UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)
 X       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---      EXCHANGE ACT OF 1934

                     For the quarterly period ended     June 30, 2000
                                                      -------------------
                                       OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---         EXCHANGE ACT OF 1934

                  For the transition period from             to
                                                  ----------    ---------

Commission          Registrant, State of Incorporation,      I.R.S. Employer
File Number            Address, and Telephone Number       Identification No.
-----------         -----------------------------------    ------------------


001-14786                     CMP GROUP, INC.                01-0519429
                  83 Edison Drive, Augusta, Maine  04336
                              (207) 623-3521

   1-5139               CENTRAL MAINE POWER COMPANY          01-0042740
                  83 Edison Drive, Augusta, Maine  04336
                              (207) 623-3521

Indicate  by check mark  whether  the  registrants  (1) have  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
registrants  were required to file such  reports),  and (2) have been subject to
the filing requirements for at least the past 90 days.

         CMP Group, Inc.:                   Yes   X    No
         Central Maine Power Company:       Yes   X    No

This  combined  Form 10-Q is separately  filed by CMP Group,  Inc.,  and Central
Maine Power Company.  Information contained herein relating to either individual
registrant is filed by such registrant on its own behalf.  Each registrant makes
no representation as to information relating to the other registrant.

As of August 10, 2000, the number of shares of Common Stock outstanding for each
registrant was as follows:

                            Registrant                             Shares

CMP Group, Inc., Common Stock, $5 Par Value                      32,442,552
Central Maine Power Company, Common Stock, $5 Par Value (All
   held by CMP Group, Inc.)                                      31,211,471


<PAGE>

                                Table of Contents

                                                                         Page
                                                                         Number

Glossary                                                                   1

Part I.  Financial Information

Item 1 - Consolidated Financial Statements

CMP Group, Inc.
   Consolidated Statement of Earnings for the Three Months
   Ended June 30, 2000 and 1999                                            5

   Consolidated Statement of Earnings for the Six Months
   Ended June 30, 2000 and 1999                                            6

   Consolidated Balance Sheet - June 30, 2000 and December 31, 1999:
     Assets                                                                7
     Stockholders' Equity and Liabilities                                  8

   Consolidated Statement of Cash Flows for the Six Months
   Ended June 30, 2000 and 1999                                            9

Central Maine Power Company
   Consolidated Statement of Earnings for the Three Months
   Ended June 30, 2000 and 1999                                           10

   Consolidated Statement of Earnings for the Six Months
   Ended June 30, 2000 and 1999                                           11

   Consolidated Balance Sheet - June 30, 2000 and December 31, 1999:
     Assets                                                               12
     Stockholders' Equity and Liabilities                                 13

   Consolidated Statement of Cash Flows for the Six Months
   Ended June 30, 2000 and 1999                                           14

Notes to Consolidated Financial Statements                                15

Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations                                       29

Item 3 - Quantitative and Qualitative Disclosures About Market Risk       44

Part II.  Other Information                                               45

Signatures                                                                47


<PAGE>

                                    GLOSSARY

The following  abbreviations  or acronyms are used in the text of this Form 10-Q
as defined below:

             Term                                 Definition

Form 10-K                       Annual Report on Form 10-K

ARP                             Alternative Rate Plan

APB                             Accounting Principles Board

Assigned Agreements             Maine  Yankee's  Power   Contracts,
                                Additional  Power  Contracts  and Capital  Funds
                                Agreements, as amended, with its Sponsors.

Central Maine                   Central Maine Power Company, a regulated
                                electric utility and subsidiary of CMP
                                Group.

Central Securities              Central  Securities  Corporation,  a
                                wholly owned  subsidiary  of Central Maine which
                                owns and manages real estate.

CERCLA                          Comprehensive Environmental Response,
                                Compensation, and Liability Act.

CMP Group                       CMP Group,  Inc.,  is the holding  company
                                organized  effective  September  1, 1998,  which
                                owns all of the common  stock of  Central  Maine
                                Power   Company,   Union  Water  Power  Company,
                                MaineCom Services,  CNEX, MainePower,  TeleSmart
                                and New England Gas Development.

CMP Group System                CMP Group and its  wholly-owned  and  directly
                                and  indirectly controlled subsidiaries.

CMP Natural Gas                 CMP Natural Gas, L.L.C., a limited-liability
                                company owned by subsidiaries of CMP
                                Group and Energy East to distribute natural
                                gas in Maine.

CNEX                            A  wholly   owned   subsidiary   of  CMP  Group,
                                (previously     called     CMP     International
                                Consultants),  which provided utility consulting
                                (domestic  and  international)  and research and
                                was closed by CMP Group in July 2000.

Connecticut DPUC                Connecticut Department of Public Utility Control

Cumberland Securities           Cumberland Securities Corporation,  a
                                wholly owned  subsidiary  of Central Maine which
                                owns and manages real estate.

Connecticut Yankee              Connecticut Yankee Atomic Power Company

D&P                             Duff & Phelps Credit Rating Co.

DOE                             United States Department of Energy

DOJ                             United States Department of Justice

EE Merger Corp.                 A Maine corporation that is a wholly-owned
                                subsidiary of Energy East

EITF                            Emerging Issues Task Force of FASB

Energy East                     Energy East Corporation, a New York holding
                                company  which is an energy  delivery,  products
                                and services company doing business in New York,
                                Massachusetts,   Maine  and  New  Hampshire,  in
                                addition  to being the  parent  company of NYSEG
                                effective May 1, 1998, and which entered into an
                                Agreement  and Plan of  Merger  dated as of June
                                14, 1999, with CMP Group and EE Merger Corp.

EPA                             United States Environmental Protection Agency.

EPS                             Earnings per share

ERAM                            Electric Revenue Adjustment Mechanism

FASB                            Financial Accounting Standards Board

FCC                             Federal Communications Commission

FERC                            Federal Energy Regulatory Commission

FEV                             Fairfield Energy Venture

FPL                             FPL Group, Inc.

Indenture                       General and Refunding Mortgage Indenture between
                                Central  Maine and State  Street  Bank and Trust
                                Company, Trustee, dated as of April 15, 1976, as
                                amended and supplemented.

IPO                             Initial Public Offering

IRC                             Internal Revenue Code

IRS                             United States Internal Revenue Service

ISO                             Independent System Operator

Kwh                             Kilowatt-hour

MaineCom                        MaineCom Services,  a CMP Group subsidiary which
                                arranges   fiber-optic  data  service  for  bulk
                                carriers.

Maine Yankee                    Maine Yankee Atomic Power Company, a 38-percent
                                owned subsidiary of Central Maine.

MEPCO                           Maine Electric Power Company, Inc., a 78-percent
                                owned subsidiary of Central Maine
                                which owns a 345-KV transmission line from
                                Wiscasset, Maine, to New Brunswick,
                                Canada.

Merger Agreement                The Agreement and Plan of Merger dated as of
                                June 14, 1999, by and among CMP
                                Group, Energy East and EE Merger Corp.

MRS                             Monitored Retrievable Storage

Moody's                         Moody's Investors Service

MPUC                            Maine Public Utilities Commission

NB Power                        New Brunswick Power Corporation.

NEON                            NorthEast Optic Network, Inc., a corporation of
                                which MaineCom owns approximately
                                27-percent of the common stock, which is
                                building a fiber optic network in New
                                England and New York.

NEPOOL                          New England Power Pool

NERC                            North American Electric Reliability Council

NORVARCO                        A  wholly-owned  subsidiary  of  Central  Maine.
                                NORVARCO is one of two general partners with 50%
                                interests in Chester SVC Partnership, which owns
                                a static  var  compensator  facility  located in
                                Chester, Maine.

NPCC                            Northeast Power Coordinating Council

NRC                             United States Nuclear Regulatory Commission

NYSEG                           New York State Electric & Gas Corporation,
                                a utility subsidiary of Energy East.

NUG                             Non-utility generator

New  England  Gas               New  England  Gas  Development  Corporation,
Development                     a  wholly-owned subsidiary of CMP Group created
                                in September  1998 to hold up to a 50-percent
                                ownership interest in CMP Natural Gas.

OASIS                           Open Access Same-time Information System.

OPA                             Maine Office of the Public Advocate

Plant                           Maine Yankee nuclear generating plant at
                                Wiscasset, Maine

PURPA                           Public Utility Regulatory Policies Act of 1978.

RCRA                            Resource Conservation and Recovery Act.

SAB                             Securities and Exchange Commission's Staff
                                Accounting Bulletins.

S&P                             Standard & Poor's Corp.

SEC                             Securities and Exchange Commission

Secondary Purchasers            28   municipal   and    cooperative
                                utilities that had purchased  Maine Yankee power
                                under  identical  contracts  with  Maine  Yankee
                                sponsors.

SFAS                            Statement of Financial Accounting Standards

TeleSmart                       A wholly  owned  subsidiary  of CMP Group  which
                                provided accounts receivable  management and was
                                closed by CMP Group in February 2000.

Union Water                     The Union Water Power Company, a wholly owned
                                subsidiary of CMP Group.

Vermont Yankee                  Vermont Yankee Nuclear Power Corporation.

Waste Act                       Federal Low-level Radioactive Waste Policy
                                Amendments Act.

Yankee Atomic                   Yankee Atomic Electric Company


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

In the opinion of CMP Group, the unaudited financial  statements included herein
reflect all  adjustments  necessary to present fairly the  Consolidated  Balance
Sheet  as of June  30,  2000,  and the  Consolidated  Statement  of  Income  and
Consolidated  Cash Flows for the periods ended June 30, 2000 and 1999. CMP Group
is the parent holding company of Central Maine, Union Water, MaineCom,  CNEX and
New England Gas Development.  Central Maine constitutes substantially all of CMP
Group's assets, revenues and expenses. All nonutility operating transactions are
included in other  non-utility  revenues and  operating  expenses in CMP Group's
Consolidated Statement of Income.
<TABLE>
<S>                                                                       <C>           <C>
                        CMP Group, Inc. and Subsidiaries
                       Consolidated Statement Of Earnings
                                   (Unaudited)
                (Dollars in thousands, except per-share amounts)
                                                                       For the Three Months
                                                                           Ended June 30,
                                                                       --------------------
                                                                         2000           1999
                                                                         ----           ----
Revenues
     Electric operating revenues                                       $192,400       $214,686
     Other non-utility revenues                                           6,801         10,482
                                                                        -------        -------
        Total Revenues                                                  199,201        225,168
                                                                        -------        -------

Operating Expenses
     Fuel used for company generation                                       279          1,260
     Purchased power
        Energy                                                           88,839         88,842
        Other (capacity)                                                 28,685         31,214
     Other operation                                                     68,227         64,747
     Maintenance                                                         11,611          8,025
     Depreciation and amortization                                        8,622         12,005
     Taxes other than income taxes                                        5,026          4,748
                                                                        -------       --------
        Total Operating Expenses                                        211,289        210,841
                                                                        -------       --------

Operating Income (Loss)                                                 (12,088)        14,327
                                                                        -------       --------
Other Income (Expense)
     Equity in earnings of associated companies                          (1,037)           320
     Allowance for equity funds used during construction                    107            115
     Interest Income                                                      2,732          7,874
     Recovery of non provided deferred income taxes on asset sale          (752)             -
     Other, net                                                             558           (913)
     Minority interest in consolidated net income                           (65)           (69)
     Gain on security sales                                              51,094              -
     Gain on sale of investments and properties                               -          6,022
                                                                        -------       --------
        Total Other Income (Expense)                                     52,637         13,349
                                                                        -------       --------

Interest Charges

     Long-term debt                                                       3,409          7,579
     Other interest                                                       1,061         11,950
     Allowance for borrowed funds used during construction                  (17)           (77)
                                                                        -------       --------
        Total Interest Charges                                            4,453         19,452
                                                                        -------       --------

Income Before Income Taxes and Preferred Dividends                       36,096          8,224
     Income taxes                                                         7,712          3,264
     Dividends on Preferred Stock of Subsidiary                             559            919
                                                                        -------      ---------
Net Income                                                             $ 27,825     $    4,041
                                                                        =======      =========

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                               32,442,552     32,442,552

Earnings Per Share Of Common Stock - Basic                                $0.86          $0.12
Earnings Per Share Of Common Stock - Diluted                              $0.85          $0.12

Dividends Declared Per Share Of Common Stock                             $0.225         $0.225

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<S>                                                                           <C>             <C>
                        CMP Group, Inc. and Subsidiaries
                       Consolidated Statement Of Earnings
                                   (Unaudited)
                (Dollars in thousands, except per-share amounts)

                                                                              For the Six Months
                                                                                  Ended June 30,
                                                                              -------------------
                                                                              2000            1999
                                                                              ----            ----
Revenue
     Electric operating revenues                                            $457,893        $485,380
     Other non-utility revenues                                               13,188          16,421
                                                                             -------         -------
        Total Revenues                                                       471,081         501,801

Operating Expenses
     Fuel used for company generation                                            549          10,207
     Purchased power
        Energy                                                               199,243         183,317
        Other (capacity)                                                      57,095          53,988
     Other operation                                                         121,553         117,951
     Maintenance                                                              18,067          16,299
     Depreciation and amortization                                            19,394          26,677
     Taxes other than income taxes                                             9,941          12,153
                                                                             -------         -------
        Total Operating Expenses                                             425,842         420,592
                                                                             -------         -------

Operating Income                                                              45,239          81,209
                                                                             -------         -------
Other Income (Expense)
     Equity in earnings of associated companies                               (3,749)         (2,659)
     Allowance for equity funds used during construction                         330             307
     Interest income                                                           4,725           8,362
     Recovery of non provided deferred income taxes on asset sale             74,669               -
     Other, net                                                                3,395            (166)
     Minority interest in consolidated net income                               (124)           (694)
     Gain on security sale                                                    51,094               -
     Gain on sale of investments and properties                                  223          13,033
                                                                             -------         -------
        Total Other Income (Expense)                                         130,563          18,183
                                                                             -------         -------

Interest Charges
     Long-term debt                                                            6,873          18,132
     Other interest                                                           20,247          13,330
     Allowance for borrowed funds used during construction                       (65)           (214)
                                                                             -------         -------
        Total Interest Charges                                                27,055          31,248
                                                                             -------         -------

Income Before Income Taxes                                                   148,747          68,144
     Income taxes                                                             91,425          29,008
     Dividends on Preferred Stock of Subsidiary                                1,118           1,838
                                                                             -------         -------
Net Income                                                                  $ 56,204        $ 37,298
                                                                             =======         =======

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                                    32,442,552      32,442,552

Earnings Per Share Of Common Stock - Basic                                     $1.73           $1.15
Earnings Per Share Of Common Stock - Diluted                                   $1.71           $1.14

Dividends Declared Per Share Of Common Stock                                   $0.45           $0.45

The accompanying notes are an integral part of these financial statements
</TABLE>


<PAGE>

<TABLE>
<S>                                                                                      <C>              <C>
                        CMP Group, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                                   (Unaudited)
                             (Dollars in thousands)

                                    ASSETS                                            June 30,       December 31,
                                                                                        2000             1999
                                                                                      --------       ------------
Current Assets
    Cash and cash equivalents                                                        $  226,491       $  129,950
    Accounts receivable, less allowance for uncollectible accounts of
    $2,481 in 2000 and $2,904 in 1999
       Service   - billed                                                                68,146           86,599
                 - unbilled                                                              24,791           51,124
       Other accounts receivable                                                         16,826           21,662
    Inventories, at average cost
       Fuel oil                                                                               -              177

       Materials and supplies                                                            10,052           10,390
    Prepayments and other current assets                                                  5,259            9,716
                                                                                      ---------        ---------
          Total Current Assets                                                          351,565          309,618
                                                                                      ---------        ---------

Electric Property, at original cost                                                   1,355,017        1,335,674
    Less: Accumulated depreciation                                                      561,039          551,014
                                                                                      ---------        ---------
          Net electric property in service                                              793,978          784,660
                                                                                      ---------        ---------

    Construction work in progress                                                        33,092           33,681
    Nuclear fuel, less accumulated amortization of $10,385 in 2000
    and $9,996 in 1999                                                                    1,034            1,418

Property, non utility                                                                    22,096           18,487
    Less: Accumulated Depreciation                                                        6,334            5,574
                                                                                      ---------        ---------
          Net non-utility property                                                       15,762           12,913
                                                                                      ---------        ---------
          Total net property                                                            843,866          832,672

Investments In Associated Companies, at equity                                           42,875           51,059
                                                                                      ---------        ---------
    Total Net Property and Investments in Associated Companies                          886,741          883,731
                                                                                      ---------        ---------

