully below, the decrease in income is the result
          of
          losses from the start-up operations and integration of its new TMG acquisitions,
          and increased general and administrative costs associated with Sarbanes-Oxley
          compliance costs and implementation of the Company’s Oracle-based financial
          system. We note that for quarter-to-quarter comparison purposes, the impact
          of
          these costs on income from the regulated electric utility was minimized
          as a
          result of sharing of traditional fully allocated costs from MPS to its
          parent
          company, MAM, and other subsidiaries, such as The Maricor Group. As The
          Maricor
          Group, Maricor Properties and Maricor Technologies continue to grow, an
          increasing amount of corporate allocation costs will shift from MPS to
          unregulated operations. For example, governance costs, historically fully
          borne
          by MPS are now shared costs among MAM and its subsidiaries. Operating revenue
          has increased in all segments for 2005 compared to 2004. These increases
          are
          explained in more detail below.
  Management
          is closely monitoring overall year-to-date earnings and cash flow results
          and is
          taking steps to address the Company’s lagging financial performance. Earnings
          have been impacted by a number of factors that are outside the control
          of
          Management, such as the historical treatment of certain stranded cost and
          pension issues that have significantly impacted annual earnings. Further,
          while
          an overall reorganization effort is underway to streamline the enterprise,
          including increased decentralization, and implementing cost controls, Management
          believes that earnings challenges can best be met through growth of revenues,
          both from increased sales of the various products and services offered
          by our
          existing companies and through acquisitions. Additionally, Management is
          in the
          process of evaluating and addressing rising pension and health care costs.
          With
          respect to staffing levels, the Company continues to evaluate out-sourcing
          options that could improve operational and economic results; however, no
          decision has been made at this time. In addition to these activities, Management
          is evaluating potential sales of unregulated assets to enhance near-term
          earnings. While a number of activities are underway to actively address
          earnings
          challenges, Management cannot provide any assurance that such efforts will
          substantially improve near-term earnings.
 
 34
  ***Interest
          Expense***
  Interest
          Expense is accrued on the Company’s long-term debt and short-term credit
          arrangements in accordance with debt agreements. Interest Expense on long-term
          debt and short-term credit arrangements was $709,000 and $590,000 for the
          quarters ending September 30, 2005, and 2004, respectively. For the nine
          months
          ended September 30, 2005, and 2004, interest expense was $2.02 million
          and $1.72
          million, respectively. TMG and Maricor Properties Ltd incurred interest
          on
          short-term debt during the entire second and third quarters of 2005, compared
          to
          only a portion of the same period in 2004, while MPS incurred higher short-term
          debt and experienced higher short-term rates in 2005.
  ***Income
          Tax Expense (Benefit)***
  Income
          tax expense for MPS was $38,000 for the quarters ended September 30, 2005,
          and
          2004. The regulated utility provision for income taxes for the nine months
          ended
          September 30, 2005, and 2004, was $1.03 million and $1.25 million, respectively.
          The unregulated tax benefit for the quarter ended September 30, 2005, was
          $447,000 compared to $116,000 for the same period in 2004. For the first
          nine
          months of 2005 and 2004, this benefit was $1.03 million and $340,000,
          respectively. The benefit is primarily from an increased loss at TMG in
          2005.
  ***Taxes
          Other Than Income***
  Taxes
          other than income were $428,000 and $431,000 for the quarters ended September
          30, 2005 and 2004, respectively, and $1.36 million and $1.23 million for
          the
          nine months ended September 30, 2005 and 2004, respectively. Taxes other
          than
          income for the engineering subsidiaries are classified as cost of sales
          for
          taxes related to labor dollars for employees who work directly on engineering
          projects, and presented on the Statement of Consolidated Income within
          “Unregulated Operation and Maintenance.”
  **REGULATED
          OPERATIONS**
 
 The
          following discussion includes the operations of MPS and Me&NB, the Company’s
          regulated subsidiary and inactive unregulated Canadian subsidiary:
  **Three
                    Months Ended**
                  **September
                    30,**
                
                **Nine
                    Months Ended**
                  **September
                    30,*****(dollars
                    in thousands except per share amounts)***
                
                **2005**
                
                **2004**
                
                **2005**
                
                **2004**rNet
                    (Loss) Income — Regulated Electric Utility
                
                $
                (275
                )
                $
                (78
                )
                $
                1,115
                
                $
                1,895(Loss)
                    Earnings Per Share from Regulated Electric Utilities
                
                $
                (0.17
                )
                $
                (0.05
                )
                $
                0.68
                
                $
                1.18
 
 ***Regulated
          Operating Revenue***
  Consolidated
          Revenues and Megawatt Hours (“MWH”) for the three and nine months ended
          September 30, 2005, and 2004, are as follows:
 **Three
                        Months Ended****September
                        30, 2005**
                    
                    **September
                        30, 2004**
                    
                    **Dollar
                        Change**
                    
                    **Volume
                        Change*****(In
                        thousands of dollars)***
                    
                    **Dollars**
                    
                    **MWH**
                    
                    **Dollars**
                    
                    **MWH**
                    
                    **Dollars**
                    
                    **Percent**
                    
                    **MWH**
                    
                    **Percent**Residential
                    
                    $
                    3,365
                    
                    
                    42,473
                    
                    $
                    3,141
                    
                    
                    39,748
                    
                    $
                    224
                    
                    
                    7
                    %
                    
                    2,725
                    
                    
                    7
                    %Large
                        Commercial
                    
                    
                    1,147
                    
                    
                    42,109
                    
                    
                    1,009
                    
                    
                    43,156
                    
                    
                    138
                    
                    
                    14
                    %
                    
                    (1,047
                    )
                    
                    (2
                    )%Medium
                        Commercial
                    
                    
                    1,121
                    
                    
                    27,845
                    
                    
                    1,094
                    
                    
                    27,948
                    
                    
                    27
                    
                    
                    2
                    %
                    
                    (103
                    )
                    
                    0
                    %Small
                        Commercial
                    
                    
                    1,304
                    
                    
                    21,055
                    
                    
                    1,203
                    
                    
                    19,470
                    
                    
                    101
                    
                    
                    8
                    %
                    
                    1,585
                    
                    
                    8
                    %Other
                        Retail
                    
                    
                    508
                    
                    
                    850
                    
                    
                    768
                    
                    
                    840
                    
                    
                    (260
                    )
                    
                    (34
                    )%
                    
                    10
                    
                    
                    1
                    %Total
                        Regulated Retail
                    
                    $
                    7,445
                    
                    
                    134,332
                    
                    $
                    7,215
                    
                    
                    131,162
                    
                    $
                    230
                    
                    
                    3
                    %
                    
                    3,170
                    
                    
                    2
                    %
  35
 **Nine
                        Months Ended****September
                        30, 2005**
                    
                    **September
                        30, 2004**
                    
                    **Dollar
                        Change**
                    
                    **Volume
                        Change*****(In
                        thousands of dollars)***
                    
                    **Dollars**
                    
                    **MWH**
                    
                    **Dollars**
                    
                    **MWH**
                    
                    **Dollars**
                    
                    **Percent**
                    
                    **MWH**
                    
                    **Percent**Residential
                    
                    $
                    10,690
                    
                    
                    135,594
                    
                    $
                    10,373
                    
                    
                    132,656
                    
                    $
                    317
                    
                    
                    3
                    %
                    
                    2,938
                    
                    
                    2
                    %Large
                        Commercial
                    
                    
                    3,847
                    
                    
                    129,226
                    
                    
                    3,674
                    
                    
                    128,390
                    
                    
                    173
                    
                    
                    5
                    %
                    
                    836
                    
                    
                    1
                    %Medium
                        Commercial
                    
                    
                    3,960
                    
                    
                    80,516
                    
                    
                    3,917
                    
                    
                    80,849
                    
                    
                    43
                    
                    
                    1
                    %
                    
                    (333
                    )
                    
