UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                  For the fiscal year ended December 31, 1999



              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

              THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                   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

Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
Registrant           Title of each class           on which registered
----------           -------------------          -----------------------

CMP Group, Inc.   Common Stock, $5 Par Value       New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                                                      Name of each exchange
Registrant                    Title of each class      on which registered
----------                    -------------------     ---------------------

Central Maine Power Company  6% Preferred Stock                   -
                             $100 Par Value (Voting,
                             Noncallable)

                             Dividend Series Preferred Stock      -
                             $100 Par Value (Callable)






Indicate by check mark whether the registrant (1) has 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  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

CMP Group, Inc.                          Yes x       No _
                                             --
Central Maine Power Company              Yes  x      No _
                                             ---

This  combined  Form 10-K 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.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.

CMP Group, Inc.                                  x
                                               ---

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  of the registrant.  The aggregate market value of such common
equity held by non-affiliates of the Company was:

CMP Group, Inc.                            $905,657,399 on March 1, 2000 (based,
                                           in the case of the common stock of
                                           CMP Group, Inc., on the last reported
                                           sale price thereof on the New York
                                           Stock Exchange on March 1, 2000).
Central Maine Power Company                $0 (all held by CMP Group, Inc.)

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

As of March 1, 2000, the number of shares of Common Stock  outstanding  for each
registrant was as follows:

                       Registrant                                      Shares

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

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:(1)  Any  annual  report  to  security  holders;  (2) Any  proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.

None.




                               CMP GROUP, INC. and

                           CENTRAL MAINE POWER COMPANY

                        INFORMATION REQUIRED IN FORM 10-K

                                                                        Page

Glossary

Item Number                          Part I

Item 1.    Business                                                        5
Item 2.    Properties                                                     17
Item 3.    Legal Proceedings                                              25
Item 4.    Submission of Matters to a Vote of Security Holders            27

                                     Part II

Item 5.    Market for the Registrant's Common Equity and Related          28
           Stockholder Matters
Item 6.    Selected Financial Data                                        28
Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations of CMP Group and
           Central Maine Power Company                                    29

Item 7A    Quantitative and Qualitative Disclosures
           About Market Risk                                              49
Item 8.    Financial Statements and Supplementary Data                    50
Item 9     Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure                           100


                                    Part III

Item 10.   Directors and Executive Officers of the Registrant            101
Item 11.   Executive Compensation                                        104
Item 12.   Security Ownership of Certain Beneficial Owners
           and Management                                                118
Item 13.   Certain Relationships and Related Transactions                120

                                     Part IV

Item 14.   Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K                                           121

           Signatures                                                    122






                                    GLOSSARY

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

Term                                    Definition

Form 10-K                 Annual Report on Form 10-K

ARP                       Alternative Rate Plan

APB                       Accounting Principles Board

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

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

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

CERCLA                    Comprehensive Environmental Response, Compensation,
                          and Liability Act.

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

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

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

CNEX                      A wholly owned  subsidiary  of CMP Group,  (previously
                          called CMP International Consultants),  which 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

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.

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 37.9-percent of the common stock, which
                          is building a fiber optic network in the northeastern
                          United States

NEPOOL                    New England Power Pool

NERC                      North American Electric Reliability Council

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

NPCC                      Northeast Power Coordinating Council

NRC                       United States Nuclear Regulatory Commission

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

NUG                       Non-utility generator

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

OASIS                     Open Access Same-time Information System.

OPA                       Maine Office of the Public Advocate

Plant                     Maine Yankee nuclear generating plant at Wiscasset,
                          Maine

PURPA                     Public Utility Regulatory Policies Act of 1978.

RCRA                      Resource Conservation and Recovery Act.

SAB                       Securities and Exchange Commission's Staff Accounting
                          Bulletin.

S&P                       Standard & Poor's Corp.

