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 September 30, 1999

                                       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 November 8, 1999,  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             5
   September 30, 1999 and 1998

   Consolidated Statement of Earnings for the Nine Months Ended              6
   September 30, 1999 and 1998

   Consolidated Balance Sheet  - September 30, 1999 and December 31,
   1998:
     Assets                                                                  7
     Stockholders' Equity and Liabilities                                    8

   Consolidated Statement of Cash Flows for the Nine Months Ended            9
   September 30, 1999 and 1998

Central Maine Power Company
   Consolidated Statement of Earnings for the Three Months Ended            10
   September 30, 1999 and 1998

   Consolidated Statement of Earnings for the Nine Months Ended             11
   September 30, 1999 and 1998

   Consolidated Balance Sheet  - September 30, 1999 and December 31,
   1998:
     Assets                                                                 12
     Stockholders' Equity and Liabilities                                   13

   Consolidated Statement of Cash Flows for the Nine Months Ended           14
   September 30, 1999 and 1998

Notes to Consolidated Financial Statements                                  15

Item 2 - Management's Discussion and Analysis of Financial Condition        31
and Results of Operations

Item 3 - Quantitative and Qualitative Disclosures About Market Risk         49

Part II.  Other Information                                                 50

Signatures                                                                  51



<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

ARP 2000             The proposed rate plan filed by Central Maine with the MPUC
                     on September 30, 1999.

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   provides    management,
                     planning,    consulting,    and   research   and
                     information  services  to foreign  and  domestic
                     utilities and government agencies.

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,  formed
                     for the sole  purpose of  completing  the merger
                     with CMP Group.

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 wholly  owned  CMP  Group
                     subsidiary  which  provides   telecommunications
                     services.

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  38.5-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
Development          New England Gas Development Corporation, 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
                     provides accounts receivable management services
                     for utility clients.

Union Water          The Union Water Power Company, a diversified 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  September  30, 1999 and 1998,  and the  Consolidated  Statement  of
Income and Consolidated  Cash Flows for the periods ended September 30, 1999 and
1998.  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 September 30,
                                                               1999           1998
Revenues
     Electric operating revenues                             $238,898      $ 234,056
     Other non-utility revenues                                10,292          2,875
                                                              -------        -------
        Total Revenues                                        249,190        236,931
                                                              -------        -------

Operating Expenses
     Fuel used for company generation                             281         10,393
     Purchased power
        Energy                                                107,667         89,238
        Other (capacity)                                       28,766         22,617
     Other operation                                           57,705         55,037
     Maintenance                                                7,331         11,441
     Depreciation and amortization                             11,996         14,057
     Taxes other than income taxes                              5,027          7,680
                                                              -------        -------
        Total Operating Expenses                              218,773        210,463
                                                              -------        -------

Operating Income                                               30,417         26,468
                                                              -------       -------

Other Income (Expense)
     Equity in earnings of associated companies                (1,747)          (741)
     Allowance for equity funds used during construction          172            179
     Minority interest in consolidated net income                  (6)           (64)
     Gain on sale of investments and properties                  (793)        19,108
     Other, net                                                 1,938           (270)
                                                              -------        -------
        Total Other Income (Expense)                             (436)        18,212
                                                              -------        -------

Interest Charges
     Long-term debt                                             4,372         10,247
     Other interest                                             7,331          2,612
     Allowance for borrowed funds used during construction        (46)          (132)
                                                              -------        -------
        Total Interest Charges                                 11,657         12,727
                                                              -------        -------

Income Before Income Taxes and Preferred Dividends             18,324         31,953
     Income taxes                                               8,703         13,594
     Dividends on Preferred Stock of Subsidiary                   918            919
                                                              -------        -------
Net Income                                                  $   8,703       $ 17,440
                                                              =======        =======

Weighted Average Number of Shares of Common
     Stock Outstanding                                     32,442,552     32,442,687

Earnings Per Share of Common Stock (Basic and Diluted)          $0.27           $.54

Dividends Declared Per Share of Common Stock                    $.225          $.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 Nine Months
                                                                 Ended September 30,
                                                               1999            1998
Revenue
     Electric operating revenues                             $724,278        $691,017
     Other non-utility revenues                                26,713           4,586
                                                              -------         -------
        Total Revenues                                        750,991         695,603
                                                              -------         -------

Operating Expenses
     Fuel used for company generation                          10,488          22,374
     Purchased power
        Energy                                                290,984         279,002
        Other (capacity)                                       82,754          68,079
     Other operation                                          175,656         152,990
     Maintenance                                               23,630          30,120
     Depreciation and amortization                             38,673          41,687
     Taxes other than income taxes                             17,180          20,721
                                                              -------         -------
        Total Operating Expenses                              639,365         614,973
                                                              -------         -------

Operating Income                                              111,626          80,630
                                                              -------         -------

Other Income (Expense)
     Equity in earnings of associated companies                (4,406)          1,007
     Allowance for equity funds used during construction          479             468
     Minority interest in consolidated net income                (700)           (178)
     Gain on sale of investments and properties                12,240          19,108
     Other, net                                                10,134           1,450
                                                              -------         -------
        Total Other Income (Expense)                           17,747          21,855
                                                              -------         -------

Interest Charges
     Long-term debt                                            22,504          31,746
     Other interest                                            20,661           6,639
     Allowance for borrowed funds used during construction       (260)           (331)
                                                              -------         -------
        Total Interest Charges                                 42,905          38,054
                                                              -------         -------

Income Before Income Taxes and Preferred Dividends             86,468          64,431
     Income taxes                                              37,711          26,131
     Dividends on Preferred Stock of Subsidiary                 2,756           3,890
                                                              -------         -------
Net Income                                                   $ 46,001        $ 34,410
                                                              =======         =======

Weighted Average Number of Shares of Common
     Stock Outstanding                                     32,442,552      32,442,730

Earnings Per Share of Common Stock - Basic                      $1.42           $1.06
Earnings Per Share of Common Stock - Diluted                    $1.41           $1.06

Dividends Declared Per Share of Common Stock                    $.675           $.675

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
                             (Dollars in thousands)

                                   Assets                                       September 30,      December 31,
                                                                                    1999               1998
                                                                                 (Unaudited)
Current Assets
    Cash and cash equivalents                                                   $   224,792         $    30,540
    Accounts receivable, less allowance for uncollectible accounts of
    $2,915 in 1999 and $3,136 in 1998
       Service   - billed                                                            75,538              81,169
                 - unbilled                                                          45,755              53,296
       Other accounts receivable                                                     10,912              13,753
    Inventories, at average cost
       Fuel oil                                                                          94               5,879
       Materials and supplies                                                         9,728              13,126
    Funds on deposit with trustee                                                         1                   1
    Prepayments and other current assets                                             12,341              10,268
                                                                                 ----------          ----------
          Total Current Assets                                                      379,161             208,032
                                                                                 ----------          ----------

Electric Property, at original cost                                               1,328,731           1,750,837
    Less: Accumulated depreciation                                                  545,915             694,410
                                                                                 ----------           ---------
          Net electric property in service                                          782,816           1,056,427
                                                                                 ----------           ---------

Property, non utility                                                                20,004              23,244
    Less: Accumulated Depreciation                                                    5,897               6,802
                                                                                 ----------           ---------
          Net Non-Utility property                                                   14,107              16,442

    Construction work in progress                                                    23,154              19,538
    Nuclear fuel                                                                      1,626               1,147
                                                                                 ----------           ---------
          Total net property                                                        821,703           1,093,554

Investments In Associated Companies, at Equity                                       55,257              71,880
                                                                                 ----------           ---------
    Total Net Property and Investments in Associated Companies                      876,960           1,165,434
                                                                                 ----------           ---------

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned projects, net                      74,424              78,539
    Yankee Atomic purchased-power contract                                            4,297               7,761
    Connecticut Yankee purchased-power contract                                      26,969              29,913
    Maine Yankee purchased-power contract                                           248,689             273,895
    Regulatory assets-nuclear impairment                                             78,867                   -
    Regulatory assets-deferred taxes                                                209,442             235,451
    Other deferred charges and other assets                                         247,371             263,859
                                                                                 ----------           ---------
          Deferred Charges and Other Assets, Net                                    890,059             889,418
                                                                                 ----------           ---------

          Total Assets                                                           $2,146,180          $2,262,884
                                                                                  =========           =========

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
                             (Dollars in thousands)

                   Stockholders' Equity and Liabilities
                                                            September 30,       December 31,
                                                                 1999              1998
                                                             (Unaudited)
Current Liabilities and Interim Financing
    Interim financing                                        $    61,450         $  298,356
    Sinking-fund requirements                                     27,696             11,455
    Accounts payable                                              74,138             90,960
    Dividends payable                                              8,266              7,304
    Accrued interest                                               2,196              7,524
    Accrued income taxes                                          74,083             19,911
    Miscellaneous current liabilities                             20,041             15,909
                                                              ----------         ----------
       Total Current Liabilities and Interim Financing           267,870            451,419
                                                              ----------         ----------

Commitments and Contingencies (Note 4)

Other Liabilities and Deferred Credits
    Accumulated deferred income taxes                             71,751            376,043
    Unamortized investment tax credits                            14,108             29,064
    Yankee Atomic purchased-power contract                         4,297              7,761
    Connecticut Yankee purchased-power contract                   26,969             29,913
    Maine Yankee purchased-power contract                        248,689            273,895
    Regulatory liabilities-nuclear impairment                     15,892                  -
    Regulatory liabilities-deferred taxes                         61,054             58,376
    Deferred gain on generation asset sale                       530,131                  -
    Other reserves and deferred credits                          193,766            116,805
                                                               ---------         ----------
       Total Other Liabilities and Deferred Credits            1,166,657            891,857
                                                               ---------         ----------

Long-Term Debt
    Mortgage debt                                                      -            117,683
    Other long-term obligations                                  123,422            228,598
                                                               ---------         ----------
       Total Long-Term Obligations                               123,422            346,281
                                                               ---------         ----------

Redeemable Preferred Stock                                         9,910             18,910
                                                               ----------        ----------

Stockholders' Equity
    Common-stock                                                 162,213            162,213
    Other paid in capital                                        286,056            285,835
    Reacquired common stock                                       (1,028)              (827)
    Retained earnings                                             95,552             71,668
    Preferred stock                                               35,528             35,528
                                                               ---------         ----------
       Total Stockholders' Equity                                578,321            554,417
                                                               ---------         ----------

       Total Stockholders' Equity and Liabilities             $2,146,180         $2,262,884
                                                               =========          =========

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 Nine Months
                                                                            Ended September 30,
                                                                              1999          1998
Cash From Operations
    Net income                                                             $ 46,001      $ 34,410
    Items not requiring (not providing) cash:
       Depreciation                                                          30,446        34,957
       Amortization                                                          29,568        28,907
       Deferred income taxes and investment tax credits, net                 (8,632)       20,107
       Allowance for equity funds used during construction                     (479)         (468)
    Preferred stock dividends of subsidiary                                   2,756         3,890
    Gain on sale of investments and properties                              (12,240)      (19,108)
    Incremental power supply                                                (23,111)            -
    Changes in certain assets and liabilities:
       Accounts receivable                                                   16,013        13,114
       Other current assets                                                  (3,429)       (7,717)
       Inventories                                                              632        (3,020)
       Accounts payable                                                     (13,034)      (22,240)
       Accrued taxes and interest                                            17,994        (1,267)
       Miscellaneous current liabilities                                      3,859        10,030
    Deferred ice storm cost                                                    (793)      (51,923)
    Deferred energy-management costs                                            985        (1,583)
    Restructuring of purchased power contract                                     -       (22,500)
    Accrued carrying costs on deferred gain and other items                  10,493             -
    MaineCom equity losses in NEON                                            7,719             -
    Union Water Power Co. unearned revenues                                   2,575             -
    Other, net                                                                8,182         7,169
                                                                            -------       -------
          Net Cash Provided  by Operating Activities                        115,505        22,758
                                                                            -------       -------

Investing Activities
       Construction expenditures                                            (37,880)      (27,700)
       Investments in and loans to affiliates                                     -       (17,800)
       Repayment of loan by affiliates                                            -        17,800
       Central Maine sale of assets                                         850,987             -
       Tax payments related to sale of assets                              (249,250)            -
       Selling expense for sale of generation assets                        (17,886)            -
       Proceeds from sale of investments and properties                      14,018        21,347
       Changes in accounts payable - investing activities                    (3,788)       (2,122)
                                                                            -------        ------
          Net Cash Provided (Used) by Investing Activities                  556,201        (8,475)
                                                                            -------        ------

Financing Activities
    Issuances:
       Revolving credit agreement                                                 -        10,100
       Medium-term notes                                                          -       187,000
    Redemptions:
       Mortgage bonds                                                      (118,717)     (177,283)
       Preferred stock                                                            -       (48,619)
       Medium-term note                                                    (257,000)      (18,000)
       Revolving credit agreement                                           (50,000)            -
       Other long-term obligations                                          (12,841)       (2,970)
       Short-term obligations, net                                          (15,000)         (154)
    Funds on deposit with trustee                                                 -        61,694
    Purchase of treasury stock                                                 (160)         (811)
    Dividends:
       Common stock                                                         (21,899)      (21,915)
       Preferred stock of subsidiary                                        (1,837)        (4,868)
                                                                            ------        -------
          Net Cash Used by Financing Activities                            (477,454)      (15,826)
                                                                            -------       -------
          Net Increase (Decrease) in Cash                                   194,252        (1,543)
Cash and Cash Equivalents, Beginning of Year                                 30,540        20,841
                                                                            -------       -------
Cash and Cash Equivalents, End of Year                                     $224,792      $ 19,298
                                                                            =======       =======