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned projects, net                               -           73,052
    Nuclear purchased-power contracts                                                   249,854          270,311
    Regulatory assets-nuclear impairment                                                 16,035           77,489
    Regulatory assets - deferred taxes                                                  123,779          204,994
    Other deferred charges and other assets                                             138,809          228,065
                                                                                      ---------        ---------
          Deferred Charges and Other Assets, Net                                        528,477          853,911
                                                                                      ---------        ---------

          Total Assets                                                               $1,766,783       $2,047,260
                                                                                      =========        =========
The accompanying notes are an integral part of these financial statements
</TABLE>


<PAGE>

<TABLE>
<S>                                                                                    <C>               <C>

                        CMP Group, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                                   (Unaudited)
                             (Dollars in thousands)

                   STOCKHOLDERS' EQUITY AND LIABILITIES                             June 30,         December 31,
                                                                                      2000               1999
                                                                                    --------         ------------
Current Liabilities and Interim Financing
    Interim financing                                                              $      750         $   60,199
    Sinking-fund requirements                                                          20,538             11,937
    Accounts payable                                                                   79,052            104,581
    Dividends payable                                                                   7,324              7,412
    Accrued interest                                                                    1,766              2,678
    Accrued income taxes                                                                1,020                  -
    Accounts Payable to Energy Provider                                                17,817                  -
    Miscellaneous current liabilities                                                  17,200             16,731
                                                                                    ---------          ---------
       Total Current Liabilities and Interim Financing                                145,467            203,538
                                                                                    ---------          ---------

Commitments and Contingencies

Reserves and Deferred Credits
    Accumulated deferred income taxes                                                  58,699             66,472
    Unamortized investment tax credits                                                 10,171             13,926
    Nuclear purchased-power contracts                                                 249,854            270,311
    Regulatory liabilities-deferred taxes                                              46,298             60,564
    Deferred gain on generation asset sale                                            244,312            536,368
    Other reserves and deferred credits                                               204,304            194,162
                                                                                    ---------          ---------
       Total Reserves and Deferred Credits                                            813,638          1,141,803
                                                                                    ---------          ---------

Long-Term Debt
    Other long-term obligations                                                       186,057            122,542
                                                                                    ---------          ---------
       Total Long-Term Obligations                                                    186,057            122,542
                                                                                    ---------          ---------

Redeemable Preferred Stock                                                                910                910
                                                                                    ---------          ---------

Stockholders' Equity
    Common-stock                                                                      162,213            162,213
    Other paid in capital                                                             284,462            284,330
    Reacquired common stock                                                                 -               (642)
    Retained earnings                                                                 138,508             97,038
    Preferred stock                                                                    35,528             35,528
                                                                                    ---------          ---------
       Total Stockholders' Equity                                                     620,711            578,467
                                                                                    ---------          ---------

       Total Stockholders' Equity and Liabilities                                  $1,766,783         $2,047,260
                                                                                    =========          =========

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<S>                                                                           <C>           <C>
                                 CMP Group, Inc. and Subsidiaries
                               CONSOLIDATED STATEMENT OF CASH FLOWS
                                           (Unaudited)
                                      (Dollars in thousands)

                                                                            For the Six Months
                                                                              ended June 30,
                                                                            ------------------
                                                                             2000         1999
                                                                             ----         ----
CASH FROM OPERATIONS
    Net income                                                             $ 56,204      $ 37,298
    Items not requiring (not providing) cash:
       Depreciation                                                          17,772        21,627
       Amortization                                                           7,586        19,269
       Deferred income taxes and investment tax credits, net                (19,696)      (14,739)
       Allowance for equity funds used during construction                     (330)         (307)

    Preferred stock dividends of subsidiary                                   1,118         1,838
    Gain on sale of investments and properties                              (51,094)      (13,033)
    Incremental power supply                                                 (9,612)      (13,903)
    Changes in certain assets and liabilities:
       Accounts receivable                                                   35,969        22,464
       Other current assets                                                   3,520         4,302
       Inventories                                                              515         1,455
       Accounts payable                                                     (21,413)      (22,246)
       Accrued taxes and interest                                               108         4,103
       Miscellaneous current liabilities                                     18,286         2,220
    Changes in deferred balances and related carrying cost                    7,626         4,000
    MaineCom equity losses in NEON                                            6,087         5,687
    Other, net                                                                7,595        (4,364)
                                                                            -------       -------
          Net Cash Provided  by Operating Activities                         60,241        55,671
                                                                            -------       -------

INVESTING ACTIVITIES
       Construction expenditures                                            (34,887)      (21,470)
       Customer deposits for construction                                    22,737             -
       Central Maine sale of assets                                                       850,629
       Tax payments related to sale of assets                                            (153,650)
       Selling expense for sale of generation assets                                      (11,697)
       Proceeds from sale of investments and properties                      54,363        18,119
       Changes in accounts payable - investing activities                    (4,116)       (4,783)
                                                                            -------       -------
          Net Cash Provided by Investing Activities                          38,097       677,148
                                                                            -------       -------

FINANCING ACTIVITIES
    Issuances:
       Medium-term notes                                                     75,000             -
    Redemptions:
       Mortgage bonds                                                                    (118,717)
       Medium-term note                                                     (60,000)     (217,000)
       Revolving credit agreement                                                         (50,000)
       Other long-term obligations                                           (1,514)      (11,860)
       Short-term obligations, net                                              551       (15,000)
    Purchase of treasury stock                                                    -          (160)
    Dividends:
       Common stock                                                         (14,609)      (14,609)
       Preferred stock of subsidiary                                         (1,225)        (919)
                                                                            -------       -------
          Net Cash Used by Financing Activities                              (1,797)     (428,265)
                                                                            -------       -------
          Net Increase in Cash                                               96,541       304,554
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                129,950        30,540
                                                                            -------       -------
CASH AND CASH EQUIVALENTS, END OF YEAR                                     $226,491      $335,094
                                                                            =======       =======

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  instruments  purchased  having a maturity of three  months or less to be
cash equivalents.

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

In the opinion of Central Maine,  the unaudited  financial  statements  included
herein  reflect all  adjustments  necessary to present  fairly the  Consolidated
Balance Sheet as of June 30, 2000, and the Consolidated  Statement of Income and
Consolidated  Cash Flows for the periods  ended June 30, 2000 and 1999.  Central
Maine's consolidated  financial statements include the accounts of Central Maine
and its wholly  owned and  controlled  subsidiaries.  All  nonutility  operating
transactions are included in other non-utility  revenues and operating  expenses
in Central Maine's Consolidated Statement of Income.
<TABLE>
<S>                                                                         <C>             <C>
                  Central Maine Power Company and Subsidiaries
                       Consolidated Statement Of Earnings
                                   (Unaudited)
                (Dollars in thousands, except per-share amounts)

                                                                             For the Three Months
                                                                                 Ended June 30,
                                                                             --------------------
                                                                             2000            1999
                                                                             ----            ----
Revenues

     Electric operating revenues                                            $192,437        $214,737
     Other non-utility revenues                                                  121             631
                                                                             -------         -------
        Total Revenues                                                       192,558         215,368
                                                                             -------         -------
Operating Expenses
     Fuel used for company generation                                            279           1,260
     Purchased power
        Energy                                                                88,839          88,842
        Other (capacity)                                                      28,685          31,214
     Other operation                                                          59,767          55,518
     Maintenance                                                              11,674           7,978
     Depreciation and amortization                                             8,095          11,757
     Taxes other than income taxes                                             5,010           4,735
                                                                             -------         -------
        Total Operating Expenses                                             202,349         201,304
                                                                             -------         -------

Operating Income (Loss)                                                       (9,791)         14,064
                                                                             -------         -------

Other Income (Expense)
     Equity in earnings of associated companies                                  626           2,712
     Allowance for equity funds used during construction                         107             115
     Interest income                                                           2,187           7,960
     Recovery of non provided deferred income taxes on asset sale               (781)              -
     Other, net                                                                1,012          (1,735)
     Minority interest in consolidated net income                                (65)            (69)
     Gain on sale of investments and properties                                    -              24
                                                                             --------        -------
        Total Other Income (Expense)                                            3,086          9,007
                                                                             --------        -------

Interest Charges
     Long-term debt                                                            3,361           7,534
     Other interest                                                            1,065          11,793
     Allowance for borrowed funds used during construction                       (17)            (77)
                                                                             -------         -------
        Total Interest Charges                                                 4,409          19,250
                                                                             -------         -------

Income (Loss) Before Income Taxes                                            (11,114)          3,821
     Income taxes                                                             (5,571)            567
                                                                             -------         -------
Net Income (Loss)                                                             (5,543)          3,254
     Dividends on Preferred Stock                                                559             919
                                                                             -------         -------
Earnings Applicable to Common  Stock                                        $ (6,102)       $  2,335
                                                                             =======         =======

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                                    31,211,471      31,211,471

Earnings Per Share Of Common Stock - Basic and Diluted                        ($0.20)          $0.07

Dividends Declared Per Share Of Common Stock                                   $0.36           $0.36

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<S>                                                                         <C>             <C>
                  Central Maine Power Company and Subsidiaries
                       Consolidated Statement Of Earnings
                                   (Unaudited)
                (Dollars in thousands, except per-share amounts)

                                                                              For the Six Months
                                                                                 Ended June 30,
                                                                              -------------------
                                                                             2000            1999
                                                                             ----            ----
Revenues

     Electric operating revenues                                            $458,010        $485,307
     Other non-utility revenues                                                  344           1,110
                                                                             -------         -------
        Total Revenues                                                       458,354         486,417

Operating Expenses
     Fuel used for company generation                                            549          10,207
     Purchased power
        Energy                                                               199,243         183,317
        Other (capacity)                                                      57,095          53,988
     Other operation                                                         106,522         103,367
     Maintenance                                                              18,150          16,039
     Depreciation and amortization                                            18,493          26,206
     Taxes other than income taxes                                             9,909          12,096
                                                                             -------         -------
        Total Operating Expenses                                             409,961         405,220
                                                                             -------         -------

Operating Income                                                              48,393          81,197

                                                                             -------         -------
Other Income (Expense)
     Equity in earnings of associated companies                                2,380           3,683
     Allowance for equity funds used during construction                         330             307
     Interest income                                                           4,027           8,243
     Recovery of non provided deferred income taxes on asset sale             74,640               -
     Other, net                                                                3,816          (1,444)
     Minority interest in consolidated net income                               (124)           (694)
     Gain on sale of investments and properties                                  223           7,034
                                                                             -------         -------
        Total Other Income (Expense)                                          85,292          17,129
                                                                             -------         -------

Interest Charges
     Long-term debt                                                            6,781          18,038
     Other interest                                                           20,245          13,166
     Allowance for borrowed funds used during construction                       (65)           (214)
                                                                             -------         -------
        Total Interest Charges                                                26,961          30,990
                                                                             -------         -------

Income Before Income Taxes                                                   106,724          67,336
     Income taxes                                                             78,499          26,435
                                                                             -------         -------
Net Income                                                                    28,225          40,901
     Dividends on Preferred Stock                                              1,118           1,838
                                                                             -------         -------
Earnings Applicable to Common Stock                                         $ 27,107        $ 39,063
                                                                             =======         =======

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                                    31,211,471      31,211,471

Earnings Per Share Of Common Stock (Basic and Diluted)                         $0.87           $1.25

Dividends Declared Per Share Of Common Stock                                  $0.720          $0.585

The accompanying notes are an integral part of these financial statements
</TABLE>


<PAGE>

<TABLE>
<S>                                                                                       <C>              <C>
                  Central Maine Power Company and Subsidiaries
                           Consolidated Balance Sheet
                                   (Unaudited)
                             (Dollars in thousands)

                                    ASSETS                                           June 30,        December 31,
                                                                                       2000              1999
                                                                                       ----              ----
Current Assets
    Cash and cash equivalents                                                        $  155,329       $  112,872
    Accounts receivable, less allowance for uncollectible accounts of
    $2,481 in 2000 and $2,904 in 1999
       Service   - billed                                                                68,004           86,455
                 - unbilled                                                              24,791           51,124
       Other accounts receivable                                                         12,955           19,647
    Prepaid income taxes                                                                 10,915                -
    Inventories, at average cost
       Fuel oil                                                                               -              177
       Materials and supplies                                                             9,983            9,927
    Prepayments and other current assets                                                  5,068            8,393
                                                                                      ---------        ---------
          Total Current Assets                                                          287,045          288,595
                                                                                      ---------        ---------

Electric Property, at original cost                                                   1,355,013        1,335,670
    Less: Accumulated depreciation                                                      561,035          550,990
                                                                                      ---------        ---------
          Net electric property in service                                              793,978          784,680
                                                                                      ---------        ---------

    Construction work in progress                                                        33,059           32,357
    Nuclear fuel, less accumulated amortization of $10,385 in 2000
    and $9,996 in 1999                                                                    1,034            1,418

Property, non utility                                                                    10,231           10,430
    Less: Accumulated Depreciation                                                        3,730            3,069
                                                                                      ---------        ---------
          Net non-utility property                                                        6,501            7,361
                                                                                      ---------        ---------
          Total net property                                                            834,572          825,816

Investments In Associated Companies, at equity                                           38,677           38,236
                                                                                      ---------        ---------
    Total Net Property and Investments in Associated Companies                          873,249          864,052
                                                                                      ---------        ---------

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned projects, net                               -           73,052
    Nuclear purchased-power contracts                                                   249,854          270,311
    Regulatory asset-nuclear impairment                                                  16,035           77,489
    Regulatory assets - deferred taxes                                                  123,779          204,994
    Other deferred charges and other assets                                             132,976          223,341
                                                                                      ---------        ---------
          Deferred Charges and Other Assets, Net                                        522,644          849,187
                                                                                      ---------        ---------

          Total Assets                                                               $1,682,938       $2,001,834
                                                                                      =========        =========

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<S>                                                                                    <C>                <C>
                  Central Maine Power Company and Subsidiaries
                           Consolidated Balance Sheet
                                   (Unaudited)
                             (Dollars in thousands)

                   STOCKHOLDERS' EQUITY AND LIABILITIES                             June 30,         December 31,
                                                                                      2000              1999
                                                                                    --------         ------------
Current Liabilities and Interim Financing
    Interim financing                                                              $        -         $   60,000
    Sinking-fund requirements                                                          20,538             11,937
    Accounts payable                                                                   77,213            107,600
    Dividends payable                                                                      24                112
    Accrued interest                                                                    1,766              2,678
    Income taxes payable to parent company                                                  -                  -
    Accounts payable to energy provider                                                17,817                  -
    Miscellaneous current liabilities                                                  15,298             15,855
                                                                                    ---------          ---------
       Total Current Liabilities and Interim Financing                                132,656            198,182
                                                                                    ---------          ---------

Commitments and Contingencies

Reserves and Deferred Credits
    Accumulated deferred income taxes                                                  63,774             63,792
    Unamortized investment tax credits                                                 10,171             13,926
    Nuclear purchased-power contracts                                                 249,854            270,311
    Regulatory liabilities-deferred taxes                                              46,298             60,564
    Deferred gain on generation asset sale                                            244,312            536,368
    Other reserves and deferred credits                                               190,332            181,348
                                                                                    ---------          ---------
       Total Reserves and Deferred Credits                                            804,741          1,126,309
                                                                                    ---------          ---------

Long-Term Debt
    Other long-term obligations                                                       183,748            120,186
                                                                                    ---------          ---------
       Total Long-Term Obligations                                                    183,748            120,186
                                                                                    ---------          ---------

Redeemable Preferred Stock                                                                910                910
                                                                                    ---------          ---------

Stockholders' Equity
    Common-stock                                                                      162,213            162,213
    Other paid in capital                                                             276,844            276,709
    Reacquired common stock                                                           (19,000)           (19,000)
    Retained earnings                                                                 105,255            100,754
    Preferred stock                                                                    35,571             35,571
                                                                                    ---------          ---------
       Total Stockholders' Equity                                                     560,883            556,247
                                                                                    ---------          ---------

       Total Stockholders' Equity and Liabilities                                  $1,682,938         $2,001,834
                                                                                    =========          =========

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<S>                                                                            <C>         <C>
                           Central Maine Power Company and Subsidiaries
                               CONSOLIDATED STATEMENT OF CASH FLOWS
                                           (Unaudited)
                                      (Dollars in thousands)

                                                                             For the Six Months
                                                                               Ended June 30,
                                                                             ------------------
                                                                             2000          1999
                                                                             ----          ----
CASH FROM OPERATIONS
    Net income                                                             $ 28,225      $ 40,901
    Items not requiring (not providing) cash:
       Depreciation                                                          16,878        21,161
       Amortization                                                           7,578        19,262
       Deferred income taxes and investment tax credits, net                (11,895)      (14,407)
       Allowance for equity funds used during construction                     (330)         (307)
    Gain on Sale of Investments and Properties                                 (223)       (7,034)
    Incremental power supply                                                 (9,612)      (13,903)
    Changes in certain assets and liabilities:
       Accounts receivable                                                   37,823        13,792
       Other current assets                                                   2,388         4,669
       Inventories                                                              121         1,552
       Accounts payable                                                     (26,271)      (18,989)
       Accrued taxes and interest                                           (11,827)        3,316
       Miscellaneous current liabilities                                     17,260         1,695
    Deferred Ice storm costs                                                   (100)            -
    Changes in deferred balances and related carrying cost                    8,351         4,000
    Other, net                                                                8,430            36
                                                                            -------       -------
          Net Cash Provided by Operating Activities                          66,796        55,744
                                                                            -------       -------

INVESTING ACTIVITIES
       Construction expenditures                                            (32,786)      (20,786)
       Customer deposits for construction                                    22,737             -
       Central Maine sale of assets                                               -       850,629
       Tax payments related to sale of assets                                     -      (153,650)
       Selling expense for sale of generation assets                              -       (11,697)
       Proceeds from sale of investments and properties                           -         7,813
       Changes in accounts payable - investing activities                    (4,116)       (4,793)
                                                                            -------       -------
          Net Cash Provided (Used) by Investing Activities                  (14,165)      667,516
                                                                            -------       -------

FINANCING ACTIVITIES
    Issuances:
       Medium-term notes                                                     75,000             -
    Redemptions:
       Mortgage bonds                                                             -      (118,717)
       Medium term notes                                                    (60,000)     (217,000)
       Revolving Credit Agreement                                                 -       (50,000)
       Other long-term obligations                                           (1,467)      (11,887)
       Short-term obligations                                                     -       (15,000)
    Dividends:
       Common stock                                                         (22,482)      (18,268)
       Preferred stock                                                       (1,225)         (919)
                                                                            -------       -------
          Net Cash Used by Financing Activities                             (10,174)     (431,791)
                                                                            -------       -------
          Net Increase in Cash                                               42,457       291,469
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              112,872        22,628
                                                                            -------       -------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                   $155,329      $314,097
                                                                            =======       =======

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  instruments  purchased  having a maturity of three  months or less to be
cash equivalents.

