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 March 31, 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 May 12, 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





                                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 March 31, 1999 and 1998                                            5

   Consolidated Balance Sheet - March 31, 1999 and December 31, 1998:
     Assets                                                                 6
     Stockholders' Equity and Liabilities                                   7

   Consolidated Statement of Cash Flows for the Three Months
   Ended March 31, 1999 and 1998                                            8

Central Maine Power Company
   Consolidated Statement of Earnings for the Three Months
   Ended March 31, 1999 and 1998                                            9

   Consolidated Balance Sheet - March 31, 1999 and December 31, 1998:
     Assets                                                                10
     Stockholders' Equity and Liabilities                                  11

   Consolidated Statement of Cash Flows for the Three Months
   Ended March 31, 1999 and 1998                                           12

Notes to Consolidated Financial Statements                                 13

Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations                                        25

Item 3 - Quantitative and Qualitative Disclosures About Market Risk        39

Part II.  Other Information                                                40

Signatures                                                                 42





                                    GLOSSARY




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

     Term                                         Definition

Form 10-K                      Annual Report on Form 10-K

ARP                            Alternative Rate Plan

APB                            Accounting Principles Board

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

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

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

CERCLA                         Comprehensive Environmental Response, Compensa-
                               tion, 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 utility  consulting
                               (domestic and international) and research.

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

EITF                           Emerging Issues Task Force of FASB

Energy East                    Energy East Corporation,  a New York holding
                               company and the parent company of NYSEG effective
                               May 1, 1998

EPA                            United States Environmental Protection Agency.

EPS                            Earnings per share

ERAM                           Electric Revenue Adjustment Mechanism

FASB                           Financial Accounting Standards Board

FERC                           Federal Energy Regulatory Commission

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

IRS                            United States Internal Revenue Service

ISO                            Independent System Operator

Kwh                            Kilowatt-hour

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

MainePower                     A wholly owned subsidiary of CMP Group created in
                               September 1998.

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.

MRS                            Monitored Retrievable Storage

Moody's                        Moody's Investors Service

MPUC                           Maine Public Utilities Commission

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

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.

OI                             Nuclear Regulatory Commission's Office of
                               Investigations

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
SFAS                           Statement of Financial Accounting Standards

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.

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

Vermont Yankee                 Vermont Yankee Nuclear Power Corporation.

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

Yankee Atomic                  Yankee Atomic Electric Company








                         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 March  31,  1999,  and the  Consolidated  Statement  of  Income  and
Consolidated Cash Flows for the periods ended March 31, 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  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 March 31,
                                                                      1999          1998
Revenues
     Electric operating revenues                                   $270,694       $248,745
     Other non-utility revenues                                       5,939            697
                                                                    -------        -------
        Total Revenues                                              276,633        249,442
                                                                    -------        -------

Operating Expenses
     Fuel used for company generation                                 8,947          4,072
     Purchased power
        Energy                                                       94,475        104,295
        Other (capacity)                                             22,774         24,376
     Other operation                                                 53,204         45,774
     Maintenance                                                      8,274         10,115
     Depreciation and amortization                                   14,672         13,822
     Taxes other than income taxes                                    7,405          7,054
                                                                    -------        -------
        Total Operating Expenses                                    209,751        209,508
                                                                    -------        -------

Operating Income                                                     66,882         39,934
                                                                     ------         ------

Other Income (Expense)
     Equity in earnings of associated companies                      (2,979)         1,591
     Allowance for equity funds used during construction                192            174
     Other, net                                                       1,235            636
     Minority interest in consolidated net income                     (625)           (48)
     Gain on sale of investments and properties                       7,011            (1)
                                                                    -------        -------
        Total Other Income (Expense)                                  4,834          2,352
                                                                    -------        -------

Interest Charges
     Long-term debt                                                  10,553         10,850
     Other interest                                                   1,380          1,676
     Allowance for borrowed funds used during construction             (137)          (127)
                                                                     ------         -----
        Total Interest Charges                                       11,796         12,399
                                                                     ------         ------

Income Before Income Taxes and Preferred Dividends                   59,920         29,887
     Income taxes                                                    25,744         11,592
     Dividends on Preferred Stock of Subsidiary                         919          1,897
                                                                    -------        -------
Net Income                                                         $ 33,257       $ 16,398
                                                                    =======        =======

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                           32,442,552     32,442,752

Earnings Per Share Of Common Stock - Basic                            $1.03          $0.51
Earnings Per Share Of Common Stock - Diluted                          $1.02          $0.51

Dividends Declared Per Share Of Common Stock                         $0.225         $0.225

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





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

                                  ASSETS           March 31,     December 31,
                                                        1999            1998
                                                  (Unaudited)
Current Assets
    Cash and cash equivalents                       $    33,122    $    30,540
    Accounts receivable, less allowance for 
    uncollectible accounts of
    $2,994 in 1999 and $2,507 in 1998
       Service   - billed                                83,625         81,169
                 - unbilled                              46,649         53,296
       Other accounts receivable                         14,805         13,753
    Inventories, at average cost
       Fuel oil                                           4,894          5,879
       Materials and supplies                            12,853         13,126
    Funds on deposit with trustee                             1              1
    Prepayments and other current assets                  9,774         10,268
                                                     ----------     ----------
          Total Current Assets                          205,723        208,032
                                                     ----------     ----------

Electric Property, at original cost                   1,756,311      1,750,837
    Less: Accumulated depreciation                      704,214        694,410
                                                     ----------     ----------
          Net electric property in service            1,052,097      1,056,427
                                                      ---------      ---------

    Construction work in progress                        20,445         19,538
    Nuclear fuel                                          1,833          1,147
                                                     ----------     ----------
          Total net electric property                 1,074,375      1,077,112

Investments In Associated Companies, at equity           69,013         71,880
                                                    -----------    -----------
    Total Net Electric Property and Investments
    in Associated Companies                           1,143,388      1,148,992

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned
    projects, net                                        77,167         78,539
    Yankee Atomic purchased-power contract                6,643          7,761
    Connecticut Yankee purchased-power contract          28,950         29,913
    Maine Yankee purchased-power contract               268,828        273,895
    Regulatory assets - deferred taxes                  235,451        235,451
    Other deferred charges and other assets             271,789        280,301
                                                     ----------     ----------
          Deferred Charges and Other Assets, Net        888,828        905,860
                                                     ----------     ----------

          Total Assets                               $2,237,939     $2,262,884
                                                      =========      =========

The accompanying notes are an integral part of these financial statements






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

                   STOCKHOLDERS' EQUITY AND LIABILITIES
                                                    March 31,      December 31,
                                                       1999            1998
                                                  (Unaudited)
Current Liabilities and Interim Financing
    Interim financing                                $  327,253      $  298,356
    Sinking-fund requirements                            19,388          11,455
    Accounts payable                                     76,964          90,960
    Dividends payable                                     8,243           7,304
    Accrued interest                                      4,948           7,524
    Accrued income taxes                                 35,695          19,911
    Miscellaneous current liabilities                    18,964          15,909
                                                     ----------     -----------
       Total Current Liabilities and 
       Interim Financing                                491,455         451,419
                                                      ---------      ----------

Commitments and Contingencies

Reserves and Deferred Credits
    Accumulated deferred income taxes                   373,756         376,043
    Unamortized investment tax credits                   28,695          29,064
    Yankee Atomic purchased-power contract                6,643           7,761
    Connecticut Yankee purchased-power contract          28,950          29,913
    Maine Yankee purchased-power contract               268,828         273,895
    Regulatory liabilities - deferred taxes              58,376          58,376
    Other reserves and deferred credits                 118,329         116,805
                                                      ---------      ----------
       Total Reserves and Deferred Credits              883,577         891,857
                                                      ---------      ----------

Long-Term Debt
    Mortgage debt                                        73,994         117,683
    Other long-term obligations                         189,816         228,598
                                                      ---------      ----------
       Total Long-Term Obligations                      263,810         346,281
                                                      ---------      ----------

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

Stockholders' Equity
    Common-stock                                        162,213         162,213
    Other paid in capital                               285,917         285,835
    Reacquired common stock                              (1,014)           (827)
    Retained earnings                                    97,543          71,668
    Preferred stock                                      35,528          35,528
                                                     ----------     -----------
       Total Stockholders' Equity                       580,187         554,417
                                                      ---------      ----------

       Total Stockholders' Equity and Liabilities    $2,237,939      $2,262,884
                                                      =========       =========

The accompanying notes are an integral part of these financial statements.