                    0
                    %Small
                        Commercial
                    
                    
                    4,975
                    
                    
                    69,305
                    
                    
                    4,697
                    
                    
                    65,595
                    
                    
                    278
                    
                    
                    6
                    %
                    
                    3,710
                    
                    
                    6
                    %Other
                        Retail
                    
                    
                    1,361
                    
                    
                    2,544
                    
                    
                    1,644
                    
                    
                    2,531
                    
                    
                    (283
                    )
                    
                    (17
                    )%
                    
                    13
                    
                    
                    1
                    %Total
                        Regulated Retail
                    
                    $
                    24,833
                    
                    
                    417,185
                    
                    $
                    24,305
                    
                    
                    410,021
                    
                    $
                    528
                    
                    
                    2
                    %
                    
                    7,164
                    
                    
                    2
                    %
  Overall,
          Regulated Utility Operating Revenue has increased, both in volume and in
          dollars, for the quarter and the year-to-date 2005, compared to 2004.
          Residential revenue dollars and volume are both up 7% for the quarter,
          compared
          to the prior year, due to the unusually warm weather experienced by the
          Company’s service territory in July. This increase was the majority of the 2%
          increase in volume and 3% increase in revenue dollars
          year-over-year.
  Despite
          a
          2% decrease in volume, large commercial customer revenue increased $138,000
          or
          14% in the third quarter of 2005, compared to the same period of 2004.
          The
          decrease in volume is primarily due to one large customer, which experienced
          a
          fire in the second quarter of 2005 and has not yet returned to full demand.
          The
          increase in revenue dollars is attributable to a rate adjustment in August,
          2004
          that reduced revenue by approximately $133,000. Large commercial customer
          revenue is also up, both in volume and in dollars, for the nine months
          ended
          September 30, 2005, compared to 2004. The 5% or $173,000 increase in revenue
          dollars is largely attributable to increased usage at several of the Company’s
          manufacturing customers. Medium commercial customer revenue, both volume
          and
          dollars, is flat in relation to the prior year. The number of customers
          in this
          class decreased slightly from 218 at September 30, 2004, to 215 at September
          30,
          2005. The 8% increase in 2005 quarterly revenue and the 6% increase in
          revenue
          for the year-to-date for small commercial customers are also partly due
          to the
          unusually warm weather in July. Further, several of the Company’s local potato
          growers have experienced higher energy usage to meet their storage needs
          for the
          2004 crops.  Other
          retail revenue is down, primarily due to an $86,000 lower estimate of unbilled
          revenue at September 30, 2005, compared to September 30, 2004, reduction
          of
          income from billable projects compared to prior year, **** and
          to an
          $11,000 increase in special discounts. For more information on regulatory
          orders
          approving the most recent rate increases, see Part II, Item 1, “Legal
          Proceedings.”
  ***Regulated
          Utility Expenses***
  For
          the
          three and nine months ended September 30, 2005, and 2004, regulated operation
          and maintenance expenses and stranded costs are as follows:
  **Three
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**Regulated
                    Operation and MaintenanceTransmission
                    and Distribution
                
                $
                957
                
                $
                834
                
                $
                123
                
                
                15
                %Customer
                    Service
                
                
                430
                
                
                407
                
                
                23
                
                
                6
                %Administrative
                    and General
                
                
                2,295
                
                
                2,211
                
                
                84
                
                
                4
                %Total
                    Regulated Operation and Maintenance
                
                $
                3,682
                
                $
                3,452
                
                $
                230
                
                
                7
                %Stranded
                    CostsWheelabrator-Sherman
                
                $
                1,656
                
                $
                1,805
                
                $
                (149
                )
                
                (8
                )%Maine
                    Yankee
                
                
                804
                
                
                750
                
                
                54
                
                
                7
                %Seabrook
                
                
                277
                
                
                278
                
                
                (1
                )
                
                0
                %Amortization
                    of Wheelabrator-Sherman Restructuring Payment
                
                
                363
                
                
                363
                
                
                —
                
                
                0
                %Deferred
                    Fuel
                
                
                (586
                )
                
                (808
                )
                
                222
                
                
                (27
                )%Special
                    Discounts
                
                
                70
                
                
                70
                
                
                —
                
                
                0
                %Total
                    Stranded Costs
                
                $
                2,584
                
                $
                2,458
                
                $
                126
                
                
                5
                %
  36
  **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**Regulated
                    Operation and MaintenanceTransmission
                    and Distribution
                
                $
                2,598
                
                $
                2,385
                
                $
                213
                
                
                9
                %Customer
                    Service
                
                
                929
                
                
                1,019
                
                
                (90
                )
                
                (9
                )%Administrative
                    and General
                
                
                7,259
                
                
                6,757
                
                
                502
                
                
                7
                %Total
                    Regulated Operation and Maintenance
                
                $
                10,786
                
                $
                10,161
                
                $
                625
                
                
                6
                %Stranded
                    CostsWheelabrator-Sherman
                
                $
                5,020
                
                $
                5,446
                
                $
                (426
                )
                
                8
                %Maine
                    Yankee
                
                
                2,411
                
                
                2,300
                
                
                111
                
                
                5
                %Seabrook
                
                
                833
                
                
                833
                
                
                —
                
                
                0
                %Amortization
                    of Wheelabrator-Sherman Restructuring Payment
                
                
                1,088
                
                
                1,088
                
                
                —
                
                
                0
                %Deferred
                    Fuel
                
                
                (1,830
                )
                
                (2,773
                )
                
                943
                
                
                (34
                )%Special
                    Discounts
                
                
                210
                
                
                211
                
                
                (1
                )
                