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 September 30, 1999 and 1998, and the Consolidated  Statement
of Income and  Consolidated  Cash Flows for the periods ended September 30, 1999
and 1998. 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 September 30,
                                                                 1999            1998
Revenues
     Electric operating revenues                               $238,887        $234,027
     Other non-utility revenues                                    (408)            711
                                                                -------         -------
        Total Revenues                                          238,479         234,738
                                                                -------         -------

Operating Expenses
     Fuel used for company generation                               281          10,393
     Purchased power
        Energy                                                  107,667          89,238
        Other (capacity)                                         28,766          22,617
     Other operation                                             48,251          53,565
     Maintenance                                                  7,096          11,421
     Depreciation and amortization                               11,706          13,985
     Taxes other than income taxes                                5,021           7,668
                                                                -------         -------
        Total Operating Expenses                                208,788         208,887
                                                                -------         -------

Operating Income                                                 29,691          25,851
                                                                -------         -------

Other Income (Expense)
     Equity in earnings of associated companies                     368              67
     Allowance for equity funds used during construction            172             179
     Other, net                                                   4,010            (237)
     Minority interest in consolidated net income                    (6)            (64)
     Gain on sale of investments and properties                      27           9,545
                                                                -------         -------
        Total Other Income (Expense)                              4,571           9,490
                                                                -------         -------

Interest Charges
     Long-term debt                                               4,324          10,237
     Other interest                                               7,250           2,611
     Allowance for borrowed funds used during construction          (46)           (132)
                                                                -------         -------
        Total Interest Charges                                   11,528          12,716
                                                                -------         -------

Income Before Income Taxes                                       22,734          22,625
     Income taxes                                                 9,806           9,490
                                                                -------         -------
Net Income                                                       12,928          13,135
     Dividends on Preferred Stock                                   918             919
                                                                -------         -------
Earnings Applicable to Common  Stock                           $ 12,010        $ 12,216
                                                                =======         =======

Weighted Average Number of Shares of Common
     Stock Outstanding                                       31,211,471      32,367,201

Earnings Per Share of Common Stock - Basic and Diluted            $0.38           $0.38

Dividends Declared Per Share of Common Stock                     $0.360          $0.000

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 Nine Months
                                                               Ended September 30,
                                                               1999            1998
Revenues
     Electric operating revenues                             $724,194        $690,988
     Other non-utility revenues                                   702           2,422
                                                              -------         -------
        Total Revenues                                        724,896         693,410
                                                              -------         -------

Operating Expenses
     Fuel used for company generation                          10,488          22,374
     Purchased power
        Energy                                                290,984         279,002
        Other (capacity)                                       82,754          68,079
     Other operation                                          151,618         151,518
     Maintenance                                               23,135          30,100
     Depreciation and amortization                             37,912          41,615
     Taxes other than income taxes                             17,117          20,709
                                                              -------         -------
        Total Operating Expenses                              614,008         613,397
                                                              -------         -------

Operating Income                                              110,888          80,013
                                                              -------         -------

Other Income (Expense)
     Equity in earnings of associated companies                 4,051           1,815
     Allowance for equity funds used during construction          479             468
     Other, net                                                10,809           1,483
     Minority interest in consolidated net income                (700)           (178)
     Gain on sale of investments and properties                 7,061           9,545
                                                              -------         -------
        Total Other Income (Expense)                           21,700          13,133
                                                              -------         -------

Interest Charges
     Long-term debt                                            22,362          31,736
     Other interest                                            20,416           6,638
     Allowance for borrowed funds used during construction       (260)           (331)
                                                              -------         -------
        Total Interest Charges                                 42,518          38,043
                                                              -------         -------

Income Before Income Taxes                                     90,070          55,103
     Income taxes                                              36,241          22,027
                                                              -------         -------
Net Income                                                     53,829          33,076
     Dividends on Preferred Stock                               2,756           3,890
                                                              -------         -------
Earnings Applicable to Common Stock                         $  51,073        $ 29,186
                                                              =======         =======

Weighted Average Number of Shares of Common
     Stock Outstanding                                     31,211,471      32,417,292

Earnings Per Share of Common Stock (Basic and Diluted)          $1.64           $0.90

Dividends Declared Per Share of Common Stock                  $0.945           $0.450

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
                             (Dollars in thousands)

                                   Assets                                       September 30,      December 31,
                                                                                    1999               1998
                                                                                    ----               ----
                                                                                 (Unaudited)
Current Assets
    Cash and cash equivalents                                                      $  205,914       $    22,628
    Accounts receivable, less allowance for uncollectible accounts of
    $2,915 in 1999 and $3,136 in 1998
       Service   - billed                                                              75,418            81,082
                 - unbilled                                                            45,755            53,110
       Other accounts receivable                                                        4,377            12,698
    Inventories, at average cost
       Fuel oil                                                                            94             5,879
       Materials and supplies                                                           9,263            12,755
    Funds on deposit with trustee                                                           1                 1
    Prepayments and other current assets                                               11,837            10,161
                                                                                   ----------        ----------
          Total Current Assets                                                        352,659           198,314
                                                                                   ----------        ----------

Electric Property, at original cost                                                 1,328,702         1,750,777
    Less: Accumulated depreciation                                                    545,892           694,463
                                                                                   ----------        ----------
          Net electric property in service                                            782,810         1,056,314
                                                                                   ----------         ---------

Property, Non-Utility                                                                  12,829            15,895
    Less: Accumulated Depreciation                                                      3,642             4,150
                                                                                   ----------        ----------
          Non-Utility Property                                                          9,187            11,745

    Construction work in progress                                                      21,308            19,483
    Nuclear fuel                                                                        1,626             1,147
                                                                                   ----------        ----------
          Total net property                                                          814,931         1,088,689

Investments In Associated Companies, at Equity                                         39,614            48,406
                                                                                   ----------        ----------
    Total Net Property and Investments in Associated Companies
                                                                                      854,545         1,137,095

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned projects, net                        74,424            78,539
    Yankee Atomic purchased-power contract                                              4,297             7,761
    Connecticut Yankee purchased-power contract                                        26,969            29,913
    Maine Yankee purchased-power contract                                             248,689           273,895
    Regulatory assets-nuclear impairment                                               78,867                 -
    Regulatory assets - deferred taxes                                                209,442           235,451
    Other deferred charges and other assets                                           243,258           262,512
                                                                                    ---------         ---------
          Deferred Charges and Other Assets, Net                                      885,946           888,071
                                                                                    ---------         ---------

          Total Assets                                                             $2,093,150        $2,223,480
                                                                                    =========         =========

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
                             (Dollars in thousands)

                   Stockholders' Equity and Liabilities
                                                                               September 30,       December 31,
                                                                                   1999                1998
                                                                                   -----               ----
                                                                                (Unaudited)
Current Liabilities and Interim Financing
    Interim financing                                                              $   61,383         $  298,183
    Sinking-fund requirements                                                          27,696             11,455
    Accounts payable                                                                   73,746             93,012
    Dividends payable                                                                     967                  5
    Accrued interest                                                                    2,169              7,491
    Income taxes payable to parent company                                             74,320             20,822
    Miscellaneous current liabilities                                                  18,532             15,455
                                                                                   ----------         ----------
       Total Current Liabilities and Interim Financing                                258,813            446,423
                                                                                   ----------         ----------

Commitments and Contingencies (Note 4)

Other Liabilities and Deferred Credits
    Accumulated deferred income taxes                                                  68,274            372,243
    Unamortized investment tax credits                                                 14,108             29,064
    Yankee Atomic purchased-power contract                                              4,297              7,761
    Connecticut Yankee purchased-power contract                                        26,969             29,913
    Maine Yankee purchased-power contract                                             248,689            273,895
    Regulatory liabilities-nuclear impairment                                          15,892                  -
    Regulatory liabilities - deferred taxes                                            61,054             58,376
    Deferred gain on generation asset sale                                            530,131                  -
    Other reserves and deferred credits                                               180,836            111,506
                                                                                    ---------          ---------
       Total Other Liabilities and Deferred Credits                                 1,150,250            882,758
                                                                                    ---------          ---------

Long-Term Debt
    Mortgage debt                                                                           -            117,683
    Other long-term obligations                                                       121,042            226,151
                                                                                    ---------          ---------
       Total Long-Term Obligations                                                    121,042            343,834
                                                                                    ---------          ---------

Redeemable Preferred Stock                                                              9,910             18,910
                                                                                    ---------          ---------

Stockholders' Equity
    Common-stock                                                                      162,213            162,213
    Other paid in capital                                                             276,641            276,422
    Reacquired common stock                                                           (19,000)           (19,000)
    Retained earnings                                                                  97,710             76,349
    Preferred stock                                                                    35,571             35,571
                                                                                    ---------          ---------
       Total Stockholders' Equity                                                     553,135            531,555
                                                                                    ---------          ---------

       Total Stockholders' Equity and Liabilities                                  $2,093,150         $2,223,480
                                                                                    =========          =========

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 Nine Months
                                                                             Ended September 30,
                                                                              1999          1998
Cash From Operations
    Net income                                                             $ 53,829     $  33,076
    Items not requiring (not providing) cash:
       Depreciation                                                          29,697        34,957
       Amortization                                                          29,558        28,903
       Deferred income taxes and investment tax credits, net                 (8,310)       21,883
       Allowance for equity funds used during construction                     (479)         (468)
    Gain on sale of investments and properties                               (7,061)       (9,545)
    Incremental power supply                                                (23,111)            -
    Changes in certain assets and liabilities:
       Accounts receivable                                                   21,340        17,950
       Other current assets                                                  (3,032)       (7,780)
       Inventories                                                              727        (2,703)
       Accounts payable                                                     (15,509)      (21,682)
       Accrued taxes and interest                                             2,485        (4,215)
       Miscellaneous current liabilities                                      2,804         9,592
    Deferred ice storm costs                                                   (793)      (51,923)
    Deferred energy-management costs                                            985        (1,583)
    Restructuring of purchased power contract                                     -       (22,500)
    Accrued carrying costs on deferred gain and other items                  10,493             -
    Other, net                                                                8,821        (5,367)
                                                                            -------      --------
          Net Cash Provided by Operating Activities                         102,444        18,595
                                                                            -------      --------

Investing Activities
       Construction expenditures                                            (37,286)      (26,857)
       Investments in and loans to affiliates                                     -       (18,661)
       Central Maine sale of assets                                         850,987             -
       Tax payments related to sale of assets                              (234,409)            -
       Selling expense for sale of generation assets                        (17,778)            -
       Repayment of loan by affiliate                                             -        17,800
       Sale of subsidiaries to CMP Group, Inc.                                    -        20,093
       Proceeds from sale of investments and properties                       7,813        10,347
       Changes in accounts payable - investing activities                    (3,757)       (2,122)
                                                                            -------      --------
          Net Cash Provided by Investing Activities                         565,570           600
                                                                            -------      --------

Financing Activities
    Issuances:
       Revolving credit agreement                                                 -        10,000
       Medium-term notes                                                          -       187,000
    Redemptions:
       Mortgage bonds                                                      (118,717)     (177,283)
       Preferred stock                                                            -       (48,619)
       Medium term notes                                                   (257,000)      (18,000)
       Revolving credit agreement                                           (50,000)            -
       Other long-term obligations                                          (12,668)       (2,813)
       Short-term obligations                                               (15,000)            -
    Funds on deposit with trustee                                                 -        61,694
    Treasury stock                                                                -       (19,000)
    Dividends:
       Common stock                                                         (29,506)      (21,915)
       Preferred stock                                                       (1,837)       (4,868)
                                                                            -------       -------
          Net Cash Used by Financing Activities                            (484,728)      (33,804)
                                                                            -------       -------
          Net Increase (Decrease) in Cash                                   183,286       (14,609)
Cash and Cash Equivalents, Beginning of Period                               22,628        20,841
                                                                            -------       -------
Cash and Cash Equivalents, End of Period                                   $205,914      $  6,232
                                                                            =======       =======

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  a  public  utility   primarily  engaged  in  the  sale,
     transmission,   and   distribution   of  electric  energy  to  residential,
     commercial,  industrial,  and other  classes of  customers  in the State of
     Maine.

     Basis of  Presentation - This  Quarterly  Report on Form 10-Q is a combined
     report  of CMP  Group  and  Central  Maine,  a  regulated  electric-utility
     subsidiary of CMP Group.  The Notes to  Consolidated  Financial  Statements
     apply 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.  Central  Maine's
     consolidated  financial statements include its accounts as well as those of
     its wholly owned and controlled  subsidiaries.  Certain immaterial majority
     owned  subsidiaries,  which  were  previously  accounted  for on the equity
     method, were consolidated in September 1998.

     Central Maine's  financial  position and results of operations  account for
     substantially  all of  CMP  Group's  consolidated  financial  position  and
     results of operations.  This quarterly report should be read in conjunction
     with CMP  Group's and Central  Maine's  Annual  Report on Form 10-K for the
     year ended December 31, 1998.

     CMP  Group and  Central  Maine  believe  that the  accompanying  statements
     reflect  all  adjustments  necessary  to  present a fair  statement  of the
     consolidated  financial  position and results of operations for the interim
     periods.  All material  adjustments are of a normal recurring nature unless
     otherwise  disclosed  in  this  Form  10-Q.  All  significant  intercompany
     transactions   have  been  eliminated  from  the   consolidated   financial
     statements.

