**Exhibit99(ao)**

 

**Letterto Shareholders**

*MPS2002 Annual Report*

 

 

Maine Public Service Company is taking affirmative steps towardbuilding a diversified revenue base to counter the impacts of deregulation, achanging energy marketplace, and a low growth service area. These factorsdictate that measured change be pursued to ensure continued and long-termshareholder value.

 

For the last 100 years, adapting to change and setting new directionshave been the hallmarks of Maine Public Service Company’s and its predecessors’successes. Begun in 1903 in New Brunswick, Canada as Maine & New BrunswickElectrical Power Company, Limited, change has been a constant. Yet, no greaterchange has faced our firm and the electric utility industry than having toadapt to the impacts of deregulation and asset divestiture.

 

We are most pleased to submit our 2002 Annual Report of Maine PublicService Company highlighting the progress we’re making during this era oftransition. The year proved to be one of the most successful financial years inthe history of our firm, underscoring the firm’s ability to adapt to anever-changing environment. We’re successfully navigating the process ofderegulation, charting new courses for our future growth and working diligentlyto ensure the utmost in effective corporate governance.

 

**CorporateGovernance**

 

The value of change and honesty has long been a guiding light for ourfirm. Its history is one of credibility and open communications.  While investor confidence has beenchallenged worldwide due to the actions of a few, Maine Public Service Companyhas consistently supported a culture focused on openness, honesty and theutmost in ethics. Our values are deeply entrenched in a rural way of life,where honesty is a core value.

 

During the past year our Board of Directors formalized its fundamentalbeliefs, instituting enhanced corporate compliance policies and adopting aphilosophy that we should be leaders in corporate governance. We stronglybelieve that ethics is a culture and a way of life.  While no firm or person can ever claim perfection, we can and doclaim an unwavering commitment to the utmost in corporate ethics, setting thehighest possible standards in all our businesses.

 

During the year, full compliance with the Sarbanes-Oxley Act of 2002,new Securities and Exchange Commission and American Stock Exchange rules wereplaced as top priorities. Our overall governance structure migrated toward anincreased focus on Board committees, ensuring that each committee is keenlyfocused on its individual charter and deeply knowledgeable concerningactivities and directions of the Company. All committees consist solely of independent directors. Our Board ofDirectors consists of all

 

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but one independent member. Further, we have and are continuing tostrengthen our Audit Committee, ensuring a broad and enhanced base of financialexpertise.

 

**FinancialPerformance**

 

Maine Public Service Company’s financial performance continues tooutpace the Dow Jones Utilities Index. During the last three years, our strongperformance has been largely attributable to stringent cost controls within ourtransmission and distribution utility, combined with significant unregulatedearnings by Energy Atlantic.

 

As we look to the future, we recognize that our long-term financialstrategy must focus on growth versus simply controlling costs within ourregulated utility. While our conservative financial strategy will remain at thecore of our efforts, our future will require new investments that result indiversified and enhanced earnings.

 

The current economic downturn and social challenges continue to impactour utility business and all electric utilities. As a result of “September 11,”property and casualty insurance has skyrocketed, while our nation’s health carecrisis has driven the cost of employee medical coverage to an all-time high.Although such costs have increased, we have and continue to adjust operatingbudgets to reflect these new realities. Additionally, during the first quarterof 2003, we filed an alternative rate plan with the Maine Public UtilitiesCommission requesting a distribution rate increase and migration toperformance-based rates.

 

During 2002, a two percent transmission rate increase was approved bythe Federal Energy Regulatory Commission (FERC) and put into place. However,the rate increase did not anticipate the loss of off-system transmission salesdue to the unexpected closure of an on-system merchant generation facility. Ourtriennial FERC filing of our open access transmission tariff (OATT) will expireMay 31, 2003, requiring the filing of a new OATT that will become effectiveJune 1, 2003, subject to FERC approval. Through this triennial filing,transmission rate adjustments will be made to compensate for the loss ofoff-system transmission sales.