SEC                       Securities and Exchange Commission

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

SFAS                      Statement of Financial Accounting Standards

TeleSmart                 A closed  wholly owned  subsidiary  of CMP Group which
                          provided 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





Basis of  Presentation.  This Annual Report on Form 10-K is a combined report of
CMP Group and Central  Maine,  a regulated  electric-utility  subsidiary  of CMP
Group  whose   financial   position  and  results  of  operations   account  for
substantially all of CMP Group's consolidated  financial position and results of
operations.  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 or controlled subsidiaries, which
are Central Maine,  Union Water, CNEX,  TeleSmart and MaineCom.  Central Maine's
consolidated  financial  statements include its accounts as well as those of its
wholly owned or controlled subsidiaries,  MEPCO, NORVARCO, Cumberland Securities
and Central Securities.  Certain immaterial  majority owned subsidiaries,  which
were  previously  accounted  for on the  equity  method,  were  consolidated  in
September 1998.

Note re Forward-Looking Statements

This Report on Form 10-K contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain  risks and  uncertainties  that  could  cause  actual  results to differ
materially from those projected.  We caution readers not to place undue reliance
on these  forward-looking  statements,  which  speak only as of the date of this
Form 10-K.  We undertake no  obligation  to  republish  revised  forward-looking
statements  to reflect  subsequent  events or  circumstances  or to reflect  the
occurrence  of  unanticipated  events.  We urge readers to carefully  review and
consider the factors in the succeeding paragraph.

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

                                     PART I

Item 1.    BUSINESS.
------     --------

Introduction

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. CMP Group's principal executive offices are located
at 83 Edison Drive, Augusta,  Maine, where its general telephone number is (207)
623-3521.

Central Maine is a public utility  incorporated in Maine in 1905.  Central Maine
is primarily  engaged in the business of transmitting and distributing  electric
energy  generated by others for the benefit of customers in southern and central
Maine.  On March 1, 2000,  Central  Maine's  obligation to generate or otherwise
supply electric energy  terminated as part of the  restructuring of the electric
utility  industry in Maine.  Its principal  executive  offices are located at 83
Edison Drive, Augusta,  Maine 04336, where its general telephone number is (207)
623-3521.

Central Maine is the largest  transmission-and-distribution  electric utility in
Maine, serving approximately 541,000 customers in its 11,000 square-mile service
area in southern and central Maine.  Central  Maine's service area contains most
of Maine's  industrial and commercial  centers,  including Portland (the state's
largest city), and the  Lewiston-Auburn,  Augusta-Waterville  and Bath-Brunswick
areas, and  approximately one million people,  representing  about 80 percent of
the  total  population  of the  state.  In 1999  large  pulp-and-paper  industry
customers  accounted for approximately 56 percent of Central Maine's  industrial
sales and approximately 22 percent of total service-area sales.

The following topics are discussed under the general heading of Business.  Where
applicable,  the  discussions  make reference to the various other Items of this
report.

Topic                                                              Page
-----                                                              ----
Proposed Merger with Energy East                                     6
Regulation                                                           7
Electric-Utility Industry Restructuring                              7
Sale of Generation Assets                                           10
Alternative Rate Plan                                               11
Storm Damage to Central Maine's System                              12
Permanent Shutdown of Maine Yankee Plant                            13
Expansion of Lines of Business                                      14
Non-utility Generation                                              16
"Year 2000" Computer Issues                                         16
Financing and Related Considerations                                17
Environmental Matters                                               17
Employee Information                                                17

Proposed Merger with Energy East

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

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

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

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

Regulation

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

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

The  United  States  EPA  administers  programs  which  affect  Central  Maine's
remaining  generating  facilities.  The EPA has broad authority in administering
these   programs,   including   the   ability   to   require   installation   of
pollution-control  and mitigation devices.  CMP Group and Central Maine are also
subject to regulation by various state, local and other federal authorities with
regard to land use and other  environmental  matters.  For further discussion of
environmental  considerations  as they affect CMP Group and Central  Maine,  see
"Environmental Matters", below, and Item 3, "Legal Proceedings" - "Environmental
Matters." Other  activities of CMP Group and Central Maine from time to time are
subject  to the  jurisdiction  of various  other  state and  federal  regulatory
agencies,  including  the SEC with  respect to the  issuance of  securities  and
related matters.

