**EXHIBIT 10(b)**

September 22, 2006

Kurt A. Tornquist

28 Fort HillStreet

Fort Fairfield, ME 04742

Dear Kurt:

The following is asummary of your various benefits pursuant to your separation of employment withMaine Public Service effective September 25, 2006.

*SeverancePay*:  You will receivethree weeks of pay at your current base wage for each year of continuousservice with the company, a partial year of service shall be prorated.  You have 14.25 years of service with thecompany, so you will receive 42.75 weeks of pay, which is $98,653.74 (gross) lessnormal withholdings.  Your severance willbe paid in twenty-one (21) equal installments on a bi-weekly basis beginningwith the period ending October 8, 2006.

*Medical:*  Your coverage under the company’s medicalplan ceases effective with your separation of employment at the end of theworkday on September 25, 2006.  However,in accordance with federal law under “COBRA”, you are eligible for eighteen(18) months of coverage.  The companywill continue to make the regular employer contribution amount plus the company’sshare of the 2% administrative fee for up to three months of this COBRAcoverage for you and your family.  Shouldyou elect COBRA, your share of the premium for the first three months will be$301.83 per month.  Anthem BCBS will sendyou a monthly invoice, please send the invoice and your check payable to MPS toRuth Barnes.  Information on COBRA andCOBRA election forms are enclosed.

Your COBRA Election Formsmust be returned within 60 days of this letter for your coverage tocontinue.  Please mail to:

Maine & MaritimesCorporation

Ruth Barnes

P. O. Box 789

Presque Isle, ME04769-0789

*VacationPay: *Payment for your 247hours of accrued vacation in the amount of $14,250.02 (gross) will be paid toyou on October 12, 2006.

*FinalPaycheck:* Your final paycheckfor the week ending through October 1, 2006, will be processed and paid to youon October 12, 2006.

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*HealthCare Reimbursement Account:* You will have 30 days after September 25, 2006, to submit any claims forexpenses incurred during the plan year, prior to and including your separation ofemployment date, for reimbursement.  Or,if you wish, you can elect to continue participation in the plan on anafter-tax basis via COBRA at 102% of your current cost.  An election form is enclosed and must also bereturned to Ruth Barnes.

*Accidental Death &Dismemberment Insurance:* Your Company provided Group AD&D coverage ceases upon the separationof your employment.

*Group Term Life Insurance:*  Your Group Term Life Insurance coverage underour Prudential Group Plan terminates with your employment.  However, you have the right to either port orconvert your policy to an individual life insurance policy if desired.  If you wish to exercise your conversionprivilege, you must make written application for an individual policy and paythe first premium on it within 31 days after the cessation of yourinsurance.  Conversion forms andinformation on portability and conversion are enclosed.  Any questions regarding this should bedirected to:

Prudential Financial

Group Conversions

290 West Mt. PleasantAvenue

Mail Stop NJ-11-01-03

Livingston, NJ 07039-2729

Telephone:877-889-2070

*Disability Insurance:*  Your short-term and long-term disabilityinsurance ceases upon your separation of employment; however, you may convertyour long term disability insurance to an individual policy if you wish.  Conversion forms have been included for yourconvenience. Any questions regarding this should be directed to:

The Prudential InsuranceCompany of America

P. O. Box 8769

Philadelphia, PA19101-8769

Telephone:  1-800-842-1718

*Voluntary Accidental Death andDismemberment Insurance:* Your coverage in force ceases uponyour separation of employment. You may convert this coverage to an individualpolicy. Application and premium must be made within 31 days of the separationdate.  The amount of insurance cannot bemore than the amount in force prior to the separation of employment. Conversionforms have been included for your convenience.

*Retirement Savings Plan:*  Contributions to your Retirement SavingsAccount with Bank of America will cease upon your separation of employment.Whereas your account balance exceeds $1,000, you have the following options:

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1.               Youmay choose to receive payment of your vested account balance in the form of a lumpsum distribution as soon as practicable after your separation of employment. Ifyou receive a lump sum distribution and don’t roll it into another plan, suchas an IRA or a new employer’s sponsored plan, you will have to pay tax inaddition to a 10% penalty on the distribution.

2.               You may leave yourfunds in the Company’s Plan and continue to direct the investment of yourvested account balance until 60 days after the end of the plan year in whichyou attain age 65. If you do not select an earlier date, your account will bedistributed in a lump sum or in installments, if you have so elected, when youattain age 65.

Enclosed is a Special TaxNotice for your review.  A distributionpackage will be sent to you from the Bank of America.  If you have any questions, please contact:

Vivian Sawyer

Bank of America

100 Middle Street, 3rd Floor

Portland, ME 04101

(207) 874-5622

*Defined Benefit Pension Plan: *Upon your separation ofemployment you will have met the Years of Vesting Service under the Company’spension plan for a non-forfeitable benefit. A statement of benefits will beprovided by Bank of America as soon as feasible following your separation ofemployment.

*Expenses:*  If you have any expenses you have not yetreported, please complete the expense report that is included with this packagewithin the next ten days.  Send thecompleted form to Ruth Barnes for processing.