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

                                CMP Group, Inc. and Subsidiaries
                              CONSOLIDATED STATEMENT OF CASH FLOWS
                                           (Unaudited)
                                     (Dollars in thousands)
                                                                          For the Three Months
                                                                             ended March 31,
                                                                               1999
                                                                                     1998
CASH FROM OPERATIONS
    Net income                                                             $33,257       $16,398
    Items not requiring (not providing) cash:
       Depreciation                                                         12,136        11,292
       Amortization                                                          9,179         9,033
       Deferred income taxes and investment tax credits, net                (2,934)       19,028
       Allowance for equity funds used during construction                    (192)         (174)
    Preferred stock dividends of subsidiary                                    919         1,897
    Gain on sale of investments and properties                              (7,060)            -
    Changes in certain assets and liabilities:
       Accounts receivable                                                   3,139        16,336
       Other current assets                                                    494         1,288
       Inventories                                                           1,258        (4,167)
       Accounts payable                                                     (9,287)        9,526
       Accrued taxes and interest                                           13,208       (12,055)
       Miscellaneous current liabilities                                     3,055         1,102
    Deferred ice storm cost                                                   (533)      (52,557)
    Deferred energy-management costs                                          (201)         (348)
    Other, net                                                               7,017         3,405
                                                                           -------       -------
          Net Cash Provided by Operating Activities                         63,455        20,004
                                                                            ------        ------

INVESTING ACTIVITIES
       Construction expenditures                                           (11,241)       (9,880)
       Investments in and loans to affiliates                                    -          (300)
       Proceeds from sale of investments and properties                      7,563             -
       Changes in accounts payable - investing activities                   (4,709)       (1,732)
                                                                           -------      --------
          Net Cash Used by Investing Activities                             (8,387)      (11,912)
                                                                           -------       -------

FINANCING ACTIVITIES
    Issuances:
       Medium-term notes                                                         -        60,000
    Redemptions:
       Mortgage bonds                                                            -       (61,000)
       Preferred stock                                                                         -
       Revolving Credit Agreement                                          (40,000)      (60,000)
       Other long-term obligations                                               -           (50)
       Short-term obligations, net                                          (5,000)            -
    Funds on deposit with trustee                                                -        61,000
    Purchase of treasury stock                                                (187)            -
    Dividends:
       Common stock                                                         (7,299)       (7,305)
       Preferred stock of subsidiary                                         -            (1,897)
                                                                       ------------       ------

          Net Cash Used by Financing Activities                            (52,486)       (9,252)
                                                                            ------        ------
          Net Increase (Decrease) in Cash                                    2,582        (1,160)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                30,540        20,841
                                                                           -------        ------
CASH AND CASH EQUIVALENTS, END OF YEAR                                     $33,122       $19,681

                                                                            ======        ======
</TABLE>
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.









                         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 March 31, 1999, and the Consolidated Statement of Income and
Consolidated  Cash Flows for the periods ended March 31, 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  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 March 31,
                                                                          1999             1998
Revenues
     Electric operating revenues                                          $270,570        $248,745
     Other non-utility revenues                                                479             697
                                                                           -------         -------
        Total Revenues                                                     271,049         249,442
                                                                           -------         -------

Operating Expenses
     Fuel used for company generation                                        8,947           4,072
     Purchased power
        Energy                                                              94,475         104,295
        Other (capacity)                                                    22,774          24,376
     Other operation                                                        47,849          45,774
     Maintenance                                                             8,061          10,115
     Depreciation and amortization                                          14,449          13,822
     Taxes other than income taxes                                           7,361           7,054
                                                                           -------         -------
        Total Operating Expenses                                           203,916         209,508
                                                                           -------         -------

Operating Income                                                            67,133          39,934
                                                                          --------          ------

Other Income (Expense)
     Equity in earnings of associated companies                                971           1,591
     Allowance for equity funds used during construction                       192             174
     Other, net                                                                574             636
     Minority interest in consolidated net income                             (625)           (48)
     Gain on sale of investments and properties                              7,010             (1)
                                                                          --------           -----
        Total Other Income (Expense)                                         8,122           2,352
                                                                          --------           -----

Interest Charges
     Long-term debt                                                         10,504          10,850
     Other interest                                                          1,373           1,676
     Allowance for borrowed funds used during construction                    (137)          (127)
                                                                         ----------         -----
        Total Interest Charges                                              11,740          12,399
                                                                           -------          ------

Income Before Income Taxes                                                  63,515          29,887
     Income taxes                                                           25,868          11,592
                                                                           -------          ------
Net Income                                                                  37,647          18,295
     Dividends on Preferred Stock                                              919           1,897
                                                                         ---------           -----
Earnings Applicable to Common  Stock                                      $ 36,728        $ 16,398
                                                                           =======         =======

Weighted Average Number Of Shares Of Common
     Stock Outstanding                                                  31,211,471      32,442,752

Earnings Per Share Of Common Stock - Basic and Diluted                       $1.18           $0.51

Dividends Declared Per Share Of Common Stock                                $0.225          $0.225
</TABLE>

The accompanying notes are an integral part of these financial statements.





                                 Central Maine Power Company and Subsidiaries
                                          Consolidated Balance Sheet
                                            (Dollars in thousands)

                                  ASSETS          March 31,        December 31,
                                                    1999               1998
                                                 (Unaudited)
Current Assets
    Cash and cash equivalents                   $    25,692       $    22,628
    Accounts receivable, less allowance for
    uncollectible accounts of
    $2,994 in 1998 and $2,507 in 1997
       Service   - billed                            83,565            81,082
                 - unbilled                          46,579            53,110
       Other accounts receivable                     11,877            12,698
    Inventories, at average cost
       Fuel oil                                       4,894             5,879
       Materials and supplies                        12,295            12,755
    Funds on deposit with trustee                         1                 1
    Prepayments and other current assets              9,614            10,161
                                                 ----------       -----------
          Total Current Assets                      194,517           198,314
                                                 ----------        ----------

Electric Property, at original cost               1,756,282         1,750,777
    Less: Accumulated depreciation                  704,194           694,463
                                                 ----------        ----------
          Net electric property in service        1,052,088         1,056,314
                                                  ---------         ---------

    Construction work in progress                    19,654            19,483
    Nuclear fuel                                      1,833             1,147
                                                 ----------      ------------
          Total net electric property             1,073,575         1,076,944

Investments In Associated Companies, at equity       48,174            48,406
                                                 ----------       -----------
    Total Net Electric Property and Investments 
    in Associated Companies                       1,121,749         1,125,350

Deferred Charges And Other Assets
    Recoverable costs of Seabrook 1 and abandoned
     projects, net                                   77,167            78,539
    Yankee Atomic purchased-power contract            6,643             7,761
    Connecticut Yankee purchased-power contract      28,950            29,913
    Maine Yankee purchased-power contract           268,828           273,895
    Regulatory assets - deferred taxes              235,451           235,451
    Other deferred charges and other assets         265,645           274,257
                                                 ----------        ----------
          Deferred Charges and Other Assets, Net    882,684           899,816
                                                 ----------        ----------

          Total Assets                           $2,198,950        $2,223,480
                                                  =========         =========

The accompanying notes are an integral part of these financial statements.




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

                                 Central Maine Power Company and Subsidiaries
                                          Consolidated Balance Sheet
                                            (Dollars in thousands)

                   STOCKHOLDERS' EQUITY AND LIABILITIES
                                                          March 31,         December 31,
                                                             1999              1998
                                                         (Unaudited)
Current Liabilities and Interim Financing
    Interim financing                                      $  327,100         $  298,183
    Sinking-fund requirements                                  19,388             11,455
    Accounts payable                                           77,614             93,012
    Dividends payable                                             943                  5
    Accrued interest                                            4,922              7,491
    Income taxes payable to parent company                     35,572             20,822
    Miscellaneous current liabilities                          18,150             15,455
                                                          -----------        -----------
       Total Current Liabilities and Interim Financing        483,689            446,423
                                                           ----------         ----------

Commitments and Contingencies

Reserves and Deferred Credits
    Accumulated deferred income taxes                         369,879            372,243
    Unamortized investment tax credits                         28,695             29,064
    Yankee Atomic purchased-power contract                      6,643              7,761
    Connecticut Yankee purchased-power contract                28,950             29,913
    Maine Yankee purchased-power contract                     268,828            273,895
    Regulatory liabilities - deferred taxes                    58,376             58,376
    Other reserves and deferred credits                       112,339            111,506
                                                           ----------         ----------
       Total Reserves and Deferred Credits                    873,710            882,758
                                                           ----------         ----------

Long-Term Debt
    Mortgage debt                                              73,994            117,683
    Other long-term obligations                               187,388            226,151
                                                           ----------         ----------
       Total Long-Term Obligations                            261,382            343,834
                                                           ----------         ----------

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

Stockholders' Equity
    Common-stock                                              162,213            162,213
    Other paid in capital                                     276,504            276,422
    Reacquired common stock                                   (19,000)           (19,000)
    Retained earnings                                         105,971             76,349
    Preferred stock                                            35,571             35,571
                                                          -----------        -----------
       Total Stockholders' Equity                             561,259            531,555
                                                           ----------         ----------

       Total Stockholders' Equity and Liabilities          $2,198,950         $2,223,480
                                                            =========          =========
</TABLE>

The accompanying notes are an integral part of these financial statements.