                0
                %Total
                    Stranded Costs
                
                $
                7,732
                
                $
                7,105
                
                $
                627
                
                
                9
                %
  In
          the
          third quarter of 2005, distribution expenses continued to exceed the amount
          for
          2004. The majority of the increase is approximately $45,000 of additional
          maintenance of conductors and approximately $45,000 of additional expense
          associated with PCB mitigation. This increase was partly offset by the
          decrease
          in transmission expenses from the prior year. The maintenance of transmission
          station equipment has decreased approximately $68,000, while other transmission
          expenses, including transmission rent expense, have increased, netting
          to a
          decrease quarter-over-quarter of approximately $31,000. Customer service
          expenses for the third quarter of 2005 were $23,000 higher than the expenses
          for
          the third quarter of 2004, reversing the trend of lower customer service
          expenses experienced in previous quarters. Approximately $13,000 of this
          increase is additional bad debt expense, from the write-off of various
          small
          accounts during the third quarter.
  Administrative
          and general expenses increased approximately $84,000 for the quarter, and
          are up
          approximately $502,000 for the year-to-date. The majority of the increase
          for
          the quarter was additional corporate allocations from MAM, which increased
          approximately $194,000. Of this increase, $139,000 was due to additional
          expenses associated with the Sarbanes-Oxley compliance effort. This increase
          was
          offset by a decrease in estimated pension expense of approximately $71,000,
          associated with a change in the salary assumption used for actuarial valuation
          purposes. The remaining year-to-date increase is attributable to a $608,000
          increase in corporate allocations, primarily Sarbanes-Oxley compliance
          costs,
          through the second quarter offset by a $161,000 decrease in regulatory
          commission expense for the first six months of the year.
  Stranded
          costs continue to exceed the prior year by approximately $126,000 in the
          third
          quarter. This increase is due to the timing of the recognition of expenses,
          as
          well as additional Maine Yankee stranded cost expenses which were recognized
          in
          the third quarter of 2005 that were not recognized in the third quarter
          of 2004.
          The increase for 2005 year-to-date, compared to 2004, is attributable to
          the
          change in recovery of stranded costs under MPUC Docket No. 2003-666, which
          went
          into effect on March 1, 2004. This docket resulted in additional expense
          recorded in the first quarter of 2005 that was not recorded in the first
          quarter
          of 2004.
  **UNREGULATED
          ENGINEERING SERVICES** ******
  This
          section includes the operations of the unregulated engineering services
          segment,
          including The Maricor Group and its subsidiaries:
 -
                The
                    Maricor Group New England, and
 -
                The
                    Maricor Group, Canada Ltd.
  Unregulated
          engineering services operations began in late 2003, with the creation of
          The
          Maricor Group and the acquisition of Eastcan Consultants, Inc. in December.
          Morris & Richard Consulting Engineers, Ltd. was acquired on June 1, 2004,
          and amalgamated with Eastcan Consultants as The Maricor Group, Canada Ltd.
          RES
          Engineering, Inc. was acquired on June 15, 2004, and recently renamed as
          The
          Maricor Group, New England. The net losses below include corporate allocations,
          as noted, that would have been historically borne by MPS.
  37
  **Three
                    Months Ended**
                
                **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,**
                
                **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004**Net
                    Loss - Unregulated Engineering Services
                
                $
                (540
                )
                $
                (285
                )
                $
                (1,310
                )
                $
                (615
                )Basic
                    Loss Per Share from Unregulated Engineering Services
                
                $
                (0.33
                )
                $
                (0.17
                )
                $
                (0.80
                )
                $
                (0.38
                )
  The
          Engineering Services segment’s growth strategy expands MAM’s business and
          revenue models to include:
 -
                Mechanical
                    and Electrical Engineering Services
 -
                Energy
                    Efficiency Solutions
 -
                Asset
                    Development
 -
                Facility
                    Lifecycle Asset Management Services
  In
          addition, efforts continue to identify and execute opportunities to design,
          build, own and/or operate customer-hosted energy-related assets, such as
          central
          utility steam plants, customer-hosted non-merchant alternative fuel projects
          and
          customer-hosted co-generation assets.
  
 
 
   For
          the
          year-to-date September 30, 2005, the mechanical and electrical engineering
          service segment of the unregulated engineering services business was profitable,
          contributing approximately 24% to the gross margin for the three engineering
          companies combined. Start-up costs for the lifecycle asset management,
          energy
          efficiency and asset development segments of the business, as well as sales
          and
          marketing salaries included in Cost of Sales at TMGNE and TMGC, detracted
          from
          the gross margin by approximately 17%, for an actual gross margin of
          7%.
  Management
          has undertaken steps to address the lagging performance of The Maricor
          Group,
          New England and The Maricor Group, Canada Ltd. Activities at TMGNE’s Hudson
          office have been significantly reduced, and activities at its Boston office
          expanded, reflecting the reality that the bulk of the subsidiary’s market and
          customer base is in Boston. While the overall staffing experienced some
          downsizing due to the consolidation of the two offices, additional hires
          have
          been made with improved skill sets since that time. In addition, MAM is
          migrating toward increased decentralization, enabling subsidiaries to be
          more
          independent, operating under enterprise-wide policies, in an attempt to
          minimize
          corporate allocations. Such decentralization is designed to promote
          decision-making closer to the actual profit and loss center. There is also
          an
          increased focus on sales, particularly in the lifecycle asset management
          and
          energy efficiency areas, while implementing more rigid cost controls. However,
          the long-term profitability of The Maricor Group and its subsidiaries is
          clearly
          dependent upon achieving increased revenues through enhanced marketing
          and
          sales, diversifying sales away from a predominance of design engineering
          services into higher margin products and services, and increasing the overall
          scale of the unregulated subsidiaries through strategic acquisitions.
  38
  ***Unregulated
          Engineering Services—Operating Revenue***
  Unregulated
          engineering services revenues for the three and nine months ended September
          30,
          2005, and 2004:
 
 **Three
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**The
                    Maricor Group, New England
                
                $
                444
                
                $
                695
                
                $
                (251
                )
                
                (36
                )%The
                    Maricor Group, Canada Ltd
                
                
                823
                
                
                597
                
                
                226
                
                
                38
                %Total
                    Unregulated Engineering Operating Revenue
                
                $
                1,267
                
                $
                1,292
                
                $
                (25
                )
                
                (2
                )%
 
 **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**The
                    Maricor Group, New England
                
                $
                1,613
                
                $
                842
                
                $
                771
                
                
                92
                %The
                    Maricor Group, Canada Ltd
                
                
                2,423
                
                
                1,365
                
                
                1,058
                
                
                78
                %Total
                    Unregulated Engineering Operating Revenue
                
                $
                4,036
                
                $
                2,207
                
                $
                1,829
                
                
                83
                %
  Total
          revenue is up 83% year-to-date compared to the prior year, due to the
          acquisitions of M&R and RES in June, 2004. The above chart compares 4 months
          of revenue in 2004 for these two divisions, to 9 months of revenue in 2005.
          For
          the quarter, revenue at The Maricor Group, New England is down in 2005
          compared
          to 2004 due to the completion of several large design-build contracts in
          2004,
          while The Maricor Group, Canada Ltd has increased revenue through an increase
          in
          capacity from hiring several new employees.
  The
          principal types of projects which generate revenue for the two companies
          are
          mechanical and electrical engineering design and design/build projects
          on a
          fee-for-service basis. Increasingly, their businesses are focusing on facility
          lifecycle asset management, energy efficiency and emissions reductions,
          as well
          as development of end-user energy assets, such as central utility plants,
          all
          typically higher value and higher margin offerings.
  ***Unregulated
          Engineering Services Operating Expenses***
  Unregulated
          engineering services operating & maintenance expenses for the three and nine
          months ended September 30, 2005, and 2004:
 
 **Three
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**Cost
                    of Sales
                
                $
                1,264
                
                $
                916
                
                $
                348
                
                
                38
                %Other
                    Operating Expenses
                
                
                867
                
                
                697
                
                
                170
                
                
                24
                %Depreciation
                
                
                5
                
                
                3
                
                
                2
                
                
                67
                %Amortization
                
                
                17
                
                
                15
                
                
                2
                
                
                13
                %Taxes
                    Other than Income
                
                
                (5
                )
                
                8
                
                
                (13
                )
                
                (163
                )%Income
                    Taxes
                
                
                (397
                )
                
                (110
                )
                
                (287
                )
                