The accompanying notes are an integral part of these financial statements
</TABLE>

<PAGE>


                                  CMP Group and
                           Central Maine Power Company

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies
     ------------------------------------------

     General  Description - CMP Group was organized effective September 1, 1998,
     at which  time all of the  shares of common  stock of  Central  Maine  were
     converted into an equal number of shares of common stock of CMP Group.  CMP
     Group  owns all of the  shares of  common  stock of  Central  Maine and the
     former non-utility subsidiaries of Central Maine (TeleSmart, MaineCom, CNEX
     and Union Water Power  Company) in addition to New England Gas  Development
     Corporation, a subsidiary organized in 1998.

     Central  Maine is  primarily  engaged in the business of  transmitting  and
     distributing  electric  energy  generated  by  others  for the  benefit  of
     customers in southern and central Maine. On March 1, 2000,  Central Maine's
     obligation to generate or otherwise  supply electric  energy  terminated as
     part of the restructuring of the electric utility industry in Maine, except
     as  directed  by the MPUC to  secure a supply  of  energy  for the  default
     standard offer for medium and large customers.

     CMP Group,  Energy East and EE Merger Corp., a Maine  corporation that is a
     wholly-owned  subsidiary of Energy East, entered into an Agreement and Plan
     of Merger,  dated as of June 14, 1999,  providing for a merger  transaction
     among  CMP  Group,  Energy  East  and  EE  Merger  Corp.  Refer  to  Note 2
     "Commitments and Contingencies."

     Financial  Statements  -  CMP  Group's  consolidated  financial  statements
     include  the  accounts  of CMP Group and its  wholly  owned and  controlled
     subsidiaries,   including  Central  Maine.   Central  Maine's  consolidated
     financial  statements  include its  accounts as well as those of its wholly
     owned and controlled  subsidiaries.  Central Maine's financial position and
     results  of  operations  account  for  substantially  all  of  CMP  Group's
     consolidated financial position and results of operations. All intercompany
     accounts  and  transactions   have  been  eliminated  in  the  consolidated
     financial statements. The preparation of financial statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the  financial  statements,  and the  reported  amounts of revenues  and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates.

     Beginning March 1, 2000,  Central Maine became a billing agent for standard
     offer providers and competitive  energy providers.  These  transactions are
     not recorded as revenues, but as Accounts Receivable and Accounts Payable.

<PAGE>

     Supplemental  Cash Flow  Disclosure  - Cash paid for the three months ended
     June 30, 2000 and 1999:

                                                           (In Millions)
                                                     2000               1999
                                                     ----               ----
     CMP Group
        Interest, net of amounts capitalized        $ 8.8              $ 26.9
        Income taxes                                 32.7               195.6

     Central Maine
        Interest, net of amounts capitalized        $ 8.5              $ 26.8
        Income Taxes                                 24.8               193.4

     Stock-Based  Compensation  - Under CMP Group's  Long-Term  Incentive  Plan,
     stock options were granted in 1998 and 1999 with an exercise price equal to
     the fair market  value on the date of the grants.  They expire  seven years
     from their grant date. One third of the options vest  annually,  commencing
     on the first  anniversary  of the options  grant date.  Upon vesting  stock
     options  are  exercisable  during  periods of active  employment  or within
     thirty days after termination of employment,  provided  termination did not
     occur due to cause.  Coincident  with the completion of the proposed merger
     of CMP Group with Energy East,  all stock  options  will be  cancelled  and
     holders of the options  will be  entitled to payment  from CMP Group of the
     excess of $29.50 per share over the exercise price of the options.

     Performance shares are granted at the beginning of a three-year performance
     cycle and are paid out in the form of CMP Group  common stock at the end of
     the cycle,  based on achievement of  performance  goals directly  linked to
     increasing  shareholder  value. If the goals are not achieved at the end of
     the three-year  cycle,  the performance  shares are forfeited.  Performance
     shares were granted in 1997,  1998 and 1999. In 2000,  phantom  shares were
     granted  which will be  prorated  and paid out as cash  equivalents  by CMP
     Group  at  the  merger  date.  All  grants  of  performance  shares  have a
     three-year cycle and are being accrued accordingly.  The amount expensed in
     the first half of 2000 for all  performance  cycles was $1.6 million.  Also
     coincident with the completion of the proposed merger,  performance  shares
     for  cycles  that are not  completed  will  vest and the  grantees  will be
     entitled to payment of $29.50 by CMP Group for each performance  share that
     vests.

     The  outstanding  options  and  performance  shares at June 30, 2000 are as
     follows:

     Year                        2000        1999         1998
     ----                        ----        ----         ----
     Options                        0      254,304      176,016
     Performance Shares*       98,036       67,150       64,518

     *Accrued over three year performance  cycle,  actual awards range from 0 to
     150 percent of the grant based on performance levels achieved.

     Earnings per Share - Stock options and  performance  shares granted to date
     under  CMP  Group's   Long-Term   Incentive   Plan  resulted  in  potential
     incremental  shares of common stock  outstanding  for purposes of computing
     both  basic and  diluted  earnings  per share for the three and six  months
     ended June 30, 2000 and 1999. The following table presents the calculations
     of earnings per share for CMP Group:

<TABLE>
<S>                                                           <C>               <C>              <C>               <C>
                                                                      Three Months                         Six Months
                                                                      Ended June 30,                     Ended June 30,
                                                                  ---------------------              ---------------------
     (In thousands except per share amounts)                      2000             1999              2000             1999
                                                                  ----             ----              ----             ----

     Net income                                                  $27,825            $4,041          $56,204           $37,298

     Basic average shares outstanding                         32,442,552        32,442,552       32,442,552        32,442,552

     Dilutive effect of stock and options                        333,725           216,524          332,782           173,487
                                                              ----------        ----------       ----------      ------------

     Diluted average shares outstanding                       32,776,277        32,659,076       32,775,334        32,616,039

     Basic earnings per share                                  $.86               $.12            $1.73             $1.15

     Diluted earnings per share                                $.85               $.12            $1.71             $1.14

</TABLE>

     Reclassification  - Certain amounts from prior years  financial  statements
     have been reclassified to conform to the current year presentation.

     Impact of New Accounting Standards - In June 1998, the FASB issued SFAS No.
     133,  Accounting for Derivatives and Hedging  Activities.  The new standard
     applies to all entities and is effective for all fiscal  quarters of fiscal
     years beginning after June 15, 2000, with earlier adoption  encouraged.  It
     requires companies to record derivatives on the balance sheet at their fair
     value depending on the intended use of the derivative. The adoption of this
     standard did not have an impact on these financial statements.

2.   Commitments and Contingencies
     -----------------------------

     Proposed  Merger with  Energy  East - CMP Group,  Energy East and EE Merger
     Corp.,  a Maine  corporation  that is a  wholly-owned  subsidiary of Energy
     East,  entered into an Agreement  and Plan of Merger,  dated as of June 14,
     1999,  providing for a merger transaction among CMP Group,  Energy East and
     EE Merger Corp.  Energy East is an energy  delivery,  products and services
     holding  company  doing  business in New York,  Massachusetts,  Maine,  New
     Hampshire and New Jersey,  which  delivers  electricity  and natural gas to
     retail  customers  and  provides   electricity,   natural  gas  and  energy
     management  and other  services to retail and  wholesale  customers  in the
     Northeast.

     Pursuant to the merger agreement,  EE Merger Corp. will merge with and into
     CMP Group with CMP Group being the  surviving  corporation  and  becoming a
     wholly-owned  subsidiary  of Energy East.  We expect the merger,  which was
     unanimously  approved by the  respective  boards of directors of CMP Group,
     Energy  East  and EE  Merger  Corp.,  to  occur  shortly  after  all of the
     conditions  to the  consummation  of the merger,  including  the receipt of
     required regulatory approvals, are satisfied.

     Under the terms of the  merger  agreement,  each  outstanding  share of CMP
     Group  common  stock,  $5.00 par value per share,  other than any  treasury
     shares or shares  owned by Energy  East or any  subsidiary  of CMP Group or
     Energy East,  will be converted  into the right to receive  $29.50 in cash.
     Pursuant to the merger agreement,  approximately  $957 million in cash will
     be paid to holders of shares of CMP Group  common  stock,  with  additional
     payments  being made to holders of stock  options  and  performance  shares
     awarded under CMP Group's performance incentive plans.

     The merger is subject to certain  customary closing  conditions,  including
     without limitation the receipt of all necessary  governmental approvals and
     the making of all necessary  governmental filings. CMP Group's shareholders
     approved the merger at a special  meeting on October 7, 1999. The MPUC, the
     U.S.  Department  of  Justice,   the  Federal  Trade  Commission,   Federal
     Communications  Commission, the NRC, the Connecticut DPUC and the FERC have
     approved the merger. The final regulatory approval is pending from the SEC.
     If the SEC  approval  is  granted,  we  estimate  that the merger  could be
     completed during the third quarter of 2000.

     Permanent  Shutdown of Maine Yankee Plant - On August 6, 1997, the Board of
     Directors of Maine Yankee voted to  permanently  cease power  operations at
     its nuclear generating plant at Wiscasset, Maine (the "Plant") and to begin
     decommissioning   the  Plant.   The  Plant  had  experienced  a  number  of
     operational  and regulatory  problems and did not operate after December 6,
     1996. The decision to close the Plant  permanently was based on an economic
     analysis of the costs,  risks and  uncertainties  associated with operating
     the Plant compared to those associated with closing and decommissioning it.
     The Plant's operating license from the NRC was scheduled to expire in 2008.

     FERC Rate Case - On November 6, 1997,  Maine  Yankee  submitted to FERC for
     filing  certain   amendments  to  the  Power  Contracts  (the   "Amendatory
     Agreements")  and revised  rates to reflect  the  decision to shut down the
     Plant  and to  request  approval  of an  increase  in  the  decommissioning
     component of its formula  rates.  Maine  Yankee's  submittal also requested
     certain other rate changes,  including  recovery of unamortized  investment
     (including  fuel) and certain  changes to its billing  formula,  consistent
     with the  non-operating  status of the Plant.  By Order  dated  January 14,
     1998,  the FERC accepted  Maine  Yankee's new rates for filing,  subject to
     refund  after a  minimum  suspension  period,  and set  for  hearing  Maine
     Yankee's Amendatory  Agreements,  rates, and issues concerning the prudence
     of the Plant-shutdown decision that had been raised by intervenors.

     During 1998 and early 1999 the active  intervenors,  including among others
     the MPUC Staff,  the Maine Office of the Public Advocate  ("OPA"),  Central
     Maine and other  owners,  municipal  and  cooperative  purchasers  of Maine
     Yankee power (the "Secondary Purchasers"),  and a Maine environmental group
     (together,  the  "Settling  Parties"),  engaged in extensive  discovery and
     negotiations,  which resulted in the filing of a settlement  agreement with
     the FERC on January 19, 1999. A separately negotiated settlement filed with
     the FERC on February 5, 1999,  resolved the issues  raised by the Secondary
     Purchasers  by limiting the amounts they will pay for  decommissioning  the
     Plant and by  settling  other  points of  contention  affecting  individual
     Secondary  Purchasers.  Both  settlements  were  found to be in the  public
     interest  and  approved  by the  FERC  on  June 1,  1999.  The  settlements
     constitute  full  settlement of all issues  raised in the FERC  proceeding,
     including decommissioning-cost issues and issues pertaining to the prudence
     of the management,  operation,  and decision to permanently cease operation
     of the Plant.

     The primary  settlement  provided for Maine Yankee to collect $33.1 million
     in the  aggregate  annually,  effective  August  1,  1999,  including  both
     decommissioning  costs and costs related to Maine Yankee's  planned on-site
     independent spent fuel storage installation ("ISFSI"). The 1997 FERC filing
     had called for an aggregate  annual  collection  rate of $36.4  million for
     decommissioning  and the ISFSI,  based on a 1997 estimate.  Pursuant to the
     approved   settlement  the  amount   collected   annually  was  reduced  to
     approximately $25.6 million, effective October 1, 1999, as a result of 1999
     Maine legislation  allowing Maine Yankee to (1) use for construction of the
     ISFSI funds held in trust under Maine law for spent-fuel disposal,  and (2)
     access  approximately  $6.8 million held by the State of Maine for eventual
     payment to the State of Texas  pursuant to a compact for low-level  nuclear
     waste  disposal,  the future of which is in question after rejection of the
     selected disposal site in west Texas by a Texas regulatory agency.

     The  settlement  also provides for recovery of the  unamortized  investment
     (including  fuel) in the  Plant,  together  with a return on equity of 6.50
     percent,  effective  January  15,  1998,  on equity  balances up to maximum
     allowed equity amounts, which resulted in a pro-rata refund of $9.3 million
     (including  tax  impacts) to the  sponsors on July 15,  1999.  The Settling
     Parties  also agreed not to contest  the  effectiveness  of the  Amendatory
     Agreements  submitted  to FERC as part of the original  filing,  subject to
     certain  limitations  including  the  right to  challenge  any  accelerated
     recovery  of  unamortized  investment  under  the  terms of the  Amendatory
     Agreements  after a required  informational  filing  with the FERC by Maine
     Yankee. In addition, the settlement contains incentives for Maine Yankee to
     achieve further savings in its  decommissioning and ISFSI-related costs and
     resolves issues concerning restoration and future use of the Plant site and
     environmental  matters of concern  to  certain  of the  intervenors  in the
     proceeding.

     As a separate part of the  settlement,  Central Maine,  the other two Maine
     utilities which own interests in Maine Yankee,  the MPUC Staff, and the OPA
     entered  into a further  agreement  resolving  retail rate issues and other
     issues specific to the Maine parties,  including those that had been raised
     concerning  the  prudence of the  operation  and shutdown of the Plant (the
     "Maine  Agreement").  Under the Maine Agreement Central Maine is recovering
     its Maine Yankee costs in  accordance  with its most recent rate order from
     the MPUC.

     Finally, the Maine Agreement requires Central Maine and the other two Maine
     utilities,  for the period from March 1, 2000, through December 1, 2004, to
     hold their Maine retail  ratepayers  harmless from the amounts by which the
     replacement power costs for Maine Yankee exceed the replacement power costs
     assumed in the report to the Maine Yankee Board of Directors that served as
     a basis for the Plant shutdown decision,  up to a maximum cumulative amount
     of $41 million. Central Maine's share of that amount would be $31.2 million
     for the period.  Based on the results of the two year  entitlement  auction
     already  completed,  the  Company  will not  incur any  liability  for this
     provision in 2000 and does not believe that it will incur any  liability in
     2001.