 

Each of the last three years, earnings per share has steadilyincreased, influenced by Energy Atlantic’s earning contribution. Their earningscontribution was largely attributable to Energy Atlantic’s award of a standardoffer service contract for the Central Maine Power service area. This contractexpired in 2002 and will result in reduced earnings by Energy Atlantic in 2003.Efforts are underway to rebuild its revenues and earnings through increasedcompetitive energy sales and continued bidding for standard offer contracts.However, Energy Atlantic’s unregulated retail energy sales will be dependentupon its ability to obtain wholesale supply with minimal credit and pricerisks.

 

Net income and earnings per share increased significantly in 2002, achievingan earnings per share of $4.16, a 25% increase over 2001.  While overall earnings per share were up,core transmission and distribution earnings was down by 79 cents per share.However, the decline in core transmission and distribution earnings wereimpacted by a variety of

 

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unmitigable and strategic expenditures, including a voluntary early retirement program (VERP),which resulted in approximately a  sevenpercent reduction in staff and an impact to earnings per share of $0.15.

 

Increases in employee benefits, principally pension and medical, andproperty and casualty insurance costs resulted in a $0.46 cost per share. Thesecost increases were directly attributable to increased property and casualtycosts as a result of the September 11, 2001 attack on the World Trade Center;increased directors’ and officers’ liability insurance associated with thecollapse of major firms; our nation’s health care cost crisis; and thesignificant decline in the stock market. Clearly, these represent significantcosts going forward for all electric utilities. However, we are aggressivelydeveloping solutions to address and control these business costs.

 

Regulatory and legal related expenditures increased due to a myriad offactors, including compliance issues associated with the passage of theSarbanes-Oxley Act of 2002; filings with FERC relative to our OATT; developmentof our alternative rate plan for filing in 2003, with the Maine PublicUtilities Commission, requesting an increase in overall distribution rates; andefforts associated with our proposal to reorganize Maine Public Service Companyto a holding company corporate structure. These, as well as the followingdescribed strategic expenditures, accounted for a $0.37 cost per share.

 

Strategic expenditures included costs associated with an independent,in-depth audit of the firm’s transmission and distribution infrastructure, aswell as an independent audit of our information technology infrastructure. Bothaudits were undertaken at the company’s initiative. These studies are essentialplatforms for our migration to an enhanced asset management model and tofacilitate overall increased productivity. Based on the transmission anddistribution system audit, a system condition baseline has been created allowingfor more effective capital budgeting of future expenditures.  Future capital budgeting will be based on along-range system plan focusing on improved asset management to reduce capitalexpenditure requirements.

 

Maine Public Service Company ended 2002 in a strong financial position.We are taking aggressive steps to address the decline in our transmission anddistribution utility’s earnings through rate increases. However, we are highlycognizant of our need to ensure competitive rates and keenly aware of ourservice area’s declining to flat economy. Additionally, replacing the earningsassociated with Energy Atlantic’s former standard offer service within theCentral Maine Power service area is essential. Consequently, we are pursuing,as described herein, new efforts to further grow and diversify our business.

 

**ServiceArea Overview**

 

For those of us who live and work in Northern Maine, the bond andloyalty we feel to our communities is deep and abiding. The strengths andbeauty of the region are truly an American heritage.  Yet, similar to much of rural America, our service area hasexperienced a significant loss in population with a disturbing out-migration ofthe area’s

 

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young. Although the area’s population has been declining for most ofthe last forty years, the loss of population during the last decade has beenthe most severe.

 

Along with the area’s loss in population, a correlated decline in thearea’s economy has occurred. While the area has been somewhat successful inrecruiting new jobs to the region after the closure of Loring Air Force Base,these jobs tend to be lower paying than the higher paying jobs formerlyassociated with the base. These trends, combined with employment declines inthe region’s manufacturing and agricultural sectors, directly impact ourtransmission and distribution utility.

 

To assist in changing these trends, we are actively involved ineconomic development efforts and are encouraged that through public and privateeconomic development partnerships, these trends can be reversed.  Yet, we recognize that reversing thesetrends will take time and substantial effort by many. Consequently, we arevividly aware of our need to diversify our business within more growth orientedmarkets.