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


                          Central Maine Power Company and Subsidiaries
                              CONSOLIDATED STATEMENT OF CASH FLOWS
                                           (Unaudited)
                                     (Dollars in thousands)
                                                                          For the Three Months
                                                                              Ended March 31,
                                                                            1999          1998
CASH FROM OPERATIONS
    Net income                                                           $  37,647     $  18,295
    Items not requiring (not providing) cash:
       Depreciation                                                         11,916        11,292
       Amortization                                                          9,179         9,033
       Deferred income taxes and investment tax credits, net                (2,816)       19,028
       Allowance for equity funds used during construction                    (192)         (174)
    Gain on Sale of Investments and Properties                              (7,060)            -
    Changes in certain assets and liabilities:
       Accounts receivable                                                   4,869        16,336
       Other current assets                                                    547         1,288
       Inventories                                                           1,445        (4,167)
       Accounts payable                                                    (10,689)        9,526
       Accrued taxes and interest                                           12,181       (12,055)
       Miscellaneous current liabilities                                     2,695         1,102
    Deferred Ice storm costs                                                  (533)      (52,557)
    Deferred energy-management costs                                          (201)         (348)
    Other, net                                                               3,755         3,405
                                                                         ---------     ---------
          Net Cash Provided by Operating Activities                         62,743        20,004
                                                                          --------      --------

INVESTING ACTIVITIES
       Construction expenditures                                           (10,505)       (9,880)
       Investments in and loans to affiliates                                    -          (300)
       Proceeds from sale of investments and properties                      7,563             -
       Changes in accounts payable - investing activities                   (4,709)       (1,732)
                                                                         ---------     ---------
          Net Cash Used by Investing Activities                             (7,651)      (11,912)
                                                                         ---------      --------

FINANCING ACTIVITIES
    Issuances:
       Medium-term notes                                                         -        60,000
    Redemptions:
       Mortgage bonds                                                            -       (61,000)
       Revolving Credit Agreement                                          (40,000)      (60,000)
       Other long-term obligations                                               -           (50)
       Short-term obligations                                               (5,000)            -
    Funds on deposit with trustee                                                -        61,000
    Dividends:
       Common stock                                                         (7,028)       (7,305)
       Preferred stock                                                           -        (1,897)
                                                                           -------     ---------
          Net Cash Used by Financing Activities                            (52,028)       (9,252)
                                                                          --------     ---------
          Net Increase (Decrease) in Cash                                    3,064        (1,160)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              22,628        20,841
                                                                          --------      --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $  25,692     $  19,681
                                                                          ========      ========
</TABLE>

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




                                  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 of electric
     energy at the  wholesale  and  retail  levels 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.  For all periods  prior to
     September  1,  1998,  the  historic   financial  position  and  results  of
     operations of CMP Group reflect the activity of Central Maine.

     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 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.

     For purposes of the  statement of cash flows,  CMP Group and Central  Maine
     consider all highly liquid instruments purchased having maturities of three
     months or less to be cash equivalents.

     Supplemental  Cash Flow  Disclosure  - Cash paid for the three months ended
     March 31, 1999 and 1998:

                                                             (In Millions)
                                                            1999         1998

     CMP Group
              Interest, net of amounts capitalized        $12.5         $14.7
              Income taxes                                 12.0           1.5

     Central Maine
              Interest, net of amounts capitalized         13.1          14.7
              Income Taxes                                 12.0           1.5


     Stock-Based  Compensation  - Under CMP Group's  Long-Term  Incentive  Plan,
     stock options were granted in 1998 and 1999 with an exercise price equal to
     the fair market  value on the date of the grants.  One third of the options
     vest  annually,  commencing  on the first  anniversary  of the option grant
     date. Upon vesting 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.  Performance  shares are
     shares of CMP Group stock granted at the end of a 3-year performance cycle,
     based on  achievement of  performance  goals directly  linked to increasing
     shareholder  value.  If the goals are not achieved at the end of the 3-year
     cycle,  the  performance  shares are  forfeited.  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.

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

Options granted                         -           241,996      256,214
Performance Shares*                     61,437      66,906       67,654

*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  potential
     incremental  shares of common stock  outstanding  for purposes of computing
     both basic and diluted  earnings per share for the three months ended March
     31, 1999.

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

     Impact of New Accounting Standards - In June 1998, the FASB issued SFAS No.
     133,  Accounting for Derivatives and Hedging  Activities.  The new standard
     applies to all entities and is effective for all fiscal  quarters of fiscal
     years beginning after June 15, 1999, with earlier adoption  encouraged.  It
     requires companies to record derivatives on the balance sheet at their fair
     value depending on the intended use of the  derivative.  Based on CMP Group
     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.   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.

     Since  the  filing  of the  rate  request,  Maine  Yankee  and  the  active
     intervenors,  including among others the MPUC Staff, the OPA, Central Maine
     and other owners, the Secondary Purchasers, and a Maine environmental group
     (the "Settling Parties"),  engaged in extensive discovery and negotiations.
     Those parties  participated in settlement  discussions  that resulted in an
     Offer of  Settlement  filed by those  parties  with the FERC on January 19,
     1999.  On  February  8, 1999,  the FERC Trial  Staff  recommended  that the
     presiding  judge  certify  the  settlement  to the  FERC  and that the FERC
     approve it. Upon approval by the FERC,  the settlement  would  constitute 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.  A separately  negotiated  settlement  filed with the FERC on
     February  5,  1999,  would  resolve  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.   On  February  24,  1999,  the  FERC  Trial  Staff
     recommended certification and approval of the settlement with the Secondary
     Purchasers.

     The Offer of Settlement  provides for Maine Yankee to collect $33.6 million
     in the aggregate  annually,  effective January 15, 1998,  consisting of (1)
     $26.8 million for estimated decommissioning costs, and (2) $6.8 million for
     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 the  TLG  estimate.  Under  the
     settlement the amount collected  annually could be reduced to approximately
     $26  million  if Maine  Yankee is able 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  being  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 now in  question  after
     rejection of the selected disposal site in west Texas by a Texas regulatory
     agency.  Both would require  authorizing  legislation in Maine, which Maine
     Yankee is committed to use its best efforts to obtain.

     The Offer of  Settlement  also  provides  for  recovery of all  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.  The Settling  Parties also agreed in the
     proposed  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 Offer of 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 would
     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 has
     collected  from its  retail  customers  a return on equity in excess of the
     6.50 percent  contemplated by the Offer of Settlement,  no refunds would be
     required, but such excess amounts would be credited to the customers to the
     extent required by the ARP.

     The final 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 sets forth the methodology for calculating  such replacement
     power costs.

     CMP Group and Central Maine believe that the Offer of Settlement, including
     the Maine  Agreement,  constitutes  a reasonable  resolution  of the issues
     raised in the Maine Yankee FERC proceeding,  and that approval of the Offer
     of  Settlement  by  the  FERC  would  eliminate  significant  uncertainties
     concerning CMP Group's and Central  Maine's future  financial  performance.
     Although all of the active  parties to the  proceeding,  including the FERC
     Trial Staff, support or, with respect to certain individual provisions,  do
     not oppose,  the Offer of  Settlement,  CMP Group and Central  Maine cannot
     predict with  certainty  whether or in what form it will be approved by the
     FERC.

     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 generating  units,  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 March 31, 1999,  the  liability  recorded by
     Central Maine for its estimated environmental remediation costs amounted to
     $2.9  million,  which  management  has  determined  to be the most probable
     amount within the range of $2.9 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.

     Millstone  Unit No. 3  Litigation  - On August 7, 1997,  Central  Maine and
     other minority  owners of Millstone Unit No. 3 filed suit in  Massachusetts
     Superior Court against Northeast Utilities and its trustees,  and initiated
     an   arbitration   claim   against  two  of  its   subsidiaries,   alleging
     mismanagement  of the  unit by the  defendants.  The  minority  owners  are
     seeking  to   recover   their   additional   costs   resulting   from  such
     mismanagement,  including their replacement power costs.  Since August 1997
     the  parties  have been  engaged  in  resolving  preliminary  issues and in
     extensive  pre-hearing  discovery on a schedule  calling for an arbitration
     hearing in the fall of 1999.  Central  Maine cannot  predict the outcome of
     the  litigation  and  arbitration  or whether the current  schedule will be
     maintained.

     Proposed  Federal  Income Tax  Adjustments - On September 3, 1997,  Central
     Maine received from the Internal  Revenue Service ("IRS") a Revenue Agent's
     Report  summarizing all adjustments  proposed by the IRS as a result of its
     audit of Central  Maine's  federal  income tax  returns  for the years 1992
     through 1994, and on September 12, 1997, Central Maine received a notice of
     deficiency   relating  to  the  proposed   disallowances.   There  are  two
     significant  disallowances  among those proposed by the IRS. The first is 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 were charged to income in 1994 in connection with
     the  adoption of the  Alternative  Rate Plan ("ARP")  effective  January 1,
     1995.  The second major  adjustment  would  disallow  Central  Maine's 1994
     deduction  of the  cost  of the  buyout  of the  Fairfield  Energy  Venture
     purchased-power  contract  by  Central  Maine in 1994.  The  aggregate  tax
     impact,  including both federal and state taxes,  of the unresolved  issues
     amounts  to  approximately  $39.0  million,  over 90  percent  of  which is
     associated with the two major  disallowances.  The two major  disallowances
     relate  largely to the timing of the deductions and would not affect income
     except for the cumulative  interest  impact which,  through March 31, 1999,
     amounted to $20.1  million,  or a decrease in net income of $11.9  million,
     and which could increase  interest  expense by  approximately  $500,000 per
     month until either the tax deficiency is paid or the issues are resolved in
     favor of Central Maine,  in which case no interest would be due. If the IRS
     were to prevail,  Central Maine believes the deductions  would be amortized
     over periods of up to twenty,  post-1994, tax years. Central Maine believes
     its tax treatment of the  unresolved  issues was proper and as a result the
     potential  interest has not been  accrued.  On December  10, 1997,  Central
     Maine filed a petition in the United States Tax Court contesting the entire
     amount of the deficiencies  and 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.  As of March 31,
     1999,  four of the seven issues in dispute had been  resolved,  but not the
     two  major  disallowances.  Central  Maine  will  continue  to work  toward
     resolving  the  remaining  issues,  but a trial may be necessary for one or
     more of those  issues.  Absent such a  resolution,  Central  Maine plans to
     pursue vigorously the Tax Court litigation, but cannot predict the result.