     CMP Group and Central Maine believe that the approved settlement, including
     the Maine  Agreement,  constitutes  a reasonable  resolution  of the issues
     raised in the Maine Yankee FERC proceeding,  which  eliminated  significant
     uncertainties  concerning CMP Group's and Central Maine's future  financial
     performance.

     Termination  of  Decommissioning   Operations   Contract  -  As  previously
     reported,  on  May 4,  2000,  Maine  Yankee  notified  its  decommissioning
     operations  contractor,   Stone  &  Webster  Engineering  Corp.  ("Stone  &
     Webster"), that it was terminating its decommissioning  operations contract
     pursuant  to the  terms  of the  contract.  Stone  &  Webster  subsequently
     notified  Maine Yankee that it was  disputing  Maine  Yankee's  grounds for
     terminating the contract.  On May 8, Stone & Webster  announced that it had
     signed a letter of intent with Jacobs Engineering  Group, Inc.  ("Jacobs"),
     regarding  a  proposed   transaction   in  which   Jacobs   would   acquire
     substantially  all of Stone & Webster's assets in exchange for an immediate
     credit facility and other consideration,  including cash and stock. Stone &
     Webster  said the credit  facility  was  intended  enable it to address its
     liquidity  difficulties  and continue to operate its  businesses  until the
     asset sale was  completed.  Stone & Webster also announced that it intended
     to seek bankruptcy court approval of the asset sale and credit agreement.

     On June 2, 2000,  Stone & Webster filed a voluntary  petition under Chapter
     11 of the United States  Bankruptcy Code with the United States  Bankruptcy
     Court for the District of Delaware.  By Sale Order dated July 13, 2000, the
     Bankruptcy  Court  approved  the  sale  of  substantially  all of  Stone  &
     Webster's assets to the successful  bidder in the Chapter 11 sale, The Shaw
     Group,  Inc.  ("Shaw"),  for cash,  stock,  and the  assumption  of certain
     liabilities of Stone & Webster,  and the earlier  agreement with Jacobs was
     terminated.  Stone & Webster  reported that that the Shaw  transaction  was
     effectively  closed on July 14, 2000, and that it would continue to operate
     as a  Debtor-in-Possession  subject  to the  supervision  and orders of the
     Bankruptcy Court.

     As  previously  reported,  on May 10, 2000,  Maine  Yankee  entered into an
     interim  agreement  with Stone & Webster in order to allow  decommissioning
     work to  continue  and  avoid  the  adverse  consequences  of an  abrupt or
     inefficient demobilization from the Plant site. After obtaining assignments
     of several  subcontracts  from Stone & Webster and upon  termination of the
     interim agreement on July 1, Maine Yankee at least temporarily  assumed the
     general  contractor  role,  utilizing  a reduced  number of Stone & Webster
     personnel  under a revised  interim  agreement  that expires  September 30,
     2000.  The  decommissioning  of the Plant site is  progressing,  with major
     emphasis  being  directed to  maintaining  the  schedule  on  critical-path
     projects such as  construction  of the ISFSI and preparation of the Plant's
     reactor vessel for eventual shipment to an off-site disposal facility.

     On June 30, 2000,  Federal  Insurance Company  ("Federal"),  which provided
     performance  and  payment  bonds in the  amount  of $37.6  million  each in
     connection with the decommissioning  operations contract, filed a Complaint
     for  Declaratory  Judgment  against  Maine  Yankee  in  the  United  States
     Bankruptcy Court for the District of Delaware.  The Complaint  alleges that
     Maine Yankee improperly terminated the decommissioning  operations contract
     with Stone & Webster and failed to give proper notice of the termination to
     Federal  under the  contract,  and that  Federal  therefore  had no further
     obligations under the bonds.  Maine Yankee believes that its termination of
     the decommissioning  operations contract was proper, but cannot predict the
     outcome of the litigation.

     Maine Yankee is evaluating all available long-term  alternatives for safely
     and efficiently completing the decommissioning of the Plant site, including
     the  possibilities  of contracting  with a new  decommissioning  operations
     contractor or assuming that function itself on a long-term basis.  However,
     we cannot predict at this point what effect the financial  difficulties  of
     Stone &  Webster  and the  termination  of its  decommissioning  operations
     contract  with  Maine  Yankee  will  have on the  cost or  schedule  of the
     decommissioning project.

     Legal and Environmental  Matters - CMP Group,  Central Maine and certain of
     its affiliates  are subject to regulation by federal and state  authorities
     with respect to air and water  quality,  the handling and disposal of toxic
     substances  and  hazardous  and solid  wastes,  and the handling and use of
     chemical products.  Electric utility companies generally use or generate in
     their operations a range of potentially  hazardous products and by-products
     that are the focus of such regulation.  CMP Group and Central Maine believe
     that their current  practices  and  operations  are in compliance  with all
     existing  environmental  laws except for such  non-compliance  as would not
     have a material adverse effect on their financial  position.  Central Maine
     reviews its overall  compliance  and  measures the  liability  quarterly by
     assessing a range of reasonably likely costs for each identified site using
     currently available information,  including existing technology,  presently
     enacted laws and regulations,  experience  gained at similar sites, and the
     probable level of involvement and financial  condition of other potentially
     responsible parties. These estimates include costs for site investigations,
     remediation, operation and maintenance, monitoring and site closure.

     New and changing  environmental  requirements could hinder the construction
     and/or modification of transmission and distribution lines, substations and
     other  facilities,  and could raise  operating  costs  significantly.  As a
     result, Central Maine may incur significant additional environmental costs,
     greater than amounts  reserved,  in  connection  with the  transmission  of
     electricity and the storage, transportation and disposal of by-products and
     wastes. Central Maine may also encounter  significantly  increased costs to
     remedy the environmental  effects of prior waste handling  activities.  The
     cumulative  long-term cost impact of increasingly  stringent  environmental
     requirements cannot accurately be estimated.

     Central  Maine has recorded a  liability,  based upon  currently  available
     information,   for  what  it  believes  are  the  estimated   environmental
     remediation  costs that it expects to incur for  identified  waste disposal
     sites. In most cases, additional future environmental cleanup costs are not
     reasonably  estimable  due to a number of  factors,  including  the unknown
     magnitude of possible  contamination,  the appropriate remediation methods,
     the possible  effects of future  legislation or regulation and the possible
     effects of technological changes. Central Maine cannot predict the schedule
     or scope of remediation  due to the regulatory  process and  involvement of
     non-governmental  parties.  At June 30,  2000,  the  liability  recorded by
     Central Maine for its estimated environmental remediation costs amounted to
     $3.6  million,  which  management  has  determined  to be the most probable
     amount within the range of $3.6 million to $13.4 million. Such costs may be
     higher if Central  Maine is found to be  responsible  for cleanup  costs at
     additional sites or identifiable possible outcomes change.

     Wyman No. 4  Arbitration  - By notice of claim  dated  June 24,  1999,  the
     non-operator  owners  of the  Wyman  No.  4  oil-fired  generating  unit in
     Yarmouth, Maine, which was approximately 60-percent owned by Central Maine,
     served  notice on Central  Maine that they  believe  they are entitled to a
     portion of the proceeds of the sale of Central Maine's interest in the unit
     as part of the April 1999 sale of its non-nuclear  generation assets to FPL
     Energy.  The claimants contend that certain sections of the joint ownership
     agreement  under  which  they  share in the  output  of the unit  require a
     pro-rata  distribution  to them of part of those  proceeds  as a result  of
     Central  Maine's  sale of its  interest  in the unit.  The joint  ownership
     agreement provides for arbitration of claims arising under the agreement.

     Central Maine believes that although the amount of the claim is substantial
     (up to $62  million),  the  claimants  have  suffered  no loss  and are not
     entitled to any part of the generation-asset  sale proceeds.  Central Maine
     intends to continue to contest the claim vigorously, but cannot predict the
     result of the arbitration proceeding.

     Millstone  Unit No. 3 Litigation  - In August 1997 Central  Maine and other
     minority  owners  of  Millstone  Unit  No.  3 filed  suit in  Massachusetts
     Superior Court against Northeast Utilities and its trustees,  and initiated
     an   arbitration   claim   against  two  of  its   subsidiaries,   alleging
     mismanagement  of the unit by the  defendants.  The  minority  owners  were
     seeking  to   recover   their   additional   costs   resulting   from  such
     mismanagement, including their replacement power costs.

     On January 28, 2000, Central Maine entered into a settlement agreement with
     the  defendants  and  subsequently  dismissed  its lawsuit and  arbitration
     claim. The settlement is generally similar to earlier  settlements with the
     defendants  by two joint  owners which own in the  aggregate  approximately
     sixteen  percent of the unit.  It called for the payment of $4.8 million to
     Central  Maine,  which was reflected in 1999 net income,  and other amounts
     contingent upon future events, and provides for Central Maine's 2.5-percent
     interest in the unit to be  included in the auction to Dominion  Resources,
     Inc., of the majority  interests  and certain of the minority  interests in
     the Millstone units expected to be completed in 2001.

     Non-Utility  Generators  -  Central  Maine  has  entered  into a number  of
     long-term, non-cancelable contracts for the purchase of capacity and energy
     from non-utility generators ("NUG"). The agreements generally have terms of
     five to 17 years,  with  expiration  dates ranging from 2000 to 2016.  They
     require  Central  Maine to  purchase  the  energy at  specified  prices per
     kilowatt-hour, which are often above market prices.

     As  required  by the Maine  restructuring  legislation,  on July 30,  1999,
     Central Maine offered at auction its rights to the capacity and energy from
     its undivested  generation  assets and  generation-related  business.  Upon
     completion  of the auctions,  in December 1999 Central Maine  contracted to
     sell such rights with respect to its undivested  nuclear  generation assets
     (Vermont Yankee and Millstone Unit 3) and its NUG contract  entitlements to
     the  successful  bidder for a  two-year  period  commencing  March 1, 2000.
     Central Maine also  auctioned its  Hydro-Quebec  entitlement to a different
     buyer for the same period.  All of the auction results were approved by the
     MPUC.

     The  aggregate  above-market  costs  associated  with the NUG  contracts is
     estimated to be  approximately  $1 billion over the lives of the contracts,
     based on certain market price assumptions.  Those costs are being recovered
     in rates as  stranded  costs over the lives of the  contracts  pursuant  to
     Central Maine's January 27, 2000, MPUC rate-case settlement.

     Natural Gas  Distribution - New England Gas Development  Corporation  ("New
     England  Gas"),  which is a wholly  owned  subsidiary  of CMP  Group,  held
     approximately  a 12 percent  interest at June 30, 2000, in CMP Natural Gas,
     L.L.C.,  now called Maine Natural Gas, L.L.C.  ("Maine Natural Gas"). Maine
     Natural  Gas is a  joint  venture  of  New  England  Gas  and  Energy  East
     Enterprises,  a wholly owned  subsidiary of Energy East.  Maine Natural Gas
     was formed to construct,  own and operate a natural gas distribution system
     to serve  certain  areas of Maine that did not have gas service,  utilizing
     natural gas delivered to Maine through new interstate pipeline facilities.

     Maine Natural Gas began construction of its first local distribution system
     in Windham,  Maine,  in early 1999 and began serving its first  customer in
     May 1999.  On July 8, 1999,  Maine Natural Gas and Calpine  Corporation,  a
     California-based  independent  power  company,  announced  the signing of a
     20-year  contract  for Maine  Natural Gas to provide  natural gas  delivery
     service to  Calpine's  540-megawatt  natural  gas-fired  power  plant under
     construction  in  Westbrook,  Maine.  Maine Natural Gas expects to commence
     service  to the  plant in the  summer  of  2000,  after  construction  of a
     two-mile  lateral  pipeline  along an existing  Central Maine  transmission
     corridor.

     If the merger of CMP Group and Energy East is completed,  Maine Natural Gas
     will become a wholly owned subsidiary of Energy East  Enterprises,  and New
     England  Gas will cease to exist.  During  1999  Energy East also agreed to
     business   combinations  with  two  established  natural  gas  distribution
     companies  in  Connecticut  and one in  western  Massachusetts,  subject to
     customary closing  conditions,  including  shareholder votes and regulatory
     approvals.  One of the Connecticut  acquisitions  was completed in February
     2000. The other two transactions are awaiting SEC approval.

3.   Regulatory Matters and Electric-Utility Industry Restructuring
     --------------------------------------------------------------

     Alternative  Rate Plan - On September 30, 1999,  Central Maine submitted to
     the MPUC a proposed  seven-year rate plan  ("ARP2000") to take effect after
     completion  of the merger  with  Energy  East.  The  formula for ARP2000 is
     substantially  similar  to that of the ARP,  being  based  on an  inflation
     index,  with  a  productivity  offset,   qualifying  facility  offset,  and
     provisions  for  earnings  sharing  and  flowthrough  and  mandated  items.
     However,  under  ARP 2000 the  one-percent  productivity  offset of the ARP
     would  escalate in annual  increments of 0.25 percent from 1.00 percent for
     the 2001 price change to 1.75  percent in 2004 to 2007.  The purpose of the
     proposed  escalation is to assure that Central  Maine's  customers  benefit
     from the  increased  savings  expected  from the  Energy  East  merger.  In
     addition,  in the  mandated-costs  exclusion in ARP2000 only mandated costs
     over  $50,000  would be  recognized  and only the excess over $3 million of
     accumulated  mandated cost would be recoverable,  not the entire $3 million
     non-cumulative cost recoverable under the 1995-1999 ARP. The rate of return
     on  equity  of 10.5  percent  established  by the  MPUC for  Central  Maine
     effective  March 1,  2000,  would  be the  basis  for the  earnings-sharing
     bandwidth,  and not the 11.5 percent  under the ARP.  ARP2000 is before the
     MPUC for approval.  Central Maine cannot  predict what features of the rate
     plan will be approved by the MPUC.

     Maine Restructuring Legislation - The Maine Legislature enacted legislation
     in 1997 to restructure  the electric  utility  industry in Maine  effective
     March 1, 2000. The principal  restructuring  provisions of the  legislation
     provided for customers to have direct retail access to generation  services
     and for deregulation of competitive electric providers, commencing March 1,
     2000,  with  transmission-and-distribution  companies such as Central Maine
     continuing  to be  regulated  by the  MPUC.  By that  date,  investor-owned
     utilities   were   required   to   divest   all   generation   assets   and
     generation-related  business  activities,  with two major  exceptions:  (1)
     non-utility  generator  contracts with qualifying  facilities and contracts
     with demand-side  management or conservation  providers,  brokers or hosts,
     and (2) ownership  interests in nuclear power  plants.  As discussed  below
     under "Sale of Generation  Assets," Central Maine completed the sale of its
     non-nuclear generating assets on April 7, 1999.

     The legislation also required investor-owned utilities to sell their rights
     to the  capacity  and energy from all  undivested  generation  assets after
     February   29,  2000,   including   nuclear   generation   assets  and  the
     purchased-power contracts that had not previously been divested pursuant to
     the legislation.  On July 30, 1999, Central Maine offered its rights to the
     capacity   and   energy   from  its   undivested   generation   assets  and
     generation-related  business to  prospective  bidders and in December  1999
     contracted  to sell such  rights  with  respect to its  undivested  nuclear
     generation  assets  (Vermont  Yankee  and  Millstone  Unit  3) and  its NUG
     contract entitlements for a two-year period commencing March 1, 2000.

     As a  transmission-and-distribution  utility,  Central  Maine is prohibited
     from selling electric energy to retail customers, except as may be directed
     by the MPUC. Any competitive  electricity  provider affiliated with Central
     Maine would be allowed to sell electricity  outside Central Maine's service
     territory  without  limitation  as to amount,  but within  Central  Maine's
     service territory the affiliate would be limited to providing not more than
     33 percent of the total  kilowatt-hours  sold with Central  Maine's service
     territory,  as determined by the MPUC. CMP Group  currently does not intend
     to create such an affiliate.

     MPUC Proceeding on Stranded Costs, Revenue Requirements,  and Rate Design -
     By order dated March 19, 1999,  the MPUC  completed  the first phase of its
     proceeding  contemplated by Maine's restructuring  legislation to establish
     the recoverable  amount and timing of Central Maine's  stranded costs,  its
     revenue  requirements  and the design of its rates effective March 1, 2000.
     In its Phase I order the MPUC  decided the  "principles"  by which it would
     set  Central  Maine's  transmission-and-distribution  rates,  but  deferred
     actually  calculating the rates until later in the proceeding  because some
     of the necessary information was not yet available.