                (261
                )%Total
                    Unregulated Operating Expenses
                
                $
                1,751
                
                $
                1,529
                
                $
                222
                
                
                15
                %
 
 **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,****2005**
                
                **2004**
                
                **Dollar
                    Change**
                
                **Percent
                    Change**Cost
                    of Sales
                
                $
                3,758
                
                $
                1,626
                
                $
                2,132
                
                
                131
                %Other
                    Operating Expenses
                
                
                2,119
                
                
                1,409
                
                
                710
                
                
                50
                %Depreciation
                
                
                14
                
                
                2
                
                
                12
                
                
                600
                %Amortization
                
                
                101
                
                
                15
                
                
                86
                
                
                573
                %Taxes
                    Other than Income
                
                
                34
                
                
                42
                
                
                (8
                )
                
                (19
                )%Income
                    Taxes
                
                
                (915
                )
                
                (334
                )
                
                (581
                )
                
                174
                %Total
                    Unregulated Operating Expenses
                
                $
                5,111
                
                $
                2,760
                
                $
                2,351
                
                
                85
                %
 
 Total
          operating expenses are up 85% year-to-date compared to the prior year,
          due to
          the acquisitions of M&R and RES in June, 2004. The above chart compares 4
          months of expenses in 2004 for these two divisions, to 9 months of expenses
          in
          2005. Total expenses are up 15% for the third quarter, compared to the
          same
          quarter of last year.
  39
  The
          cost
          of sales above consists primarily of direct labor expenses and direct contract
          costs, as well as marketing, sales, and business development expenses with
          labor, overheads, and consulting services for developing business relationships
          and re-branding this business segment as The Maricor Group. The remaining
          operating expenses were used for parent company corporate overhead allocations,
          office supplies, insurance, and administrative and general expenses.
 
 **UNREGULATED
          REAL ESTATE SUBSIDIARY**
  Year-to-date
          revenue from this subsidiary was approximately $221,000, which was offset
          by
          operating expenses net of tax of $201,000, depreciation of $43,000, and
          net
          interest of $83,000. Net loss from this operating company for the third
          quarter
          2005 was $30,000 or $.02 per share, and $105,000, or $.06 per share, for
          the
          nine months ended September 30, 2005. Efforts are underway to improve the
          leasing of Maricor Properties’ real property in Moncton, New Brunswick and to
          increase the overall scale of that company through additional acquisitions
          and
          developments. While increased leasing efforts are essential, it should
          also be
          recognized that the overall appraised value of the real estate holdings
          of MAM’s
          real estate subsidiaries has increased since acquisition.
  On
          August
          16, 2005, Maricor Properties Ltd entered into a joint venture agreement
          with
          Ashford Investments, Inc., a real estate development and management company.
          Both companies have operations in Moncton, New Brunswick, and Halifax,
          Nova
          Scotia, Canada. The joint venture is called Maricor Ashford Ltd, and is
          headquartered in Moncton, New Brunswick. Maricor Ashford Ltd is a real
          estate
          development and investment company focused on opportunities in Atlantic
          Canada.
  On
          October 7,
          2005, Maricor Properties completed the purchase of Cornwallis Court
          Developments, Limited (“Cornwallis”). Maricor Properties acquired all of the
          outstanding shares of Cornwallis for $2 million CDN and the assumption
          of a
          $3.69 million CDN mortgage. The $2 million acquisition cost was financed
          through
          the RBC and is secured by a $1.73 million USD letter of credit from Bank
          of
          America. The term of the new RBC note is one-year at an interest rate of
          Royal
          Bank prime plus 0.25%. The only asset of Cornwallis was the J. Angus MacDonald
          Building, a 60,000 square foot facility located in downtown Halifax, Nova
          Scotia, Canada. The building was fully leased at the time of acquisition.
          This
          purchase is the second building acquired in Halifax in the past eighteen
          months,
          and is further execution of the Company’s real estate investment
          strategy.
  **UNREGULATED
          SOFTWARE TECHNOLOGY**
  The
          unregulated software technology subsidiary incurred a loss of $90,000 for
          the
          third quarter of 2005, and a loss of $218,000 for the year-to-date. This
          loss is
          primarily composed of software amortization of $89,000 for the third quarter
          of
          2005, and $208,000 for the first nine months of 2005. The software is being
          amortized on a straight-line basis for 2005 in accordance with Statement
          of
          Financial Accounting Standards No. 86, Accounting for the Costs of Computer
          Software to be Sold, Leased or Otherwise Marketed (“SFAS 86”). The segment also
          recognized revenue of $29,000 and $67,000 for the quarter and year-to-date,
          respectively, primarily from support services provided to existing
          customers.
  **UNREGULATED
          ENERGY MARKETING—ENERGY ATLANTIC DISCONTINUED OPERATIONS**
  On
          March
          1, 2004, EA suspended all active operations and has been classified as
          a
          discontinued operation in accordance with FASB No. 144, as discussed in
          more
          detail below.
  The
          Company recognized income (loss) from discontinued operations of $5,000
          and
          $(413,000) for the nine months ended September 30, 2005, and 2004, respectively,
          classified as discontinued operations in the Statement of Consolidated
          Operations. The 2005 year-to-date net income represents the final settlement
          of
          software and equipment lease obligations and miscellaneous other small
          transactions. The 2004 net loss includes additional software lease expense
          of
          $181,000, recognized on the buy-out of a software lease by EA, $172,000
          for
          employee severance payments, and a loss on disposal of fixed assets of
          $69,000.
          The following table summarizes the statement of operations for EA:
  **Three
                    Months Ended**
                
                **Nine
                    Months Ended*****(In
                    thousands of dollars)***
                
                **September
                    30,**
                
                **September
                    30,****2005**
                
                **2004**
                
                **2005**
                
                **2004**Revenue
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                572Expenses
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,186
                )Other
                    income, deductions and interest
                
                
                (3
                )
                
                (16
                )
                
                5
                
                
                (70
                )Pretax
                    (loss) income from discontinued operations
                
                
                (3
                )
                
                (16
                )
                
                5
                
                
                (684
                )Income
                    tax (provision) benefit
                
                
                3
                
                
                8
                
                
                —
                
                
                271(Loss)
                    income from discontinued operations
                
                $
                —
                
                $
                (8
                )
                $
                5
                
                $
                (413
                )Loss
                    per share from discontinued operations (basic and diluted)
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                (0.25
                )
  40
 