     Results shown for the respective  interim periods being reported herein are
     not  necessarily  indicative of results to be expected for the fiscal years
     due to seasonal  factors  which are inherent in the  operations of electric
     utilities in New  England.  A greater  proportionate  amount of revenues is
     earned in the first and  fourth  quarters  (winter  season)  of most  years
     because more electricity is sold due to weather conditions, fewer day-light
     hours, and related factors.




<PAGE>



     Supplemental  Cash Flow  Disclosure  - Cash paid for the nine months  ended
September 30, 1999 and 1998:

                                                           (In Millions)
                                                         1999         1998

     CMP Group
              Interest, net of amounts capitalized     $  32.8         $40.8
              Income taxes                               271.4           2.5

     Central Maine
              Interest, net of amounts capitalized        32.6          40.7
              Income Taxes                               273.7           2.5

     Stock-Based  Compensation  - Under CMP Group's  Long-Term  Incentive  Plan,
     options on CMP Group  common  stock  were  granted in 1998 and 1999 with an
     exercise  price equal to the fair  market  value on the date of the grants.
     The term of all  options  granted  is seven  (7)  years.  One  third of the
     options vest  annually,  commencing on the first  anniversary of the option
     grant date,  except for 1998 options which were fully vested in 1999.  Upon
     vesting,  the  stock  options  are  exercisable  during  periods  of active
     employment  or within  thirty (30) days after  termination  of  employment,
     provided  termination did not occur due to cause. Upon the effectiveness of
     the  proposed  merger of CMP Group with Energy East all such stock  options
     will be  cancelled  and the  holders of the  options  will be  entitled  to
     payment by CMP Group of the  excess of $29.50  per share over the  exercise
     price per share of the options.

     Performance  shares are granted at the  beginning  of a 3-year  performance
     cycle.  Performance  shares were granted in 1997,  1998 and 1999. All three
     grants have a three-year  cycle and are being accrued  accordingly;  in the
     event performance goals for a performance cycle are achieved,  common stock
     is awarded at the end of that  performance  cycle.  In accordance  with the
     plan document,  the  performance  shares could be awarded at 150 percent if
     certain  targets  are met.  If  performance  goals  are not  achieved,  the
     performance shares are forfeited.  As of the effective date of the proposed
     merger,  it is  intended  that  performance  shares for cycles that are not
     completed  will vest and grantees will be entitled to payment of $29.50 for
     each performance share that vests.

                                          1997       1998          1999
                                          ----       ----          ----

Options granted (100%)                      -       233,359       254,304
Performance Shares* (100%)               59,125      64,518        67,150
Performance Shares (150%)                88,688      96,777       100,725

*Accrue over a 3-year cycle.

     Earnings per Share - Stock options and  performance  shares granted to date
     under CMP Group's Long-Term  Incentive Plan resulted in incremental  shares
     of common  stock  outstanding  for  purposes  of  computing  both basic and
     diluted  earnings  per share for the three  and nine  month  periods  ended
     September 30, 1999. The number of  incremental  shares for the three months
     ended  September  30,  1999  was  346,647  and for the  nine  months  ended
     September 30, 1999 was 279,105.

     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.  It  requires
     companies to record  derivatives  on the balance  sheet at their fair value
     depending on the intended use of the derivative.  The new standard  applies
     to all entities and the original  effective  date was June 15, 1999. On May
     19, 1999 the FASB determined  that the statement  should be delayed for one
     year. Based on CMP Group's and Central Maine's current  business  practices
     the  adoption of this  standard is not  anticipated  to have a  significant
     impact on their financial statements.

2.   Merger Agreement With Energy East

     On  June  14,  1999,  CMP  Group,  Energy  East  and  EE  Merger  Corp.,  a
     wholly-owned  subsidiary of Energy East, entered into an Agreement and Plan
     of Merger ("Merger Agreement"). Pursuant to the Merger Agreement, EE Merger
     Corp.  will merge into CMP Group,  with CMP Group  becoming  the  surviving
     company and becoming a  wholly-owned  subsidiary of Energy East.  CMP Group
     shareholders  will  receive  $29.50  per  share  in cash if the  merger  is
     consummated.

     The merger is subject to certain  customary closing  conditions,  including
     without  limitation  the receipt of the  required  approvals of a number of
     governmental agencies, including the MPUC, Connecticut DPUC, SEC, FERC, NRC
     and the FCC, and the making of all other  necessary  governmental  filings.
     The  shareholders of CMP Group approved the Merger  Agreement on October 7,
     1999. It is anticipated  that all  regulatory  approvals can be obtained by
     mid-2000.

3.   Accounting for the Effects of Certain Types of Regulation

     Central Maine prepares its financial statements in accordance with SFAS No.
     71  "Accounting  for the  Effects of Certain  Types of  Regulation,"  which
     requires  rate-regulated  companies  to reflect the  effects of  regulatory
     decisions in their financial statements. Central Maine has deferred certain
     costs pursuant to rate actions of the MPUC and FERC and is  recovering,  or
     expects to recover,  such costs in electric,  transmission and distribution
     rates charged to customers.

     The FASB's EITF has addressed the appropriateness of continued  application
     of SFAS No. 71 by  entities  in  states  that  have  enacted  restructuring
     legislation  similar to  Maine's.  The EITF issued its  statement  No. 97-4
     "Deregulation of Pricing  Electricity  Issues Related to the Application of
     FASB Statements 71 and 101", which concluded that an entity should cease to
     apply SFAS 71 when a deregulation plan is in place and its terms are known.
     With respect to the generation  portion of Central Maine's  business,  this
     occurred  during the second quarter of 1999 with the completion of the sale
     of  most  of  its  generation  assets  to  FPL  Group  and  the  subsequent
     development of a compliance filing with the MPUC in Phase II of the ongoing
     MPUC proceeding on stranded costs,  revenue  requirements  and rate design.
     Effective  June 30,1999,  Central Maine adopted SFAS 101 for the generation
     segment of its business.  SFAS No. 101 "Regulated  Enterprises - Accounting
     for the  Discontinuation of Application of FASB Statement No. 71," requires
     a  determination   of  impairment  of  plant  assets  under  SFAS  No.  121
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets to Be  Disposed  Of," and the  elimination  of all  effects  of rate
     regulation that have been  recognized as assets and liabilities  under SFAS
     71.

     Central  Maine  performed  impairment  tests on its two  operating  nuclear
     generation facilities,  Millstone 3 and Vermont Yankee, on a plant-specific
     basis.  The amount  determined  to be impaired as of  September  30,1999 is
     approximately  $78.9  million.  Impaired  value is the  excess of net plant
     investment  at  September  30, 1999 over the value of net cash flows during
     the  remaining  lives  of the  investments.  Annual  net  cash  flows  were
     determined by subtracting  estimated  generation  sustenance costs from the
     estimated  market  value of power from the plants.  The MPUC in its Phase I
     order dated March  19,1999 in the ongoing  proceeding  provided  for future
     recovery of nuclear generation and other generation-related stranded costs.
     Central Maine has  established a regulatory  asset as of September 30, 1999
     for $78.9  million  consistent  with  that  order  associated  with the two
     operating nuclear  investments.  As a result there is no income impact from
     these  impairment  tests,  but rather  recognition  of the impairment and a
     corresponding regulatory asset.

     Central  Maine has  long-term  power-purchase  contracts  with  NUGs  which
     require   payments  above   anticipated   market  rates.  The  estimate  of
     above-market  payments is approximately $800 million.  The costs associated
     with  these  NUG   contracts   remain  a   regulated   obligation   of  the
     transmission-and-distribution  company as a statutory requirement and their
     recovery  has  been  provided  for by the MPUC in its  revenue  requirement
     determination in Phase I of the above-mentioned proceeding.

     Central Maine  believes  that its electric  transmission  and  distribution
     operations  continue  to meet  the  requirements  of SFAS  No.  71 and that
     regulatory   assets  associated  with  those  operations  as  well  as  any
     generation-related  costs that the MPUC has  determined  to be  recoverable
     from  ratepayers  also meet the  criteria.  At  September  30,1999,  $853.5
     million of regulatory assets remain on Central Maine's books. Approximately
     $214.4  million  will be charged  on March 1, 2000  against  the  estimated
     deferred gain of $548.6 million  resulting  from the generation  asset sale
     while the remainder  will be amortized over periods to be determined by the
     MPUC in Phase II of the above-mentioned proceeding.

4.   Commitments and Contingencies

     Permanent  Shutdown  of Maine  Yankee  Plant - In August  1997 the board of
     directors of Maine Yankee voted to  permanently  cease power  operations at
     the  Maine  Yankee  plant  at   Wiscasset,   Maine  (the  "Plant")  and  to
     decommission  the Plant.  In November  1997 Maine Yankee  submitted to FERC
     revised  rates  reflecting  the decision to shut down the Plant,  including
     amendments to its Power  Contracts.  On January 14, 1998, FERC accepted the
     new rates for filing,  subject to refund,  and set the new rates, the Power
     Contract   amendments,   and  issues   concerning   the   prudence  of  the
     Plant-shutdown decision for hearing.

     After  the  filing  of  the  rate  request  Maine  Yankee  and  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  (the  "Settling  Parties"),  engaged  in
     extensive  discovery  and  negotiations,  which  resulted  in a  settlement
     agreement  filed by those  parties  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 settlement  constitutes a full  settlement of all
     issues   raised   in   the   consolidated   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  provides for Maine Yankee to collect $33.1 million
     in the  aggregate  annually,  effective  August  1,  1999,  including  both
     decommissioning  costs and  ISFSI-related  costs.  The original filing with
     FERC on November 6, 1997, 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 has been
     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.  Central  Maine
     received $3.5 million.  The Settling  Parties also agreed in the settlement
     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 will continue
     to recover its Maine  Yankee costs in  accordance  with its most recent ARP
     order from the MPUC without any  adjustment  reflecting  the outcome of the
     FERC proceeding. To the extent that Central Maine collected from its retail
     customers a return on equity in excess of the 6.50 percent  contemplated by
     the settlement, no refunds would be required, but such excess amounts would
     be credited to the customers to the extent required by the ARP.

     Finally,  a major  provision  of the  Maine  Agreement  requires  the Maine
     owners,  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 $41.0  million.  Central  Maine's  share of that amount  would be $31.16
     million for the period. The Maine Agreement, which was approved by the MPUC
     on December 22, 1998, also set forth the  methodology for calculating  such
     replacement power costs.

     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,  and has eliminated significant
     uncertainties  concerning CMP Group's and Central Maine's future  financial
     performance.

     Legal  and  Environmental  Matters  -  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.  Central  Maine  believes  that its
     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 Central  Maine's  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  generation  and
     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 September 30, 1999, the liability recorded by
     Central Maine for its estimated environmental remediation costs amounted to
     $3.0  million,  which  management  has  determined  to be the most probable
     amount within the range of $3.0 million to $10.3 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
     ($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
     contest  any such claim  vigorously,  but cannot  predict the result of any
     arbitration proceeding that the non-operator owners may initiate.

     Millstone Unit No. 3 Litigation - On August 7, 1997,  Central Maine and the
     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  are
     seeking  to   recover   their   additional   costs   resulting   from  such
     mismanagement, including their replacement power costs. Since the filing of
     the suit and arbitration  claim, the parties have been engaged in resolving
     preliminary issues and in extensive pre-hearing discovery.  The arbitration
     hearing is scheduled to begin on November  16, 1999.  Central  Maine cannot
     predict the outcome of the litigation and arbitration.

     Tax Settlement - On September 12, 1997,  Central Maine received a notice of
     deficiency  from the Internal  Revenue  Service  ("IRS") as a result of its
     audit of Central  Maine's  federal  income tax  returns  for the years 1992
     through 1994. There were two significant  adjustments  among those proposed
     by the IRS. The first was a disallowance  of Central  Maine's  write-off of
     the  under-collected  balance  of fuel and  purchased-power  costs  and the
     unrecovered  balance of its unbilled Electric Revenue Adjustment  Mechanism
     ("ERAM") revenues,  both as of December 31, 1994, which had been charged to
     income in 1994 in connection with the adoption of the ARP effective January
     1, 1995.  The second  major  adjustment  disallowed  Central  Maine's  1994
     deduction of the cost of the buyout of the Fairfield Energy Venture ("FEV")
     purchased-power contract.

     On December  10, 1997 Central  Maine filed a petition in the United  States
     Tax Court contesting the entire amount of the  deficiencies.  Subsequently,
     Central Maine sought review of the asserted  deficiencies by an IRS Appeals
     Officer to determine  whether all or part of the dispute  could be resolved
     in advance of a court determination.

     In June 1999, the IRS Appeals  Officer and Central Maine reached  agreement
     resolving all issues.  Under the proposed  agreement the ERAM component was
     allowed  as fully  deductible  in 1994,  while $24  million of the fuel and
     purchased-power costs was deemed to be deductible in 1994 and the remaining
     $30 million deductible in 1995. The parties also agreed to increase the tax
     basis of the FEV plant from $2 million to $11  million,  to be  depreciated
     over 20 years,  and that the remaining  FEV contract  buyout costs would be
     fully deductible in 1994.

     As a result of the  settlement,  Central Maine made payments to the IRS and
     the  State  of  Maine  totaling  $11.8  million  for the  1992 to 1994  tax
     deficiencies, as well as $6.0 million in associated interest. Substantially
     all of the tax impacts were normalized,  as Central Maine will be deducting
     any  disallowed  costs for tax purposes in future years.  The net impact of
     the tax and interest true-up for all the years under consideration  reduced
     net income in the second  quarter of 1999 by $0.6 million due  primarily to
     interest expense. Of the $6.0 million interest payment,  approximately $1.0
     million was previously  accrued,  and $1.8 million  associated with the FEV
     facility was deferred consistent with regulatory practice.  Interest income
     of $2.5 million was accrued for the years 1995 through September 1999.