     With respect to stranded  costs,  the MPUC  indicated that it would set the
     amount  of  recoverable  stranded  costs  for  Central  Maine  later in the
     proceeding.   The  restructuring  statute  requires  the  MPUC  to  provide
     transmission-and-distribution utilities a reasonable opportunity to recover
     such costs that is equivalent to the utility's opportunity to recover those
     costs prior to the  commencement  of retail access.  The MPUC also reviewed
     the  prescribed  methodology  for  determining  the  amount of a  utility's
     stranded  costs,  including  among other factors the  application of excess
     value from Central Maine's  divested  generation  assets to offset stranded
     costs.

     In the area of revenue  requirements,  the Phase I order did not  establish
     definitive  amounts,  but  did  contain  the  MPUC's  conclusion  that  the
     appropriate    cost   of   common   equity   for   Central   Maine   as   a
     transmission-and-distribution   company   was   10.50   percent,   with   a
     common-equity  component of 47 percent.  In dealing  with rate design,  the
     MPUC again limited itself  primarily to establishing  principles that would
     guide it in designing Central Maine's rates effective March 1, 2000.

     On July 1, 1999,  Central  Maine filed its Phase II case with the MPUC.  In
     that filing Central Maine updated  certain  test-year data to reflect known
     and  measurable  changes to its revenue  requirement,  updated its stranded
     cost  estimate to reflect  actual  data from the April 1999  closing of its
     generation-asset sale, and proposed its rate design based on the principles
     enunciated  in the  Phase  I  order.  Some  of the  information  needed  to
     establish rates was still incomplete in that filing, however, since neither
     the  auction  of the  output of  Central  Maine's  non-divested  generation
     resources  nor the bid  process  for  "standard-offer"  service  (for those
     customers  who do not  select  a  competitive  energy  supplier)  had  been
     completed.  In addition,  several  issues  raised by the Phase I MPUC order
     remained  unresolved,  including,  among others, (i) whether the MPUC could
     require the  unamortized  investment tax credits and excess deferred income
     taxes associated with the sale of Central Maine's  generation  assets to be
     flowed  through to  ratepayers,  and (ii) the rate treatment of the gain on
     the sale of Union  Water's  generation-related  assets to FPL and  employee
     transition costs resulting from the generation-asset sale.

     In an order dated  December 3, 1999, in a separate but related  proceeding,
     the MPUC  approved  Central  Maine's plan for the sale of the output of its
     non-divested  generation  assets. In another related  proceeding,  by order
     dated October 25, 1999, the MPUC accepted a competitive  energy  supplier's
     bid to provide  standard-offer  service to Central Maine's  residential and
     small commercial customers who did not select a competitive energy supplier
     after  March 1,  2000.  In the same  order  the  MPUC  rejected  all of the
     standard-offer  bids for Central  Maine's  medium and large  commercial and
     industrial  customers  and sought a second round of bids. In the December 3
     order the MPUC rejected all of the second round of standard-offer  bids for
     Central  Maine's  medium and large  classes and ordered that Central  Maine
     arrange such service for those classes.

     On January 19, 2000, the MPUC issued its Phase II order determining Central
     Maine's  revenue  requirement as a  transmission-and-distribution  utility,
     effective March 1, 2000. In the order the MPUC disallowed  approximately $8
     million of the  approximately  $12 million  revenue  increase  requested in
     Central Maine's Phase II filing,  which had been based on certain known and
     measurable changes to its revenue requirement.

     A negotiated  settlement approved by the MPUC on January 27, 2000, resolved
     the major issues remaining outstanding in the final phase of the ratemaking
     proceeding.  The settlement confirmed that the $18.2 million of unamortized
     investment tax credits and excess  deferred income taxes related to Central
     Maine's  generation-asset  sale would flow through to shareholders pursuant
     to the  normalization  rules of the  Internal  Revenue  Code.  In addition,
     Central Maine agreed not to seek judicial  review of an August 2, 1999 MPUC
     order  regarding  the  treatment  of gains  from  sales of  easements  that
     required  Central Maine to recognize 10 percent of the gain  currently with
     the remaining 90 percent being amortized over 5 years,  effective as of the
     dates of the 1998 and 1999 sale transactions. Central Maine also agreed not
     to seek reconsideration of other  cost-of-service  updates in the rate case
     or to challenge a $4.7 million  disallowance of employee  transition costs,
     and to  withdraw  its  appeal  of the rate  treatment  of the gain on Union
     Water's generation-related assets.

     The  settlement  also  allowed  Central  Maine to charge off $88 million on
     March  1,  2000,  representing  its  entire  remaining  investment  in  the
     Millstone 3 nuclear unit in Connecticut,  against the regulatory Asset Sale
     Gain  Account  created  in  the  ratemaking  proceeding  to  recognize  the
     above-book  value realized through Central Maine's  generation-asset  sale.
     This provision  reflected the resolution of Central Maine's arbitration and
     litigation  claims against the lead owners of the  jointly-owned  Millstone
     Unit 3, in which Central Maine owns a 2.5-percent interest.

     As part of the settlement  Central Maine also agreed to a one-time earnings
     cap for 1999. Earnings above the cap were deferred in 1999 and will be used
     to offset  rate  increases  that would  otherwise  be  required to mitigate
     stranded   costs  and  increases  in  operating   expenses   through  2001.
     Amortization from this account for the first half of 2000 provided recovery
     of expenses in the amount of $2.5 million.

     The   rate   settlement    established   Central   Maine's   rates   as   a
     transmission-and-distribution  utility  effective March 1, 2000. A separate
     order fixed the standard-offer  prices for Central Maine's medium and large
     commercial and industrial  customers at levels  intended to reflect current
     market pricing and to avoid under-collection of Central Maine's costs.

     The  asset-sale  gain  account was drawn down on March 1, 2000,  by Central
     Maine's writing off $161.8 million of deferred  regulatory  assets relating
     to  non-utility  power-contract  restructurings  and  other  assets,  $65.2
     million of Central  Maine's  interest in Millstone Unit 3 and $75.4 million
     in regulatory assets related to deferred taxes.

     The last step in the  restructuring  process  began in March  2000 with the
     jurisdictional  separation of Central  Maine's $415 million overall revenue
     requirement  between  the  federal  and state  jurisdictions.  Transmission
     service  pricing,  accounting  for  approximately  11  percent of the total
     revenue   requirement,   falls   under  the  federal   jurisdiction   while
     distribution and stranded cost recovery pricing, representing approximately
     89 percent of the revenue requirement, is a state responsibility.  The MPUC
     approved in August 2000 the distribution and stranded cost recovery portion
     of the overall  revenue  requirement  that was effective March 1, 2000. The
     Company  has  filed  with  FERC  new  transmission  rates  to be  effective
     September 1, 2000. The impact of the new  transmission  rates, if approved,
     will increase  revenue  requirements  by  approximately  $10 million,  with
     approximately  $5  million of the  proposed  increase  associated  with the
     incremental  costs  of  transmission   congestion  in  New  England.  These
     federally  mandated  charges  include the costs of  upgrading  transmission
     circuits to accommodate  merchant  power plants,  and are being assessed on
     all New England  utilities.  The  remainder of the rate  increase  reflects
     updated  transmission  costs  based on 1999  activity  versus the 1996 test
     period used previously.

     Sale of Generation  Assets - On April 7, 1999,  Central Maine completed the
     sale of all of its hydro,  fossil and biomass  power plants with a combined
     generating capacity of 1,185 megawatts for $846 million in cash,  including
     approximately  $18  million for assets of Union  Water,  to  affiliates  of
     Florida-based  FPL  Group.  The  related  book  value for these  assets was
     approximately  $217.3 million.  In addition,  as part of its agreement with
     FPL Group,  Central Maine entered into energy buy-back agreements to assist
     in fulfilling its obligation to supply its customers with power until March
     1, 2000.  Subsequently,  an agreement  was reached to sell related  storage
     facilities  to FPL Group for an  additional  $4.6 million ($1.5 million for
     the assets and $3.1 million estimated for lease revenue associated with the
     properties that Central Maine  retained),  including $2.0 million for Union
     Water  assets.  The related  book value of these  assets was  approximately
     $11.4 million.

     As required by the MPUC,  Central Maine recorded a pre-tax deferred gain of
     $518.8 million net of selling costs and certain  non-normalized  income tax
     impacts from the sale of  generation  assets by  establishing  a regulatory
     liability in 1999, which eliminated most income recognition.  Central Maine
     did  record  an  income  impact  from the  sale  amounting  to $18  million
     associated  with the  related  unamortized  investment  credits  and excess
     deferred tax  reserves as required by the IRS  regulations.  Central  Maine
     also recorded  curtailment and special termination deferred charges of $4.1
     million  associated  with  pension  and  postretirement  benefit  costs  of
     employees  leaving  the company as a result of the  generation-asset  sale.
     These  deferred  charges  are  being  amortized  over a  three-year  period
     beginning March 1, 2000, as required by the MPUC. The regulatory  liability
     for the asset sale gain, including interest, amounted to approximately $548
     million at December 31, 1999,  and after  consideration  of the  previously
     described  writedown on March 1, 2000, is being  amortized over an 8.5 year
     period  beginning  March 1, 2000. The  amortization  will vary from year to
     year. Amortization for the first half of year 2000 was $8 million.

     On August 7, 2000, the owners of Millstone Unit 3, including Central Maine,
     entered  into  agreements  to sell the unit with the  other  two  Millstone
     units, to Dominion Resources, Inc., in an auction of those units supervised
     by the Connecticut DPUC.  Completion of the sale, which is expected in 2001
     after  regulatory  approvals  are  obtained  and  other  customary  closing
     conditions are satisfied, will have no significant effect on Central Maine,
     since the sale was  anticipated  in the terms of the  settlement of Central
     Maine's   Millstone-related   arbitration  and  litigation  claims  against
     Northeast Utilities and its affiliates.

     FERC Order on Merchant Plant  Interconnection Costs - On June 28, 2000 FERC
     issued an order  regarding  the  funding  responsibility  for  transmission
     network  upgrades  to  accommodate  the  direct  interconnection  with  new
     merchant  generating plants.  Central Maine has required the merchant plant
     developers  to fund all  interconnection  and network  upgrades in advance.
     Based on FERC's latest ruling,  certain  generation  projects  entered into
     prior  to  October  29,  1998  would  require  a  50  percent   sharing  of
     interconnection  and upgrade  costs  between the developer and the utility.
     Certain generation  projects entered into after October 29, 1998 but before
     June 22, 1999 would limit the utility's funding responsibility to a maximum
     of $2 million  based on at least $5 million  in total  interconnection  and
     upgrade costs.  In all other cases the developer  would be responsible  for
     100 percent of the interconnection and upgrade costs. Based on this ruling,
     Central  Maine will have to refund to developers in the range of $18 to $30
     million over the next two years. Any amounts refunded to developers will be
     capitalized   on  Central   Maine's  books  and  recovered   over  time  as
     transmission  costs  via the  regional  or local  open  access  tariff,  as
     appropriate.

     Meeting the Requirements of SFAS No. 71
     ---------------------------------------

     Central  Maine  continues  to meet  the  requirements  of SFAS  No.  71 for
     transmission and distribution. The standard provides specialized accounting
     for regulated  enterprises,  which  requires  recognition  of  "regulatory"
     assets  and  liabilities  that  enterprises  in general  could not  record.
     Examples of regulatory assets include deferred income taxes associated with
     previously  flowed  through  items,  NUG buyout costs,  losses on abandoned
     plants,  deferral  of  postemployment  benefit  costs,  and  losses on debt
     refinancing.  If an entity no longer meets the requirements of SFAS No. 71,
     then regulatory assets and liabilities must be written off.

     The ARP  provided  incentive-based  rates  intended  to recover the cost of
     service plus a rate of return on Central Maine's investment together with a
     sharing of the costs or earnings  between  ratepayers and the  shareholders
     should the earnings be less than or exceed a target rate of return. Central
     Maine has received  recognition from the MPUC that the rates implemented as
     a result of the ARP continue to provide specific recovery of costs deferred
     in prior periods.

     The 1997 legislation enacted in Maine providing for industry  restructuring
     addressed  the issue of cost recovery of  regulatory  assets  stranded as a
     result of industry  restructuring.  Specifically,  the legislation requires
     the MPUC to provide a "reasonable opportunity" for the recovery of stranded
     costs  through  the  rates  of the  transmission-and-distribution  company,
     comparable to the utility's  opportunity  to recover  stranded costs before
     the implementation of retail access under the legislation.  As provided for
     in EITF 97-4,  "Deregulation of the Pricing of Electricity,"  Central Maine
     will continue to record  regulatory assets in a manner consistent with SFAS
     No. 71 as long as future  recovery  is  probable,  since the MPUC  stranded
     costs, revenue requirements and rate design orders provide for the recovery
     of  regulatory  assets  including  stranded  costs through the rates of the
     transmission-and-distribution  company. Central Maine discontinued SFAS No.
     71 for any remaining  generation  segment of its business in 1999, based on
     current generally accepted accounting principles.  Management believes that
     SFAS  No.  71 will  continue  to apply to the  regulated  distribution  and
     transmission  segments of its business.  Future  regulatory  rules or other
     circumstances   could  cause  the   application   of  SFAS  No.  71  to  be
     discontinued,  which could  result in a non-cash  write-off  of  previously
     established regulatory assets.

4.   Income Taxes
     ------------

     The  effective  tax rates of 61 percent  for CMP Group and 74  percent  for
     Central  Maine are  significantly  higher than the  statutory  rate of 40.8
     percent  through  June  2000.  This  difference  is  due  primarily  to the
     write-off of $161.8  million in  regulatory  assets and the  investment  in
     Millstone  Unit 3 of  $65.2  million  as  ordered  in the  MPUC  rate  case
     settlement. Past regulatory treatment of the tax timing differences related
     to these assets created a  non-provided  deferred tax that was reflected on
     the balance sheet.  This write-off  created a deferred tax expense of $75.4
     million.  The MPUC  allows an  offsetting  amount to be  included  in other
     income through the  amortization  of the asset sale gain account.  Although
     the effect to net income was zero, the effective tax rate was increased.

     Concurrently,  the  effective  tax rate was  decreased  by the  gross-up of
     carrying  costs on the deferred costs  associated  with the asset sale gain
     account,   the  1998  ice  storm,   and  hazardous  waste  clean-up  costs.
     Previously,  these  carrying  costs were  recorded  at an  after-tax  rate.
     Deferred tax expense was decreased by a net amount of $9.5  million,  which
     was offset in other  interest  expense.  Deferred taxes will be provided on
     all the tax timing differences created by the carrying costs in the future.

     Additionally,  Central  Maine  flowed  through $4  million  of  unamortized
     investment tax credits and excess tax reserves  associated with the sale of
     Cape Station and the write-off of Millstone Unit 3. This is consistent with
     a Private  Letter  Ruling  obtained  from the IRS by  Central  Maine at the
     request  of the  MPUC  and  affirmed  by the  MPUC in its  approval  of the
     negotiated rate case settlement on January 27, 2000.

     In the second quarter of 2000,  MaineCom  recorded an after-tax gain of $33
     million on the sale of 1.725 million shares of a portion of it's investment
     in NEON stock.  Taxes related to the sale amounted to $17.5 million,  which
     were  recorded as income tax expense.  MaineCom  also  reversed a valuation
     allowance  related to NEON of $6.5  million.  The $6.5 million  lowered the
     effective tax rate for CMP Group in the second quarter of 2000.

5.   Transactions with Affiliated Companies
     --------------------------------------

     Central Maine provides certain services to CMP Group and its  subsidiaries,
     including  administrative support services and pension and employee benefit
     arrangements.  Charges related to those services have been determined based
     on a  combination  of direct  charges and  allocations  designed to recover
     Central  Maine's  cost.  These  assessments  are  reflected as an offset to
     Central Maine's expenses and totaled approximately $4.4 million for the six
     months ended June 30, 2000.

     CMP Group provides certain managerial services to its subsidiaries. Charges
     related to those  services have been  determined  based on a combination of
     direct  charges and  allocations  in order to recover the majority of their
     expenses.  These  assessments  are  reflected  as an offset to CMP  Group's
     expenses  and totaled  approximately  $5.1 million for the six months ended
     June 30, 2000.

     In  addition,  a  subsidiary  of CMP Group  provides  certain  real  estate
     services  charged  to  Central  Maine  at  cost  and  utility  locator  and
     construction  services based on a contracted rate. These expenses  amounted
     to $1.6 million for the six months ended June 30, 2000.