We encourage you tocontact the Presque Isle Career Center at 66 Spruce Street in Presque Isle,telephone number (207) 760-6300.  This isa free outplacement service including resume writing, career development, jobsearch assistance and education assistance. The Maine Career Centerwebsite also has job search information along with a number of links tointernet job sites; address is www.mainecareercenter.com.  Additionally, the Company will provide younotice of any internal positions that become available for the next twelvemonths.

If you have anyquestions, please don’t hesitate to contact me.  Best wishes in your future endeavors.
| Sincerely,                       |
|----------------------------------|
|                             |
| /s/ Mark M. Hovey                |   |
| Mark M. Hovey                    |
| Vice President,  Human Resources |
| and  Organizational Development  |
|                             |
| Enclosures                       |

 

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**RELEASE**

The undersigned employee hereby agrees:

1.             Asconsideration for this Release, I will receive three (3) weeks of pay at mycurrent salary for each year of my prior service with the Company as severancepay, less all appropriate federal, state and local taxes, Social Security andFICA withholdings, together with the benefits described in Paragraph 2 (the “SettlementAmount”).  A partial year of serviceshall be pro-rated.  The SettlementAmount represents additional compensation which I acknowledge to be in excessof accrued vacation and regular compensation earned to date.  I understand that I will receive theSettlement Amount as part of the Company’s regular payroll cycle, and not in alump sum.  I understand that I was notalready entitled to receive the Settlement Amount, that I am required to signthis Release in order to obtain the Settlement Amount, and that the SettlementAmount constitutes consideration for this Release.

2.             TheCompany will continue to make the regular employer contribution towards mymedical insurance under COBRA plus the Company’s share of the 2% administrativefee either through payroll deduction or reimbursement directly to the providerif I provide evidence of payment.  Suchpayments will be made until I have secured alternative coverage through a newemployer but not more than three months. All other employer sponsored programs shall terminate as of mytermination date.

3.             Formyself and my heirs, representatives, successors and assigns, I hereby releaseand discharge Maine & Maritimes Corporation and all of its affiliates,subsidiaries, officers, shareholders, directors, agents, attorneys, employees,successors, and assigns (collectively the “Company”), from any and all actions,claims or demands for damages, costs, contribution, indemnification, or anyother thing whatsoever, on account of, or in any way arising out of myemployment with the Company at any time prior to the date hereof.  This Release covers both claims that I know aboutand claims that I may not know about as of the date of this Release.

4.             Iexpressly and voluntarily waive and release any and all rights or claimsarising out of my employment or termination from employment at the Company,including but not limited to (a) any and all claims of discrimination onaccount of age, race, gender, religion, physical or mental disability, (b) anyclaim of sexual harassment, (c) any claim of retaliation for exercising rightsunder state or federal law, (d) any claim of wrongful discharge, termination,demotion, or discrimination, (e) any claim of physical injury or emotionaldistress, or (f) any claims to further or future employment, whether based uponthe Maine Workers’ Compensation Act, the Maine Human Rights Act, the AmericansWith Disabilities Act, the Civil Rights Act of 1991, the Age Discrimination inEmployment Act, the Employee Retirement Income Security Act (“ERISA”) theFederal Family & Medical Leave Act, the Maine Family Medical Leave Act, theMaine or Federal Fair Labor Standards Act, or any other federal, state, orlocal law relating to employment or discrimination.

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5.             Iagree that I will not commence any lawsuit against the Company in violation ofthis Release.  If I violate this covenantnot to sue, I will pay all costs and expenses of defending against my lawsuitthat the Company or any person associated with the Company may incur,including, but not limited to, reasonable attorneys’ fees.

6.             Ihave been advised of my right to a period of at least twenty-one (21) days inwhich to consider this Release before signing, have been advised in writing ofmy right to consult an attorney before executing this Release, and understandthat I have a period of seven (7) days following the execution of this Releasein which to revoke by a written revocation any provisions relating to agediscrimination claims, including claims under the Age Discrimination inEmployment Act, or any other claims which I may have under any other federal,state or local law relating to employment or discrimination.  I understand the terms of this Release,including any terms specifically relating to age discrimination claims as wellas any other claims arising under any other federal, state or local lawrelating to employment or discrimination, and understand that the seven (7) dayrevocation period shall commence on the date of execution and that this Releaseshall become valid and enforceable on the 8th day following execution.

7.             Ihave signed this Release freely and voluntarily, and I have not been threatenedor coerced into signing this Release.  IfI have signed this Release less than 21 days after it was furnished to me, Ihave done so for my own personal reasons and with the understanding that Icould have taken the full 21 days to consider this agreement.
|                       |   |    |   |
|----------------------------|--------|---------|--------|
| Kurt A. Tornquist          |   | 9/27/06 |   |
| Employee Name (print)      |   | Date    |   |
|                       |   |    |   |
| /s/ Kurt A. Tornquist |   |    |   |
| Employee Signature         |   |    |   |
|                       |   |    |   |
| Sherri Jordan              |   |    |   |
| Witness Name (print)       |   |    |   |
|                       |   |    |   |
| /s/ Sherri Jordan     |   |    |   |
| Witness Signature          |   |    |   |

 

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