 

**TheValue of Change**

 

Successful firms continually build foundations for growth that requirechange and new investments. While we have performed well, we also understandthe dimensions of our challenges due to deregulation and a declining servicearea. Going forward, our values must be focused on diversified growth, ensuringconsistent long-term shareholder value balanced with corporate values ofresponsibilities to the area we serve and our employees.

 

The volatility within the electric utility and energy industries hasbeen significant. While certain utilities have been successful in theirdiversification efforts, others have been unsuccessful. However, the majorityof those that diversified and failed did so due to overly aggressiveacquisition strategies, paying excessive premiums in search of unachievablesynergies. Others have been challenged due to their diversification into energytrading, merchant generation and/or telecommunications related businesses, eachof which has experienced significant downturns. Maine Public Service Company’sdiversification strategy does not include entering into any of thesebusinesses. We clearly understand that successful acquisitions must be based onclear objectives and proven financial value.

 

We recognize both the merits and risks associated with diversification.We have closely evaluated numerous long-term business options, including simplyremaining a transmission and distribution electric utility. Several specificreasons have led the Board of Directors and management to believe this is notthe most optimal strategy.

 

Key issues leading us to this conclusion include the reality that ourservice area continues to lag economically, with forecasts showing continueddepopulation for at least the next decade. The service area’s no growth todeclining characteristics, along with the firm’s declining regulatory assetbase, suggest eventual reductions in our regulated rate base.

 

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In order to diversify and grow our business, we are proposing to ourshareholders the formation of a holding company, the Maine & MaritimesCorporation, Maine Public Service Company’s parent company. The proposedstructure achieves several overriding objectives.  First, the formation of a holding company will increase ourability to protect our regulated utility from the possible financialdifficulties another subsidiary may experience, or vice versa. Currently,subsidiaries such as Energy Atlantic are direct subsidiaries of Maine PublicService Company, exposing the utility parent company to direct subsidiaryrisks.

 

Second, due to regulations within the State of Maine, without a holdingcompany all individual unregulated growth initiatives would require expensiveand lengthy regulatory approval processes through the Maine Public UtilitiesCommission. Such regulatory processes create severe time and cost impedimentsto opportunistic growth initiatives.

 

Finally, such a corporate structure enables the organization to grow inways that would be difficult to achieve if it remained a regulated transmissionand distribution utility under the current economic, regulatory and demographicenvironment.

 

**SettingOur Course**

 

Subject to shareholders’ approval of a holding company structure, ourlong-term growth and diversification strategy will focus on a balance betweenservice and asset-based business acquisitions within the regulated andunregulated sectors. Through a portfolio approach, we anticipate managing ourgrowth among three different, but complementary “revenue funds.” These includean “annuity fund” consisting of Maine Public Service Company and possibly otherutilities; a “growth fund” focusing on the convergence of energy andenvironmental engineering; and a “real estate investment fund” consisting ofphysical assets that provide strong cash flow, have appreciatingcharacteristics and are highly liquid.

 

Obviously, our overall strategy will require execution over thelong-term. After extensive research, study, and counsel, we’re confident our“portfolio approach” to growth can provide near and long-term earnings growthand stability.  We have a clear visionof those businesses that can fit within our desired profile.  Further, in the current market ofundervalued energy and energy-related businesses and assets, we understand theneed to be opportunistic. However, we also understand that the ability toleverage opportunities, when they arise, is dependent upon a corporatestructure that enables speed, allows for prudent risk management, and reducesregulatory constraints. Our proposed creation of the Maine & MaritimesCorporation is the required organizational platform to facilitate thisstrategy. For more detailed information on our proposed strategies, pleasereview the enclosed “Questions and Answers” piece located in this report, priorto the 10-K.

 

In closing, we wish to pay special tribute to our employees. Along withthe challenge of change comes the need to improve performance. Even in light ofrescaling our organization to fit new economic realities, our employees haveconsistently focused on

 

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increasing shareholder value, understanding that increasing shareholdervalue is at the heart of our long-term success. Their continuing commitment toour shareholders and customers gives us great confidence in their ability tosuccessfully adapt to the changes we face. Simply put, when work ethic,capabilities and values may be questioned elsewhere, they are the foundationsupon which our employees operate.