     As  of  June 30, 2000, Central  Maine's accounts  receivable  and  accounts
     payable included the following:
                                           (Dollars in thousands)

                                  Accounts                  Accounts
                                 Receivable                  Payable
                                 ----------                 --------

     CMP Group                     $2,984                      $1,347
     CNEX                              24                          14
     MaineCom                          33                         -
     Union Water                      322                         352
     New England Gas                    1                         -
                                    -----                       -----
                                   $3,364                      $1,713
                                    =====                       =====

Item 2:  Management's Discussion and Analysis of Financial Condition and Results
of Operations of CMP Group and Central Maine Power Company

This is a combined Quarterly Report on Form 10-Q of CMP Group and Central Maine.
Therefore,  our Management's  Discussion and Analysis of Financial Condition and
Results of Operations  (MD&A) applies to both CMP Group and Central  Maine.  CMP
Group's consolidated  financial statements include the accounts of CMP Group and
its  wholly  owned  and  controlled   subsidiaries,   including   Central  Maine
(collectively,  the CMP Group System).  Central Maine's  consolidated  financial
statements  include  its  accounts  as well as those  of its  wholly  owned  and
controlled  subsidiaries.  The  MD&A  should  be read in  conjunction  with  the
consolidated financial statements included herein.

Note re Forward-Looking Statements
----------------------------------

This  Report  on  Form  10-Q  contains  forecast   information  items  that  are
"forward-looking  statements"  as defined in the Private  Securities  Litigation
Reform  Act  of  1995.   Such  statements  are  subject  to  certain  risks  and
uncertainties  which could cause actual results to differ  materially from those
projected.   Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking  statements,  which speak only as of the date hereof.  CMP Group
and Central Maine undertake no obligation to republish  revised  forward-looking
statements  to  reflect  events or  circumstances  after  the date  hereof or to
reflect the occurrence of unanticipated  events.  Readers are urged to carefully
review and consider the factors in the succeeding paragraph.

Factors  that could cause actual  results to differ  materially  include,  among
other  matters,  the results of the pending  merger with Energy  East,  electric
utility  industry  restructuring,   including  the  ongoing  state  and  federal
activities  that will determine  Central Maine's ability to recover its stranded
costs and the cost of upgrades of  transmission  facilities to  accommodate  new
merchant generating plants; future economic conditions,  earnings-retention  and
dividend-payout  policies;  developments  in the  legislative,  regulatory,  and
competitive   environments  in  which  CMP  Group  and  Central  Maine  operate;
investments in unregulated businesses; and other circumstances that could affect
anticipated  revenues and costs, such as unscheduled  maintenance and repairs of
transmission and distribution facilities,  unanticipated  environmental cleanups
and compliance with new or  re-interpreted  laws and  regulations  affecting the
operation of the business.

Formation of Holding Company and Proposed Merger
------------------------------------------------

CMP Group is a holding company organized effective September 1, 1998, which owns
all of the common stock of Central Maine and the former non-utility subsidiaries
of Central Maine.  As part of the  reorganization,  all of the shares of Central
Maine's  common stock were converted into an equal number of shares of CMP Group
common stock,  which are listed on the New York Stock  Exchange under the symbol
CTP. The reorganization was approved by Central Maine's  shareholders on May 21,
1998,  and on  various  dates  in  1998 by the  appropriate  state  and  federal
regulatory agencies.

On  June  14,  1999,  CMP  Group,  Energy  East  and EE  Merger  Corp.,  a Maine
corporation  that is a wholly-owned  subsidiary of Energy East,  entered into an
Agreement and Plan of Merger providing for a merger transaction among CMP Group,
Energy East and EE Merger Corp. Energy East is an energy delivery,  products and
services holding company doing business in New York,  Massachusetts,  Maine, New
Hampshire and New Jersey,  which delivers  electricity and natural gas to retail
customers and provides electricity,  natural gas and energy management and other
services to retail and wholesale customers in the Northeast.

Pursuant to the merger  agreement,  EE Merger Corp. will merge with and into CMP
Group with CMP Group being the surviving corporation and becoming a wholly-owned
subsidiary of Energy East. We expect the merger,  which was unanimously approved
by the  respective  boards of directors of CMP Group,  Energy East and EE Merger
Corp.,  to occur shortly after all of the conditions to the  consummation of the
merger, including the receipt of required regulatory approvals, are satisfied.

Under the terms of the merger  agreement,  each  outstanding  share of CMP Group
common  stock,  $5.00 par value per  share,  other than any  treasury  shares or
shares owned by Energy East or any subsidiary of CMP Group or Energy East,  will
be converted  into the right to receive  $29.50 in cash.  Pursuant to the merger
agreement,  approximately $957 million in cash will be paid to holders of shares
of CMP Group Common Stock,  with  additional  payments  being made to holders of
stock  options and  performance  shares  awarded  under CMP Group's  performance
incentive plans.

The merger is subject to certain customary closing conditions, including without
limitation the receipt of all necessary governmental approvals and the making of
all necessary governmental filings. CMP Group's shareholders approved the merger
at a special  meeting  on  October 7, 1999.  The MPUC,  the U.S.  Department  of
Justice, the Federal Trade Commission,  Federal Communications  Commission,  the
NRC,  the  Connecticut  DPUC and the FERC have  approved  the merger.  The final
regulatory  approval is pending from the SEC. If the SEC approval is granted, we
estimate that the merger could be completed during the third quarter of 2000.

Operating Results
-----------------
                                CMP
                               Group                    Central Maine
                               -----                    -------------
                                     (dollars in millions)
Net income Six months ended:
     June 30, 1999             $37.3     $1.15/share      $40.9
     June 30, 2000              56.2     $1.73/share       28.2
                                ----                       ----
     Increase (Decrease)       $18.9                     $(12.7)

Earnings applicable to
common stock
   Six months ended:
     June 30, 1999               N/A                      $39.1      $1.25/share
     June 30, 2000               N/A                      $27.1       $.87/share

Effective  March 1, 2000,  Central Maine no longer sells electric  energy to its
residential  and small business  customers.  Central Maine is the default energy
provider for medium and large  customers  who choose not to select a competitive
energy  provider and this service is provided at cost.  Central  Maine  provides
transmission  and  distribution  services for electricity for all its customers,
the rates for which are  tariffed.  As a result of this change,  when  comparing
post-March  1, 2000  results,  to the same period in 1999,  revenues and related
energy costs are lower as is operating and net income.  The primary  reason that
operating  income for the period ended June 2000 is $32.8 million lower than the
same period in 1999 is due to the state  mandated  divestiture of the generation
related  business.  Partially  offsetting this operating income decrease,  which
post tax equates to approximately $19.4 million, is a one-time tax benefit of $4
million  associated with the  unamortized  investment tax credits related to the
Millstone investment. Also, interest costs are lower during the first six months
of 2000 when compared to the same period in 1999 by $2.4 million post tax due to
lower average debt.

CMP Group net income for the six months  ended June 30, 2000  includes a gain of
approximately  $33  million  from the sale of  1,725,000  shares of NEON  common
stock,  a  telecommunication  company  of which  MaineCom,  a 100  percent-owned
subsidiary  of CMP Group,  owned  approximately  38  percent  through a separate
subsidiary. As a result of the sale, MaineCom ownership dropped to approximately
27 percent of NEON.  CMP Group net income  increased by $6.5 million  associated
with the reversal of a valuation allowance  associated with NEON. The six months
ended June 30, 1999 includes approximately $7.2 million in net income associated
with the sale of Union Water's  generation-related  assets to FPL and CMP's sale
of easements, negatively impacting the year-over-year gain in net income.

Revenues also decreased as a result of a Central Maine price reduction effective
March 1, 2000,  resulting  in  total-bill  savings  averaging  approximately  10
percent for residential and small business customers.

Service  Area Kwh Sales - Central  Maine's  service  area  sales of  electricity
totaled approximately 2.32 billion kilowatt-hours in the second quarter of 2000,
up 7.3  percent  from the 2.16  billion  kilowatt-hour  level of a year ago,  as
detailed below:
<TABLE>
<S>                      <C>           <C>               <C>          <C>             <C>                <C>
               Service Area Kilowatt-hour Sales (Millions of KWHs)
                              Period Ended June 30,

                                   Three Months                                       Six Months
                        -------------------------------------          ---------------------------------------
                        2000           1999          % Change          2000            1999           % Change
                        ----           ----          --------          ----            ----           --------


Residential              679.5         621.5             9.3%         1,500.1         1,411.7            6.3%
Commercial               677.9         631.4             7.4          1,367.0         1,275.5            7.2
Industrial               950.1         888.4             6.9          1,783.8         1,719.4            3.7
Other                      8.7          17.6           (50.6)            17.5            65.1          (73.1)
                       -------       -------                          -------         -------
                       2,316.2       2,158.9             7.3%         4,668.4         4,471.7            4.4%
                       =======       =======                          =======         =======
</TABLE>

Kilowatt-hour  sales to  residential  customers  increased by 9.3 percent in the
second  quarter of 2000,  and 6.3 percent  when  compared to the same  six-month
period in 1999.  The  increase  for the quarter  related  primarily to June 2000
having 1.4 more  meter-reading  days than June 1999.  In  addition,  residential
customers  increased  1.4  percent  from June  1999 and  usage  per  residential
customer was up slightly during the first six months of 2000.

Commercial  kilowatt-hour  sales  increased by 7.4 percent in the second quarter
and by 7.2 percent for the six months ended June 30, 2000.  The increased  sales
in the retail trade and service sectors,  which comprise the largest  percentage
of commercial  sales, were due to a strong economy which resulted in an increase
in non-manufacturing  jobs of 3.7 percent since May 1999. Sales to gas pipelines
and to  generating  facilities  now owned by FPL  helped to boost the  utilities
sector.

Industrial  kilowatt-hour  sales  increased by 6.9 percent in the second quarter
and 3.7 percent  for the six months  ended June 30, 2000 as compared to the same
periods in 1999.  Paper  industry  kilowatt-hour  sales were up 1.9 percent over
1999 levels due to greater  production  at several paper mills.  Other  sections
showing  strong  growth  were food  processing,  lumber and wood,  printing  and
publishing,  and electrical  machinery.  The pulp-and-paper  sector accounts for
approximately 54 percent of the industrial sales category.

Wholesale  kilowatt-hour  sales,  which is included  under  "Other" in the chart
above,  decreased by 47.6 million kwh through June 2000  compared to 1999 due to
the  termination  of wholesale  contracts when Central Maine sold its generating
assets in April 1999.

Operating Expenses
------------------

Central Maine's fuel used for company generation decreased by approximately $9.7
million  in the first half of 2000  compared  to 1999 due to the sale of Central
Maine's generating assets in April 1999.

Central Maine's purchased power-energy expense increased by $15.9 million in the
first  half of 2000,  compared  to  1999.  The  increase  was due  primarily  to
purchases from FPL and higher sales volume.

Central Maine's purchased  power-capacity  expense increased $3.1 million in the
first half compared to 1999.  Capacity charges were up $10.4 million  associated
with the standard offer energy  provider  partially  offset with lower operating
costs at Maine Yankee by $4 million and lower charges  related to contracts with
major utilities of $3 million.

Central Maine's  maintenance  expense  increased $2.1 million for the six months
ended June 30, 2000  compared to 1999.  This  increase was due  primarily to the
amortization of $4.2 million of ice storm costs. Lower expenses due to the asset
sale partially offset the increase.

Operating  expenses  were $3.2 million  higher for the six months ended June 30,
2000 than the same period in 1999. Central Maine's results include $9 million of
increased  expenses  related to ISO and  congestion  uplift  charges  related to
transmission  service.  These  expenses were offset by decreases  related to the
sale of  generation  assets  in  April  1999,  and the  termination  of some NUG
contract costs.

Federal and state income taxes fluctuate with the level of pre-tax  earnings and
the  regulatory  treatment of taxes by the MPUC.  This expense  increased by $62
million for the  six-month  period ended June 30, 2000  compared to 1999 for CMP
Group.  The  variance  is  primarily   attributable  to  the  $75.4  million  of
non-provided deferred taxes on regulatory assets written off on March 1, 2000 as
part of the rate case  settlement.  This  charge  was  directly  offset in other
income through the amortization of the generation  asset sale gain account,  and
therefore had no effect on net income. Tax expense was decreased by the gross-up
of carrying costs to a pre-tax rate. During the second quarter, the sale of NEON
stock  generated  $11  million in tax  expense,  after a reversal of a valuation
allowance of $6.5 million. See Note 4, "Income Taxes."

Other Income and Expense
------------------------

Equity in Earnings of Associated Companies for CMP Group decreased by $1 million
in the first half of 2000 compared to 1999. Amortization of gains on the sale of
easements related to MEPCO increased equity earnings by $0.8 million. As part of
the January 2000 rate case settlement, Central Maine deferred these gains and is
amortizing  them over five years.  NEON,  which is a 27-percent  owned  indirect
subsidiary of MaineCom,  had losses $0.4 million greater than the same period in
1999.  Equity  earnings for six months ended June 30, 1999 included $2.3 million
related to subsidiaries that were sold as part of the generation asset sale.

Interest  income  decreased  $3.6  million year to date and $5.1 million for the
quarter  due to the fact that  proceeds of the  generation-asset  sale that were
invested in the first half of 1999 were  utilized to pay down debt in the second
half of 1999.

Other income,  net,  increased $3.6 million year to date from 1999. The increase
relates to carrying costs on deferred costs  associated with the 1998 ice storm,
hazardous waste clean-up, and demand-side management.

Other income  included  $75.4  million of income  associated  with  non-provided
deferred  taxes  on  assets  written  off  per  the  rate  case  settlement.   A
corresponding  charge to income tax expense resulted in no impact to net income.
See Note 4, "Income Taxes," for more details.

The decrease in gain on sale of  investments  and properties is due primarily to
the sale of transmission line right-of-way  access to a gas-pipeline  project in
1999.

Interest on long-term  debt decreased by $4.2 million for the second quarter and
$11.2  million year to date when  compared to the same periods in 1999.  This is
due to the redemption of mortgage bonds in the second half of 1999.

Other interest  expense  decreased for the second quarter by $10.9 million.  The
quarterly  variance is due to a $5.6 million  decrease in carrying  costs on the
asset sale gain  account and deferred  power supply costs on which  amortization
started March 1, 2000. Also, the 1999 period includes  interest  associated with
an IRS settlement of $4.5 million.

Other Interest  Expense  increased by $6.9 million during the first half of 2000
as compared to 1999.  The increase was due to the  recording of $13.8 million to
gross-up  carrying  costs on the asset sale gain account to a pre-tax level with
an offsetting decrease in deferred tax expense.  The year-to-date  variance also
includes the interest associated with an IRS tax settlement of $4.5 million, and
$1.4 million more in carrying costs on the asset sale gain account than in 2000.
Interest on short-term debt was $0.9 million less than last year.

For  the   six-month   period  ended  June  30,  2000,   Central  Maine  reduced
preferred-stock  dividends  by $720  thousand as a result of the  redemption  of
180,000 shares of 7.99% Series Preferred Stock in 1999.

Liquidity and Capital Resources
-------------------------------

From 1995 through 1999 increases in Central Maine's retail rates were limited by
Central Maine's ARP. On September 30, 1999,  Central Maine submitted to the MPUC
a proposed seven year rate plan ("ARP 2000") to take effect after the completion
of the merger with Energy East. A price  decrease took effect March 1, 2000, for
most residential and small business customers.  For a discussion of the proposed
new rate  plan and the  price  decrease,  see Note 3,  "Regulatory  Matters  and
Electric-Utility Industry Restructuring" - "Alternative Rate Plan."

Approximately  $61.5 million and $40.5  million of cash was provided  during the
six months ended June 30, 2000, for CMP Group and Central  Maine,  respectively,
from net income before non-cash items, primarily depreciation,  amortization and
deferred income taxes. During that period  approximately $58.8 million and $36.0
million  of  cash  was  provided  due to  fluctuations  in  certain  assets  and
liabilities and from other operating activities for CMP Group and Central Maine,
respectively.  In addition $9.6 million of incremental power costs was recovered
through  amortization  that  had  been  deferred  at the  time  of the  sale  of
generation assets.

During the second quarter,  New England Business Trust, a wholly-owned  indirect
subsidiary  of MaineCom,  sold 1.725 million  shares of its  6.181-million-share
common-stock  holding  in NEON  through an  underwritten  public  offering.  CMP
Group's net proceeds  realized  through the offering was $54.4  million,  with a
pretax gain of $51.1 million.

CMP Group's investing  activities  provided  approximately $38.1 million of cash
for the six months ended June 30, 2000.  Central Maine received $22.7 million in
deposits from customers relating to pending merchant  generating plant activity.
On June 28, 2000 FERC issued an order regarding the funding  responsibility  for
transmission network upgrades to accommodate the direct interconnection with new
merchant  plants.  Central Maine has required the merchant  plant  developers to
fund all interconnection and network upgrades in advance. Based on FERC's latest
ruling, certain generation projects entered into prior to October 29, 1998 would
require a 50 percent  sharing of  interconnection  and upgrade costs between the
developer  and the  utility.  Certain  generation  projects  entered  into after
October 29, 1998 but before  June 22,  1999 would  limit the  utility's  funding
responsibility  to a maximum of $2 million based on at least $5 million in total
interconnection  and upgrade  costs.  In all other cases the developer  would be
responsible for 100 percent of the  interconnection  and upgrade costs. Based on
this ruling, Central Maine will have to refund to developers in the range of $18
to $30 million over the next two years.  Any amounts refunded to developers will
be capitalized on Central  Maine's books and recovered over time as transmission
costs via the regional or local open access tariff, as appropriate.