 ***Income
          Taxes***
  Please
          refer to the Note 2 of the financial statements for a discussion of the
          effects
          of income taxes.
  ***Off-Balance
          Sheet Arrangements and Financial Information System Hosting
          Agreement***
  Please
          refer to Note 8 of the financial statements.
  ***Operating
          Capital and Liquidity***
  On
          October 7, 2005, MPS arranged a new three-year $10 million revolving, working
          capital line of credit with Bank of America as Agent, secured by $6.0 million
          of
          first mortgage bonds. This line of credit replaces the former $6 million
          line of
          credit with Bank of New York as Agent. Interest rates on the new Bank of
          America
          facility are at either LIBOR plus 1.375% or at Bank of America’s prime rate, at
          MPS’ election. Also, MAM, on October 21, 2005, arranged a new three-year $4
          million revolving, working capital line of credit which repaid the $750,000
          Katahdin Trust Company ninety-day line of credit and provides for additional
          working capital borrowings. As discussed in Note 11 to the Consolidated
          Financial Statements, $1.73 million of the $4 million revolving line of
          credit
          secures a portion of the MacDonald Building acquisition. The MAM line of
          credit
          is secured by a general security interest in the business assets of MAM.
          The
          interest rates on MAM’s new facility are at LIBOR plus 2.0% or Bank of America’s
          prime rate, at MAM’s election. These new credit facilities improve the Company’s
          ability to fund its on-going working capital requirements. These lines
          of credit
          are subject to certain financial covenants, measured quarterly beginning
          December 31, 2005. These covenants include a minimum tangible net worth,
          a
          minimum debt service coverage ratio and a maximum debt-to-equity ratio.
 On
            October 31, 2005, Maricor Properties Ltd arranged a $2.3 million CDN
            revolving
            term facility with Royal Bank of Canada (“RBC”), the proceeds of which were used
            to pay the $2.0 million USD term note for the Vaughan Harvey property
            at
            Katahdin Trust Company. The term of the new RBC note is one-year at a
            rate of
            Royal Bank prime plus 0.50%. This facility is secured in the amount of
            $2.30
            million CDN by a collateral mortgage covering the Vaughan Harvey Boulevard
            property in Moncton, New Brunswick, and by a $570,000 CDN guarantee and
            a
            collateral mortgage covering the Mecel Holdings property in Halifax,
            Nova
            Scotia.
  Continuing
          efforts are being made to evaluate the Company’s overall banking and short-term
          liquidity needs. Aligning the Company’s growth strategy with the right U.S. and
          Canadian banking relationships is essential to the Company’s near and long-term
          success. Our mid-term and long-term liquidity and cash positions remain
          solid.
  The
          Company’s cash and cash equivalents as of September 30, 2005, were $556,000,
          $637,000 less than the December 31, 2004, balance of $1,193,000. The “Statements
          of Consolidated Cash Flows” of the Company’s Consolidated Financial Statements
          as presented in Part 1, Item 1, of this Form 10-Q, reflects the Company’s
          liquidity and sources of operating capital.
  Cash
          flow
          provided by operating activities for the first nine months of 2005 was
          $3.63
          million while the net loss was $447,000. The largest increases in operating
          cash
          flows were the decrease in accounts receivable and unbilled revenue of
          $1.64
          million and the non-cash add back for depreciation and amortization of
          $3.25
          million. The deferral of $2.69 million of deferred regulatory and debt
          issuance
          costs, principally Wheelabrator-Sherman costs in accordance with MPS’s stranded
          cost recovery, accounted for the biggest reduction in operating cash flows.
          Cash
          flow provided by financing activities for the first nine months of 2005
          totaled
          $420,000. Uses of cash included $1.23 million paid in dividends and long-term
          debt reductions of $1.24 million. The uses of cash were offset by an increase
          in
          short-term borrowings of $2.89 million. For the first nine months of 2005,
          cash
          flow used for investing activity totaled $4.68 million. The Company’s
          wholly-owned software technology subsidiary, Maricor Technologies, Inc.
          (“MTI”)
          acquired lifecycle asset management software for $1.2 million, $50,000
          of which
          was cash, $950,000 of which was preferred stock, and $200,000 in the form
          of a
          put option. The Company also invested $4.98 million in fixed
          assets.
  Net
          cash
          flows from operating activities for the first nine months of 2004 were
          $3.7
          million with net income of $801,000. The deferral of $3.7 million of deferred
          regulatory and debt issuance costs, principally Wheelabrator-Sherman costs
          in
          accordance with MPS’s stranded cost recovery accounted for the biggest reduction
          in operating cash flows. For the nine months ended September 30, 2004,
          the
          increase in cash from financing activities of $3.15 million was due to
          $3.55
          million of additional long-term borrowings and $2.14 million of net short-term
          borrowings partially offset by dividend payments of $1.83 million and the
          repayment of long-term debt of $705,000. Net cash outflows for investing
          activities were $10.15 million. During the first nine months of 2004, MPS
          invested $6.22 million in electric plant. Construction work-in-progress,
          reported in the Utility Plant section of the Company’s September 30, 2004,
          Consolidated Balance Sheet, increased by $1.29 million from the balance
          as of
          December 31, 2003, due to the timing of expenditures for the Automated
          Meter
          Reading project and conversion of the Caribou substation to a higher voltage.
          In
          addition, MPS received $200,000 for the partial redemption of its Maine
          Yankee
          Common Stock. The Maricor Group and Maricor Ltd spent $3.53 million net
          cash to
          acquire RES and M&R in June 2004.
  41
  Effective
          January 1, 2005, the Board of Directors increased the quarterly dividend
          by
          $0.05 per share from $0.20 per share to $0.25, for an annual dividend of
          $1.00
          per share. As of September 30, 2004, the quarterly dividend was $ 0.38
          per
          share, or $1.52 per share annually. The Board of Directors had decreased
          the
          October 1, 2004, dividend to $0.20 to conserve capital in support of the
          Company’s growth strategy, while still maintaining a competitive yield for
          shareholders.
  Until
          entering the new agreement described above on October 7, 2005, MPS used
          short-term borrowings from its revolving credit agreement of $6.0 million
          to
          satisfy working capital requirements.  The agreement was secured by $6.0
          million of first mortgage bonds and its due date was June 8, 2006.  In
          addition, on October 1, 2003, MPS executed an additional $3.0 million line
          of
          credit with the Bank of New York.  This facility was unsecured and
          originally set to expire on March 29, 2004, but MPS received an extension
          to
          December 31, 2004, when it expired. Interest rates on this facility were
          comparable to the rates on the existing revolving credit agreement.  The
          additional facility provided an additional source of short-term borrowings
          in
          the event required borrowings exceeded the existing revolving credit
          agreement.
  As
          of
          September 30, 2005, MPS had $5.15 million of short-term debt outstanding,
          with
          $850,000 available, compared to $3.2 million outstanding, with $2.8 million
          available, at the end of 2004. Interest rates on these short-term borrowings
          were below the existing prime rate.  For additional information on the
          short-term credit facility, see Note 6 of the Notes to Consolidated Financial
          Statements, “Short-Term Credit Arrangements” of the Company’s 2004 Form
          10-K.
  Due
          to
          negative cash flows from stranded cost deferrals for MPS and start-up cash
          requirements for TMG, Management is continuing to work to ensure the Company
          has
