**Exhibit 10(al)**

 
| **DATE:**  |   | **Sep 10, 2003**                                |
|------------|--------|-------------------------------------------------|
|       |   |                                            |
| **TO:**    |   | **MAINE PUBLIC SERVICE COMPANY,  (Party B)**    |
| **ATTN:**  |   | **KURT A TORNQUIST**                            |
| **FAX:**   |   | **207-764-6586**                                |
| **PHONE:** |   | **207-768-5811**                                |
|       |   |                                            |
|       |   |                                            |
| **FROM:**  |   | **Fleet National Bank, (Party A)**              |
| **ATTN:**  |   | **Derivatives Confirmation Unit**               |
| **FAX:**   |   | **(617) 434-4284**                              |
| **PHONE:** |   | **(617) 434-4787 or (617) 434-7878**            |
|       |   |                                            |
| **RE:**    |   | **INTEREST RATE SWAP  Our Ref: 80643FB/129891** |

 

 

The purpose of this letter agreement is to set forth**theterms and conditions of the Transaction entered into between Fleet NationalBank Party A and MAINE PUBLIC SERVICE COMPANY Party B on the Trade Datespecified below (the “Transaction”). This letter constitutes a “Confirmation”as referred to in the ISDA Master Agreement specified below.

 

The definitions and provisions contained in the 2000 ISDA Definitions(the “Definitions”), as published by the international Swaps and DerivativesAssociation, Inc. (“ISDA”), are incorporated into this Confirmation. In theevent of any inconsistency between the Definitions and provisions in thisConfirmation, this Confirmation will govern.

 

1.                                       Thisconfirmation constitutes a “Confirmation” as referred to in, and supplements,forms a part of and is subject to, the ISDA Master Agreement dated as of9//09/03, as amended and supplemented from time to time (the “Agreement”),between you and us. All provisions contained in the Agreement govern thisconfirmation except as expressly modified below.

 

2.                                       Theterms of the particular Transaction to which this Confirmation relates are asfollows:

 
| Trade Date       |   | Sep 09, 2003                                                                                                  |
|------------------|--------|---------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                          |
| Effective Date   |   | Sep 09, 2003                                                                                                  |
|             |   |                                                                                                          |
| Termination Date |   | Oct 01, 2025 subject to adjustment in accordance with the  Modified  Following Business Day  convention. |
|             |   |                                                                                                          |
| Notional Amount  |   | USD 9,000,000.00                                                                                              |

 

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Floating Amounts

 
| Floating Rate Payer         |   | Fleet National Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Floating Rate Payment Dates |   | Monthly  on the lst, commencing Oct 01, 2003 and ending on the Termination Date  subject to adjustment in accordance with the Modified Following Business Day  Convention.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Floating  Rate Option       |   | USD-BMA;  meaning the rate in effect for a Reset Date shall be determined on the basis  of “The Bond Market Association Municipal swap Index”, a trademark of the  Bond Market Association and formerly named the PSA Municipal Swap Index, announced  by Municipal Market Data on Wednesday, or if the rate is not announced on  such day, the next succeeding Business bay on which the rate is announced;  provided, however, that Floating Rate for the initial Calculation Period  shall be the rate in effect for the immediately preceding date that would  have been a Reset Date for the relevant transaction. If for a Calculation  Period the Bond Market Association Municipal Swap Index for a *Reset Date  i*n that calculation Period is not announced, the rate for such  Reset Date shall be determined as if the parties had specified “USD-JJKENNY”  (as defined herein below) as the applicable Floating Rate Option. The rate so  determined will be deemed USD-BMA for the purpose of this transaction.  “USD-JJKENNY”; meaning the rate in effect for a Reset Date shall be  determined on the basis of the “Kenny S&P 7-day High Grade Index” (the  “Kenny Index”) announced by Kenny S&P Evaluation Services at the  beginning of business on Tuesday, or if the rate is not announced on such  day, the next succeeding Business Day on which the rate is announced;  provided, however, the Floating Rate for the initial Calculation Period shall  be the rate in effect for the immediately preceding date that would have been  a Reset Date for the |

 