Central  Maine  is  also  engaged  in  a  continuing   construction  program  to
accommodate  existing and future loads on its electric  system.  Central Maine's
plans for improvements  and expansions,  its load forecasts and its power-supply
sources  are  under  a  process  of  continuing  review.   Actual   construction
expenditures  depend upon the availability of capital and other resources,  load
forecasts, customer growth, the number of merchant plants constructed in Central
Maine territory,  and general business conditions.  The ultimate nature,  timing
and  amount of  financing  for  Central  Maine's  total  construction  programs,
refinancing,  and  energy-management  capital requirements will be determined in
light of market conditions, earnings and other relevant factors.

During the six months  ended June 30, 2000,  CMP Group paid  dividends on common
stock of $14.6 million,  while  preferred-stock  dividends paid by Central Maine
utilized $1.2 million of cash.

Central Maine's Articles of Incorporation  limit certain unsecured  indebtedness
that may be outstanding to 20 percent of capitalization, as defined, without the
consent of the holders of Central Maine's preferred stock; 20 percent of defined
capitalization  amounted  to $120  million  as of  June  30,  2000.  Outstanding
unsecured  indebtedness  amounted  to $57 million as of June 30,  2000.  Central
Maine's $500 million  medium-term  note program,  having received the consent of
Central  Maine's  preferred  stockholders  in  May  1997,  is  not  included  in
"unsecured  indebtedness"  for purposes of the  20-percent  limitation.  Central
Maine had $85 million of medium-term notes outstanding at June 30, 2000.

On December  31,  1999,  Central  Maine  entered  into a $75 million  three-year
secured  revolving-credit  facility with three banks,  with The Bank of New York
acting as  administrative  agent.  The facility  provides for  LIBOR-priced  and
base-rate-priced  loans,  which are  secured by a security  interest  in Central
Maine's  accounts  receivable.  The  arrangement  also  requires  the payment of
customary  fees,  based in large part on Central  Maine's  credit  ratings.  The
amount of Central  Maine's  short-term  borrowing will fluctuate with day-to-day
operational needs, the timing of long-term financing, and market conditions.  No
loans were outstanding under the new facility at June 30, 2000.

In August 1998, the MPUC approved Central Maine's  application to purchase up to
11 million shares of its outstanding common stock over a three-year period, with
a  limitation  of three  million  shares  that may be  repurchased  prior to the
closing  of the sale of Central  Maine's  generating  assets.  The amount of any
stock  purchases  and their timing by Central  Maine or CMP Group will depend on
the need for equity in the respective  Company's capital  structure,  investment
opportunities and other considerations.

Upon  completion  of the  merger of CMP Group and  Energy  East,  Central  Maine
intends to conform its capital structure to the 47-percent  common-equity  ratio
required by the MPUC.  This process may include  repurchases  of common stock by
Central  Maine and CMP Group and would  reduce  Central  Maine's  liquidity  and
increase its financing requirements.

Permanent Shutdown of Maine Yankee Plant
----------------------------------------

On August 6, 1997,  the Board of Directors of Maine Yankee voted to  permanently
cease power operations at its nuclear generating plant at Wiscasset,  Maine (the
"Plant") and to begin  decommissioning  the Plant.  The Plant had  experienced a
number of operational and regulatory problems and did not operate after December
6, 1996.  The decision to close the Plant  permanently  was based on an economic
analysis of the costs,  risks and  uncertainties  associated  with operating the
Plant  compared to those  associated  with closing and  decommissioning  it. The
Plant's operating license from the NRC was scheduled to expire in 2008.

FERC Rate Case - On November 6, 1997,  Maine Yankee submitted to FERC for filing
certain  amendments to the Power  Contracts (the  "Amendatory  Agreements")  and
revised  rates to  reflect  the  decision  to shut down the Plant and to request
approval of an increase in the  decommissioning  component of its formula rates.
Maine Yankee's  submittal also requested  certain other rate changes,  including
recovery of unamortized  investment  (including fuel) and certain changes to its
billing formula, consistent with the non-operating status of the Plant. By Order
dated January 14, 1998,  the FERC accepted  Maine Yankee's new rates for filing,
subject to refund after a minimum  suspension  period, and set for hearing Maine
Yankee's Amendatory Agreements, rates, and issues concerning the prudence of the
Plant-shutdown decision that had been raised by intervenors.

During 1998 and early 1999 the active  intervenors,  including  among others the
MPUC Staff, the Maine Office of the Public Advocate  ("OPA"),  Central Maine and
other owners,  municipal and  cooperative  purchasers of Maine Yankee power (the
"Secondary  Purchasers"),   and  a  Maine  environmental  group  (together,  the
"Settling  Parties"),  engaged in extensive  discovery and  negotiations,  which
resulted in the filing of a  settlement  agreement  with the FERC on January 19,
1999.  A  separately  negotiated  settlement  filed with the FERC on February 5,
1999,  resolved the issues  raised by the  Secondary  Purchasers by limiting the
amounts they will pay for decommissioning the Plant and by settling other points
of contention affecting individual Secondary  Purchasers.  Both settlements were
found to be in the public interest and approved by the FERC on June 1, 1999. The
settlements  constitute  full  settlement  of all  issues  raised  in  the  FERC
proceeding,  including  decommissioning-cost issues and issues pertaining to the
prudence  of the  management,  operation,  and  decision  to  permanently  cease
operation of the Plant.

The primary settlement provided for Maine Yankee to collect $33.1 million in the
aggregate  annually,  effective August 1, 1999,  including both  decommissioning
costs and costs related to Maine Yankee's planned on-site independent spent fuel
storage installation ("ISFSI"). The 1997 FERC filing had called for an aggregate
annual collection rate of $36.4 million for decommissioning and the ISFSI, based
on a 1997 estimate.  Pursuant to the approved  settlement  the amount  collected
annually was reduced to approximately $25.6 million,  effective October 1, 1999,
as a result  of 1999  Maine  legislation  allowing  Maine  Yankee to (1) use for
construction  of the ISFSI funds held in trust  under  Maine law for  spent-fuel
disposal,  and (2) access  approximately $6.8 million held by the State of Maine
for eventual  payment to the State of Texas  pursuant to a compact for low-level
nuclear waste  disposal,  the future of which is in question after  rejection of
the selected disposal site in west Texas by a Texas regulatory agency.

The  settlement  also  provides  for  recovery  of  the  unamortized  investment
(including fuel) in the Plant, together with a return on equity of 6.50 percent,
effective  January 15, 1998,  on equity  balances up to maximum  allowed  equity
amounts,  which  resulted in a pro-rata  refund of $9.3 million  (including  tax
impacts) to the sponsors on July 15, 1999. The Settling  Parties also agreed not
to contest the effectiveness of the Amendatory  Agreements  submitted to FERC as
part of the original filing,  subject to certain limitations including the right
to challenge any accelerated recovery of unamortized  investment under the terms
of the Amendatory Agreements after a required informational filing with the FERC
by Maine Yankee.  In addition,  the  settlement  contains  incentives  for Maine
Yankee to achieve further savings in its decommissioning and ISFSI-related costs
and resolves issues concerning  restoration and future use of the Plant site and
environmental   matters  of  concern  to  certain  of  the  intervenors  in  the
proceeding.

As a  separate  part of the  settlement,  Central  Maine,  the  other  two Maine
utilities  which own  interests  in Maine  Yankee,  the MPUC Staff,  and the OPA
entered into a further  agreement  resolving retail rate issues and other issues
specific to the Maine parties,  including those that had been raised  concerning
the prudence of the operation and shutdown of the Plant (the "Maine Agreement").
Under the Maine Agreement  Central Maine is recovering its Maine Yankee costs in
accordance with its most recent rate order from the MPUC.

Finally,  the Maine  Agreement  requires  Central  Maine and the other two Maine
Utilities,  for the period from March 1, 2000, through December 1, 2004, to hold
their Maine retail ratepayers harmless from the amounts by which the replacement
power costs for Maine Yankee exceed the  replacement  power costs assumed in the
report to the Maine  Yankee  Board of  Directors  that served as a basis for the
Plant  shutdown  decision,  up to a maximum  cumulative  amount of $41  million.
Central  Maine's  share of that  amount  would be $31.2  million for the period.
Based on the results of the two year entitlement auction already completed,  the
Company will not incur any  liability  for this  provision in year 2000 and does
not believe that it will incur any liability in 2001.

CMP Group and Central Maine believe that the approved settlement,  including the
Maine Agreement, constitutes a reasonable resolution of the issues raised in the
Maine  Yankee  FERC  proceeding,   which  eliminated  significant  uncertainties
concerning CMP Group's and Central Maine's future financial performance.

Termination of Decommissioning  Operations Contract - As previously reported, on
May 4, 2000, Maine Yankee notified its  decommissioning  operations  contractor,
Stone & Webster  Engineering Corp. ("Stone & Webster"),  that it was terminating
its  decommissioning  operations contract pursuant to the terms of the contract.
Stone & Webster  subsequently  notified Maine Yankee that it was disputing Maine
Yankee's  grounds  for  terminating  the  contract.  On May 8,  Stone &  Webster
announced that it had signed a letter of intent with Jacobs  Engineering  Group,
Inc. ("Jacobs"),  regarding a proposed transaction in which Jacobs would acquire
substantially  all of Stone &  Webster's  assets in  exchange  for an  immediate
credit  facility  and other  consideration,  including  cash and stock.  Stone &
Webster said the credit facility was intended enable it to address its liquidity
difficulties  and  continue to operate its  businesses  until the asset sale was
completed.  Stone & Webster also announced  that it intended to seek  bankruptcy
court approval of the asset sale and credit agreement.

On June 2, 2000, Stone & Webster filed a voluntary  petition under Chapter 11 of
the United States  Bankruptcy Code with the United States  Bankruptcy  Court for
the District of  Delaware.  By Sale Order dated July 13,  2000,  the  Bankruptcy
Court approved the sale of substantially  all of Stone & Webster's assets to the
successful  bidder in the Chapter 11 sale, The Shaw Group,  Inc.  ("Shaw"),  for
cash, stock, and the assumption of certain  liabilities of Stone & Webster,  and
the earlier agreement with Jacobs was terminated.  Stone & Webster reported that
that the Shaw  transaction was effectively  closed on July 14, 2000, and that it
would continue to operate as a  Debtor-in-Possession  subject to the supervision
and orders of the Bankruptcy Court.

As previously  reported,  on May 10, 2000,  Maine Yankee entered into an interim
agreement  with  Stone &  Webster  in  order to  allow  decommissioning  work to
continue  and  avoid  the  adverse  consequences  of an  abrupt  or  inefficient
demobilization  from the Plant  site.  After  obtaining  assignments  of several
subcontracts  from Stone & Webster and upon termination of the interim agreement
on July 1, Maine  Yankee at least  temporarily  assumed the  general  contractor
role,  utilizing a reduced number of Stone & Webster  personnel  under a revised
interim  agreement that expires September 30, 2000. The  decommissioning  of the
Plant site is progressing, with major emphasis being directed to maintaining the
schedule  on  critical-path  projects  such as  construction  of the  ISFSI  and
preparation of the Plant's  reactor vessel for eventual  shipment to an off-site
disposal facility.

On  June  30,  2000,  Federal  Insurance  Company  ("Federal"),  which  provided
performance  and payment bonds in the amount of $37.6 million each in connection
with the decommissioning  operations contract, filed a Complaint for Declaratory
Judgment  against  Maine Yankee in the United  States  Bankruptcy  Court for the
District  of  Delaware.  The  Complaint  alleges  that Maine  Yankee  improperly
terminated  the  decommissioning  operations  contract  with Stone & Webster and
failed to give proper notice of the  termination  to Federal under the contract,
and that Federal  therefore had no further  obligations  under the bonds.  Maine
Yankee believes that its termination of the decommissioning  operations contract
was proper, but cannot predict the outcome of the litigation.

Maine Yankee is evaluating all available  long-term  alternatives for safely and
efficiently  completing  the  decommissioning  of the Plant site,  including the
possibilities of contracting with a new decommissioning operations contractor or
assuming that function itself on a long-term basis.  However,  we cannot predict
at this point what effect the financial  difficulties of Stone & Webster and the
termination of its  decommissioning  operations  contract with Maine Yankee will
have on the cost or schedule of the decommissioning project.

Regulation
----------

General - Central  Maine and its public  utility  affiliates  are subject to the
regulatory  authority  of the  MPUC  as to  retail  rates,  accounting,  service
standards,  territory served, the issuance of securities  maturing more than one
year after the date of  issuance,  certification  of  transmission  projects and
various other matters.  Central Maine is also subject to the jurisdiction of the
FERC under the  Federal  Power Act for some  phases of its  business,  including
accounting, rates relating to wholesale sales and to interstate transmission and
sales of energy and certain other matters.

The Maine  Yankee Plant and the other  nuclear  generating  facilities  in which
Central  Maine has an interest are subject to  regulation by the NRC. The NRC is
empowered to authorize the siting,  construction,  operation and decommissioning
of nuclear reactors after consideration of public health, safety,  environmental
and antitrust matters.

The  United  States  EPA  administers  programs  which  affect  Central  Maine's
remaining  generating  facilities.  The EPA has broad authority in administering
these   programs,   including   the   ability   to   require   installation   of
pollution-control  and mitigation devices.  CMP Group and Central Maine are also
subject to regulation by various state, local and other federal authorities with
regard to land use and other  environmental  matters.  For further discussion of
environmental  considerations  as they affect CMP Group and Central  Maine,  see
"Environmental  Matters",  below, and Note 2, "Legal and Environmental Matters."
Other activities of CMP Group and Central Maine from time to time are subject to
the  jurisdiction  of  various  other  state and  federal  regulatory  agencies,
including  the SEC with  respect  to the  issuance  of  securities  and  related
matters.

Electric-Utility Industry Restructuring
---------------------------------------

Maine  Restructuring  Legislation - The Maine Legislature enacted legislation in
1997 to restructure  the electric  utility  industry in Maine effective March 1,
2000. The principal  restructuring  provisions of the  legislation  provided for
customers  to  have  direct  retail  access  to  generation   services  and  for
deregulation of competitive  electric providers,  commencing March 1, 2000, with
transmission-and-distribution  companies such as Central Maine  continuing to be
regulated by the MPUC. By that date,  investor-owned  utilities were required to
divest all generation assets and  generation-related  business activities,  with
two major  exceptions:  (1)  non-utility  generator  contracts  with  qualifying
facilities and contracts with demand-side management or conservation  providers,
brokers or hosts,  and (2)  ownership  interests  in nuclear  power  plants.  As
discussed below under "Sale of Generation  Assets,"  Central Maine completed the
sale of its non-nuclear generating assets on April 7, 1999.

The legislation also required  investor-owned  utilities to sell their rights to
the capacity and energy from all undivested generation assets after February 29,
2000, including nuclear generation assets and the purchased-power contracts that
had not previously been divested pursuant to the legislation.  On July 30, 1999,
Central Maine offered its rights to the capacity and energy from its  undivested
generation assets and generation-related  business to prospective bidders and in
December  1999  contracted  to sell such rights with  respect to its  undivested
nuclear  generation  assets  (Vermont  Yankee and Millstone  Unit 3) and its NUG
contract entitlements for a two-year period commencing March 1, 2000.

As a transmission-and-distribution utility since March 1, 2000, Central Maine is
prohibited from selling  electric energy to retail  customers,  except as may be
directed by the MPUC.  Any  competitive  electricity  provider  affiliated  with
Central  Maine  would be allowed to sell  electricity  outside  Central  Maine's
service  territory without  limitation as to amount,  but within Central Maine's
service  territory the affiliate  would be limited to providing not more than 33
percent of the total kilowatt-hours sold with Central Maine's service territory,
as determined by the MPUC. CMP Group currently does not intend to create such an
affiliate.

MPUC Proceeding on Stranded Costs,  Revenue  Requirements,  and Rate Design - By
order dated March 19, 1999, the MPUC completed the first phase of its proceeding
contemplated by Maine's  restructuring  legislation to establish the recoverable
amount and timing of Central Maine's  stranded costs,  its revenue  requirements
and the design of its rates  effective  March 1, 2000.  In its Phase I order the
MPUC  decided  the   "principles"   by  which  it  would  set  Central   Maine's
transmission-and-distribution rates, but deferred actually calculating the rates
until later in the proceeding because some of the necessary  information was not
yet available.