     Due to the materiality of the amounts involved,  approval of the settlement
     from the  Congress's  Joint  Committee on Taxation is required and is being
     sought by the IRS.

     Natural Gas  Distribution.  New England Gas Development  Corporation  ("New
     England  Gas"),  which is a wholly  owned  subsidiary  of CMP Group,  holds
     approximately  a twenty-two  percent  interest in CMP Natural  Gas,  L.L.C.
     ("CMP Natural Gas").  CMP Natural Gas is a joint venture of New England Gas
     and Energy East Enterprises,  a wholly owned subsidiary of Energy East. CMP
     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,  and began providing  service to customers in May 1999,  utilizing
     natural gas delivered to Maine through new interstate pipeline facilities.

     CMP 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,  CMP  Natural  Gas  and  Calpine  Corporation,  a
     California-based  independent  power  company,  announced  the signing of a
     20-year  contract  for CMP  Natural  Gas to provide  natural  gas  delivery
     service to Calpine's  proposed  540-megawatt  natural gas-fired power plant
     under construction in Westbrook, Maine. CMP Natural Gas expects to commence
     service to the plant by June 1, 2000,  after MPUC approval and construction
     of a two-mile lateral pipeline along an existing Central Maine right of way
     that would interconnect with the new interstate pipeline  facilities.  In a
     report dated November 2, 1999, the MPUC hearing  examiner  recommended that
     CMP Natural Gas be authorized to provide  service to the Calpine plant,  as
     well as the unserved areas in the  municipalities  of Westbrook and Gorham,
     which would  increase  the number of  municipalities  in Maine in which CMP
     Natural  Gas is  authorized  to serve to 37.  The  decision  by the MPUC is
     scheduled for November 15, 1999.

     If the merger of CMP Group and Energy  East is  completed,  CMP Natural Gas
     will become a wholly owned subsidiary of Energy East  Enterprises,  and New
     England Gas will cease to exist. In April and June, 1999,  Energy East also
     agreed  to  business   combinations   with  two  established   natural  gas
     distribution  companies  in  Connecticut,  subject to  closing  conditions,
     including shareholder votes and regulatory approvals.



<PAGE>



5.   Regulatory Matters and Electric-Utility Industry Restructuring

     Alternative Rate Plan - On March 15, 1999, Central Maine submitted its 1999
     ARP compliance  filing to the MPUC. In the filing Central Maine recommended
     that rates  remain  unchanged  for the period July 1, 1999 to February  29,
     2000.  On July 13,  1999,  the MPUC issued an order which  provided  for no
     increase in rates effective July 1, 1999. In a related matter, on August 2,
     1999, the MPUC issued an order regarding the treatment of gains on the sale
     of  easements  by  Central  Maine in late  1998 and early  1999.  The order
     allocated  90 percent of the benefit of the  proceeds  from the sale of the
     easements to ratepayers and 10 percent to shareholders,  with the ratepayer
     portion being  amortized over a five-year  period.  Central Maine requested
     reconsideration of the order. As of September 30, 1999,  approximately $9.4
     million of the previously  recognized gain would be deferred and net income
     reduced  accordingly,  if the MPUC position should  prevail.  Central Maine
     believes  that both under Maine legal  precedent and under the terms of the
     ARP these gains should be  recognized  as of the time the property was sold
     and should  accrue to the benefit of  shareholders,  and intends to contest
     the order vigorously.

     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, except that 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 whether or
     not such savings are achieved. 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  costs  would  be
     recoverable,  not the entire $3  million  non-cumulative  cost  recoverable
     under the current ARP.  Also,  the rate of return on equity of 10.5 percent
     already established by the MPUC would be the basis for the earnings-sharing
     bandwidth,  and not the 11.5 percent  under the ARP.  ARP2000 is subject to
     MPUC approval.  For a detailed description of the current ARP, see our Form
     10-K for the twelve months ended December 31, 1998.

     Stranded Costs - The enactment by Congress of the Energy Policy Act of 1992
     accelerated planning by electric utilities,  including Central Maine, for a
     transition to a more competitive industry. In Maine,  legislation that will
     restructure the electric-utility  industry on March 1, 2000, was enacted by
     the Maine Legislature in May 1997, and is discussed in detail below. Such a
     departure from traditional  regulation,  however,  could have a substantial
     impact  on the value of  utility  assets  and on the  ability  of  electric
     utilities  to recover  their costs  through  rates.  In the absence of full
     recovery,  utilities would find their  above-market costs to be "stranded",
     or unrecoverable, in the new competitive setting.

     Central Maine has  substantial  exposure to cost stranding  relative to its
     size.  In general,  its stranded  costs reflect the excess costs of Central
     Maine's purchased-power obligations over the market value of the power, and
     the costs of  deferred  charges  and  other  regulatory  assets.  The major
     portion of Central Maine's stranded costs is related to above-market  costs
     of  purchased-power  obligations  arising from Central  Maine's  long-term,
     noncancelable  contracts  for the purchase of capacity and energy from NUGs
     estimated at $800 million, with lesser estimated amounts related to Central
     Maine's deferred regulatory assets.

     Maine Restructuring  Legislation.  The 1997 Maine restructuring legislation
     requires  the MPUC,  when retail  access to  generation  begins on March 1,
     2000,  to provide a  "reasonable  opportunity"  to recover  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.  Stranded costs are
     defined  as  the  legitimate,   verifiable  and   unmitigable   costs  made
     unrecoverable as a result of the restructuring required by the legislation.
     Central  Maine's  recoverable  amount  and the timing of  recovery  will be
     determined  by the  MPUC in the  second  phase  of the  ongoing  proceeding
     discussed  under the heading "MPUC  Proceeding on Stranded  Costs,  Revenue
     Requirements, and Rate Design," below.

     The  principal  restructuring  provisions  of the  legislation  provide 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 continuing to be regulated by
     the MPUC. By that date,  subject to possible  extensions of time granted by
     the MPUC to improve  the sale value of  generation  assets,  investor-owned
     utilities   are   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 does,  however,  require  investor-owned  utilities,  after
     February 29, 2000, to sell their rights to the capacity and energy from all
     undivested  generation assets,  including nuclear generation assets and the
     purchased-power contracts that had not previously been divested pursuant to
     the  legislation,  with certain  immaterial  exceptions.  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 the bids were  received  by  October 1,  1999.  The  proposed
     successful  bids were  submitted  to the MPUC for  approval  on November 8,
     1999.

     Upon the commencement of retail access on March 1, 2000,  Central Maine, as
     a  transmission-and-distribution  utility,  will be prohibited from selling
     electric energy to retail customers.  Any competitive  electricity provider
     that is 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
     within Central  Maine's service  territory,  as determined by the MPUC. CMP
     Group has stated  that it does not intend to engage in the sale of electric
     energy after March 1, 2000.

     For a summary of other provisions of the 1997  legislation,  see the Annual
     Report on Form 10-K of CMP Group and  Central  Maine for the twelve  months
     ended December 31, 1998.

     MPUC Proceeding on Stranded Costs, Revenue  Requirements,  and Rate Design.
     By order dated March 19, 1999,  the MPUC  completed  the first phase of the
     proceeding  contemplated  by Maine's  restructuring  legislation  that will
     ultimately  determine the recovery of Central Maine's  stranded costs,  its
     revenue  requirements,  and the  design of its rates to be  effective  when
     Central Maine becomes a  transmission-and-distribution  utility at the time
     retail  access to  generation  begins in Maine on March 1,  2000.  The MPUC
     stressed  in its Phase I order that it was  deciding  the  "principles"  by
     which it would set  Central  Maine's  transmission-and-distribution  rates,
     effective March 1, 2000, but was deferring calculating the rates themselves
     until Phase II of the  proceeding  because such  calculations  at that time
     would rely excessively on estimates.

     With respect to stranded  costs,  the MPUC  indicated that it would set the
     amount of  recoverable  stranded costs for Central Maine in Phase II of the
     proceeding  pursuant  to its  mandate  under the  restructuring  statute 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  include
     definitive  amounts,  but did  contain  the  MPUC's  conclusions  as to the
     appropriate    cost   of   common   equity   for   Central   Maine   as   a
     transmission-and-distribution  company  beginning  March 1,  2000.  Central
     Maine had  recommended a 12-percent cost of common equity with a 55-percent
     common  equity  component  in the capital  structure.  The MPUC  approved a
     common-equity  cost of 10.50 percent with a  common-equity  component of 47
     percent, and an overall  weighted-average  cost of capital of 8.68 percent.
     In dealing with rate  design,  the MPUC again  limited  itself in the first
     phase of the proceeding  primarily to  establishing  principles  that would
     guide it in designing Central Maine's rates to be effective March 1, 2000.

     Central  Maine  submitted  its Phase II filing to the MPUC on July 1, 1999.
     The filing was organized into sections  covering  revenue  requirements,  a
     sales forecast,  stranded costs, and rate design,  with updated information
     provided in each area. As with Phase I, some of the calculations  submitted
     in the Phase II filing were still estimates,  since some of the information
     that will provide the basis for the MPUC's  decisions in the proceeding was
     not yet  available.  This  information  will  include  the  results  of the
     auctioning  of Central  Maine's  energy and capacity of nuclear  generation
     assets and NUG contracts and the market prices for  electricity,  including
     the standard-offer  price, all of which Central Maine expects to be able to
     provide the MPUC in an updated filing in December 1999.

     In a "bench  analysis" issued on September 28, 1999, the MPUC Staff took no
     final position on revenue requirements,  stranded costs or rate design, due
     to  the  continued  unavailability  of  the   NUG-contract-entitlement  and
     standard-offer  auction results, but did recommend  disallowance of certain
     of Central Maine's  proposed  expenses,  particularly in the operations and
     maintenance  category.  The  challenged  costs fell largely in the areas of
     employee  transition costs,  payroll and medical costs, and certain nuclear
     stranded  costs.  On  October  12,  1999,   Central  Maine  filed  comments
     responsive to the bench  analysis and to other issues raised by intervenors
     in the  proceeding,  asserting that such costs should be recovered in rates
     and  that  disallowance  by the MPUC  would  deprive  Central  Maine of any
     reasonable  opportunity to earn its 10.5-percent  allowed rate of return on
     equity.

     Central Maine's requested  revenue  requirement  amount,  together with its
     interim  assumption  for  market  electricity  prices,  would  result in an
     average  10.4-percent price decrease for its core rate customers  effective
     March 1, 2000. This amount is likely to change, however, as a result of the
     information to be submitted in the December  filing and the MPUC's decision
     on Central Maine's revenue requirements.

     On October 25, 1999,  the MPUC issued an order  rejecting  all the bids for
     standard-offer   service  in  Central  Maine's  and  Bangor  Hydro-Electric
     Company's service  territories,  finding them to be "unreasonably high." In
     its order, the MPUC initiated a new selection process and indicated that it
     expected to announce the results of the process by December 1, 1999.

     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  $217.8
     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 will  retain),  including  $2.0 million for Union Water
     assets.  The related  book value of these  assets was  approximately  $11.9
     million.

     Central Maine  recorded a pre-tax  deferred  gain of $519.4  million net of
     selling costs and certain  non-normalized  income tax impacts from the sale
     of generation  assets by establishing a regulatory  liability in the second
     quarter of 1999,  which  eliminated any income  recognition.  Central Maine
     also recorded  curtailment and special termination deferred charges of $8.1
     million  associated  with  pension  and  postretirement  benefit  costs  of
     employees  leaving  the company as a result of the  generation  asset sale.
     These deferred charges,  in the amount finally allowed by the MPUC, will be
     amortized over a three-year  period  beginning March 1, 2000 as required by
     the MPUC. In Phase II of the above described  "MPUC  Proceeding on Stranded
     Costs,  Revenue  Requirements and Rate Design," the MPUC will determine the
     amount of the  regulatory  liability  that will be used to reduce  stranded
     costs and the  utilization  and timing of the  recognition of any remaining
     regulatory liability.

     Central  Maine also  recorded a pre-tax  deferred  gain  amounting to $30.8
     million to offset  the income  impact of the  flow-through  of  unamortized
     investment tax credits and excess deferred taxes associated with the assets
     sold.  Central  Maine has  requested a private  letter  ruling from the IRS
     regarding  the  appropriate  treatment  of  these  items  as  a  result  of
     directives  from the MPUC.  Central  Maine is of the opinion,  based on its
     review of the rules and regulations and IRS rulings in similar  situations,
     that any  unamortized  investment  tax  credits and excess  deferred  taxes
     relating to the property sold become  nonregulated  property at the time of
     sale.  Central Maine  believes that  regulatory  agencies,  therefore,  are
     precluded from  considering  these  unamortized  investment tax credits and
     excess deferred tax reserves in  establishing  regulated rates because they
     would  constitute  a  violation  of the  normalization  requirement  of the
     Internal  Revenue Code. The MPUC directed Central Maine to seek the private
     ruling to be  certain  in this case  whether  ratepayers  can  continue  to
     benefit from these excess  reserves.  Central  Maine does not know when the
     IRS will rule on its requests, but expects a ruling before the end of 1999.