     Joint  Venture - CMP Group and  Energy  East,  through  subsidiaries,  have
     entered into a  joint-venture  agreement to distribute  natural gas to many
     Maine communities that are not now served with that fuel. On July 24, 1998,
     the MPUC authorized the provision of such service by the joint venture. CMP
     Group's  level  of   investment  is  dependent  on  the  overall   economic
     feasibility  of natural  gas as a  competitive  energy  option in Maine,  a
     sufficient  expression of customer interest in gas service from CMP Natural
     Gas, and the prospects for  achieving an acceptable  return on  investment.
     Subsidiaries of CMP Group and Energy East own  approximately 40 percent and
     60 percent,  respectively,  of CMP Natural Gas, which is positioning itself
     to offer gas in a number of  communities  in Maine  that are not now served
     with gas.

 3.   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 the Company  recommended
     that rates  remain  unchanged  for the period July 1, 1999 to February  29,
     2000. The design and levels of Central Maine's rates as a transmission  and
     distribution company,  effective March 1, 2000, will be determined in Phase
     II of the  MPUC  proceeding  discussed  below  in  this  note  under  "MPUC
     Proceeding on Stranded Costs, Revenue Requirements, and Rate Design."

     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,
     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
     and will be determined by the MPUC as provided in the legislation. The MPUC
     has been  conducting  separate  adjudicatory  proceedings  to determine the
     stranded costs for each Maine utility, along with the corresponding revenue
     requirements   and   stranded-cost   charges   to  be   charged   by   each
     transmission-and-distribution utility. The first phase of the Central Maine
     proceeding  was completed in early 1999 and is discussed in this note under
     the heading "MPUC Proceeding on Stranded Costs, Revenue  Requirements,  and
     Rate Design," below.

     In addition, the legislation requires utilities to use all reasonable means
     to reduce  their  potential  stranded  costs and to maximize the value from
     generation assets and contracts. The MPUC must consider a utility's efforts
     to mitigate its stranded costs in  determining  the amount of the utility's
     stranded  costs.  Stranded costs and the related rates charged to customers
     will  be  prospectively   adjusted  as  necessary  to  correct  substantial
     inaccuracies in the year 2003 and at least every three years thereafter.

     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.  However, the MPUC can
     require the Company to divest its  interest in Maine  Yankee  Atomic  Power
     Company on or after  January 1, 2009.  As  discussed  below  under "Sale of
     Generation  Assets,"  Central  Maine  contracted  to sell  its  non-nuclear
     generating assets and, after a favorable court decision, completed the sale
     on April 7, 1999. The legislation also requires  investor-owned  utilities,
     after  February 29,  2000,  to sell their rights to the capacity and energy
     from all generation assets,  including the  purchased-power  contracts that
     had not previously been divested pursuant to the legislation,  with certain
     immaterial exceptions.

     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 does not now intend to engage in the sale of  electric  energy  after
     March 1, 2000.

     Legislative  bills  that  would  amend  certain   provisions  of  the  1997
     legislation  have been  submitted  to the 1999  legislative  session of the
     Maine  Legislature.  CMP Group and Central Maine cannot predict whether any
     changes to the 1997 legislation will be enacted.

     MPUC Proceeding on Stranded Costs, Revenue Requirements, and Rate Design. -
     The MPUC has 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. On December 23, 1998, the MPUC
     Hearing  Examiners in the proceeding  issued their report, in the form of a
     recommended  decision.  Central  Maine  disagreed  with  a  number  of  the
     individual  recommendations in the stranded-costs and  revenue-requirements
     areas and filed exceptions to those  recommendations.  The MPUC deliberated
     the  recommendations  on February 10 and 11, 1999,  indicated  disagreement
     with some of the recommendations, and issued its written order on March 19,
     1999.

     The MPUC  stressed in its 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 not  calculating  the rates  themselves
     because such calculations at that time would rely excessively on estimates.
     The MPUC  pointed  out that it would hold a "Phase  II"  hearing to set the
     actual rates and determine the recoverable  stranded costs after processing
     information expected to become available during 1999.

     With respect to stranded  costs,  the MPUC  indicated that it would set the
     amount  of  recoverable  stranded  costs  for  Central  Maine  later in the
     proceeding  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 these 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 divested  generation  assets to offset stranded costs. At
     the  beginning of the  proceeding  Central  Maine had  estimated  its total
     stranded costs to be approximately $1.3 billion.

     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, after weighing
     conflicting  recommendations,  decided  on 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 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.  The MPUC
     indicated  that it would  focus on (1)  facilitating  the  transition  to a
     competitive  market for  generation,  and (2)  implementing  a  "no-losers"
     policy,  i.e.,  that the new rate  design  would  cause  no  Central  Maine
     customer's  bill  to  increase  on  March  1,  2000.  Applying  the  latter
     principle,   the  MPUC   rejected  a  newly   designed   standby  rate  for
     self-generators  proposed by Central  Maine in favor of a design  generally
     similar to Central Maine's current rate for the class. The MPUC stated that
     it planned to undertake a comprehensive  rate design and  alternative  rate
     plan  proceeding  for Central  Maine prior to March 1, 2002,  when it could
     consider   experience   gained   with   the   cost   structures   of  other
     transmission-and-distribution  utilities  after the  commencement of retail
     access to generation.

     The Phase I order resulted from an extended  proceeding with many points of
     view  represented  and  covers a wide  variety  of  rate-related  subjects.
     Definitive  findings by the MPUC in a number of the subject areas await the
     second phase of the  proceeding,  which must be  completed  before March 1,
     2000. CMP Group and Central Maine cannot  predict the definitive  amount of
     stranded  costs the MPUC will determine that Central Maine will be entitled
     to recover  pursuant to the mandate of the  restructuring  statute,  or the
     revenue  requirements and rate design that will result from Phase II of the
     MPUC proceeding.  Central Maine is preparing its Phase II filing,  which it
     expects to file with the MPUC in June or July of 1999.

     Sale of Generation  Assets - On January 6, 1998,  Central  Maine  announced
     that it had reached agreement to sell 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  Florida-based  FPL Group. The related book value for these
     assets was approximately $ 218.9 million at December 31, 1998. 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
     $3.6  million  ($1.5  million  for the  assets and $2.1  million  for lease
     revenue  associated  with the properties  that CMP will retain),  including
     $1.15  million for Union  Water  assets.  The  related  book value of these
     assets was approximately $11.9 million at December 31, 1998.

     Central Maine's interests in the power  entitlements from  approximately 50
     power-purchase   agreements  with   non-utility   generators   representing
     approximately 488 megawatts, its 2.5-percent interest in the Millstone Unit
     No. 3 nuclear generating unit in Waterford,  Connecticut,  its 3.59-percent
     interest in the output of the Vermont  Yankee nuclear  generating  plant in
     Vernon, Vermont, and its entitlement in the NEPOOL Phase II interconnection
     with Hydro-Quebec all attracted insufficient interest to be included in the
     pending sale.  Central Maine will continue to seek buyers for those assets.
     Central  Maine  did not offer for sale its  interests  in the Maine  Yankee
     (Wiscasset,  Maine),  Connecticut  Yankee (Haddam,  Connecticut) and Yankee
     Atomic (Rowe, Massachusetts) nuclear generating plants, all of which are in
     the process of being decommissioned.

     On November 17, 1998, FPL Group announced that its  subsidiary,  FPL Energy
     Maine,  Inc.  ("FPL  Energy") had filed a civil action in the United States
     District  Court  for  the  Southern  District  of  New  York  requesting  a
     declaratory  judgment that Central Maine could not meet essential  terms of
     the January  agreement.  FPL Group asserted that based on October 1998 FERC
     rulings on transmission  access,  as well as other issues, it believed that
     Central Maine could not comply with the conditions in the purchase contract
     and that FPL Energy should not be bound to complete the transaction.

     On November  23,  1998,  the MPUC  granted its  approval of the sale to FPL
     Energy of the generating  assets  contemplated  by the purchase  agreement,
     finding  the sale to be in the  public  interest.  The MPUC  also  made the
     findings required as a prerequisite to a FERC designation of the generating
     facilities as "exempt  wholesale  generators,"  which had been requested by
     FPL Energy.

     On November  24,  1998,  the FERC  approved  the sale of the Central  Maine
     generating assets to FPL Energy, after making the required finding that the
     sale  was  consistent  with  the  public  interest,  and  accepted  certain
     implementing  agreements  for filing.  The FERC granted its approval of the
     transfer of hydroelectric  and water storage licenses on December 28, 1998,
     and its approval of  exempt-wholesale-generator  status for the  generating
     facilities on February 24, 1999.

     On March 11, 1999,  the hearing on FPL Energy's  request for a  declaratory
     judgment  was held in the United  States  District  Court for the  Southern
     District of New York.  On the same day the  presiding  judge ruled that FPL
     Energy was not entitled to the  declaratory  judgment and entered  judgment
     for  Central  Maine  and its  affiliated  defendants  on all  counts of the
     complaint.  Thereafter on that day FPL Energy  announced  that it would not
     appeal the decision,  but would proceed to a closing of the sale.  The sale
     was completed on April 7, 1999.  The pretax gain of  approximately  $500 to
     $600 million from the divested generation assets will initially be recorded
     as a  regulatory  liability.  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 recognition
     of any remaining regulatory liability.

     Storm  Damage to  Company's  System - On January 7 through 9, 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.
     Central  Maine's  incremental  non-capital  costs of the repair effort were
     $50.7 million, most of which is labor-related.