Electric-Utility Industry Restructuring

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sale of Generation Assets

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

Central Maine recorded a pre-tax  deferred gain of $518.8 million net of selling
costs and certain  non-normalized income tax impacts from the sale of generation
assets by  establishing a regulatory  liability in 1999,  which  eliminated most
income  recognition.  Central  Maine did record an income  impact  from the sale
amounting  to $18 million  associated  with the related  unamortized  investment
credits and excess  deferred  tax  reserves as required by the IRS  regulations.
Central Maine also recorded curtailment and special termination deferred charges
of $5.2 million  associated  with pension and  postretirement  benefit  costs of
employees  leaving the company as a result of the  generation-asset  sale. These
deferred charges are being amortized over a three-year period beginning March 1,
2000, as required by the MPUC. The regulatory liability for the asset sale gain,
including interest, amounted to approximately $548 million at December 31, 1999,
and is being  amortized  over an 8.5 year period  beginning  March 1, 2000.  The
amortization will vary from year to year.

With the cash proceeds of the sale Central Maine  redeemed the remaining  $118.7
million of its outstanding General and Refunding Mortgage Bonds on May 10, 1999,
and paid at maturity  $47 million of its  medium-term  notes on May 4, 1999.  On
June 1, 1999,  Central Maine redeemed $180 million of its medium-term  notes, as
well as all of the  outstanding $10 million Town of Yarmouth  Pollution  Control
Revenue  Bonds,  which  had been  issued  in 1977 and  1978.  On  August  31 and
September  9, 1999  Central  Maine  paid at  maturity  another  $40  million  of
medium-term  notes.  Approximately  $293.5 million of the proceeds were required
for federal and state income taxes resulting from the sale and $45.4 million for
incremental  energy purchases to meet Central Maine's  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.

As required by the Maine  restructuring  legislation,  on July 30, 1999, Central
Maine  offered  at  auction  its  rights to the  capacity  and  energy  from its
undivested generation assets and generation-related business. Upon completion of
the auctions, in December 1999 Central Maine contracted to sell such rights with
respect  to  its  undivested  nuclear  generation  assets  (Vermont  Yankee  and
Millstone Unit No. 3) and its NUG contract entitlements to the successful bidder
for a two-year period commencing March 1, 2000. Central Maine also auctioned its
Hydro-Quebec  entitlement to a different  buyer for the same period.  All of the
auction results were approved by the MPUC.

Alternative Rate Plan

Central  Maine's ARP was in effect from  January 1, 1995,  through  December 31,
1999.  Instead of rate changes based on the level of costs  incurred and capital
investments,  the ARP provided for one annual  adjustment of an  inflation-based
cap on each of  Central  Maine's  rates,  with no  separate  reconciliation  and
recovery of fuel and purchased-power costs. Under the ARP, the MPUC continued to
regulate Central Maine's  operations and prices,  provide for continued recovery
of  deferred  costs,  and  specify  a range  for its  rate of  return.  The MPUC
confirmed  in its order  approving  the ARP that the ARP was  intended to comply
with the  provisions  of  Statement of Financial  Accounting  Standards  No. 71,
"Accounting for the Effects of Certain Types of Regulation."

The ARP contained a mechanism that provided price caps on Central Maine's retail
rates  to be  adjusted  annually  on  each  July 1,  commencing  in  1995,  by a
percentage combining (1) a price index, (2) a productivity offset, (3) a sharing
mechanism,  and (4) flow-through items and mandated costs. The price cap applied
to all of Central Maine's retail rates.

A specified  standard  inflation  index was the basis for each annual  price-cap
change. The inflation index was reduced by the sum of two productivity  factors,
a general  productivity offset of 1.0 percent, and a second formula-based offset
that started in 1996 and was intended to reflect the limited effect of inflation
on Central Maine's  purchased-power  costs during the five-year  initial term of
the ARP.