     Union Water's net income reflects a $3.7 million increase during the second
     quarter  of  1999  due to  its  portion  of the  proceeds  of the  sale  of
     generation assets as determined by the MPUC.  Central Maine is appealing to
     the Maine Supreme  Judicial  Court the imputation of $13.2 million of value
     of the Union Water assets to Central Maine. The $13.2 million imputation is
     included in the Central Maine deferred gain of $519.4 million.

     With the cash  proceeds of the sale Central  Maine  redeemed the  remaining
     $118.7 million of its outstanding  General and Refunding  Mortgage Bonds on
     May 10, 1999, and paid at maturity $47 million of its medium-term  notes on
     May 4, 1999. On June 1, 1999,  Central  Maine  redeemed $180 million of its
     medium-term  notes,  as well as all of the  outstanding $10 million Town of
     Yarmouth Pollution Control Revenue Bonds, which had been issued in 1977 and
     1978.  Approximately  $294.5  million of the proceeds  will be required for
     federal and state income taxes resulting from the sale and, after providing
     for closing  costs and energy  purchases to meet  power-supply  obligations
     until the start of  retail  competition  on March 1,  2000,  Central  Maine
     expects to transfer  the balance to its parent,  CMP Group.  Proceeds  that
     have not been applied have been invested in accordance with Central Maine's
     cash  investment  policy.  Uses of the  balance of the  proceeds  are under
     consideration by CMP Group.

     Storm  Damage  to  Company's  System - In  January  1998,  an ice  storm of
     unprecedented   breadth  and  severity   struck  Central   Maine's  service
     territory,  causing  power  outages  for  approximately  280,000 of Central
     Maine's 528,000  customers,  and substantial  widespread  damage to Central
     Maine's  transmission  and distribution  system.  To restore its electrical
     system,   Central  Maine  supplemented  its  own  crews  with  utility  and
     tree-service  crews from throughout the northeastern  United States and the
     Canadian maritime provinces, with assistance from the Maine national guard.

     On January 15, 1998,  the MPUC issued an order  allowing  Central  Maine to
     defer on its  books  the  incremental  non-capital  costs  associated  with
     Central  Maine's  efforts to  restore  service  in  response  to the damage
     resulting  from the storm.  In October 1998, the MPUC staff issued a report
     of its summary  investigation of the Maine  utilities'  response to the ice
     storm. The report found no basis for formal adjudicatory investigation into
     the response and supported the utilities' actions. Based on the MPUC order,
     Central  Maine has  deferred  $53.3  million in storm  related  costs as of
     September 30, 1999, including $3.4 million of carrying costs..

     In the spring of 1998 Congress appropriated $130 million for Presidentially
     declared disasters in 1998,  including  storm-damage cost reimbursement for
     electric  utilities.  On November 5, 1998 the United  States  Department of
     Housing and Urban  Development  ("HUD") announced that of those funds, $2.2
     million  had been  awarded  to Maine,  with  none  designated  for  utility
     infrastructure,  which Central Maine and the Maine Congressional delegation
     protested as inadequate and  inconsistent  with  Congressional  intent.  On
     March 23, 1999, HUD announced that Maine would receive an additional  $2.15
     million and HUD  subsequently  announced  that another $17 million would be
     available for Maine.  On October 6, 1999 Central Maine received  payment in
     the amount of $19.6  million from HUD and reduced the  regulatory  asset by
     that amount.  The MPUC has stated its belief that Central Maine's prudently
     incurred ice-storm costs should be recovered through rates commencing March
     1, 2000, but deferred final action pending the  determination of the amount
     of federal reimbursement.

6.   Income Taxes

     The CMP Group  effective tax rate is higher than the statutory rate and the
     prior year's  effective tax rate primarily due to losses  associated with a
     CMP Group equity investment in a subsidiary. The effective tax rate for the
     quarter ended  September 30, 1999 was 47.5 percent and 43.6 percent year to
     date.  The increase for the quarter is due to the reversal of book interest
     expense  related  to  carrying  costs  on the  deferred  gain  on  sale  of
     generating assets, which is not deductible for tax purposes.

7.   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  costs.  These  assessments  are reflected as an offset to
     Central  Maine's  expenses and totaled  approximately  $4.6 million for the
     nine months ended September 30, 1999.

     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  $7.9 million for the nine months ended
     September 30, 1999.

     In addition,  a  subsidiary  of CMP Group has been  providing  certain real
     estate and river management  services charged to Central Maine at cost, and
     environmental, engineering, utility locator and construction services based
     on a contracted rate. These expenses  amounted to $4.3 million for the nine
     months ended September 30, 1999.

     Central Maine provides  services to CMP Group and its  subsidiaries as well
     as  non-affiliated  parties.  As of  September  30, 1999,  Central  Maine's
     accounts receivable and accounts payable included the following:


<PAGE>



                                        (Dollars in thousands)

                                  Accounts                  Accounts
                                 Receivable                  Payable

    CMP Group                     $1,446                      $4,232
    CNEX                              90                          45
    MaineCom                         125                           2
    Telesmart                         12                          50
    Union Water                      498                         253
                                  ------                      ------
                                  $2,171                      $4,582
                                   =====                       =====


<PAGE>



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 in this report.

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.   We  caution   readers  not  to  place   undue   reliance  on  these
forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to republish revised forward-looking  statements to reflect events
or  circumstances  after the date of this report or to reflect the occurrence of
unanticipated  events.  We urge  readers 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 outcome of the regulatory  proceedings involving the proposed
acquisition of CMP Group by Energy East; the costs of decommissioning  the Maine
Yankee  plant;  failure  to  resolve  any  significant  aspect of the "Year 2000
problem";  electric utility industry restructuring,  including the ongoing state
and federal  activities  that will determine  Central Maine's ability to recover
its stranded costs and establish its revenue  requirements  and rate design as a
transmission-and-distribution  utility commencing March 1, 2000; Central Maine's
ability to recover its costs  resulting  from the  January  1998 ice storms that
damaged its transmission and distribution  system;  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; CMP Group's investments in unregulated businesses;  other
circumstances  that  could  affect  anticipated  revenues  and  costs,  such  as
unscheduled  maintenance  or repair  requirements  at  nuclear  plants and other
facilities; and compliance with laws and regulations.

Corporate Organization

General.  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 and Energy East entered
into an  Agreement  and  Plan of  Merger,  which  was  approved  by CMP  Group's
shareholders  on October 7, 1999, but remains  subject to a number of regulatory
approvals.
See "Proposed Merger" below, for further discussion.

Operating Results

                                       CMP
                                      Group                  Central Maine
                              (dollars in millions)
Net income Three months ended:
     September 30, 1999         $8.7    $0.27/share     $12.9
     September 30, 1998         17.4    $0.54/share      13.1
                                ----                     ----
     Decrease                  $(8.7)                  $ (0.2)
   Nine months ended:
     September 30, 1999        $46.0    $1.42/share     $53.8
     September 30, 1998         34.4    $1.06/share      33.1
                                ----                     ----
     Increase                  $11.6                    $20.7

Earnings applicable to common
stock Three months ended:
     September 30, 1999          N/A                    $12.0    $0.38/share
     September 30, 1998          N/A                     12.2    $0.38/share
   Nine months ended:
     September 30, 1999          N/A                    $51.1    $1.64/share
     September 30, 1998          N/A                    $29.2     $.90/share

The decrease in net income of $8.7 million for the three months ended  September
30, 1999 versus the same period last year is driven  primarily  by  nonrecurring
revenues from sales of financial  interests and easements in 1998.  For the nine
months ended  September 30, 1999,  net income  increased  $11.6 million due to a
combination of robust year over year revenue growth in the electric business and
essentially flat expenses.  Revenues  increased $55.4 million for the first nine
months  of 1999 and when  adjusted  to  exclude  approximately  $26  million  of
subsidiary  operations  revenue not  consolidated  in 1998,  the basic  electric
business  revenues  show an  increase  of $29.4  million,  or 4.2  percent.  The
residential and commercial  sectors have seen the strongest  growth in kwh sales
year-to-date,  rising 4.0 percent and 5.1 percent, respectively. The improvement
in electric  revenues is due to higher sales volume  attributed to colder winter
weather,  a warmer,  drier summer and  increased  production by the paper mills.
Also,  in 1998  Central  Maine  lost sales due to the  unprecedented  ice storm.
Overall  growth  in  electric  sales was up 2.2  percent  for the  period  ended
September 1999 over September 1998.

Operating expenses were $24.4 million higher than 1998 for the nine months ended
September  30,  1999.  Similar  to  the  revenues,   subsidiary  operations  not
consolidated  in 1998 account for  approximately  $25.4 million of the increase,
resulting in  essentially  flat  expense  growth year to year.  While  operation
expenses  associated with generation are expected to decrease year over year due
to the sale of  generation  assets on April 7, 1999,  purchased-power  costs are
expected to increase due to Central  Maine's interim  purchase-power  agreements
entered into with FPL to provide  power until March 1, 2000.  Central  Maine and
the MPUC agreed to  segregate  approximately  $41  million of sales  proceeds to
offset these costs. A true-up will occur in the first quarter of the year 2000.

Service  Area Kwh Sales - Central  Maine's  service  area  sales of  electricity
totaled approximately 2.45 billion  kilowatt-hours in the third quarter of 1999,
up 5.5  percent  from the 2.32  billion  kilowatt-hour  level of a year ago,  as
follows:

                      Service Area Kilowatt-hour Sales (Millions of KWHs)
                                   Period Ended September 30,

                              Three                            Nine
                              Months                          Months
                   1999        1998   % Change      1999       1998    % Change
                   ----        ----     ------      ----       ----      ------

Residential        714.7       676.5      5.6%     2,151.5    2,067.8      4.0%
Commercial         752.3       689.1      9.2      2,023.1    1,925.6      5.1
Industrial         971.0       892.7      8.8      2,679.4    2,606.9      2.8
Other                8.7        60.7    (85.7)        73.8      178.5    (58.7)
              ----------   ---------             ---------   --------
                 2,446.7     2,319.0      5.5%     6,927.8    6,778.8      2.2%
                 =======     =======               =======    =======

The changes in service area kilowatt-hour sales reflect the following:

Kilowatt-hour  sales to  residential  customers  increased by 5.6 percent in the
third quarter,  and 4.0 percent when compared to the same  nine-month  period in
1998. The increase for the quarter  related  primarily to much warmer weather in
the summer of 1999 than in the summer of 1998.  Most of the  overall  growth for
the nine  months  ended  September  30,  1999,  was due to 1) the  absence of an
ice-storm in 1999 of the kind that caused widespread customer outages in January
1998  (approximately  44.8 million kwh, of which approximately 30 million kwh is
residential),  2) an unusually warm summer  (approximately 59.2 million kwh) and
3) a colder winter (approximately 15.0 million kwh).

Commercial kilowatt-hour sales increased by 9.2 percent in the third quarter and
by 5.1 percent for the nine months ended September 30, 1999. The increased sales
in the retail trade and service sectors,  which comprise the largest  percentage
of commercial sales, were also primarily weather related.

Industrial kilowatt-hour sales increased by 8.8 percent in the third quarter and
2.8 percent for the nine months ended September 30, 1999 as compared to the same
period in 1998. An  exceptionally  strong third quarter  helped kwh sales to the
paper  industry to rebound  from a negative  28.5  million kwh at the end of the
second  quarter to a positive  variance of 27.0 million kwh as of September  30,
1999. Low water  conditions and increased  production  levels resulted in all of
the  large  paper  mills  in  Central  Maine's  service   territory   purchasing
approximately 55.5 million more kwh in the third quarter of 1999 compared to the
same period in 1998. The pulp-and-paper  sector of the industrial class accounts
for approximately 56 percent of the industrial sales category.

Wholesale  kilowatt-hour  sales,  which is included  under  `Other' in the chart
above,  decreased by 68.8 percent through September 1999 compared to 1998 due to
the expected loss through contract  expirations with three wholesale customers -
one ending in February, and the other two ending in May of 1999.

Operating Expenses

Central  Maine's fuel used for company  generation  decreased  by  approximately
$11.9  million in the third  quarter of 1999 compared to 1998 due to the sale of
its generation assets.

Central Maine's purchased  power-capacity  expense increased $6.1 million in the
third quarter and $14.7 million  year-to-date  compared to 1998. The increase is
due primarily to increased capacity costs associated with the restructuring of a
NUG contract and the power-purchase  contracts with FPL, partially offset by the
effects of the  permanent  shutdown of the Maine Yankee plant in August 1997 and
the resulting decline in operating costs.

CMP Group's maintenance expense decreased $6.5 million for the nine months ended
September  30, 1999  compared to 1998.  This  decrease was due  primarily to the
temporary  increase  in costs  in 1998  caused  by  Central  Maine's  operations
personnel  working in a maintenance  capacity and to subsequent  cleanup efforts
that resulted from the 1998 ice storm. In addition,  hydro maintenance decreased
$1.3 million due to the sale of generation assets.

CMP Group's  other  operations  expense  increased  by $2.7 million in the third
quarter of 1999 and $22.7 million year-to-date as compared to 1998. The increase
is due primarily to the  consolidation  of its  subsidiaries  as of September 1,
1998,   which  accounts  for   approximately   $24.0  million  of  the  increase
year-to-date.  The majority of the increase  ($21.4  million) is associated with
Union Water-Power Company.

Federal and state income taxes fluctuate with the level of pre-tax  earnings and
the regulatory  treatment of taxes by the MPUC.  This expense  decreased by $4.9
million and  increased by $11.6  million,  respectively,  for the quarter  ended
September  30, 1999,  and year to date compared to the same period in 1998, as a
result of lower  pre-tax  earnings  for the third  quarter,  but higher  pre-tax
earnings for the nine-month period. The effective tax rate for the quarter ended
September 30, 1999 was 47.5 percent and 43.6 percent year to date.  The increase
for the  quarter is due to the  reversal  of book  interest  expense  related to
carrying costs on the deferred gain on sale of generating  assets,  which is not
deductible for tax purposes.