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|                             |   | relevant transaction. If, at any time, both the Kenny Index and  USD-BMA are no longer determined and announced or are materially modified a  comparable alternative index mutually agreed upon by both parties shall be  used. The rate so determined will be deemed USD-BMA for the purpose of this  Transaction, |
|----------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Designated Maturity              |   | 1 week                                                                                                                                                                                                                                                                                                              |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Spread                           |   | None                                                                                                                                                                                                                                                                                                                |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Floating Rate Day Count Fraction |   | ACTUAL / ACTUAL                                                                                                                                                                                                                                                                                                     |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Floating Rate Reset Dates        |   | The last Business Day of each Calculation Period                                                                                                                                                                                                                                                                    |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Compounding                      |   | Inapplicable                                                                                                                                                                                                                                                                                                        |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Method of Averaging              |   | Weighted Average                                                                                                                                                                                                                                                                                                    |
|                             |   |                                                                                                                                                                                                                                                                                                                |
| Business Days                    |   | New York                                                                                                                                                                                                                                                                                                            |

 

Fixed Amounts

 
| Fixed Rate Payer              |   | MAINE PUBLIC SERVICE COMPANY                                                                                                                                               |
|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                       |
| Fixed Rate Payment Dates      |   | Monthly*on*the  1st, commencing Oct 01, 2003 and ending**on the Termination Date subject to  adjustment in accordance with the Modified Following Business Day Convention. |
|                          |   |                                                                                                                                                                       |
| Fixed Rate                    |   | 4.530000%                                                                                                                                                                  |
|                          |   |                                                                                                                                                                       |
| Fixed Rate Day Count Fraction |   | ACTUAL /360                                                                                                                                                                |
|                          |   |                                                                                                                                                                       |
| Business Days                 |   | New York                                                                                                                                                                   |
|                          |   |                                                                                                                                                                       |
| Calculation Agent             |   | Fleet National Bank                                                                                                                                                        |
|                          |   |                                                                                                                                                                       |
| Governing Law                 |   | New York law                                                                                                                                                               |
|                          |   |                                                                                                                                                                       |
| Documentation                 |   | ISDA Master Agreement to be provided by Fleet National Bank                                                                                                                |

 

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3.                                       RelationshipBetween Parties

 

Each party represents to the other partythat:

 

(a) Non-Reliance. It is acting for its ownaccount, and it has made its own independent decisions to enter thisTransaction and as to whether this Transaction is appropriate or proper for itbased upon its own judgment and upon advice from such advisors as it has deemed**necessary.It *is*notrelying on any communication (written or oral) from the other party asinvestment advice or as a recommendation to enter into this Transaction; itbeing understood that information and explanations related to the terms andconditions of this Transaction shall not be considered investment advice or arecommendation to enter into this Transaction. It has not received from theother party any assurance or guarantee as to the expected results of thisTransaction.

 

(b) Evaluation and Understanding. It iscapable of evaluating and understanding Con its own behalf or throughindependent professional advice), and understands and accepts, the terms,conditions and risks of this Transaction. It is also capable of assuming, andassumes, the financial and other risks of this Transaction.

 

(c) Status of Parties. The other party isnot acting as a fiduciary or an advisor for it in respect of this Transaction.

 

(d) Risk Management. It has entered intothis Transaction for the purpose of (i) managing its borrowings or investments,(ii) hedging its underlying assets or liabilities or (iii) in connection withits line of business.

 

(e) It is an “eligible contractparticipant” as defined in Section la(12) of the Commodity Exchange Act.

 

4.                                       AdditionalTermination Event****will**apply.

 

(i)                                     Theoccurrence of any of the following shall constitute an Additional TerminationEvent with respect to Party B for which Party B will be the Affected Party:

 

(1)                                  Party A isno longer party to any or all of the Credit Support Documents identified inPart 4(f)(ii) of the Schedule to the Agreement, as such documents areamended, modified, or supplemented from time to time.

 

(2)                                  Any or allof the Credit Support Documents identified in Part 4(f)(ii) of theSchedule to the Agreement, as such documents are amended, modified, orsupplemented from time to time, are terminated or ceases to exist for anyreason prior to the satisfaction of the obligations of this Transaction.

 

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(ii)                                  NotwithstandingSection 6(b) of the Agreement or any other provision of the Agreement,Party A shall not initially have the right to designate an Early TerminationDate upon the occurrence of an Additional Termination Event. In lieu of theright to designate an Early Termination Date, Party A grants Party B the rightsspecified in the following subparts (1) or (2)**to assign, as applicable,either Party A or Party B’s rights and obligation under this Transaction.