          adequate credit facilities for 2005 and beyond to cover sinking fund payments,
          construction activities and other financial obligations.
  The
          Maricor Group has a revolving credit arrangement with Banknorth N.A. for
          borrowings up to $1.0 million. This revolving credit arrangement closed
          on
          September 21, 2004, expires on April 30, 2006, and is subject to extension
          with
          the consent of the bank. One provision of this revolving credit arrangement
          requires that the line be paid off for one thirty-day period during the
          year.
          The Company has not yet met this requirement, but has incorporated it in
          the
          short-term planning referenced in the second paragraph of this section.
          As of
          September 30, 2005, $975,000 was outstanding under this facility, with
          $25,000
          unused. As of December 31, 2004, there was $789,500 outstanding under the
          revolving credit arrangement, with $210,500 unused.
  ***Capital
          Resources***
  The
          Company has the ability to raise capital through the issuance of common
          and
          preferred stock.  The Company is authorized by its Articles of
          Incorporation to issue up to 5,000,000 shares of common stock and 500,000
          shares
          of preferred stock.  MPS can also issue $2.5 million of first mortgage
          bonds and $15.8 million of second mortgage bonds without bondable property
          additions.
  Management
          continues to believe the Company’s overall growth and long-term viability is
          dependent upon the full implementation of the Company’s growth strategy. In
          order to implement the strategy, capital formation will be essential. Management
          is evaluating a number of equity-related offerings that may include the
          issuance
          of additional common and/or preferred stock. Monies from these offerings
          may be
          used to eliminate debt in order to enhance net income and to facilitate
          strategic growth acquisitions.
  On
          November 22, 2004, MPS entered into a $6.0 million, unsecured, seven-year
          term
          loan with Fleet National Bank, now Bank of America. The proceeds of the
          loan
          were used to repay and refinance a portion of the amounts outstanding under
          MPS’s revolving credit arrangement associated with the Company’s prior capital
          expenditures. The loan agreement contains certain covenants requiring the
          maintenance of a minimum tangible net worth, maximum ratio of indebtedness
          for
          borrowed money to total capital and a minimum ratio of net income to fixed
          charges. Interest is payable monthly at a variable interest rate of One-Month
          LIBOR, plus 1.5%. The loan is to be repaid in scheduled monthly principal
          payments as follows:
  December
          1, 2004 through November 1, 2007  $50,000
 December
          1, 2007 through November 1, 2009  $80,000
 December
          1, 2009 through November 1, 2011  $95,000
  On
          August
          12, 2004, Maine & Maritimes Corporation entered into a $2,000,000,
          unsecured, two-year term loan with Katahdin Trust Company. The proceeds
          of the
          loan were used to acquire and renovate certain real estate assets in Moncton,
          New Brunswick, Canada. The loan requires interest-only payments from September
          12, 2004, through maturity at a variable interest rate of Three-Month LIBOR
          plus
          2.65%.
  On
          September 21, 2004, The Maricor Group entered into a $2.2 million secured,
          10-year term loan with Banknorth N.A. The proceeds of the loan were used,
          in
          part, for the acquisition of the common stock of RES Engineering and Morris
          & Richard Consulting Engineers. The loan requires interest-only payments
          at
          a variable interest rate of One-Month LIBOR, plus 2.00% through September
          1,
          2007. Quarterly, principal payments of approximately $79,000 commence October
          1,
          2007, through maturity at September 1, 2014.
  42
  The
          Maine
          Public Utility Financing Bank (“MPUFB”) has issued its tax-exempt bonds on
          behalf of MPS for the construction of qualifying distribution property. 
Originally issued for $15.0 million and reduced with generating asset sale
          proceeds, the 1996 Refunding Series had $13.6 million outstanding at June
          30,
          2005, and is due in 2021.  On October 19, 2000, the 2000 Series of bonds
          was issued in the amount of $9.0 million, with these bonds due in 2025. 
The proceeds of the 2000 Series were placed in trust to be drawn down for
          the
          reimbursement of issuance costs and for the construction of qualifying
          distribution property. For both tax-exempt bond series, a long-term note
          was
          issued under a loan agreement between MPS and the MPUFB, with MPS agreeing
          to
          make payments to the MPUFB for the principal and interest on the bonds. 
Concurrently, pursuant to a letter of credit and reimbursement agreement,
          the
          Bank of New York has separately issued its direct pay letter of credit
          (“LOC”)
          for the benefit of the holders of each series of bonds.  Both LOC’s are due
          to expire in June 2006. To secure MPS’s obligations under the letter of credit
          and reimbursement agreement for the 1996 Refunding Series, MPS issued second
          mortgage bonds in the amount of $14.4 million in June 2002.  For the 2000
          series, MPS issued first and second mortgage bonds, in the amounts of $5.0
          million and $4.53 million, respectively, to secure MPS’s obligation under the
          letter of credit and reimbursement agreement for this series.  For both
          series, MPS has the option of selecting weekly, monthly, annual or term
          interest
          rate periods.  For both series, MPS has continued to use the weekly
          interest rate period.  Since issuance, the average of these weekly rates
          was 2.776% and 1.912% for the 1996 Refunding Series and the 2000 Series,
          respectively.  In September 2003, MPS executed an interest rate swap
          agreement with Fleet National Bank for the remaining terms of the issues
          with an
          effective fixed rate of 4.57% for the 1996 series and 4.68% for the 2000
          series.  By its rate order in Docket No. 2003-85, the MPUC approved the
          execution of the agreements and allowed recovery of the additional interest
          costs.
  On
          May
          29, 1998, FAME issued $11.54 million of its Taxable Electric Rate Stabilization
          Revenue Notes, Series 1998A (MPS) (the “Notes”) on behalf of MPS.  The
          Notes were issued pursuant to, and are secured under, a Trust Indenture
          by and
          between FAME and Peoples Heritage Bank, Portland, Maine, as Trustee (“the
          Trustee”), for the purpose of:  (i) financing the up-front payment to
          Wheelabrator-Sherman of approximately $8.7 million, as required under an
          amended
          purchase power agreement; (ii) for the Capital Reserve Fund, as required
          by FAME
          under their Electric Rate Stabilization Program; and (iii) for issuance
          costs.  The Notes are limited obligations of FAME, payable solely out of
          the trust estate available under the Indenture, principally the Loan Note
          and
          Loan Agreement with MPS and the Capital Reserve Fund held by the Trustee. 
MPS issued $4.0 million of its first mortgage bonds and the MPUC also approved
          the execution of an interest rate swap agreement in September 2003 with
          Fleet
          National Bank, now Bank of America, for the remaining term of the issue
          with an
          effective fixed rate of 2.79%.
  As
          more
          fully discussed in Part II, Item 1(c), “Legal Proceedings - Requests for
          Issuance of Certificates of Public Convenience and Necessity in Connection
          with
          the Construction of a Proposed Transmission Line and Various Transmission
          Service Renovations,” MPS is pursuing the authorization to build, and include in
          rate base, a transmission line for system security and reliability purposes.
          Through the third quarter of 2005, $829,000 has been spent on this proposed
          transmission line.
  In
          accordance with rate stipulations approved by the MPUC, for ratemaking
          purposes,
          MPS is required to maintain a capital structure not to include more than
          51%
          common equity for the determination of delivery rates.
  In
          the
          order approving the reorganization of MPS and the formation of Maine &
Maritimes Corporation, the parties stipulated to the following conditions. 