The sharing  mechanism could adjust the subsequent  year's July price-cap change
in the event Central  Maine's  earnings were outside a range of 350 basis points
above or below Central Maine's  allowed return on equity  (starting at the 10.55
percent  allowed  return in 1995 and  indexed  annually  for  changes in capital
costs).  Outside  that  range,  profits  and losses  could be shared  equally by
Central Maine and its customers in computing the price-cap  adjustment.  The ROE
used for earnings sharing was increased to 11.5 percent  effective with the July
1999 price change.

The ARP also  provided for partial  flow-through  to  ratepayers of cost savings
from non-utility  generator  contract  buy-outs and  restructuring,  recovery of
energy-management  costs,  and penalties for failure to attain  customer-service
and  energy-efficiency  targets.  The ARP also generally  defined mandated costs
that would be recoverable by Central Maine notwithstanding the index-based price
cap. To receive such  treatment,  the annual  revenue  requirement  related to a
mandated cost must have exceeded $3 million and have a  disproportionate  effect
on Central Maine or the electric-power industry.

The components of the last three ARP price increases are as follows:

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

     Inflation Index                           .89%        1.78%        2.12%
     Productivity Offset                     (1.00)       (1.00)       (1.00)
     Qualifying Facility Offset                .04         (.29)        (.42)
     Earnings Sharing                            -         1.12            -
     Flowthrough and Mandated Items            .12         (.28)         .40
                                           -------         ----        -----
                                               .05%        1.33%        1.10%
                                           =======         ====         ====

The 1997 and 1998 price increases were approved by the MPUC and implemented.

Central Maine elected not to increase prices in 1999.

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

Storm Damage to Central Maine's System

In January 1998, a severe ice storm 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.  In January 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,  amounting to $50.7  million plus accrued
carrying costs.

In the  spring  of  1998,  the  U.S.  Congress  appropriated  $130  million  for
Presidentially   declared  disasters  in  1998,   including   storm-damage  cost
reimbursement  for  electric  utilities.  On November 5, 1998 the United  States
Department  of Housing and Urban  Development  ("HUD")  announced  that of those
funds $2.2 million had been awarded to Maine,  with none  designated for utility
infrastructure,  which  Central  Maine  and the Maine  Congressional  delegation
protested as inadequate and inconsistent with  Congressional  intent.  HUD later
announced  that Maine  would  receive  additional  funds and on October 6, 1999,
Central Maine received  payment in the amount of $19.6 million from HUD. Central
Maine is  recovering  the $34.1  million  balance of the deferred  storm-related
costs, including $3.9 million of carrying costs, through rates over a three-year
period commencing March 1, 2000.

Permanent Shutdown of Maine Yankee Plant

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

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

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

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

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

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

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

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

Expansion of Lines of Business

General.  CMP  Group  has been  expanding  its  business  opportunities  through
investments that capitalize on core competencies.  CMP International Consultants
(d/b/a  CNEX),  a wholly owned  subsidiary  of CMP Group,  provides  management,
planning,  consulting  and  research  and  information  services  to foreign and
domestic utilities and government agencies. TeleSmart, a wholly owned subsidiary
of CMP Group, which provided accounts receivable management services for utility
clients  was closed by CMP Group on  February  14,  2000,  after a review of the
subsidiary's prospects. The Union Water-Power Company, a wholly owned subsidiary
of CMP Group,  provides  utility  construction  and support  services (On Target
division);   energy  efficiency  performance  contracting  and  energy  use  and
management  services (Combined Energies  division);  and real estate development
services (UnionLand Services division).

Natural Gas Distribution.  New England Gas Development Corporation ("New England
Gas"),  which is a wholly owned subsidiary of CMP Group,  holds  approximately a
twenty-two  percent  interest at December  31, 1999 in CMP Natural  Gas,  L.L.C.
("CMP Natural  Gas").  CMP Natural Gas is a joint venture of New England Gas and
Energy East  Enterprises,  a wholly  owned  subsidiary  of Energy  East,  and is
subject to  regulation  as a public  utility by the MPUC.  CMP  Natural  Gas was
formed to construct,  own and operate a natural gas distribution system to serve
certain  areas of Maine that did not have gas  service,  utilizing  natural  gas
delivered to Maine through new interstate pipeline facilities.