     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.  The order required Central Maine, as part of its
     annual filing under the ARP, to file  information  on the amounts  deferred
     under the order and to  submit a  proposal  as to how the costs  associated
     with the order  should be  recovered  under the ARP. In the 1998 ARP filing
     Central  Maine stated that once the final cost of the storm was  determined
     and the status of federal  assistance  was  finalized  Central  Maine would
     propose a plan for recovery of its costs. Based on the MPUC order,  Central
     Maine has deferred  $52.9  million in storm  related  costs as of March 31,
     1999,  including $2.2 million of carrying  costs. In October 1998, the MPUC
     staff  issued its draft  report of its summary  investigation  of the Maine
     utilities'  response to the January ice storm.  This report  found no basis
     for formal  adjudicatory  investigation  into the response and supports the
     utilities'   actions.   On  May  1,  1998,   President   Clinton  signed  a
     Congressional   appropriation   bill  that   included   $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 10, 1999, HUD published a notice in the Federal  Register
     inviting parties to re-apply for storm-damage cost reimbursement.  On March
     23,  1999,  HUD  announced  that Maine would  receive an  additional  $2.15
     million,  and later  announced  that another $17 million would be available
     for  Maine.  At the same time,  however,  the  Congress  is  considering  a
     proposal to shift the  responsibility  for allocating  the  disaster-relief
     funds from which Maine's $17 million would be taken from HUD to the Federal
     Emergency  Management  Agency.  Consequently,   Central  Maine  cannot  now
     determine  whether  those funds will be allocated to Maine and, if so, what
     portion  Central Maine would  receive.  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 has deferred action pending the
     determination  of the  amount  of  any  federal  reimbursement.  Therefore,
     Central Maine cannot predict what portion of its ice storm-related costs it
     will ultimately  recover through  federal  assistance,  if any, or from its
     customers, or when any such recovery will take place.

     Meeting the  Requirements of SFAS No. 71 - During the first quarter of 1999
     Central  Maine  continued  to meet the  requirements  of SFAS No.  71.  The
     standard provides specialized accounting for regulated  enterprises,  which
     requires   recognition  of  "regulatory"   assets  and   liabilities   that
     enterprises  in general  could not record.  Examples of  regulatory  assets
     include  deferred income taxes  associated  with previously  flowed through
     items,  NUG  buyout  costs,   losses  on  abandoned  plants,   deferral  of
     postemployment benefit costs, and losses on debt refinancing.

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

     The 1997 legislation enacted in Maine providing for industry  restructuring
     specifically  addressed  the issue of cost  recovery of  regulatory  assets
     stranded  as  a  result  of  industry  restructuring.   Specifically,   the
     legislation  requires the MPUC,  when retail  access  begins,  to provide a
     "reasonable  opportunity"  for the recovery of stranded  costs  through the
     rates  of  the  transmission-and-distribution  company,  comparable  to the
     utility's  opportunity to recover stranded costs before the  implementation
     of retail  access  under the  legislation.  As  provided  for in EITF 97-4,
     "Deregulation of the Pricing of  Electricity,"  Central Maine will continue
     to record regulatory assets in a manner consistent with SFAS No. 71 as long
     as future recovery is probable,  since the Maine  legislation  provides the
     opportunity to recover  regulatory assets including  stranded costs through
     the rates of the transmission-and-distribution  company. As a result of the
     legislation  discussed  above,  Phase I of the "MPUC Proceeding on Stranded
     Costs, Revenue Requirements and Rate Design," and the generation asset sale
     which was an integral part of the Phase I order,  Central Maine anticipates
     that it will  discontinue the application of SFAS No. 71 for the generation
     portion of its business in the second  quarter of 1999.  Central Maine does
     not  anticipate  that any regulatory  assets will be written-off  since the
     1997 legislation and the Phase I Order continue to provide for the recovery
     of  stranded  costs  in the  rates  of the  transmission  and  distribution
     company.  Central Maine  further  anticipates,  based on current  generally
     accepted accounting principles,  that SFAS No. 71 will continue to apply to
     the  regulated  distribution  and  transmission  segments of its  business.
     Future regulatory rules or other  circumstances could cause the application
     of SFAS  No.  71 to be  discontinued,  which  could  result  in a  non-cash
     write-off of previously established regulatory assets.

 4.   Income Taxes

     The 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.

 5.   Transactions with Affiliated Companies

     Central Maine provides certain services to CMP Group and its  subsidiaries,
     including  administrative support services and pension and employee benefit
     arrangements.  Charges related to those services have been determined based
     on a  combination  of direct  charges and  allocations  designed to recover
     Central  Maine's  cost.  These  assessments  are  reflected as an offset to
     Central  Maine's  expenses and totaled  approximately  $1.5 million for the
     quarter ended March 31, 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  allocation  in order to recover the  majority of their
     expenses.  These  assessments  are  reflected  as an offset to CMP  Group's
     expenses and totaled approximately $2.0 million for the quarter ended March
     31, 1999.

     In addition,  a subsidiary  of CMP Group  provides  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 $1.8  million for the
     quarter ended March 31, 1999.

     Central Maine provides  services to CMP Group and its  subsidiaries as well
     as non-affiliated  parties.  As of March 31, 1999, Central Maine's accounts
     receivable and accounts payable included the following:
                                               (Dollars in thousands)

                                         Accounts                  Accounts
                                        Receivable                  Payable

           CMP Group                     $  156                      $1,479
           CMPI                             120                          76
           MaineCom                          82                           3
           Telesmart                         70                          67
           Union Water                    1,070                       1,158
                                          -----                       -----
                                         $1,498                      $2,783
                                          =====                       =====





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

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

Note re Forward-Looking Statements

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

Factors  that could cause actual  results to differ  materially  include,  among
other  matters,  the outcome of the FERC  proceeding  involving  Maine  Yankee's
rates,  decommissioning  costs and issues  related  to the  closing of the Maine
Yankee nuclear generating plant; the actual 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  investment in unregulated  businesses;  and
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.

Formation of Holding Company

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.







Operating Results

                                  CMP
                                 Group               Central Maine
                                            (dollars in millions)
Net income Three months ended:
     March 31, 1999               $33.3    $1.03/share    $37.6
     March 31, 1998                16.4    $0.51/share     18.3
                                   ----                    ----
     Increase                     $16.9                   $19.3

Earnings applicable to common stock Three months ended:
     March 31, 1999                N/A                     $36.7     $1.18/share
     March 31, 1998                N/A                      16.4     $0.51/share

The 1999 results have benefited significantly from increased sales and favorable
operating  cost trends.  Colder  weather and the absence of an ice storm,  which
decreased  sales in 1998,  contributed to the 2.2 percent gain in  kilowatt-hour
sales over the first quarter of 1998. In addition, the sale of transmission line
right-of-way  access  to a  gas  pipeline  project,  and  a  settlement  payment
involving  regional  transmission  tariffs  realized a total of $6 million after
taxes.

Service  Area Kwh Sales - Central  Maine's  service  area  sales of  electricity
totaled approximately 2.32 billion  kilowatt-hours in the first quarter of 1999,
up 2.2  percent  from the 2.27  billion  kilowatt-hour  level of a year ago,  as
follows:

                Service Area Kilowatt-hour Sales (Millions of KWHs)
                               Period Ended March 31,

                                         Three
                                        Months
                                  1999             1998             % Change

  Residential                      792.7             743.2            6.7%
  Commercial                       648.0             621.0            4.3
  Industrial                       833.3             846.0           (1.5)
  Other                             47.4              60.6          (25.3)
                               ---------         ---------
                                 2,321.4           2,270.8            2.2%
                                 =======           =======

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

     Kilowatt-hour  sales to residential  customers  increased by 6.7 percent in
     the first quarter of 1999  compared to 1998.  The bulk of the growth is due
     to the absence of an ice-storm  in 1999 of the kind that caused  widespread
     customer  outages  in  January  1998.  Another  contributor  was the colder
     weather conditions in 1999, increasing heating requirements,  as well as an
     increase in new residential customers.

     Commercial  kilowatt-hour  sales  increased  by 4.3  percent  in the  first
     quarter of 1999  compared to 1998.  The  increased  sales in the retail and
     service   sectors  were  due   primarily  to  the  absence  of   widespread
     storm-caused outages in 1999 and colder weather in 1999 than in 1998.

     Industrial  kilowatt-hour  sales  decreased  by 1.5  percent  in the  first
     quarter of 1999  compared to 1998.  Decreased  sales to the paper  industry
     (26.3 million kwh) more than offset the positive sales growth (13.5 million
     kwh)  experienced in the "other  industrial"  sector.  The primary  factors
     contributing to the 5.4 percent drop in sales to the paper industry were 1)
     the  shutdown  of two of the four  paper  machines  at one of the  mills in
     November of 1998 to balance  production with demand;  and 2) the closure of
     another mill in 1998, which continues to impact 1999 results, with sales to
     the mill down 4.5 million kwh  compared to the first  quarter of 1998.  The
     pulp-and-paper sector of the industrial class accounts for approximately 55
     percent of the industrial sales category.

Operating Expenses

Central Maine's fuel used for company generation increased by approximately $4.9
million in the first  quarter of 1999  compared to 1998 due to higher demand for
company generation.