Other Income and Expense

Equity in Earnings  of  Associated  Companies  for CMP Group  decreased  by $5.4
million  through  September  30, 1999 as compared to 1998.  This decrease is due
primarily to losses  associated  with NEON of $7.7  million,  which is an equity
investment of MaineCom, a CMP Group subsidiary.

The decrease in gain on sale of investments  and properties of $19.9 million and
$6.9  million for the three and nine month  periods  ended  September  30, 1999,
respectively,  is due  primarily  to the  sale in 1998 of  MaineCom's  ownership
interest in New England  Fiber and the sale of  transmission  line  right-of-way
access to a gas-pipeline project. Year to date September 1999 gains include $5.1
million of gain associated with Union  Water-Power  Company's sale of generating
assets,  and $6.1 million on total gains on sale of easements  for Central Maine
and MEPCO.

Long-term  debt  interest  expense  decreased by $5.9 million and $9.2  million,
respectively,  for the third  quarter of 1999 and  year-to-date,  as compared to
1998.  The decrease is due to the  repurchase of mortgage  bonds with asset sale
proceeds.

Other  Interest  Expense  increased by $4.7 million  during the third quarter of
1999 and $14.0 million  year-to-date  as compared to 1998.  The increase was due
primarily to interest  accruing to ratepayers of $10.8 million  associated  with
the deferred gain of $519.3 million relating to Central Maine's generation asset
sale to FPL and $4.0 million due to the interest  expense on the settlement of a
tax liability for tax years 1992 to 1994 with the IRS.

Other  income  increased  $2.2  million  in the third  quarter  of 1999 and $8.7
million  year-to-date  over the same  period in 1998 due  primarily  to interest
income associated with proceeds from the generation asset sale.

Year-to-date  preferred stock dividends were reduced by $1.1 million as compared
to 1998 due to redemptions involving several series of preferred stock.

Liquidity and Capital Resources

Increases in Central  Maine's  retail rates are limited by Central  Maine's ARP.
For a discussion of the ARP, see Note 3, "Regulatory Matters," "Alternative Rate
Plan" of CMP Group and Central Maine's Form 10-K for the year ended December 31,
1998.

Approximately  $96.9  million of cash was provided  during the nine months ended
September  30,  1999,  from  net  income  before   non-cash   items,   primarily
depreciation,  amortization  and  deferred  income  taxes.  During  that  period
approximately  $51.2 million of cash was used for fluctuations in certain assets
and liabilities and from other operating  activities.  In addition $23.1 million
of incremental power costs was incurred due to the sale of generation assets and
$12.2 million was provided due to the gain on sale of investments of properties.

Investing  activities provided  approximately $556.2 million for the nine months
ended  September  30, 1999.  The $556.2  million is comprised of the  following:
proceeds of $851 million from the generation assets sale,  utilization of $249.2
for tax payments and $17.9 for selling  expenses  associated with the generation
asset  sale,  proceeds  of  $14.0  million  from  the  sale of  investments  and
properties,  along with construction expenditures,  which utilized $41.7 million
in  cash  for  the  nine  months  ended   September  30,  1999  for  generation,
transmission,  distribution,  and general construction expenditures. In order to
accommodate  existing and future loads on its electric  system  Central Maine is
engaged  in  a  continuing  construction  program.  Central  Maine's  plans  for
improvements and expansions,  its load forecast 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, the timing
of its  divestiture  of its  generating  assets,  customer  growth  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 nine months ended  September  30, 1999,  CMP Group paid  dividends on
common stock of $21.9 million and preferred-stock dividends of $1.8 million.

At the 1997 annual meeting of the  stockholders  of Central Maine the holders of
Central  Maine's  outstanding  preferred stock consented to the issuance of $350
million in principal amount of Central Maine's  medium-term notes in addition to
the $150 million in  principal  amount to which they had  previously  consented.
This  expansion  of the  medium-term  note program was  implemented  to increase
Central  Maine's  financing  flexibility in anticipation  of  restructuring  and
increased  competition.  On September 30, 1999, Central Maine had $70 million of
its medium-term notes outstanding.

To support its short-term capital  requirements,  in October 1996, Central Maine
entered  into  a  $125  million  Credit  Agreement  with  several  banks,   with
BankBoston, N.A., and The Bank of New York acting as agents for the lenders. The
arrangement  originally  had  two  credit  facilities:  a $75  million,  364-day
revolving  credit facility and a $50-million,  3-year revolving credit facility.
Effective  December 15, 1998, the banks'  commitments under the 364-day facility
were reduced  from $75 million to $25 million by  agreement of the parties,  and
other  provisions  were amended to reflect the  reorganization  of Central Maine
into a  holding-company  structure  and recognize  other changed  circumstances.
Central Maine had no outstanding notes as of September 30, 1999 under the credit
facilities, and the facilities were terminated on October 21, 1999.

On May 10,  1999,  Central  Maine  redeemed  its last two series of General  and
Refunding Mortgage Bonds. On July 27, 1999, Central Maine discharged its General
and Refunding Mortgage Indenture, leaving no class of secured debt outstanding.

On August 20, 1999,  Central Maine  restructured a purchased-power  contract for
energy and capacity from a wood-fired plant in Athens,  Maine.  This transaction
is  estimated  to save  Central  Maine's  customers  $9.9 million in net present
value.

Proposed Merger

On June 14, 1999, CMP Group and Energy East, a New York holding company which is
an energy  delivery,  products and services  company doing business in New York,
Massachusetts, Maine and New Hampshire, 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 (the "Merger  Agreement"),  providing
for a merger transaction among CMP Group, Energy East and EE Merger Corp.

Pursuant to the Merger  Agreement,  EE Merger Corp. will merge with and into CMP
Group  (the  "Merger"),  with CMP Group  being  the  surviving  corporation  and
becoming  a  wholly-owned  subsidiary  of Energy  East.  The  Merger,  which was
unanimously  approved by the respective boards of directors of CMP Group, Energy
East and EE  Merger  Corp.,  is  expected  to  occur  shortly  after  all of the
conditions to the consummation of the Merger,  including the receipt of required
regulatory  approvals,  are  satisfied.  CMP Group  expects  that  decisions  of
regulatory  agencies can be obtained by  mid-2000.  CMP Group filed its petition
for  approval  of the  merger  with  the  MPUC on July 1,  1999,  and  requested
expedited  consideration to assure receipt of approval on or before December 31,
1999.

Under the terms of the Merger  Agreement,  each  outstanding  share of CMP Group
common stock,  $5.00 par value per share (the "CMP Group Common  Stock"),  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
(the "Merger  Consideration").  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. Approvals of the MPUC, the Connecticut DPUC,
the SEC under the Public Utility Holding Company Act of 1935, as amended,  FERC,
the NRC and the FCC are necessary.  Filings of the requisite  notifications with
the  Federal  Trade   Commission   and  the  Department  of  Justice  under  the
Hart-Scott-Rodino  Antitrust  Improvements  Act of  1976,  as  amended,  and the
expiration  of the  associated  waiting  period are also  required.  CMP Group's
shareholders  approved the Merger at a special  meeting on October 7, 1999.  For
further discussion of the Merger Agreement,  see our Form 10-Q for the quarterly
period ended June 30, 1999.

"Year 2000" Computer Issues

The "Year 2000 problem" arose because many computer  programs have used only the
last two digits to refer to a year.  Therefore  those  computer  programs do not
properly recognize a year that begins with "20" instead of the familiar "19". If
not  corrected,  many  computer  applications  could  fail or  create  erroneous
results, with potentially serious and widespread adverse consequences.

CMP  Group,  through  Central  Maine,  began its Year 2000  problem  remediation
efforts in 1996,  and since that time has  developed  and executed a broad-based
and  comprehensive  project  plan for  addressing  Year  2000  issues.  The plan
includes both Information  Technology ("IT") and non-IT systems,  addresses both
centralized and distributed  systems,  and encompasses  systems  critical to the
transmission  and  distribution  of electric  energy as well as the  traditional
business systems necessary to the CMP Group System.

CMP Group has met the  target  date for  systems  critical  to the  delivery  of
electric power.  CMP Group reported to the North American  Electric  Reliability
Council  (NERC)  at the end of June  1999 that all  "mission  critical"  systems
(those  systems  essential to the delivery of power to customers)  had been made
Year 2000  ready.  This  target had been  established  at the  direction  of the
Department of Energy.  Utility  progress in achieving this goal has been tracked
by NERC. CMP Group reported to NERC on a monthly basis, as required, from August
1998 through the final report delivered at the end of June 1999.

CMP  Group  has  also  completed  remediation  efforts  for all of its  internal
technology  infrastructure  systems.  All  components  and  systems  required to
support telephone,  radio,  microwave and fiber optics  communications have been
readied for Year 2000.  In  addition,  Year 2000  readiness  is complete for all
hardware and system  software in the company's  mainframe,  client  server,  and
local and wide area network  environments.  Remediation and testing of mainframe
and distributed  application  systems has been completed with the exception of a
few non-critical  applications dependent on vendor upgrades. These upgrades have
been received and are in process for implementation. Completion is scheduled for
mid-November 1999.

In addition to the internal Year 2000 readiness  activities discussed above, CMP
Group  continues  to  actively  participate  in a  joint  ISO/NEPOOL  initiative
designed to assess,  and assure,  power reliability within the NEPOOL area. This
initiative encompasses all participants, including Central Maine, within the New
England area.

CMP Group also has an active  program in place to identify  and  address  issues
associated with external suppliers. The program addresses business relationships
with all external  suppliers,  but focuses on those suppliers deemed critical to
CMP Group's business. At this time CMP Group has no indication that any external
supplier  with which CMP Group has a material  relationship  is expecting a Year
2000-related  business   interruption.   Some  vendors  are  reporting  slightly
increased lead times as a result of inventory build up within the industry.  CMP
Group will continue to monitor and assess its external supplier relationships.

CMP Group estimates it will incur approximately $4.1 million of costs associated
with  making  the  necessary  modifications  identified  to  date  to  both  the
centralized and non-centralized systems. As of September 30, 1999, approximately
$3.8 million of such costs has been incurred. Some of these costs are associated
with the generation facilities sold to FPL Energy on April 7, 1999.

CMP Group recognizes that failure to correct problems  associated with Year 2000
issues has the potential to result in material  operational  and financial risks
if the affected systems either cease to function or produce  erroneous  results.
Such risks  could  include  disruptions  in the  operation  of  Central  Maine's
transmission and distribution  systems, an inability to access  interconnections
with other utilities,  and disruptions to Central Maine's major business systems
(customer information and service, administrative, financial).

Central  Maine  believes,  however,  that the most  likely  worst-case  scenario
resulting from these risks would be a temporary,  and short-term,  disruption of
electric  service.  This could occur  either as a failure on the part of Central
Maine to successfully address all critical Year 2000 issues, as a failure on the
part of a critical  third-party  provider,  or as a failure on the part of other
entities,  including  ISO-New England,  to successfully  maintain the short-term
reliability of power supply and delivery on a regional basis. Central Maine does
not expect that any such  short-term  service  disruption  would have a material
impact on its operations, liquidity, or financial condition.

In order to minimize these risks,  and the potential  recovery  time,  from Year
2000  problems,  CMP Group is actively  involved  in  contingency  planning  and
execution  of those  plans.  Although  CMP Group  has  extensive  knowledge  and
specific  experience  in  disaster/recovery  planning and  execution,  CMP Group
recognizes   the  importance  of  Year  2000  specific   contingency   planning.
Accordingly,  Central  Maine  is  participating  in the  integrated  contingency
planning  effort headed by NERC and the Northeast  Power  Coordinating  Council.
Further,  Central  Maine  has  completed  a  comprehensive  Year  2000  specific
contingency  plan  for  its  own  independent  operations.  This  plan  includes
provisions  for  additional   staffing   during  the  date  change  at  critical
substations, operations centers, and other key locations throughout the company.
Central Maine will be positioned to respond  rapidly to any situation that might
occur,  and will have staff prepared to confirm  functionality  of systems after
the date has changed.

CMP Group  believes  its plans are adequate to attain Year 2000  readiness,  and
that the contingency  plans currently under development both internally and at a
regional level should substantially mitigate the risks discussed above.

Storm  Damage  to  Company's   System  -  In  January  1998,  an  ice  storm  of
unprecedented  breadth and severity struck Central  Maine's  service  territory,
causing  power  outages for  approximately  280,000 of Central  Maine's  528,000
customers, and substantial widespread damage to Central Maine's transmission and
distribution   system.   To  restore  its  electrical   system,   Central  Maine
supplemented its own crews with utility and  tree-service  crews from throughout
the  northeastern  United  States  and the  Canadian  maritime  provinces,  with
assistance from the Maine national guard.

On January 15, 1998, the MPUC issued an order allowing Central Maine to defer on
its books the  incremental  non-capital  costs  associated  with Central Maine's
efforts to restore  service in response to the damage  resulting from the storm.
In October 1998, the MPUC staff issued a report of its summary  investigation of
the Maine  utilities'  response to the ice storm.  The report found no basis for
formal adjudicatory investigation into the response and supported the utilities'
actions.  Based on the MPUC order, Central Maine deferred $53.3 million in storm
related  costs as of  September  30,  1999,  including  $3.4 million of carrying
costs.