 

Respectfully submitted,

 
| G. Melvin Hovey |   | J. Nick Bayne       |
|-----------------|--------|---------------------|
| Chairman        |   | President & CEO |

 

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**Q&ACOPY**

 

**An interview with J. Nick Bayne, President and CEO of MainePublic Service Company**

 

**What isyour perspective on the current turbulence within the energy and electricutility industries?  How successful haveutilities been in diversifying their activities?**

 

Financial difficulties within the energy and utility industries are aresult of different, but related factors that have drastically changed NorthAmerica’s utility landscape. Obviously, the collapse of Enron resulted in acascading impact on those firms heavily focused in energy trading and merchantgeneration development. The lack of progress of deregulation; the Californiaelectric energy crisis; our nation’s serious transmission infrastructurelimitations; the construction of excess generation capacities in certainmarkets; a slowing economy; the collapse of energy trading; and a tighteningcredit market have had dramatic and negative impacts on firms pursuing anenergy value chain strategy.

 

In contrast to the energy value chain strategy, many electric utilitiespursued a “customer-centric,” multi-utility vision believing in the convergenceof telecom and Internet businesses with electric utilities. The global collapseof the telecom and Internet sectors, combined with the construction ofexcessive bandwidth have contributed greatly to the failure of themulti-utility growth strategy.

 

Electric utility diversification efforts within the energy trading,merchant generation, telecom and Internet sectors have been disappointing. Yet,many electric utility diversification efforts outside of these business sectorshave been highly successful.  Simply to“paint” all electric utilities’ diversification efforts with the same “brush”is mistaken. Maine Public Service Company’s proposed diversification efforts donot include energy trading, merchant generation, telecom and Internetstrategies. Our strategies are focused on specific and well-studied businessactivities that make sense within our region. Our migration to these activitieswill be methodical and realistic. While we have developed a long-term strategy,our timeline is both conservative and realistic.

 

**As thenew CEO of Maine Public Service Company, what do you feel are the greatestopportunities and challenges facing Maine Public Service in 2003 and beyond?**

 

The issues we face going forward include three overarching issues.  First, we must adapt to our altered revenuemodel; second we must address the economic and demographic stagnation of ourservice area; and third, we must diversify our business both in terms of ourlines of business and the markets in which we are involved. Maine PublicService Company’s historical business model consisted of a verticallyintegrated utility, owning every revenue and margin point in the utility valuechain from generation to transmission to distribution to customer service.  Deregulation and subsequent generationdivestiture

 

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both within the State of Maine and in Canada have significantly changedour strategic model.

 

As a result of the change in our revenue model, we’ve moved from acapital-intensive business to a labor-intensive one where the number ofemployees per dollar of investment is much higher.  Our transition to a “transmission and distribution wires businessonly” has significantly impacted overall near-term management strategies,requiring greater focus on productivity and cost control. To overcome theobstacles created by the significant geography we serve and our low number ofcustomers per mile of line, we must increasingly focus on technologyinvestments; enhance system planning and asset management; decentralizeoperations facilitated by technology integration; and improve businessprocesses to control operating costs and ensure efficiencies.

 

We have excelled in our ability to adapt to the changes that haveoccurred to date. Yet, we understand that at some point increasing shareholdervalue cannot be derived from shrinking the firm and gaining efficiencies. OurBoard of Directors and management recognize that our planning responsibilitiesare for both the short and long-term future of the firm. In the short-term, weare confident of our ability to deliver positive results. Yet, we alsorecognize there is a threshold relative to scale reductions and efficiencygains that is unrealistic. A singular strategy focused on scale reductions andefficiency gains cannot build the long-term shareholder value we believeessential. We must balance our emphasis on increasing revenues and earningswith the same vigor we’ve focused on controlling costs.

 

We’ve spent considerable time analyzing and mapping current trends andtheir long-term impacts. Given the economic stagnation of our service area, itis essential that we begin deliberate and conservative migration into highergrowth geographic markets and into expanded lines of business. Increasingshareholder value for the long-term will be dependent upon our ability toachieve these goals.