Central Maine's purchased  power-energy  expense decreased by $10 million in the
first  quarter,  compared to 1998.  The decrease is due primarily to the buyout,
restructuring  and expiration of contracts with  non-utility  generators  during
1998, resulting in lower costs in the first quarter of 1999.

Central Maine's purchased  power-capacity  expense decreased $1.6 million in the
first quarter  compared to 1998.  The decrease is due primarily to the permanent
shutdown of the Maine Yankee plant in August 1997 and the  resulting  decline in
operating costs. This was offset by increased capacity costs associated with the
restructuring of a NUG contract.

CMP Group maintenance  expense decreased $1.8 million for the three months ended
March  31,  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.

CMP Group  other  operations  expense  increased  by $7.4  million  in the first
quarter of 1999 as compared to 1998.  The primary  reasons for this increase are
1) the consolidation of its subsidiaries, including approximately $5 million for
Union  Water,  and 2) in the first  quarter of 1998 Central  Maine's  operations
personnel  worked  temporarily  in a  maintenance  capacity  during the 1998 ice
storm.

Federal and state income taxes fluctuate with the level of pre-tax  earnings and
the regulatory  treatment of taxes by the MPUC. This expense  increased by $14.2
million for the first quarter ended March 31, 1999 compared to 1998, as a result
of higher pre-tax earnings for the three months ended March 31, 1999.






Other Income and Expense

Equity in Earnings  of  Associated  Companies  for CMP Group  decreased  by $4.6
million in the first  quarter of 1999  compared  to  1998.This  decrease  is due
primarily  to losses  associated  with NEON,  which is an equity  investment  of
MaineCom, a CMP Group subsidiary.

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

Other Interest  Expense  decreased by $0.3 million during the first three months
of 1999 as compared to 1998.  The decrease was due  primarily to lower levels of
borrowing under Central Maine's revolving credit facilities.

For the quarter  ended March 31, 1999,  Central  Maine  reduced  preferred-stock
dividends by $155  thousand as a result of the earlier  redemption of its 8 7/8%
Series  Preferred  Stock at par,  under the mandatory and optional  sinking-fund
provisions of that series.  A reduction of $591 thousand  related to the earlier
redemption  of  Central  Maine's 7 7/8 Series  Preferred  Stock.  The  remaining
difference  relates to an earlier  repurchase of 7.99% Series  Preferred  Stock,
resulting in a total reduction of $978 thousand as compared to the first quarter
of 1998.

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  $51.4 million of cash was provided  during the three months ended
March 31, 1999, from net income before non-cash items,  primarily  depreciation,
amortization and deferred income taxes.  During that period  approximately $18.2
million of cash was used for  fluctuations in certain assets and liabilities and
from other operating activities.

Proceeds of approximately  $7.6 million were provided from the sale of easements
and  approximately  $3.7 million from a settlement  payment  involving  regional
transmission tariffs.

Investing  activities,  along  with  construction  expenditures,  utilized  $8.4
million  in  cash  during  the  first  three  months  of  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 three months ended March 31, 1999, CMP Group paid dividends on common
stock of $7.3 million.

At the annual meeting of the  stockholders of Central Maine on May 15, 1997, 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 March 31, 1999, Central Maine had $337 million of
its medium-term notes outstanding of which $10 million are short-term.  On April
30,  1999,  Central  Maine  called  $180  million of the  medium-term  notes for
redemption on June 1, 1999.

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. Both
credit  facilities  require annual fees on the total credit lines.  The fees are
based on Central Maine's credit ratings and allow for various  borrowing options
including  LIBOR-priced,   base-rate-priced  and  competitive-bid-priced  loans.
Access to commercial paper markets has been  substantially  precluded based upon
Central  Maine's  past  credit  ratings.  The amount of  outstanding  short-term
borrowing  will  fluctuate  with  day-to-day  operational  needs,  the timing of
long-term  financing,  and market  conditions.  Central Maine had $10 million in
outstanding notes as of March 31, 1999 under the credit facilities.

On August 5, 1998, the MPUC approved Central Maine's  application to purchase up
to 11 million shares of its outstanding  common stock over a three-year  period,
with a limitation of three million shares that could be repurchased prior to the
closing  of the sale of Central  Maine's  generating  assets.  The amount of any
stock  purchases  and their timing by Central  Maine or CMP Group will depend on
the need for equity in the respective  Company's capital  structure,  investment
opportunities and other considerations.  Neither Central Maine nor CMP Group has
adopted a formal stock-purchase plan.

On February 12, 1999, Central Maine restructured a power-purchase  contract with
a NUG in  Livermore,  Maine,  which  it  expects  will  save its  customers  the
equivalent of $20.4 million in net present value.

"Year 2000" Computer Issues

The "Year 2000 problem" arose because many existing  computer  programs use 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  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
generation,  transmission,  and  distribution  of electric energy as well as the
traditional business systems necessary to the CMP Group System.

As  planned,  by the  end of 1998  CMP  Group  had  completed  much of the  work
associated  with Year  2000  readiness  for IT  infrastructure  and  centralized
business systems. The remaining work in those areas is scheduled to be completed
during the first six months of 1999. All vendors  associated with this remaining
work  have  indicated  availability  of  products  and  services  that CMP Group
believes should permit CMP Group to be Year 2000 ready by June 1999.

CMP Group's target  completion date for Year 2000 power  generation and delivery
systems is also June 1999,  consistent with the DOE's  published  request in May
1998 and the overall electric-utility  industry guidelines prepared by the North
American Electric  Reliability  Council ("NERC").  CMP Group has contracted with
the  appropriate   vendors  to  complete  critical   generation  control  system
remediation  work by June 1999,  and  believes  it is on  schedule  to meet this
target.

In addition to the internal Year 2000 readiness  activities discussed above, CMP
Group is actively  participating  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  third-party   providers.   The  program   addresses   business
relationships  with all  third-party  providers,  but focuses on those suppliers
deemed  critical  to CMP  Group's  business.  At  this  time  CMP  Group  has no
indication that any third-party with which CMP Group has a material relationship
is expecting a Year 2000-related business interruption.  CMP Group will continue
to monitor and assess its third-party 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 March 31, 1999,  approximately
$3.6 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.  Central
Maine is in the  process  of  competing  the Year 2000  readiness  work on those
facilities.

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  inability to operate  fossil  and/or hydro  generating
facilities,  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.  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 the North American Electric
Reliability  Council,  and the Northeast Power  Coordinating  Council.  Further,
Central Maine will be developing  comprehensive  Year 2000 specific  contingency
plans for its own independent operations.

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 - On January 7 through 9, 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.   Central  Maine's   incremental
non-capital  costs of the repair  effort  were $50.7  million,  most of which is
labor-related.

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.
The order required Central Maine, as part of its annual filing under the ARP, to
file  information  on the  amounts  deferred  under  the  order  and to submit a
proposal as to how the costs associated with the order should be recovered under
the ARP. In the 1998 ARP filing Central Maine stated that once the final cost of
the storm was  determined  and the status of federal  assistance  was  finalized
Central Maine would propose a plan for recovery of its costs.  Based on the MPUC
order,  Central  Maine has deferred  $52.9  million in storm related costs as of
March 31, 1999,  including $2.2 million of carrying  costs. In October 1998, the
MPUC staff  issued its draft  report of its summary  investigation  of the Maine
utilities'  response to the January  ice storm.  This report  found no basis for
formal adjudicatory  investigation into the response and supports the utilities'
actions. On May 1, 1998, President Clinton signed a Congressional  appropriation
bill that included $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 10, 1999, HUD published a notice in the Federal
Register  inviting parties to re-apply for storm-damage cost  reimbursement.  On
March 23, 1999,  HUD  announced  that Maine would  receive an  additional  $2.15
million,  and later  announced  that another $17 million  would be available for
Maine.  At the same time,  however,  the Congress is  considering  a proposal to
shift the  responsibility  for allocating the  disaster-relief  funds from which
Maine's $17 million would be taken from HUD to the Federal Emergency  Management
Agency.  Consequently,  Central Maine cannot now  determine  whether those funds
will be allocated to Maine and, if so, what portion Central Maine would receive.
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 has
deferred  action  pending  the  determina-tion  of the  amount  of  any  federal
reimbursement.  Therefore,  Central Maine cannot predict what portion of its ice
storm-related  costs it will ultimately recover through federal  assistance,  if
any, or from its customers, or when any such recovery will take place.


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, 1997,
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.

By Complaint  dated  December 9, 1997,  the Maine Office of the Public  Advocate
("OPA") sought a FERC  investigation  of Maine Yankee's  actions  leading to the
decision  to  shut  down  the  Plant,  including  actions  associated  with  the
management  and operation of Maine Yankee since 1993.  The MPUC had initiated an
investigation in Maine earlier,  raising  generally  similar issues. By decision
dated  May  4,  1998,  the  FERC   consolidated   the  OPA  Complaint  with  the
comprehensive  rate  proceeding.  In  addition,  28  municipal  and  cooperative
utilities that had purchased in the aggregate  approximately  6.2 percent of the
output of the Plant from Maine Yankee's  sponsors (the  "Secondary  Purchasers")
intervened in the FERC  proceeding,  raising  similar  prudence issues and other
issues specific to their status as indirect purchasers from Maine Yankee.