The following relate to the availability of capital resources for MAM via
          its
          relationship with MPS:
  •   MPS
          will
          not make any loan to, or guarantee or assume any obligation of, MAM or
          any of
          its affiliates without prior MPUC approval.
  •  The
          MPUC
          will not place additional restrictions, in advance, on the dividend policy
          of
          MPS.  The Board of Directors of MPS will continue to set dividend policy
          for MPS with due regard for the financial performance, needs and health
          of MPS
          and the maintenance of a safe, efficient and reasonable capital structure. 
Commencing on July 1, 2003, if at any time MPS’s common dividend payout ratio
          (dividends per share divided by earnings per share) exceeds 1.0 (i.e. 100%)
          on a
          two-year rolling average basis, MPS will notify the MPUC in writing within
          thirty (30) days of the end of the calendar quarter. For the dividend paid
          September 30, 2005, the two-year period was from July 1, 2003, to June
          30,
          2005.  The required notification should explain the circumstances
          (extraordinary or not) of this event and the financial condition of MPS. 
Moreover, the MPUC reserved the right in the future, should financial
          circumstances warrant, to impose limitations on the dividend policy of
          MPS. As
          of September 30, 2005, this limitation has not been exceeded; therefore,
          such
          notification to the MPUC has not been required.
  •  Securities
          issuances by MPS will be done independently of MAM and subject to such
          MPUC
          approvals as required.  The proceeds of any securities issued by MPS will
          be used exclusively by MPS for its business.
  43
  •  MAM’s
          total non-utility investment, excluding accumulated unregulated retained
          earnings, will not exceed $50.0 million and such amount will exclude retained
          earnings from EA, provided that MPS may at any time seek an enlargement
          of this
          limitation for good cause.
  •  Without
          prior MPUC approval, MAM will not sell, pledge or otherwise transfer any
          common
          stock of MPS.
  •  To
          protect and maintain the financial integrity of the regulated utility,
          MPS and
          MAM agreed to maintain the common equity ratio of MPS at a level of not
          less
          than forty eight percent (48%) of the total capital at all times, provided
          that
          the MPUC may establish, for good cause, a lower ratio in connection with
          its
          authorization of a future debt issuance proposed by MPS.  Total capital is
          defined as the sum of the following components:  common equity, preferred
          equity, long-term debt, current maturities long-term debt (“CMLTD”), long-term
          capital leases, current maturities long-term capital leases, and short-term
          debt.
  ***Regulatory
          Proceedings***
  For
          regulatory proceedings, see Part II, Item 1, “Legal Proceedings,” which is
          incorporated in this section by this reference.
  ***Item
          3. Quantitative and Qualitative Disclosures about Market Risk***
  (a)
                The
                    Maricor Group and its subsidiaries incurred equity price risk
                    when it
                    bought the stock of certain of its subsidiaries. Part of the
                    consideration
                    was MAM stock. In the event that the price of MAM common stock
                    was below a
                    specified price when the seller wished to sell it, The Maricor
                    Group (or
                    the applicable subsidiary) agreed to pay the difference. Forty-nine
                    thousand eight-hundred and ninety-nine (49,899) shares are currently
                    outstanding pursuant to this kind of agreement. At a market price
                    of
                    $19.70 per share at September 30, 2005, the total exposure is
                    approximately $578,000.
  Market
                    price protection of a different sort was given by Maricor Technologies
                    when it acquired the HCI assets. Part of the consideration there
                    was MAM
                    preferred stock which is convertible into 26,000 shares of MAM
                    common
                    stock on February 15, 2008, subject to some other conditions.
                    To the
                    extent that the market price of MAM common stock is then below
                    $25 per
                    share, the number of shares issuable on conversion is ratably
                    increased,
                    which could result in further dilution of MAM’s common stock.
  (b)
                The
                    Company had material interest rate risk until MPS fixed interest
                    rates on
                    three variable rate debt issues on September 9, 2003, with a
                    derivative
                    interest rate swap transaction. As discussed in previous Form
                    8-K, 10-K
                    and 10-Q quarterly filings, MPS had partially mitigated its risk
                    by
                    purchasing a 6% interest rate cap on its two tax-exempt bonds,
                    the 1996
                    Series and the 2000 Series, issued on MPS’s behalf by the Maine Public
                    Utility Financing Bank. The interest rate cap on the 1996 and
                    2000 Series
                    expired in November 2003. MPS also purchased a 7% interest rate
                    cap, which
                    expires in 2008, for MPS’s Taxable Electric Rate Stabilization Revenue
                    Notes issued in 1998 on its behalf by the Finance Authority of
                    Maine
                    (“FAME”). Further discussion on these debt issues and the associated
                    interest rate caps is contained in Item 8 to the Consolidated
                    Financial
                    Statements, “Long-Term Debt,” and is hereby incorporated by this
                    reference. Upon execution of the interest rate swaps on September
                    9, 2003,
                    MPS effectively fixed through maturity the rates on the 1996
                    Series due in
                    2021 and the 2000 Series due in 2025 at 4.57% and 4.68%, respectively.
                    The
                    rate on the 1998 Notes due in 2008 was also fixed at 2.79% through
                    maturity. As of September 30, 2005, the 1996 and 2000 Series
                    and the 1998
                    FAME Notes had outstanding balances of $13.6 million, $9.0 million
                    and
                    $5.84 million, respectively. The fixed rates are higher than
                    the previous
                    floating rates and continue to be as of the date of this filing.
                    Although
                    incurring no up-front cost to execute the swaps, MPS is currently
                    incurring increased interest expenses. However, Management believes
                    that
                    the fixing of interest rates over the terms of the debt will
                    serve to
                    protect both shareholders and consumers from what it believes
                    to be upward
                    variable interest rate pressures.
  (c)
                The
                    Company’s unregulated real estate development and investment subsidiary,
                    Maricor Properties Ltd, and its subsidiary, Mecel Properties
                    Ltd, are
                    subject to certain risks and uncertainties including, but not
                    necessarily
                    limited to interest rate risks associated with variable interest
                    rates;
                    shifts in local real estate market conditions; market-based competition;
                    the inability to fully lease rental properties; facility performance
                    related to unforeseen or unknown structural, mechanical and/or
                    electrical
                    systems failures; unexpected increases in property rehabilitation
                    costs;
                    new government regulations; and tenant credit and default risks.
  (d)
                Transactions
                    with Me&NB; The Maricor Group, Canada Ltd; and Maricor Properties Ltd
                    are subject to an immaterial amount of foreign currency translation
                    risk.
                    Income and expenses are translated at average rates of exchange
                    for the
                    period of time the income is earned or the expenses are incurred.
                    Assets
                    and liabilities are translated at year-end exchange rates.
 