 

**Areholding companies unusual in the electric utility industry and why are youproposing a holding company structure?**

 

Holding companies are more the norm than the exception for electricutilities. We are the only investor-owned electric utility in Maine that is notpart of a holding company. However, our strategy to move to a holding companyis not part of an effort to “look like” the others. Our proposal to move to a holdingcompany structure centers around our need to create a legal structure thatallows for increased flexibility; reduces risks associated with unregulatedgrowth on our regulated utility; increases capital formation capabilities; andreduces regulatory barriers to growth.

 

Today, Maine Public Service Company serves as the parent company withdirect subsidiaries, including Energy Atlantic and Maine & New BrunswickElectrical Power Company, Limited. Under our current structure, all subsidiaries have a direct impact onthe utility, both from a revenue and risk perspective. The parent company,Maine Public Service, is directly responsible for debt and credit of itssubsidiaries. We do not believe

 

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this corporate structure is in the best interest of our shareholders orconsistent with sound risk management and strategies for growth.

 

Under our current corporate structure, as a regulated utility, we areseverely limited in our abilities to take advantage of market anddiversification opportunities. Today, each time an investment opportunityarises, it requires a time consuming and typically costly regulatory filing. Toprotect consumers, the Maine Public Utilities Commission is charged withensuring the financial integrity of the regulated utility. When the regulatedutility is the parent company, it becomes directly exposed to the risks andbenefits associated with subsidiaries. Conversely, the subsidiary is directlyimpacted by the risks associated with the parent utility.

 

Through the creation of a holding company, a corporate structure iscreated that provides increased abilities to pursue growth opportunities whileproviding increased protection of the regulated utility, eliminating the needfor time consuming and costly regulatory reviews of each and everyopportunity.  Under our approved orderfrom the Maine Public Utilities Commission, we will be allowed to invest up toa cap of approximately $56 million in unregulated activities without additionalregulatory approvals. However, to ensure protection of the utility, we mustmaintain at least a 48% equity position in the utility and must usenon-recourse financing to ensure protection of utility assets. These and otherrestrictions provide excellent risk management for the utility and provide theflexibility required to grow our business and increase shareholder value. Theseprotections do not exist under our current structure.

 

**Whatwill happen to the shares of MPS common stock?**

 

Maine Public Service stock (AMEX ticker symbol “MAP”) will be tradedfor stock of the new holding company. There will be no degradation of value inthe transfer, so there will be no degradation of shareholder value.Additionally, there are expected to be no tax consequences as a result of thetrade in stock.

 

Our proposed holding company will be named the Maine & MaritimesCorporation and will trade on the American Stock Exchange (AMEX) under theticker symbol “MAM.”

 

**Why doyou think it is in the best interest of shareholders to form a holding company?**

 

There are really two questions for shareholders: One question is whathappens to shareholder value if Maine Public Service Company adopts a newholding company structure and the other question is what happens if it doesn’t?

 

Let’s consider what happens if we don’t create a holding company. Ourstrategy would then require that we attempt to create subsidiaries of MainePublic Service Company, requiring Maine Public Utilities Commission approvaleach time we attempt to diversify. This process creates significant barriers totaking advantage of market opportunities, consumes excessive time andsubstantially increases regulatory costs associated with

 

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diversification. In our view, not diversifying is simply not asolution.  Given the economiccharacteristics of our service area, we recognize that long-term shareholdervalue cannot be derived from simply “shrinking” the utility. We mustconcentrate on revenue and earnings enhancements.

 

Now let’s consider what happens if we adopt a new holding companystructure. Under this structure we’ll have increased flexibility to pursuegrowth; enhanced risk management options; increased ability to createsubsidiaries; and improved ability to pursue growth opportunities on a timelybasis.  Equally, if not more important,we’ll have increased ability to insulate and protect our regulated utility fromunregulated risks and vice versa.

 

If we begin with the premise that long-term growth throughdiversification is an absolute mandate, then the real question becomes “what’sthe best corporate structure?” We firmly believe that migration to a holdingcompany is the best structure to facilitate our essential growth.