In support of its request for an increase in decommissioning collections,  Maine
Yankee submitted with its initial FERC filing a 1997  decommissioning cost study
performed by TLG Services, Inc. ("TLG"). During 1998, Maine Yankee engaged in an
extensive  competitive  bid  process  to  engage  a  Decommissioning  Operations
Contractor  ("DOC") to perform certain major  decontamination  and dismantlement
activities at the Plant on a  fixed-price,  turnkey  basis.  As a result of that
process, a consortium headed by Stone & Webster Engineering  Corporation ("Stone
&  Webster")  was  selected  to  perform  such  activities  under a  fixed-price
contract.  The contract provides for, among other undertakings,  construction of
an independent spent fuel storage installation ("ISFSI") and completion of major
decommissioning  activities  and site  restoration  by the end of 2004.  The DOC
process  resulted in fixing certain costs that had been estimated in the earlier
decommissioning cost estimate performed by TLG.

Since the filing of the rate request,  Maine Yankee and the active  intervenors,
including among others the MPUC Staff,  the OPA, Central Maine and other owners,
the  Secondary  Purchasers,  and a  Maine  environmental  group  (the  "Settling
Parties"),  engaged in  extensive  discovery  and  negotiations.  Those  parties
participated in settlement  discussions  that resulted in an Offer of Settlement
filed by those  parties with the FERC on January 19, 1999.  On February 8, 1999,
the FERC Trial Staff recommended that the presiding judge certify the settlement
to the FERC and  that the FERC  approve  it.  Upon  approval  by the  FERC,  the
settlement  would  constitute  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. A separately  negotiated  settlement
filed with the FERC on February 5, 1999,  would resolve 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.  On February 24, 1999,  the FERC Trial Staff  recommended
certification and approval of the settlement with the Secondary  Purchasers.  On
March 10, 1999,  the presiding  judge  certified to the FERC that both Offers of
Settlement were  uncontested and joined in the Trial Staff's  comments that both
were "fair, reasonable and in the public interest."

The Offer of  Settlement  provides for Maine Yankee to collect  $33.6 million in
the  aggregate  annually,  effective  January 15, 1998,  consisting of (1) $26.8
million  for  estimated   decommissioning   costs,  and  (2)  $6.8  million  for
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 the TLG estimate.  Under the settlement the amount collected
annually could be reduced to  approximately  $26 million if Maine Yankee is able
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 being 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 now in question
after  rejection  of the  selected  disposal  site  in  west  Texas  by a  Texas
regulatory agency.  Both would require  authorizing  legislation in Maine, which
Maine Yankee is committed to use its best efforts to obtain.

The Offer of Settlement also provides for recovery of all 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.  The Settling  Parties also agreed in the  proposed  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 Offer of  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  would  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 has  collected  from its retail  customers  a return on equity in
excess of the 6.50 percent  contemplated by the Offer of Settlement,  no refunds
would be required, but such excess amounts would be credited to the customers to
the extent required by the ARP.

The final 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 sets forth
the methodology for calculating such replacement power costs.

CMP Group and Central Maine believe that the Offer of Settlement,  including the
Maine Agreement, constitutes a reasonable resolution of the issues raised in the
Maine Yankee FERC  proceeding,  and that  approval of the Offer of Settlement by
the FERC would eliminate  significant  uncertainties  concerning CMP Group's and
Central Maine's future financial performance. Although all of the active parties
to the proceeding,  including the FERC Trial Staff,  support or, with respect to
certain individual provisions, do not oppose, the Offer of Settlement, CMP Group
and Central Maine cannot predict with certainty  whether or in what form it will
be approved by the FERC.

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

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 by 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  and will be  determined by the MPUC as provided in
the legislation.  The MPUC has been conducting separate adjudicatory proceedings
to  determine  the  stranded  costs  for  each  Maine  utility,  along  with the
corresponding  revenue  requirements and stranded-cost  charges to be charged by
each transmission-and-distribution utility. The first phase of the Central Maine
proceeding was completed in early 1999 and is discussed  under the heading "MPUC
Proceeding on Stranded Costs, Revenue Requirements, and Rate Design," below.

In addition,  the legislation  requires utilities to use all reasonable means to
reduce their potential  stranded costs and to maximize the value from generation
assets and contracts. The MPUC must consider a utility's efforts to mitigate its
stranded  costs in  determining  the  amount of the  utility's  stranded  costs.
Stranded costs and the related rates charged to customers will be  prospectively
adjusted as necessary to correct  substantial  inaccuracies in the year 2003 and
at least every three years thereafter.

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.  However,  the MPUC can require  Central Maine to divest its interest in
Maine Yankee  Atomic  Power  Company on or after  January 1, 2009.  As discussed
below under "Sale of Generation  Assets,"  Central Maine  contracted to sell its
non-nuclear  generating assets and, after a favorable court decision,  completed
the  sale on  April  7,  1999.  The  legislation  also  requires  investor-owned
utilities,  after  February 29,  2000,  to sell their rights to the capacity and
energy from all generation assets, including the purchased-power  contracts that
had not  previously  been  divested  pursuant to the  legislation,  with certain
immaterial exceptions.

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 does not now 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.

Legislative  bills that would amend certain  provisions of the 1997  legislation
have been submitted to the 1999 session of the Maine Legislature.  CMP Group and
Central Maine cannot predict whether any changes to the 1997 legislation will be
enacted.

MPUC Proceeding on Stranded Costs,  Revenue  Requirements,  and Rate Design. The
MPUC has 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.  On
December 23, 1998,  the MPUC Hearing  Examiners in the  proceeding  issued their
report,  in the form of a recommended  decision.  Central Maine disagreed with a
number   of  the   individual   recommendations   in  the   stranded-costs   and
revenue-requirements  areas and filed exceptions to those  recommendations.  The
MPUC  deliberated  the  recommendations  on February 10 and 11, 1999,  indicated
disagreement with some of the  recommendations,  and issued its written order on
March 19, 1999.

The MPUC stressed in its 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 not calculating the rates themselves  because such calculations
at that time would rely  excessively on estimates.  The MPUC pointed out that it
would  hold a "Phase  II"  hearing to set the  actual  rates and  determine  the
recoverable  stranded  costs  after  processing  information  expected to become
available during 1999.

With respect to stranded costs,  the MPUC indicated that it would set the amount
of recoverable stranded costs for Central Maine later in the proceeding 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 these 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  divested
generation  assets to offset  stranded costs. At the beginning of the proceeding
Central Maine had estimated its total  stranded costs to be  approximately  $1.3
billion.

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, after weighing conflicting  recommendations,  decided on 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 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. The MPUC indicated that it
would focus on (1)  facilitating  the  transition  to a  competitive  market for
generation,  and (2) implementing a "no-losers" policy,  i.e., that the new rate
design  would  cause no Central  Maine  customer's  bill to increase on March 1,
2000. Applying the latter principle,  the MPUC rejected a newly designed standby
rate  for  self-generators  proposed  by  Central  Maine  in  favor  of a design
generally similar to Central Maine's current rate for the class. The MPUC stated
that it planned to undertake a comprehensive  rate design and  alternative  rate
plan proceeding for Central Maine prior to March 1, 2002, when it could consider
experience      gained     with     the     cost     structures     of     other
transmission-and-distribution  utilities after the commencement of retail access
to generation.

The Phase I order resulted from an extended  proceeding with many points of view
represented  and covers a wide  variety  of  rate-related  subjects.  Definitive
findings by the MPUC in a number of the subject  areas await the second phase of
the  proceeding,  which must be completed  before  March 1, 2000.  CMP Group and
Central Maine cannot  predict the  definitive  amount of stranded costs the MPUC
will  determine  that Central Maine will be entitled to recover  pursuant to the
mandate of the  restructuring  statute,  or the  revenue  requirements  and rate
design that will result from Phase II of the MPUC proceeding.

Sale of Generation Assets

On January 6, 1998,  Central Maine  announced  that it had reached  agreement to
sell  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 Florida-based FPL Group.
The related  book value for these  assets was  approximately  $218.9  million at
December 31, 1998. 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  $3.6 million ($1.5 million for the assets and $2.1 million for lease
revenue  associated with the properties  that CMP will retain),  including $1.15
million  for Union Water  assets.  The  related  book value of these  assets was
approximately $11.9 million at December 31, 1998.

Central  Maine's  interests  in the power  entitlements  from  approximately  50
power-purchase agreements with non-utility generators representing approximately
488  megawatts,  its  2.5-percent  interest in the Millstone  Unit No. 3 nuclear
generating  unit in Waterford,  Connecticut,  its  3.59-percent  interest in the
output of the Vermont Yankee nuclear  generating plant in Vernon,  Vermont,  and
its entitlement in the NEPOOL Phase II  interconnection  with  Hydro-Quebec  all
attracted  insufficient  interest to be included  in the pending  sale.  Central
Maine will continue to seek buyers for those assets. Central Maine did not offer
for sale its  interests  in the Maine  Yankee  (Wiscasset,  Maine),  Connecticut
Yankee (Haddam,  Connecticut)  and Yankee Atomic (Rowe,  Massachusetts)  nuclear
generating plants, all of which are in the process of being decommissioned.

On November 17, 1998, FPL Group announced that its subsidiary, FPL Energy Maine,
Inc. ("FPL Energy") had filed a civil action in the United States District Court
for the Southern  District of New York  requesting a  declaratory  judgment that
Central Maine could not meet essential terms of the January agreement. FPL Group
asserted that based on October 1998 FERC rulings on transmission access, as well
as other  issues,  it  believed  that  Central  Maine  could not comply with the
conditions  in the purchase  contract and that FPL Energy should not be bound to
complete the transaction.