 

(1)                                  Party B**shallbe permitted to instruct Party *A*to assign Part A’s rights and obligationunder the Agreement to a substitute swap provider reasonably acceptable toParty A and Party *B*(“Substitute swap Provider”), provided the Substitute SwapProvider expressly assumes Party A’s rights and obligations under thisAgreement in a writing reasonably satisfactory to Party A and Party B.

 

(2)                                  Party Bshall be permitted to assign its rights and obligations under the Agreement toa Substitute Swap Provider, provided the Substitute Swap Provider expresslyassumes Party B’s rights and obligations under this Agreement in a writingreasonably satisfactory to Party A and Party B.

 

Party A shall have the right to designatean Early Termination**Date under Section 6(b) of theAgreement and this Additional Termination Event if this Transaction is notassigned pursuant within twenty (20) Business Days from the date the AdditionalTermination Event occurs.

 

*5.**                                *Acknowledgement

 

MAINE**PUBLIC SERVICE COMPANY acknowledges andagrees that:

 

(a)                                  absent anexpress written agreement to the contrary, an agreement by the parties tovoluntarily terminate the Transaction before its scheduled termination date iscontingent upon the payment by one party to the other of the costs associatedwith terminating the Transaction. Such costs shall include, but may not belimited to, the aggregate difference between the market value of the terminatedportion of the Transaction and the market value of a similar transactionexecuted on the termination date with a notional amount and term equal to theterminated portion of the Transaction. Any termination cost paid by MAINEPUBLIC SERVICE COMPANY to terminate the Transaction is in addition to and notpart of any yield maintenance fee, prepayment penalty or other expense thatMAINE PUBLIC SERVICE COMPANY  may pay inconnection with the prepayment of a loan transaction with Fleet National Bankor its affiliate; and

 

(b)                                 thisacknowledgement or the provision by Fleet National Bank of a valuation orindicative termination price does not constitute a commitment by Fleet NationalBank to terminate the Transaction at such price, or otherwise, prior to itsscheduled termination date. The price and terms at which the Transaction may beterminated will be individually negotiated and, accordingly, may vary from theprice and terms offered by other financial institutions. Any commitment toterminate the Transaction shall not be binding upon the parties unlessexpressly agreed to by Fleet National Bank.

 

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6.                                       SettlementInstructions

 

Payments to MAINE PUBLIC SERVICE COMPANY in USD

 

*****  Payment Instructions To Be Advised  *****

 

Payments to Fleet National Bank in USD

 
| To             |   | Fleet National Bank ABA: 011000138 |
|----------------|--------|------------------------------------|
| Favor Of       |   | Fleet National Bank                |
| Account Number |   | 1026103-29480                      |

 

7. Contact Instructions

 
| Fleet  National Bank:         |   | Tel:  617-434-7953      |
|-------------------------------|--------|-------------------------|
| Resets/Payments               |   |                    |
|                          |   | Fax:  617-434-3588      |
| Confirmations                 |   | Tel:  617-434-4787      |
|                          |   | Fax:  617-434-4284      |
|                          |   |                    |
|                          |   |                    |
| MAINE PUBLIC SERVICE COMPANY: |   | Tel:  207-768-5811 |
|                          |   | Fax: 207-764-6586       |

 

Very truly yours,

 

**Fleet National Bank,**

 
| **By:**    | /s/ [ILLEGIBLE] |   | **By:** | /s/ [ILLEGIBLE] |   |
|------------|-----------------|--------|---------|-----------------|--------|
| **Name:**  | **Name:**       |
| **Title:** | **Title:**      |

 

Agreed and accepted as of the date first above written:

 

MAINE PUBLIC SERVICE COMPANY

 
| **By:**                            | /s/ Kurt A. Tornquist |   |   |   |   |
|------------------------------------|-----------------------|--------|--------|--------|--------|
| **Name:   Kurt A. Tornquist** |                  |
| **Title: Senior VP & CFO**     |                  |

 

**PLEASE COUNTERSIGN AND FAXTO: (617) 434-4284**

**ATTN: DerivativesConfirmations**

**REQUEST CORRECTIONS:(617) 434-4787**

**Please be advisedtelephone calls may be recorded to ensuretransaction accuracy.**

**80643FB**

 

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