 

**Whatpercentage shareholder vote will be required to approve the holding company?**

 

Moving to a holding company requires stringent review and approval bythe Securities Exchange Commission, the Maine Public Utilities Commission, theFederal Energy Regulatory Commission and others before the vote can bepresented to our shareholders. Once the vote is presented to our shareholdersit will require a simple majority for approval. However, failure of ashareholder to cast a vote will be counted as a “no” vote.  Consequently, we encourage all shareholdersto cast their votes based on their individual choices.

 

**Theregulated side of the business is still very important. What is MPS doing tokeep it strong?**

 

Simply to assume that business within the regulated electric utilitywill be the same as the past is mistaken. The electric utility industry withinMaine has changed and continues to change. We are taking actions today to position our utility for the long-term.We have submitted one of the most innovative alternative rate plans in thenation, requesting the Maine Public Utility Commission’s approval for both arate increase and adoption of performance-based rates (PBR). Should thisseven-year PBR proposal be approved, future earnings will be directlyattributable to our performance, allowing increased regulated earnings when wedo well and decreased earnings if we do poorly.

 

We have and are making great strides to ensure our improved performanceand consistent achievement of service quality indices that will ensureincreased allowable regulated earnings under our proposed PBR. We arecontinuing to streamline our organization in order to optimize all businessprocesses. We are rapidly integrating new technologies that show aggressiveinternal rates of return. For example, we are currently installing automatedmeters allowing for remote readings. Given the rural and low customer per

 

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mile density characteristics of our service area, this technology willprovide cost reductions and improvements in efficiencies.

 

We are developing a comprehensive system plan that focuses on increasedasset management to improve system performance, while detailing a plan toreduce near and long-term capital expenditures through the use of new technologies and streamlining of infrastructure.As part of our improved asset-management plan, we’re seeking to ensure that allcapital investments for renewals and replacements are done on a most economicbasis with a greater correlation with rates of depreciation. Additionally,  we are closely evaluating additional andfuture transmission interconnections to improve the potential for throughputand upgraded system security.

 

While our proposed growth will come primarily from unregulatedsubsidiaries, we are evaluating and pursuing non-core utility activities, suchas promoting business process outsourcing, offering our unique “live-line”technology and crews to other investor-owned and consumer-owned utilities on aperformance-based contracting basis.

 

**Can youexplain how you intend to diversify and why?**

 

We have found it helpful to think of our future business strategy usingan analogy to a well known investment model. As we migrate to a holding companyformat, we see the holding company as a form of “revenue fund” manager withstrategic responsibilities to manage a portfolio of diverse, but complementary,businesses, each developed under a separate business model, or “fund.” Obviously,the migration to multiple “revenue funds” is a long-term process. Yet, throughthe use of a portfolio approach we see greater opportunities both in the nearand long-term for increased earnings growth and stability. Today, we’re highlyfocused on an opportunistic approach, taking advantage of undervaluednon-generation energy businesses within the currently depressed energy market.

 

From a high-level perspective, our long-term goal is to build abalanced portfolio containing three “revenue funds” with differing, butcomplementary, characteristics. Our initial efforts are focused on identifyingand acquiring an “annuity fund” oriented business, such as another regulatedutility with financial characteristics that strengthen our shareholder valueand long-term dividend returns.

 

While we’re cognizant of our need to be measured and reasonable in ourpursuit of growth, we recognize that some opportunities may be more inenergy-related than direct energy activities. Consequently, we’re evaluating certain energy-related businesses thatresemble a “growth fund” and represent considerable potential “upside.” These“growth fund” oriented businesses are built on the convergence of energy andenvironmental engineering management. We see North America’s energy crisis due to structural and geo-politicalconditions as a long-term challenge. While energy supplies are being stressedand prices are approaching historical highs, we see an increasing desire toimprove America’s energy independence, including a renewed interest in energyefficiencies and lifecycle asset management. Simultaneously, we see anincreasing public

 

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policy mandate to address the environmental challenges facing NorthAmerica, particularly related to Canada’s adoption of the Kyoto Protocols andthe New England Governors’ and Eastern Canadian Premiers’ resolutions on energyand the environment. We strongly believe that energy-based cost pressures, aneed for improved energy independence and increasing public policy mandates forenvironmental improvement create a unique opportunity for a value propositionthat squarely addresses these issues.