With respect to stranded costs,  the MPUC indicated that it would set the amount
of  recoverable  stranded costs for Central Maine later in the  proceeding.  The
restructuring statute requires the MPUC to provide transmission-and-distribution
utilities a reasonable  opportunity  to recover such costs that is equivalent to
the utility's  opportunity to recover those costs prior to the  commencement  of
retail access. The MPUC also reviewed the prescribed methodology for determining
the amount of a utility's  stranded  costs,  including  among other  factors the
application of excess value from Central Maine's divested  generation  assets to
offset stranded costs.

In the  area of  revenue  requirements,  the  Phase I  order  did not  establish
definitive  amounts,  but did contain the MPUC's conclusion that the appropriate
cost of  common  equity  for  Central  Maine as a  transmission-and-distribution
company was 10.50  percent,  with a  common-equity  component of 47 percent.  In
dealing  with  rate  design,   the  MPUC  again  limited  itself   primarily  to
establishing  principles that would guide it in designing  Central Maine's rates
effective March 1, 2000.

On July 1, 1999,  Central  Maine filed its Phase II case with the MPUC.  In that
filing  Central  Maine  updated  certain  test-year  data to  reflect  known and
measurable  changes  to its  revenue  requirement,  updated  its  stranded  cost
estimate  to  reflect   actual   data  from  the  April  1999   closing  of  its
generation-asset  sale,  and proposed  its rate design  based on the  principles
enunciated  in the Phase I order.  Some of the  information  needed to establish
rates was still incomplete in that filing, however, since neither the auction of
the output of Central  Maine's  non-divested  generation  resources  nor the bid
process for  "standard-offer"  service (for those  customers who do not select a
competitive  energy  supplier) had been completed.  In addition,  several issues
raised by the Phase I MPUC order remained unresolved,  including,  among others,
(i) whether the MPUC could require the  unamortized  investment  tax credits and
excess  deferred  income  taxes  associated  with  the sale of  Central  Maine's
generation  assets  to be  flowed  through  to  ratepayers,  and  (ii)  the rate
treatment of the gain on the sale of Union Water's  generation-related assets to
FPL and employee transition costs resulting from the generation-asset sale.

In an order dated  December 3, 1999, in a separate but related  proceeding,  the
MPUC  approved  Central  Maine's  plan  for  the  sale  of  the  output  of  its
non-divested  generation assets. In another related  proceeding,  by order dated
October 25, 1999,  the MPUC  accepted a  competitive  energy  supplier's  bid to
provide   standard-offer  service  to  Central  Maine's  residential  and  small
commercial  customers who did not select a  competitive  energy  supplier  after
March 1, 2000.  In the same order the MPUC  rejected  all of the  standard-offer
bids for Central  Maine's medium and large  commercial and industrial  customers
and sought a second round of bids. In the December 3 order the MPUC rejected all
of the second round of standard-offer  bids for Central Maine's medium and large
classes and ordered that Central Maine arrange such service for those classes.

On January  19,  2000,  the MPUC issued its Phase II order  determining  Central
Maine's  revenue   requirement  as  a   transmission-and-distribution   utility,
effective  March 1,  2000.  In the order the MPUC  disallowed  approximately  $8
million of the approximately  $12 million revenue increase  requested in Central
Maine's Phase II filing,  which had been based on certain  known and  measurable
changes to its revenue requirement.

A negotiated  settlement  approved by the MPUC on January 27, 2000, resolved the
major  issues  remaining  outstanding  in the  final  phase  of  the  ratemaking
proceeding.  The  settlement  confirmed  that the $18.2  million of  unamortized
investment  tax  credits and excess  deferred  income  taxes  related to Central
Maine's generation-asset sale would flow through to shareholders pursuant to the
normalization  rules of the Internal  Revenue Code.  In addition,  Central Maine
agreed not to seek judicial review of an August 2, 1999 MPUC order regarding the
treatment  of gains from  sales of  easements  that  required  Central  Maine to
recognize 10 percent of the gain  currently  with the remaining 90 percent being
amortized  over 5 years,  effective  as of the  dates of the 1998 and 1999  sale
transactions.  Central  Maine also agreed not to seek  reconsideration  of other
cost-of-service  updates  in the  rate  case or to  challenge  an  $4.7  million
disallowance  of employee  transition  costs,  and to withdraw its appeal of the
rate treatment of the gain on Union Water's generation-related assets.

The settlement  also allowed Central Maine to charge off $88 million on March 1,
2000,  representing its entire  remaining  investment in the Millstone 3 nuclear
unit in Connecticut,  against the regulatory  Asset Sale Gain Account created in
the  ratemaking  proceeding to recognize the above-book  value realized  through
Central Maine's  generation-asset  sale. This provision reflected the resolution
of Central Maine's  arbitration and litigation claims against the lead owners of
the  jointly-owned  Millstone  Unit 3, in which Central Maine owns a 2.5-percent
interest.

As part of the settlement  Central Maine also agreed to a one-time  earnings cap
for  1999.  Earnings  above  the cap were  deferred  in 1999 and will be used to
offset rate  increases  that would  otherwise  be required to mitigate  stranded
costs and increases in operating expenses through 2001.

The    rate    settlement    established    Central    Maine's    rates   as   a
transmission-and-distribution  utility effective March 1, 2000. A separate order
fixed the standard-offer  prices for Central Maine's medium and large commercial
and industrial  customers at levels  intended to reflect  current market pricing
and to avoid under-collection of Central Maine's costs.

The combined  after-tax  effect of the provisions of the ratemaking  settlement,
including the earnings cap, was to reduce CMP Group's net income for 1999 by $11
million.

Central Maine  estimates  that  customers on its standard  residential  rate and
small commercial customers are saving an average of nine to ten percent on their
total electric bills after March 1, 2000, compared to earlier bills for the same
kwh usage.  Central  Maine  believes  that its medium and large  commercial  and
industrial  customers can realize savings ranging from minimal to almost fifteen
percent,  with the greater  savings  going to customers who select a competitive
energy supplier rather than taking the standard-offer service.

The  last  step in the  restructuring  process  began  in  March  2000  with the
jurisdictional  separation  of the  $415  million  overall  revenue  requirement
between the  federal  and state  jurisdictions.  Transmission  service  pricing,
accounting for approximately 11 percent of the total revenue requirement,  falls
under the federal  jurisdiction  while  distribution  and stranded cost recovery
pricing,  representing approximately 89 percent of the revenue requirement, is a
state  responsibility.  The MPUC  approved in August 2000 the  distribution  and
stranded  cost  recovery  portion of the overall  revenue  requirement  that was
effective March 1, 2000. The Company has filed with FERC new transmission  rates
to be effective  September 1, 2000. The impact of the new transmission rates, if
approved,  will increase revenue  requirements by approximately $10 million with
approximately  $5  million  of  the  proposed   increase   associated  with  the
incremental  costs of  transmission  congestion in New England.  These federally
mandated  charges  include  the  costs of  upgrading  transmission  circuits  to
accommodate  merchant  power plants,  and are being  assessed on all New England
utilities.  The remainder of the rate  increase  reflects  updated  transmission
costs based on 1999 activity versus the 1996 test period used previously.

Other Lines of Business
-----------------------

General  - CMP  Group  has been  pursuing  its  business  opportunities  through
investments that capitalize on core competencies. The Union Water-Power Company,
a wholly  owned  subsidiary  of CMP Group,  provides  utility  construction  and
support services (On Target division); energy efficiency performance contracting
and energy use and management  services (Combined Energies  division);  and real
estate development services (UnionLand Services division).  Two other subsidiary
operations,  TeleSmart and CMP International  Consultants (d/b/a CNEX) have been
closed by CMP Group in 2000.

Natural Gas Distribution - New England Gas Development Corporation ("New England
Gas"), which is a wholly owned subsidiary of CMP Group, holds approximately a 12
percent interest at June 30, 2000 in CMP Natural Gas,  L.L.C.,  now called Maine
Natural Gas, L.L.C.  ("Maine Natural Gas"). Maine Natural Gas is a joint venture
of New England Gas and Energy East  Enterprises,  a wholly owned  subsidiary  of
Energy East, and is subject to regulation as a public utility by the MPUC. Maine
Natural Gas was formed to construct,  own and operate a natural gas distribution
system to serve certain areas of Maine that did not have gas service,  utilizing
natural gas delivered to Maine through new interstate pipeline facilities.

Maine Natural Gas began construction of its first local  distribution  system in
Windham,  Maine,  in early 1999 and began serving its first  customer in May. On
July 8, 1999,  Maine  Natural Gas and Calpine  Corporation,  a  California-based
independent power company, announced the signing of a 20-year contract for Maine
Natural Gas to provide  natural gas delivery  service to Calpine's  540-megawatt
natural  gas-fired  power plant under  construction in Westbrook,  Maine.  Maine
Natural  Gas  expects  to  commence  service to the plant in the summer of 2000,
after  construction  of a two-mile  lateral  pipeline along an existing  Central
Maine transmission corridor.

If the merger of CMP Group and Energy East is completed,  Maine Natural Gas will
become a wholly owned subsidiary of Energy East Enterprises, and New England Gas
will  cease  to  exist.   During  1999  Energy  East  also  agreed  to  business
combinations  with  two  established  natural  gas  distribution   companies  in
Connecticut  and one in  western  Massachusetts,  subject to  customary  closing
conditions,  including  shareholder votes and regulatory  approvals.  One of the
Connecticut   acquisitions  was  completed  in  February  2000.  The  other  two
transactions are awaiting SEC approval.

Telecommunications  Investment - MaineCom Services, which is wholly owned by CMP
Group,   provides   telecommunications    services,   including   point-to-point
connections,  private networking,  consulting, private voice and data transport,
carrier services, and long-haul transport. MaineCom Services also holds, through
wholly owned New England Business Trust, an approximately 27-percent interest in
NorthEast  Optic  Network,   Inc.  ("NEON"),  a  facilities-based   provider  of
technologically advanced, high-bandwidth,  fiber optic transmission capacity for
communications  carriers on local loop,  inter-city,  and interstate facilities.
NEON owns and operates and is expanding a fiber optic network in New England and
New York,  utilizing primarily electric utility rights of way, including some of
Central Maine's and some owned by other electric utilities  including  Northeast
Utilities,  another  substantial  minority  stockholder.  CMP Group  reduced its
indirect  interest in NEON through its secondary  sale of 1.5 million  shares of
common  stock in NEON on May 30,  2000 and 225,000  shares on June 4, 2000.  CMP
Group realized an after-tax gain of $33 million from the sales.

On November 23, 1999, NEON announced two major agreements, one with Consolidated
Edison  Communications,  Inc. ("CEC"), a wholly owned subsidiary of Consolidated
Edison,  Inc.,  and the other with  Excelon,  a wholly owned  subsidiary of PECO
Energy,  Inc. The  agreements  effectively  expanded the reach of the network to
include  the  Philadelphia,  Baltimore  and  Washington,  D.C.,  areas.  As  the
agreements  are  implemented,  CEC  will  obtain  an  approximately  ten-percent
interest in NEON and Excelon an interest of approximately nine percent.  On July
26, 2000,  Progress  Telecom,  a  subsidiary  of Florida  Progress  Corporation,
announced  the creation of a strategic  relationship  with NEON that will extend
the reach of the network to South Florida.

CMP Group  believes that  although NEON operated at a loss since its  inception,
there is a need for the fiber optic network it is constructing  and extending in
the eastern United States. CMP Group, however, cannot predict the future results
of NEON's operations.

Environmental Matters
---------------------

Federal,  state and local environmental laws and regulations cover air and water
quality,  land  use,  power  plant  and  transmission  line  siting,  noise  and
aesthetics,   solid  and  hazardous  waste  and  other  environmental   matters.
Compliance  with  these  laws and  regulations  impacts  the  manner and cost of
electric  service by requiring,  among other  things,  changes in the design and
operation of existing facilities and changes or delays in the location,  design,
construction and operation of new facilities.  In the past, these  environmental
regulations   most   significantly   affected  Central  Maine's  electric  power
generating facilities,  which were sold to FPL Group in April 1999, as discussed
above. In addition,  Central Maine is subject to environmental proceedings under
federal and state hazardous  substance and hazardous waste  regulations (such as
the  Comprehensive  Environmental  Response,  Compensation,  and  Liability  Act
("CERCLA") and the Resource  Conservation  and Recovery Act ("RCRA") and similar
state  statutes).  Central Maine  estimates  that its capital  expenditures  for
improvements  needed to comply  with  environmental  laws and  regulations  were
approximately $9.9 million for the five years from 1995 through 1999.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

CMP Group is exposed to interest  rate risk  through the use of  fixed-rate  and
variable-rate  debt and  preferred  stock as sources of capital.  As of June 30,
2000,  Central  Maine had $85  million of  medium-term  notes  outstanding,  $10
million of which bear floating, LIBOR-based rates.

                                  Variable Long Term           Fixed Long Term
                                  ------------------           ---------------
                                                (dollars in thousands)

Weighted Average Rates                    9.29%                       7.19%

Balance at June 30, 2000                $34,158                    $210,245

Maturity Period                       2001 - 2019                2002 - 2021


<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Regulatory Matters - For a discussion of certain significant  regulatory matters
affecting CMP Group and Central Maine,  including  those related to the proposed
merger with Energy East, and an MPUC proceeding that determined  Central Maine's
stranded costs,  revenue requirements and related matters, see Item 2 of Part I,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations of CMP Group and Central Maine Power Company,"  "Formation of Holding
Company and Proposed  Merger," and "MPUC  Proceeding on Stranded Costs,  Revenue
Requirements and Rate Design," which are incorporated herein by reference.

Maine  Yankee - For a  discussion  of the  termination  by Maine  Yankee  of its
decommissioning  operations  contract with Stone & Webster and related  matters,
see  Item 2 of  Part I,  "Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations  of CMP Group and  Central  Maine  Power
Company,"  -  "Permanent  Shutdown of Maine  Yankee  Plant," -  "Termination  of
Decommissioning   Operations   Contract,"  which  are  incorporated   herein  by
reference.

Arbitration  Claim - For a discussion  of an  arbitration  claim by the minority
owners of the Wyman Unit No. 4 generating  unit against  Central Maine seeking a
share of the proceeds from Central  Maine's  generating-asset  sale, see Note 2,
"Commitments  and   Contingencies"  -  "Wyman  No.  4  Arbitration,"   which  is
incorporated herein by reference.

Environmental  Matters  -  For  a  discussion  of  administrative  and  judicial
proceedings   concerning   cleanup  of  hazardous  waste  sites,   see  Note  2,
"Commitments and  Contingencies,"  "Legal and  Environmental  Matters," which is
incorporated herein by reference.

Item 2. through Item 4. Not applicable

Item 5. Other Information.

Change in Annual  Meeting  Date and  Deadline  for  Shareholder  Proposals  - On
February  17,  2000,  CMP Group  announced  a change in its annual  shareholders
meeting date from May 18, 2000, to October 31, 2000.

For a shareholder proposal to be considered for inclusion in the proxy statement
and form of proxy for the 2000 annual meeting of  shareholders  of CMP Group, it
must have been received by Anne M. Pare,  Secretary,  CMP Group, Inc., 83 Edison
Drive, Augusta, Maine 04336, on or before May 22, 2000.

Under the articles of  incorporation  of CMP Group, a shareholder  who wishes to
nominate a candidate  for election to the board of directors of CMP Group at the
2000 annual meeting of shareholders of CMP Group or bring any matter before that
meeting (other than matters included in CMP Group's proxy materials) must submit
the  nomination  or the matter to the  Secretary  of CMP Group no  earlier  than
August 2, 2000 and no later than  September  1, 2000.  The notice must also meet
other requirements set forth in the articles of incorporation.


<PAGE>


Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits. None.
(b)      Reports on Form 8-K.  None.




<PAGE>


                                   Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrants  have duly  caused  this  report  to be  signed on their  respective
behalfs by the undersigned thereunto duly authorized.

                                  CMP GROUP, INC.



Date:  August 11, 2000        By  /s/ Arthur W. Adelberg
       ---------------            ---------------------------------------------
                                  Arthur W. Adelberg, Executive Vice President
                                  and Chief Financial Officer (Principal
                                  Financial Officer and duly authorized officer)



                                  CENTRAL MAINE POWER COMPANY



Date:  August 11, 2000        By  /s/ Michael W. Caron
       ---------------            ---------------------------------------------
                                  Michael W. Caron, Comptroller (Chief
                                  Accounting Officer and duly authorized
                                  officer)