On November 23, 1998, the MPUC granted its approval of the sale to FPL Energy of
the generating assets contemplated by the purchase  agreement,  finding the sale
to be in the public  interest.  The MPUC also made the  findings  required  as a
prerequisite  to a FERC  designation  of the  generating  facilities  as "exempt
wholesale generators," which had been requested by FPL Energy.

On November 24, 1998, the FERC approved the sale of the Central Maine generating
assets to FPL  Energy,  after  making  the  required  finding  that the sale was
consistent  with  the  public  interest,   and  accepted  certain   implementing
agreements  for  filing.  The FERC  granted  its  approval  of the  transfer  of
hydroelectric  and water storage licenses on December 28, 1998, and its approval
of  exempt-wholesale-generator  status for the generating facilities on February
24, 1999.

On March 11,  1999,  the  hearing  on FPL  Energy's  request  for a  declaratory
judgment was held in the United States District Court for the Southern  District
of New York. On the same day the  presiding  judge ruled that FPL Energy was not
entitled to the declaratory  judgment and entered judgment for Central Maine and
its affiliated defendants on all counts of the complaint. Thereafter on that day
FPL Energy announced that it would not appeal the decision, but would proceed to
a closing of the sale.  The sale was  completed  on April 7,  1999.  The gain of
approximately  $500 to $600  million from the  divested  generation  assets will
initially  be  recorded  as a  regulatory  liability.  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
recognition of any remaining regulatory liability.

With the  proceeds of the sale  Central  Maine  redeemed  the  remaining  $118.7
million of its outstanding General and Refunding Mortgage Bonds on May 10, 1999,
paid at maturity $47 million of its medium-term notes on May 4, 1999, and called
for redemption on June 1, 1999, $180 million of its medium-term  notes,  and all
of the outstanding $10 million Town of Yarmouth Pollution Control Revenue Bonds,
which were issued in 1977 and 1978.  Approximately  $300 million of the proceeds
will be required for federal and state 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 and could include repurchases of common and preferred stock.

Expansion of Lines of Business

General.  CMP Group is also preparing for  competition by expanding its business
opportunities through investments that capitalize on core competencies. MaineCom
Services is a subsidiary that arranges,  through other  investments  fiber-optic
data  service  for bulk  carriers,  offering  support  for cable  television  or
"super-cellular"   personal   communication   vendors,   and   providing   other
telecommunications  consulting  services.  TeleSmart is a wholly-owned  accounts
receivable  management  subsidiary.   Another  wholly-owned  subsidiary,   CNEX,
formerly CMP International  Consultants,  provides utility consulting  (domestic
and  international)  and research.  The  wholly-owned  Union Water Power Company
provides locating of underground  utility  facilities and infrared  photography,
real  estate  brokerage  and  management,   modular  housing,   engineering  and
environmental  services,  integrated energy solutions,  and utility construction
services.  Union Water's operating divisions include On Target Utility Services,
UnionLand Services, Maine HomeCrafters,  E/PRO, and Combined Energies(TM). These
subsidiaries  often  utilize  skills  of  former  Central  Maine  employees  and
regularly compete for business with other companies.

Natural Gas Distribution. CMP Group and Energy East, through subsidiaries,  have
entered into a  joint-venture  agreement to pursue  opportunities  to distribute
natural gas at retail in many Maine  communities  that are not currently  served
with that fuel. They would offer natural-gas  service in several areas of Maine,
primarily the Augusta,  Bangor,  Bath-Brunswick,  Bethel, Windham and Waterville
areas, none of which currently has a natural-gas  distribution  system in place.
The gas would be drawn from two new gas-pipeline  projects now under development
by unrelated  parties that would carry  Canadian gas through  Maine and into the
regional energy market using substantial portions of electric  transmission-line
corridors  owned  by  Central  Maine  and  MEPCO.  On July  24,  1998,  the MPUC
authorized the joint venture to serve the areas it had applied to serve. The new
company (now "CMP Natural Gas, L.L.C.",  of which a subsidiary of CMP Group owns
approximately  40 percent and a subsidiary of Energy East owns  approximately 60
percent)  could face  competition  from new or existing gas utilities in some of
the areas it has  targeted.  CMP Group's level of investment is dependent on the
overall  economic  feasibility of natural gas as a competitive  energy option in
Maine,  a  sufficient  expression  of customer  interest in gas service from CMP
Natural Gas, and the prospects for achieving an acceptable return on investment.

Fiber Optic Network.  CMP Group,  through its wholly-owned  subsidiary  MaineCom
Services, owns 38.5 percent of the common stock of Northeast Optic Network, Inc.
("NEON"),  which is a  facilities-based  provider of  technologically  advanced,
high-bandwidth, fiber optic transmission capacity for communications carriers on
local loop,  inter-city and interstate  facilities.  NEON is currently expanding
its fiber optic  network to encompass  over 1,000 fiber optic cable route miles,
or more than 65,000 fiber strand miles,  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, in Connecticut,  Massachusetts and New
Hampshire.   As  of  March  31,  1999,   NEON  had  completed   construction  of
approximately  600 route miles, or 49,000 fiber miles, of its planned system and
is currently  engineering,  constructing,  or acquiring additional routes with a
goal of  creating  a  continuous  fiber  optic  link  between  New York City and
Portland,  Maine,  with access into and around  Boston and numerous  other major
service areas in the Northeast.

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 March 31,
1999,  Central  Maine had an accrued  liability of $2.9 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 2, "Commitments and  Contingencies." - "Legal and Environmental
Matters" for further discussion of this matter.

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 March 31,
1999,  Central Maine had $327 million of  medium-term  notes  outstanding,  $227
million of which bear floating,  LIBOR-based  rates,  increasing its exposure to
changes in interest rates.

                            Variable Long Term            Fixed Long Term
                                       (dollars in thousands)

Weighted Average Rates               7.14%                        6.87%

Balance at March 31, 1999           $262,011                     $365,290

Maturity Period                   1999 - 2019                  1999 - 2021






                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings
Shareholder  Suit - On  September  25,  1997,  a lawsuit was filed in the United
States  District  Court for the  Southern  District  of New York by a New Jersey
resident  claiming  to be a  shareholder  of Central  Maine  against the current
members of Central Maine's board of directors,  including the then President and
Chief Executive Officer,  and three former directors.  The complaint contained a
derivative  claim that the  defendants  recklessly  mismanaged the oversight and
operation of the Maine Yankee Plant and an individual  claim that the defendants
failed to make timely and adequate disclosures of information in connection with
issues surrounding the Plant. The complaint did not seek damages against Central
Maine,  but requested that the  defendants  disgorge the  compensation  they had
received during the period of alleged mismanagement,  pay to Central Maine costs
incurred  allegedly as a result of the claimed actions,  and cause Central Maine
to take steps to prevent such actions.

The defendants  moved to dismiss the suit for failure of the plaintiff to make a
pre-suit demand on Central Maine's board of directors, as required by Maine law,
and on February  18, 1998,  the suit was  dismissed.  On April 2, 1998,  Central
Maine  received such a demand from the  plaintiff.  On December 18, 1998,  after
investigation of the plaintiff's allegations, the board rejected the demand.

Regulatory Matters - For a discussion of certain significant  regulatory matters
affecting  Central Maine,  including those related to the permanent  shutdown of
the Maine  Yankee  Plant,  as well as  electric-utility  restructuring,  an MPUC
proceeding  that will  determine  Central  Maine's  stranded  costs and  related
matters,  and  the  sale  of  its  generation  assets,  see  Item 2 of  Part  I,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operation" - "Permanent  Shutdown of Maine Yankee  Plant",  "MPUC  Proceeding on
Stranded Costs,  Revenue  Requirements and Rate Design," and "Sale of Generation
Assets," which are incorporated herein by reference.

Tax Appeal - For a  discussion  of  Central  Maine's  appeal of two  significant
federal income tax adjustments proposed by the Internal Revenue Service see Note
2, "Commitments and Contingencies" - "Proposed Federal Income Tax Adjustments."

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

Item 2. Through Item 5. Not applicable

Item 6. Exhibits and Reports on Form 8-K

      (a) Exhibits. None.
      (b)Reports on Form 8-K.  CMP Group and Central  Maine filed the  following
         reports on Form 8-K during the first  quarter of 1999 an  thereafter to
         date:

Date of Report                                          Items Reported

January 19, 1999           .........                 Item 5

 a) The registrants reported on the status of the FPL Group declaratory judgment
action.

 b)  The registrants  reported on an Offer of Settlement  filed with the FERC in
     Maine Yankee's decommissioning rate case.

 c)  The  registrants  reported on the status of the MPUC  proceeding on Central
     Maine's stranded costs, revenue requirements, and rate design.

 d)  CMP Group reported on a bylaw provision dealing with shareholder  proposals
     and nominations of directors by shareholders.

Date of Report                                          Items Reported

April 7, 1999              .........                          Item 5

The  registrants  reported  on the  completion  of the  sale of its  non-nuclear
generating  assets to FPL Group,  Inc.,  entities,  and its improved  securities
ratings.






                                   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:  May 14, 1999       By     _____________________________________
      ---------------
                                 David E. Marsh, Chief Financial Officer 
                                 (Principal Financial Officer and duly 
                                 authorized officer)



                                               CENTRAL MAINE POWER COMPANY



Date:  May 14, 1999       By     _____________________________________
      ---------------
                                 Michael W. Caron, Comptroller (Chief Accounting
                                 Officer and duly authorized officer)