In the spring of 1998  congress  appropriated  $130  million for  Presidentially
declared  disasters  in 1998,  including  storm-damage  cost  reimbursement  for
electric utilities.  On November 5, 1998 the United States Department of Housing
and Urban  Development  ("HUD")  announced that of those funds, $2.2 million had
been awarded to Maine,  with none designated for utility  infrastructure,  which
Central Maine and the Maine Congressional delegation protested as inadequate and
inconsistent  with  Congressional  intent. On March 23, 1999, HUD announced that
Maine would receive an additional $2.15 million and HUD  subsequently  announced
that  another  $17 million  would be  available  for Maine.  On October 6, 1999,
Central Maine received payment in the amount of $19.6 million from HUD. The MPUC
has stated its belief that Central Maine's  prudently  incurred  ice-storm costs
should be recovered  through rates  commencing March 1, 2000, but deferred final
action pending the determination of the amount of federal reimbursement.

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.  As  reported  in detail in
Central Maine's Annual Report on Form 10-K for the year ended December 31, 1998,
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 on October 21, 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 Maine  Yankee's
Amendatory  Agreements,   rates  and  issues  concerning  the  prudence  of  the
Plant-shutdown decision for hearing.

After the filing of the rate request  Maine  Yankee and 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
(the "Settling Parties"), engaged in extensive discovery and negotiations, which
resulted  in a  settlement  agreement  filed by those  parties  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 settlement  constitutes a full settlement of all issues raised
in the consolidated 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 provides for Maine Yankee to collect $33.1 million in the
aggregate  annually,  effective August 1, 1999,  including both  decommissioning
costs and  ISFSI-related  costs.  The  original  filing with FERC on November 6,
1997,  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  has  been  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 in
the settlement  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 will  continue  to recover  its Maine
Yankee costs in accordance  with its most recent ARP order from the MPUC without
any adjustment reflecting the outcome of the FERC proceeding. To the extent that
Central Maine  collected from its retail  customers a return on equity in excess
of the  6.50  percent  contemplated  by the  settlement,  no  refunds  would  be
required,  but such excess  amounts  would be credited to the  customers  to the
extent required by the ARP.

Finally, a major provision of the Maine Agreement requires the Maine owners, 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  $31.16  million  for the  period.  The  Maine
Agreement,  which was approved by the MPUC on December 22, 1998,  also set forth
the methodology for calculating such replacement power costs.

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,  and has  eliminated  significant  uncertainties
concerning CMP Group's and Central Maine's future financial performance

Other Maine Yankee Shareholders.  Periodically-higher nuclear-related costs have
affected  the  financial  condition  of other  stockholders  of Maine  Yankee in
varying  degrees.  A default by a Maine Yankee  stockholder  in making  payments
under its Power  Contract  or  Capital  Funds  Agreement  could  have a material
adverse effect on Maine Yankee,  depending on the magnitude of the default.  CMP
Group and Central  Maine  cannot  predict,  however,  what  effect,  if any, the
financial  and  regulatory   difficulties   experienced  by  some  Maine  Yankee
stockholders might have on Maine Yankee or Central Maine.

Regulatory Matters and Electric-Utility Industry Restructuring

Alternative Rate Plan - On March 15, 1999,  Central Maine submitted its 1999 ARP
compliance  filing to the MPUC.  In the filing  Central Maine  recommended  that
rates remain unchanged for the period July 1, 1999 to February 29, 2000. On July
13,  1999,  the MPUC  issued an order  which  provided  for no increase in rates
effective July 1, 1999. In a related matter,  on August 2, 1999, the MPUC issued
an order  regarding  the  treatment of gains on the sale of easements by Central
Maine in late 1998 and early 1999. The order allocated 90 percent of the benefit
of the proceeds from the sale of the  easements to ratepayers  and 10 percent to
shareholders,  with the  ratepayer  portion  being  amortized  over a  five-year
period.  Central Maine requested  reconsideration  of the order. As of September
30,  1999,  approximately  $9.4  million of the gain would be  deferred  and net
income reduced accordingly,  if the MPUC position should prevail.  Central Maine
believes  that both under Maine legal  precedent  and under the terms of the ARP
these gains should be recognized as of the time the property was sold and should
accrue  to the  benefit  of  shareholders,  and  intends  to  contest  the order
vigorously.

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,
except that 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  whether or not such savings are achieved.
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 costs would be  recoverable,  not the entire $3 million  non-cumulative
cost  recoverable  under the current ARP.  Also, the rate of return on equity of
10.5  percent  already  established  by the  MPUC  would  be the  basis  for the
earnings-sharing  bandwidth,  and not the 11.5 percent under the ARP. ARP2000 is
subject to MPUC approval. For a detailed description of the current ARP, see our
Form 10-K for the twelve months ended December 31, 1998.

Stranded  Costs.  The  enactment  by Congress  of the Energy  Policy Act of 1992
accelerated  planning by electric  utilities,  including  Central  Maine,  for a
transition  to a more  competitive  industry.  In Maine,  legislation  that will
restructure the  electric-utility  industry on March 1, 2000, was enacted by the
Maine  Legislature  in May 1997,  and is  discussed in detail under this heading
below.  Such a departure  from  traditional  regulation,  however,  could have a
substantial impact on the value of utility assets and on the ability of electric
utilities to recover their costs through rates. In the absence of full recovery,
utilities   would  find  their   above-market   costs  to  be   "stranded",   or
unrecoverable, in the new competitive setting.

Central Maine has substantial  exposure to cost stranding  relative to its size.
In general,  its  stranded  costs  reflect the excess  costs of Central  Maine's
purchased-power obligations over the market value of the power, and the costs of
deferred  charges  and other  regulatory  assets.  The major  portion of Central
Maine's  stranded  costs is related  to  above-market  costs of  purchased-power
obligations arising from Central Maine's long-term,  noncancelable contracts for
the purchase of capacity  and energy from NUGs,  with lesser  estimated  amounts
related to Central Maine's deferred regulatory assets.

Maine  Restructuring  Legislation.  The  1997  Maine  restructuring  legislation
requires the MPUC, when retail access to generation  begins on March 1, 2000, to
provide a "reasonable  opportunity" to recover  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.  Stranded costs are defined as the legitimate, verifiable
and  unmitigable  costs  made  unrecoverable  as a result  of the  restructuring
required by the legislation.  Central Maine's  recoverable  amount and timing of
recovery  will be  determined  by the MPUC in the  second  phase of the  ongoing
proceeding  discussed  under the heading  "MPUC  Proceeding  on Stranded  Costs,
Revenue Requirements, and Rate Design," below.

The principal restructuring  provisions of the legislation provide 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 continuing to be regulated by the MPUC.
By that date,  subject to  possible  extensions  of time  granted by the MPUC to
improve  the sale  value of  generation  assets,  investor-owned  utilities  are
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 does, however, require investor-owned utilities,  after February
29, 2000,  to sell their  rights to the capacity and energy from all  undivested
generation assets,  including nuclear generation assets and the  purchased-power
contracts that had not  previously  been divested  pursuant to the  legislation,
with certain immaterial exceptions.  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 the bids were received
by October 1, 1999. The proposed  successful bids were submitted to the MPUC for
approval on November 8, 1999.

Upon the  commencement  of retail access on March 1, 2000,  Central Maine,  as a
transmission-and-distribution  utility, will be prohibited from selling electric
energy  to  retail  customers.  Any  competitive  electricity  provider  that is
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 within Central Maine's
service territory,  as determined by the MPUC. CMP Group has stated that it does
not intend to engage in the sale of electric energy after March 1, 2000.

For a summary of other provisions of the 1997 legislation, see the Annual Report
on Form 10-K of CMP Group and Central Maine for the twelve months ended December
31, 1998.

MPUC Proceeding on Stranded Costs,  Revenue  Requirements,  and Rate Design.  By
order dated March 19, 1999, the MPUC completed the first phase of the proceeding
contemplated by Maine's restructuring legislation that will ultimately determine
the recoverable amount and timing of Central Maine's stranded costs, its revenue
requirements,  and the design of its rates to be effective  when  Central  Maine
becomes a  transmission-and-distribution  utility at the time  retail  access to
generation  begins in Maine on March 1, 2000.  The MPUC  stressed in its Phase I
order  that it was  deciding  the  "principles"  by which it would  set  Central
Maine's  transmission-and-distribution  rates,  effective March 1, 2000, but was
deferring  calculating  the rates  themselves  until Phase II of the  proceeding
because such calculations at that time would rely excessively on estimates.

With respect to stranded costs,  the MPUC indicated that it would set the amount
of  recoverable  stranded  costs for Central Maine in Phase II of the proceeding
pursuant   to  its   mandate   under  the   restructuring   statute  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  include
definitive amounts, but did contain the MPUC's conclusions as to the appropriate
cost of  common  equity  for  Central  Maine as a  transmission-and-distribution
company beginning March 1, 2000. Central Maine had recommended a 12-percent cost
of common  equity  with a  55-percent  common  equity  component  in the capital
structure.  The MPUC  approved  a  common-equity  cost of 10.50  percent  with a
common-equity  component of 47 percent, and an overall  weighted-average cost of
capital of 8.68  percent.  In dealing with rate design,  the MPUC again  limited
itself in the first phase of the proceeding primarily to establishing principles
that would guide it in designing  Central Maine's rates to be effective March 1,
2000.

Central  Maine  submitted  its Phase II filing to the MPUC on July 1, 1999.  The
filing was  organized  into  sections  covering  revenue  requirements,  a sales
forecast,  stranded costs, and rate design, with updated information provided in
each area. As with Phase I, some of the  calculations  submitted in the Phase II
filing were still estimates, since some of the information that will provide the
basis for the MPUC's  decisions in the proceeding  was not yet  available.  This
information will include the results of the auctioning of Central Maine's energy
and  capacity  of nuclear  generation  assets and NUG  contracts  and the market
prices for electricity, including the standard-offer price, all of which Central
Maine  expects to be able to provide  the MPUC in an updated  filing in December
1999.

In a "bench analysis" issued on September 28, 1999, the MPUC Staff took no final
position on revenue  requirements,  stranded  costs or rate  design,  due to the
continued  unavailability  of the  NUG-contract-entitlement  and  standard-offer
auction  results,  but did recommend  disallowance of certain of Central Maine's
proposed expenses,  particularly in the operations and maintenance category. The
challenged costs fell largely in the areas of employee transition costs, payroll
and medical costs,  and certain  stranded  costs.  On October 12, 1999,  Central
Maine filed comments responsive to the bench analysis and to other issues raised
by intervenors in the proceeding,  asserting that such costs should be recovered
in rates and that  disallowance  by the MPUC would deprive  Central Maine of any
reasonable  opportunity  to earn its  10.5-percent  allowed  rate of  return  on
equity.

Central Maine's requested revenue requirement amount,  together with its interim
assumption  for  market   electricity   prices,   would  result  in  an  average
10.4-percent price decrease for its core rate customers effective March 1, 2000.
This amount is likely to change,  however,  as a result of the information to be
submitted  in the  December  filing and the MPUC's  decision on Central  Maine's
revenue requirements.

On  October  25,  1999,  the MPUC  issued  an order  rejecting  all the bids for
standard-offer  service in Central Maine's and Bangor  Hydro-Electric  Company's
service  territories,  finding them to be "unreasonably high." In its order, the
MPUC  initiated  a new  selection  process  and  indicated  that it  expected to
announce the results of the process by December 1, 1999.


<PAGE>



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  $217.8 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 will retain),  including  $2.0 million for Union
Water  assets.  The related book value of these assets was  approximately  $11.9
million.

Central Maine recorded a pre-tax  deferred gain of $519.4 million net of selling
costs and certain  non-normalized income tax impacts from the sale of generation
assets by  establishing  a regulatory  liability in the second  quarter of 1999,
which eliminated any income recognition. Central Maine also recorded curtailment
and special termination deferred charges of $8.1 million associated with pension
and postretirement benefit costs of employees leaving the company as a result of
the generation asset sale. These deferred charges, in the amount finally allowed
by the MPUC, will be amortized over a three-year  period beginning March 1, 2000
as required by the MPUC. In Phase II of the above described "MPUC  Proceeding on
Stranded Costs,  Revenue  Requirements and Rate Design," the MPUC will determine
the  amount of the  regulatory  liability  that will be used to reduce  stranded
costs  and the  utilization  and  timing  of the  recognition  of any  remaining
regulatory liability.

Central Maine also recorded a pre-tax  deferred gain  amounting to $30.8 million
to offset the income impact of the  flow-through  of unamortized  investment tax
credits and excess deferred taxes associated with the assets sold. Central Maine
has requested a private  letter  ruling from the IRS  regarding the  appropriate
treatment of these items as a result of directives from the MPUC.  Central Maine
is of the  opinion,  based on its  review of the rules  and  regulation  and IRS
rulings in similar situations,  that any unamortized  investment tax credits and
excess deferred taxes relating to the property sold become nonregulated property
at the time of sale. Central Maine believes that regulatory agencies, therefore,
are precluded  from  considering  these  unamortized  investment tax credits and
excess deferred tax reserves in establishing  regulated rates because they would
constitute a violation of the normalization  requirement of the Internal Revenue
Code.  The MPUC directed  Central Maine to seek the private ruling to be certain
in this case  whether  ratepayers  can  continue  to benefit  from these  excess
reserves.  Central  Maine does not know when the IRS will rule on its  requests,
but expects a ruling before the end of 1999.