 

Third, we also see the potential to create a “real estate investmentfund” focused on asset-based businesses that provide appreciating and strongcash flow characteristics. We’re evaluating a number of options relative tosuch asset-based businesses that possess requisite hedge-like characteristics.Such a fund could range from energy-related assets to real estate, as long asthe assets present a combination of characteristics, such as a low valuationwith high probability appreciation characteristics, strong cash flow, and ingrowth markets that hedge our traditional geographic focus.

 

We recognize that our growth strategy must entail a “step at a time”strategy. Yet, we’re also aware of the reality that effective leveraging ofopportunities is always dependent upon timing and the market availability ofspecific opportunities. Obviously, building all funds simultaneously isimprobable and impractical.  However, weare receptive to and are analyzing opportunities within each of the three fundcategories. Obviously, achieving our portfolio growth goals will not be an“overnight” journey and must encompass a deliberate, conservative and measuredapproach. Yet, we are fully aware that our success will be highly dependentupon our ability to establish the foundation from which opportunities can berapidly leveraged, taking definitive actions when “opportunity knocks.”

 

**Whatsets Maine Public Service Company apart?**

 

We live in and serve one of the most unique markets in the UnitedStates. As a border region, our company’s roots are planted within theMaritimes region of Canada with our transmission grid only connected to Canada.Our service area is multilingual reflecting the strong Franco-American heritageof much of our service area. Our service area’s economy is far more tied to theEastern Canadian market than the New England market. We have deep experience indoing business internationally, having begun our business in 1903 in NewBrunswick, Canada. Few organizations have our knowledge and experience doingbusiness between the United States and Canada.

 

As a small investor-owned utility, we’ve built an exceptionallytalented management team with a diverse set of skills. Our collectiveexperience includes core utility and unregulated diversified operations, aswell as mergers and acquisitions activities. While we recognize the manytalented people in our world, we’re convinced we’ve assembled one of the bestmanagement teams in the industry, particularly related to our scale. We’llcontinue to strengthen this team as we diversify, including our alreadyimplemented management development program wherein management is required tocontinue their education and sharpen their skills to truly world-class caliber.

 

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Our Board of Directors consists of a set of highly qualified anddedicated individuals, each with valued and diverse business backgrounds. Theirpersonal business experiences and financial expertise provide for an exceptionallystrong Board with a keen sense of responsibility and understanding of theirrole as effective stewards for all shareholders. The level of engagement andinvolvement in the firm by our Board of Directors underscores theirunderstanding of effective corporate governance and their role in managingoverall strategy risks. They represent an exceptionally strong group ofleaders, as we seek to diversify through our balanced “revenue fund” approach.

 

The rural characteristics of our service area and firm have resulted ina foundation of values that begins with honesty and remains progressive, butconservative. We understand our place in the world and have a keen sense ofrealism. We understand scale and have only a desire to create prudentshareholder value. We are not pursuing a myth of growth where our guiding lightis to be the biggest. Our focus is on being the best at creating realistic andconsistent returns for our shareholders. Our strategies for growth are beingdriven by market realities rather than market hopes. We strongly understand andbelieve that success comes from working with proven market trends rather thantrying to be a hopeful “market-maker.”  Fundamentally,we still believe in working hard, working smart and never, ever “betting the farm.”

 

Forward-Looking Information

 

Except for historical information, all other information provided inthis report consists of “forward-looking statements” within the meaning of thePrivate Securities Litigation Reform Act of 1935. These “forward-lookingstatements” are subject to risks and uncertainties, which could cause actualresults to differ materially from those projected, anticipated or implied. Themost significant of these risks and uncertainties are discussed or identifiedin Maine Public Service Company’s public filings made with the SecuritiesExchange Commission, and include (but are not limited to) a possible inabilityto raise adequate capital to execute the proposed strategies, changes inoverall strategy due to economic, regulatory, governmental and/or marketconditions, the costs and difficulties related to the integration ofpotentially acquired businesses, potential changes in customer and supplierrelationships of potentially acquired firms, changes in governmentalregulations, changes in management, and changes in financial markets.

 

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