 44
 (e)
                The
                    Maricor Group and its subsidiaries are subject to market risks
                    associated
                    with changes in economic conditions of their respective markets,
                    the
                    ability to attract and retain key talent, and engineering design
                    errors
                    and/or omissions. The Company does carry insurance to address
                    errors and
                    omissions to mitigate certain risks.
 
 (f)
                Maricor
                    Technologies is subject to risks associated with changing technologies
                    and
                    increasing competition. As a result, MTI monitors technology
                    and
                    competitor trends to ensure its product offerings remain market
                    competitive.
 
 (g)
                The
                    new lines of credit for MPS and MAM are charged interest at Bank
                    of
                    America’s prime rate or LIBOR plus 1.375% or 2%, respectively. This
                    exposes the Company to interest rate risk from fluctuations in
                    these
                    rates.
 
 ***Item
          4. Controls and Procedures***
 
 (a)
          Evaluation of Disclosure Controls and Procedures
  Based
          on
          reviews by the Company’s President and Chief Executive Officer and Senior Vice
          President and Chief Financial Officer of the Company’s disclosure controls and
          procedures, conducted within 90 days of the filing of this Form 10-Q, as
          evidenced by the certifications appearing at the end of this Form 10-Q,
          the
          aforementioned Officers have concluded that the controls are working
          effectively.
  (b)
          Changes in Internal Control over Financial Reporting
 
 There
          was no
          change in the Company’s internal control over financial reporting that occurred
          during the most recent fiscal quarter.
  As
          a
          non-accelerated filer, the Company is taking actions to comply with Section
          404
          of The Sarbanes-Oxley Act with respect to its internal control over financial
          reporting for the fiscal year 2007.  The Company continues to assess
          the internal control environment, control designs and operating effectiveness,
          to ensure no significant deficiencies or material weaknesses
          exist.
  45
  **PART
          II. OTHER INFORMATION**
 
 ***Item
          1. Legal Proceedings***
  **Federal
          Energy Regulatory Commission 2005 Open Access Transmission Tariff Formula
          Rate
          filing, FERC Docket ER05-... (formula change filing) and ER00-1053-... (calculation
          of the revenue requirement filing)**
  On
          May
          31, 2005, pursuant to Section 205 of the Federal Power Act, 16 U.S.C. Section
          824d, and Title 18 CFR Sections 35.11 and 35.13 of the regulations of
          the FERC, MPS submitted for filing its proposed revisions to its FERC Open
          Access Transmission Tariff in Docket No. ER 05 (the “2005 OATT”) to modify its
          transmission rate formula. MPS filed its updated rates under the 2005 OATT
          formula on June 15, 2005, pursuant to Docket ER00-1053 with an effective
          date of
          June 1, 2005, for both wholesale and retail customers, subject to a customer
          refund that may occur as a result of the proceeding and potential settlement
          negotiations. The retail transmission revenue requirement was increased
          by
          $288,670 on June 1, 2005, under the 2005 OATT. This represented an increase
          of
          8% to the transmission component of retail delivery rates or an overall
          impact
          on total retail delivery rates of 0.7%. The primary reason for the increase
          was
          the increase to costs due to mandated Sarbanes-Oxley requirements, and
          the
          purchase of a new Oracle-based accounting system.
  As
          part
          of the settlement data request process, the Company identified several
          adjustments to its FERC Form 1 filing for 2004 which flow through the Company’s
          transmission rate formula. The approximate net impact of these corrections,
          once
          implemented, will be to reduce the overall increase to the projected retail
          transmission revenue requirement and result in a revised projected net
          increase
          to the retail transmission revenue requirement of $178,933 instead of the
          previously projected increase of $288,670. This adjustment will flow through
          Schedule 1.1.2 of the MPS OATT to be effective June 1, 2006, and will be
          passed
          through retail rates on July 1, 2006, when the retail rates are adjusted
          next.
          The Company has reported to FERC as scheduled that the parties are proceeding
          with the settlement process and will report back in one month. Because
          the
          Company is currently in the midst of a settlement process and continues
          to
          respond to data requests by the interveners, it cannot predict the exact
          dollar
          outcome of this proceeding at this time.
  **MPUC
          Approves the Pass-Thru of Retail Transmission Rates to MPS Retail Jurisdictional
          Customers, and the Increase to DSM Mil Rate, MPUC Docket No.
          2003-516**
 
 Per
          agreement
          with the Maine Public Utilities Commission (“MPUC”), the new transmission rates
          for retail customers (above) were put into retail rates on July 1, 2005,
          to
          coincide with MPS’s related State jurisdictional compliance filing in MPUC
          Docket No. 2003-516 to increase the DSM Mil Rate. These rates were approved
          by
          the MPUC on June 20, 2005. Per this filing, total retail delivery rates
          increased by 1.1%.
  **Requests
          for Issuance of Certificates of Public Convenience and Necessity in Connection
          With the Construction of a Proposed Transmission Line and Various Transmission
          Service Reservations.**
  On
          October 4, 2004, MPS filed a Petition with the MPUC requesting the issuance
          of
          Certificate of Public Convenience and Necessity pursuant to 35-A M.R.S.A.
          Section 3132 to construct a 138 kV transmission line originating at an
          existing
          substation in Limestone, Maine and extending to the Canadian Border near
          Hamlin,
          Maine.
  The
          project was proposed in order to ensure the reliability and integrity of
          the MPS
          transmission grid under scenarios of reduced on-system generator availability
          and peak load growth. In its petition, MPS maintained that the available
          firm
          transfer capability of the transmission system when added to the remaining
          on-system hydro generation is not sufficient to meet peak load conditions,
          should existing on-system wood-fired generation become unavailable. The
          proposed
          line would address this by significantly increasing the load-serving capability
          of the northern Maine region and would serve to reinforce the vital transmission
          ties between northern Maine and the New Brunswick transmission grid. Additional
          benefits of the proposed line include the potential for increasing the
          number of
          competitive retail electric suppliers and increasing the attractiveness
          of the
          region for development of additional generation, such as wind farms, by
          providing increased transmission export capacity.
  The
          MPUC
          Commissioners deliberated the Docket on August 29, 2005, and denied the
          petition, determining that there was no immediate reliability risk in northern
          Maine. However, the Commissioners cited several areas requiring further
          consideration with respect to regional reliability planning. The Commission
          issued the Order on October 21, 2005, that described actions to be taken
          by MPS
          and the Northern Maine ISA. The Company is currently reviewing the Order
          with
          regard to the specific requirements and may request reconsideration in
          the
          Docket. Through September 30, 2005, approximately $800,000 was spent on
          this
          transmission case. MPS anticipates seeking recovery of these expenditures
          through its transmission rates or otherwise.
  46
  In
          September 2004, MPS entered into a Commitment Agreement with NB Power.
          Under
          this Agreement, which is subject to MPS obtaining all necessary regulatory
          approvals, MPS will reserve 35 MW of transmission capacity on the NB Power
          system in conjunction with the construction of a new 345 kV transmission
          line to
          be constructed from Point Lepreau near Saint John, NB to Orrington, Maine.
          NB
          Power will own and operate the portion of the line on its side of the border,
          while Bangor Hydro-Electric Company (“BHE”) will own and operate the portion of
          the line on the U.S. side of the border known as the Northeast Reliability
          Interconnect (“NRI”). BHE filed for a Certificate of Public Convenience and
          Necessity for this line on November 5, 2004, in MPUC Docket No. 2004-771.
          MPS
          filed a petition with the MPUC seeking approval to make the reservation
          required
          under the Commitment Agreement on December 13, 2004, in MPUC Docket No.
          2004-775
          which was subsequently changed to MPUC Docket No. 2004-538 Phase II. On
          October
          7, 2005 MPS proposed several changes to the Commitment Agreement, which
          will be
          followed by a formal litigation schedule. As noted above, MPS’s obligations
          under the Commitment Agreement are dependent upon securing regulatory approval.
          MPS cannot predict the outcome of Phase II of this case at this
          time.
  ***Item
          2. Unregistered Sales of Equity Securities and Use of
          Proceeds***
 
 None
  ***Item
          3. Defaults upon Senior Securities***
 
 None
 
 ***Item
          4. Submission of Matters to a Vote of Security
          Holders***
 
 None
 
 ***Item
          5. Other Information***
 
 None
  ***Item
          6. Exhibits***
  The
          following exhibits are attached:
  ·
                Exhibit
                    31 Rule 13a-14(a)/15d-14(a)
                    Certifications
  ·
                Exhibit
                    32 Certification of Financial Reports Pursuant to 18 USC Section
                    1350
  47
  SIGNATURE
 
 
 Pursuant
          to the requirements of the Securities Exchange Act of 1934, the registrant
          has
          duly caused this report to be signed on its behalf by the undersigned thereunto
          duly authorized.
 
 
 MAINE
          & MARITIMES CORPORATION
 (Registrant)
 
 Date:
          November 10, 2005
 
 
 /s/
                    Michael I. WilliamsMichael
                    I. WilliamsVice
                    President, Controller and Chief Accounting Officer(Principal
                    Accounting Officer and Duly Authorized Officer)
  48