Union  Water's net income  reflects a $3.7  million  increase  during the second
quarter of 1999 due to its  portion of the  proceeds  of the sale of  generation
assets  as  determined  by the MPUC.  Central  Maine is  appealing  to the Maine
Supreme  Judicial  Court the  imputation  of $13.2 million of value of the Union
Water assets to Central Maine.  The $13.2 million  imputation is included in the
Central Maine deferred gain of $519.4 million.

With the cash proceeds of the sale Central Maine  redeemed the remaining  $118.7
million of its outstanding General and Refunding Mortgage Bonds on May 10, 1999,
and paid at maturity  $47 million of its  medium-term  notes on May 4, 1999.  On
June 1, 1999,  Central Maine redeemed $180 million of its medium-term  notes, as
well as all of the  outstanding $10 million Town of Yarmouth  Pollution  Control
Revenue  Bonds,  which had been  issued in 1977 and 1978.  Approximately  $294.5
million of the  proceeds  will be required  for federal and state  income  taxes
resulting  from the sale and,  after  providing  for  closing  costs and  energy
purchases to meet power-supply obligations until the start of retail competition
on March 1, 2000,  Central  Maine expects to transfer the balance to its parent,
CMP Group.  Proceeds that have not been applied have been invested in accordance
with Central Maine's cash investment policy. Uses of the balance of the proceeds
are under consideration by CMP Group.

Accounting for the Effects of Certain Types of Regulation

Central Maine prepares its financial  statements in accordance with SFAS No. 71,
which  requires  rate-regulated  companies to reflect the effects of  regulatory
decisions in their  financial  statements.  Central  Maine has deferred  certain
costs  pursuant  to rate  actions  of the MPUC and  FERC and is  recovering,  or
expects to recover, such costs in electric,  transmission and distribution rates
charged to customers.

The FASB's EITF has addressed the  appropriateness  of continued  application of
SFAS No. 71 by entities in states that have  enacted  restructuring  legislation
similar to Maine's.  The EITF issued its  statement  No. 97-4  "Deregulation  of
Pricing  Electricity - Issues Related to the  Application of FASB  Statements 71
and 101",  which  concluded  that an entity should cease to apply SFAS 71 when a
deregulation  plan is in place and its  terms are  known.  With  respect  to the
generation portion of Central Maine's business,  this occurred during the second
quarter of 1999 with the completion of the sale of most of its generation assets
to FPL and the subsequent  development  of a compliance  filing with the MPUC in
Phase II of the ongoing MPUC proceeding on stranded costs,  revenue requirements
and rate design.  Effective June 30,1999, Central Maine adopted SFAS 101 for the
generation  segment  of its  business.  SFAS 101  requires  a  determination  of
impairment of plant assets under SFAS 121, and the elimination of all effects of
rate regulation  that have been recognized as assets and liabilities  under SFAS
71.

Central Maine performed impairment tests on its two operating nuclear generation
facilities,  Millstone  3 and  Vermont  Yankee,  on a  plant-specific  basis and
determined  that $78.9  million was impaired as of September  30,1999.  Impaired
value is the excess of net plant investment at September  30,1999 over the value
of net cash flows during the remaining lives of the investments. Annual net cash
flows were determined by subtracting  estimated generation sustenance costs from
the  estimated  market  value of power from the plants.  The MPUC in its Phase I
order dated March 19,1999 in its ongoing  proceeding on stranded costs,  revenue
requirements and rate design provided for future recovery of nuclear  generation
and  other  generation-related  stranded  costs.  Central  Maine  established  a
regulatory asset as of September 30, 1999 for $78.9 million consistent with that
order associated with the two operating nuclear  investments.  As a result there
is no income impact from these impairment  tests, but rather  recognition of the
future obligation and regulatory asset on the balance sheet.

Central Maine has long-term  power-purchase contracts requiring payment of above
anticipated  market rates from NUGs.  The estimate of  above-market  payments is
approximately $800 million. The costs associated with these NUG contracts remain
a  regulated  obligation  of  the  transmission-and-distribution  company  as  a
statutory  requirement  and have been  provided  for by the MPUC in its  revenue
requirement determination in Phase I of the above-mentioned proceeding.

Central  Maine  believes  that  its  electric   transmission   and  distribution
operations  continue  to meet the  requirements  of SFAS 71 and that  regulatory
assets associated with those operations as well as any generation-related  costs
that the MPUC has determined to be  recoverable  from  ratepayers  also meet the
criteria.  At September 30, 1999 $853.5  million of regulatory  assets remain on
Central Maine's books.  Approximately $214.4 million will be charged against the
estimated  deferred gain and associated  carrying costs through March 1, 2000 of
$548.6 million resulting from the generation asset sale while the remainder will
be  amortized  over  periods  to be  determined  by the  MPUC in Phase II of the
above-mentioned proceeding.

Tax Settlement

In  September  1997  Central  Maine  received  a notice of  deficiency  from the
Internal  Revenue  Service  ("IRS") as a result of its audit of Central  Maine's
federal  income tax  returns  for the years 1992  through  1994.  There were two
significant  adjustments  among  those  proposed  by the IRS.  The  first  was a
disallowance of Central Maine's write-off of the under-collected balance of fuel
and  purchased-power  costs and the unrecovered balance of its unbilled Electric
Revenue Adjustment  Mechanism  ("ERAM") revenues,  both as of December 31, 1994,
which had been charged to income in 1994 in connection  with the adoption of the
ARP effective  January 1, 1995. The second major adjustment  disallowed  Central
Maine's 1994 deduction of the cost of the buyout of the Fairfield Energy Venture
("FEV") purchased-power contract.

In December  1997 Central  Maine filed a petition in the United States Tax Court
contesting the entire amount of the  deficiencies.  Subsequently,  Central Maine
sought  review  of the  asserted  deficiencies  by an  IRS  Appeals  Officer  to
determine  whether all or part of the dispute  could be resolved in advance of a
court determination.

In June 1999,  the IRS  Appeals  Officer  and Central  Maine  reached  agreement
resolving  all issues.  Under the  proposed  agreement  the ERAM  component  was
allowed  as  fully  deductible  in  1994,  while  $24  million  of the  fuel and
purchased-power  costs was deemed to be deductible in 1994 and the remaining $30
million deductible in 1995. The parties also agreed to increase the tax basis of
the FEV plant from $2 million to $11 million,  to be depreciated  over 20 years,
and that the  remaining FEV contract  buyout costs would be fully  deductible in
1994.

As a result of the  settlement,  Central  Maine made payments to the IRS and the
State of Maine totaling $11.8 million for the 1992 to 1994 tax deficiencies,  as
well  as $6.0  million  in  associated  interest.  Substantially  all of the tax
impacts were normalized, as Central Maine will be deducting any disallowed costs
for tax purposes in future years. The net impact of the tax and interest true-up
for all the years under  consideration  reduced net income in the second quarter
of 1999 by $0.6 million due primarily to interest  expense.  Of the $6.0 million
interest  payment,  approximately  $1 million was previously  accrued,  and $1.8
million associated with the FEV facility was deferred consistent with regulatory
practice. Interest income of $2.5 million was accrued for the years 1995 through
September 1999.

Due to the materiality of the amounts involved,  approval of the settlement from
the  Congress's  Joint  Committee on Taxation is required and is being sought by
the IRS.

Expansion of Lines of Business

General.  CMP  Group  has been  expanding  its  business  opportunities  through
investments that capitalize on core competencies.  CMP International Consultants
(d/b/a  CNEX),  a wholly owned  subsidiary  of CMP Group,  provides  management,
planning,  consulting  and  research  and  information  services  to foreign and
domestic utilities and government agencies.

TeleSmart,  a wholly owned subsidiary of CMP Group, provides accounts receivable
management services for utility clients.

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  commercial  and  residential  real  estate
development services (UnionLand Services and Maine HomeCrafters divisions).

Natural Gas Distribution.  New England Gas Development Corporation ("New England
Gas"),  which is a wholly owned subsidiary of CMP Group,  holds  approximately a
twenty-two  percent interest in CMP Natural Gas, L.L.C. ("CMP Natural Gas"). CMP
Natural Gas is a joint venture of New England Gas and Energy East Enterprises, a
wholly owned subsidiary of Energy East. CMP 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, and began providing service to customers in
May 1999,  utilizing  natural gas  delivered  to Maine  through  new  interstate
pipeline facilities.

CMP 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,  CMP  Natural  Gas and  Calpine  Corporation,  a  California-based
independent  power company,  announced the signing of a 20-year contract for CMP
Natural  Gas to provide  natural  gas  delivery  service to  Calpine's  proposed
540-megawatt  natural  gas-fired  power plant under  construction  in Westbrook,
Maine. CMP Natural Gas expects to commence service to the plant by June 1, 2000,
after MPUC approval and  construction  of a two-mile  lateral  pipeline along an
existing  Central  Maine  right  of way  that  would  interconnect  with the new
interstate  pipeline  facilities.  In a report dated  November 2, 1999, the MPUC
hearing  examiner  recommended  that CMP  Natural Gas be  authorized  to provide
service  to  the  Calpine   plant,   as  well  as  the  unserved  areas  in  the
municipalities  of  Westbrook  and Gorham,  which would  increase  the number of
municipalities  in Maine in which CMP Natural Gas is  authorized to serve to 37.
The decision by the MPUC is scheduled for November 15, 1999.

If the merger of CMP Group and Energy  East is  completed,  CMP Natural Gas will
become a wholly owned subsidiary of Energy East Enterprises, and New England Gas
will  cease to exist.  In April  and  June,  1999,  Energy  East also  agreed to
business combinations with two established natural gas distribution companies in
Connecticut,  subject to closing  conditions,  including  shareholder  votes and
regulatory approvals.

Telecommunications.  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 owns 38.5 percent of
the common stock of NorthEast  Optic Network,  Inc.  ("NEON"),  which  develops,
constructs,  owns and  operates a fiber optic  telecommunications  system in New
England and New York. NEON is currently expanding its fiber optic network in New
England  and  New  York,  utilizing  primarily  electric-utility  rights-of-way,
including  some of Central  Maine's  in Maine and some  owned by other  electric
utilities  including   Northeast   Utilities,   another   substantial   minority
stockholder.  NEON is creating a  continuous  fiber optic link  between New York
City and  Portland,  Maine,  with access  into and around  Boston and most major
cities in New England.  On July 13, 1999,  NEON  announced that it had activated
its first  high-capacity  carrier  circuit into the borough of Manhattan,  which
NEON  said  fulfilled  its  goal  of  providing   carrier  customers  with  such
high-capacity facilities into the New York City market before the end of 1999.

On August 5, 1998, NEON completed  initial public  offerings of $48.0 million of
common stock and $180.0 million of senior notes,  and Central Maine,  as part of
the  common-stock  offering,  sold some of the  shares in NEON it then owned for
proceeds of approximately $3.1 million.  In addition,  with some of the proceeds
of the offering NEON repaid approximately $18 million Central Maine had advanced
under an earlier  construction  loan  agreement.  CMP Group  believes there is a
growing  need for such a fiber optic  network in the  Northeast  and that NEON's
outside financing will provide substantial assistance in completing construction
of the network, but cannot predict the results of this venture.

Environmental Matters

CMP Group  and its  subsidiaries  assess  compliance  with laws and  regulations
related to hazardous substance remediation on an ongoing basis. At September 30,
1999,  Central  Maine had an accrued  liability of $3.0 million for  remediation
costs at  various  sites.  The costs at  identified  sites may be  significantly
higher if, among other things,  other  potentially  responsible  parties are not
financially  able to contribute to these costs or identified  possible  outcomes
change.  See Note 4, "Commitments and  Contingencies."  "Legal and Environmental
Matters" for further discussion of this subject.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Central Maine 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 September
30, 1999,  Central Maine had $70 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                9.27%                          5.57%

Balance at September 30, 1999      $34,177                       $196,205

Maturity Period                   2001-2019                     2000-2021


<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 will  determine  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  Operation,"  "Proposed  Merger,"  and "MPUC  Proceeding  on Stranded  Costs,
Revenue  Requirements  and  Rate  Design,"  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 4,
"Commitments  and   Contingencies"  -  "Wyman  No.  4  Arbitration,"   which  is
incorporated herein by reference.

Tax Settlement - For a discussion of Central  Maine's  settlement of significant
federal income tax adjustments see Note 4,  "Commitments  and  Contingencies"  -
"Tax Settlement."

Environmental  Matters  -  For  a  discussion  of  administrative  and  judicial
proceedings   concerning   cleanup  of  hazardous  waste  sites,   see  Note  4,
"Commitments and  Contingencies,"  "Legal and  Environmental  Matters," which is
incorporated herein by reference.

Item 2. and Item 3. Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

A special meeting of the  stockholders of CMP Group was held on October 7, 1999.
Proxies for the meeting  were  solicited  pursuant  to  Regulation  14 under the
Securities  Exchange  Act of 1934.  The meeting did not involve the  election of
directors.

The only matter  voted on at the meeting  was  approval of the Merger  Agreement
among CMP Group,  Energy East,  and EE Merger  Corp.  The Merger  Agreement  was
approved, with the following vote tabulations:

         Votes for - 25,305,650
         Votes against - 515,291
         Abstentions - 209,756

Item 5. Not Applicable.

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:  November 10, 1999       By _____________________________________
      --------------------
                                 David E. Marsh, Chief Financial Officer
                                 (Principal Financial Officer and duly
                                 authorized officer)



                               CENTRAL MAINE POWER COMPANY



Date:  November 10, 1999       By _____________________________________
      --------------------
                                 Michael W. Caron, Comptroller (Chief
                                 Accounting Officer and duly authorized officer)