CMP Natural Gas began  construction  of its first local  distribution  system in
Windham,  Maine,  in early 1999 and began serving its first  customer in May. On
July 8, 1999,  CMP  Natural  Gas and  Calpine  Corporation,  a  California-based
independent  power company,  announced the signing of a 20-year contract for CMP
Natural  Gas to provide  natural  gas  delivery  service to  Calpine's  proposed
540-megawatt  natural  gas-fired  power plant under  construction  in Westbrook,
Maine. CMP Natural Gas expects to commence service to the plant by June 1, 2000,
after MPUC approval and  construction  of a two-mile  lateral  pipeline along an
existing  Central  Maine  right  of way  that  would  interconnect  with the new
interstate  pipeline  facilities.  On December 13, 1999, the MPUC authorized CMP
Natural Gas to provide  service to the Calpine  plant,  as well as the  unserved
areas in the town of Gorham and on  February  18,  2000,  the MPUC  approved  an
affiliated-interest  transaction  allowing  CMP  Natural  Gas to  construct  the
pipeline on Central Maine's transmission corridor.

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

Telecommunications  Investment.  MaineCom Services, which is wholly owned by CMP
Group,   provides   telecommunications    services,   including   point-to-point
connections,  private networking,  consulting, private voice and data transport,
carrier services, and long-haul transport. MaineCom Services also holds, through
wholly owned New England Business Trust, an approximately 38-percent interest in
NorthEast  Optic  Network,   Inc.  ("NEON"),  a  facilities-based   provider  of
technologically advanced, high-bandwidth,  fiber optic transmission capacity for
communications  carriers on local loop,  inter-city,  and interstate facilities.
NEON owns and operates and is expanding a fiber optic network in New England and
New York,  utilizing primarily electric utility rights of way, including some of
Central Maine's and some owned by other electric utilities  including  Northeast
Utilities, another substantial minority stockholder.

On November 23, 1999, NEON announced two major agreements, one with Consolidated
Edison  Communications,  Inc. ("CEC"), a wholly owned subsidiary of Consolidated
Edison,  Inc.,  and the other with  Excelon,  a wholly owned  subsidiary of PECO
Energy,  Inc.  The  agreements  effectively  expand the reach of the  network to
include  the  Philadelphia,  Baltimore  and  Washington,  D.C.,  areas.  As  the
agreements  are  implemented,  CEC  will  obtain  an  approximately  ten-percent
interest in NEON and Excelon an interest of approximately nine percent.

In August 1998 NEON completed  initial public offerings of $48 million of common
stock and $180 million of senior  notes.  As part of the  common-stock  offering
Central  Maine sold some of the  shares it then owned in NEON for  approximately
$3.1  million.   With  some  of  the  proceeds  of  the  offerings  NEON  repaid
approximately   $18  million   Central  Maine  had  advanced  under  an  earlier
construction loan agreement.

On February  15,  2000,  CMP Group  announced  that New England  Business  Trust
intended to sell  approximately  2.5 million  shares of its  6.177-million-share
common-stock holding in NEON through an underwritten public offering expected to
be completed  during the second  calendar  quarter of 2000.  Although the market
value of NEON's  common  stock has  increased  substantially  since  NEON's 1998
initial  public  offering,  CMP Group cannot  accurately  estimate the amount of
proceeds to be realized through the planned offering.

CMP Group  believes that  although  NEON operated at a loss in 1999,  there is a
need for the fiber optic network it is constructing in the  northeastern  United
States.  CMP  Group,  however,  cannot  predict  the  future  results  of NEON's
operations.

Non-utility Generation

After  enactment of the federal Public Utility  Regulatory  Policies Act of 1978
("PURPA") and companion  legislation in Maine,  Central Maine became an industry
leader in purchasing  supplies of energy from non-utility  generators  ("NUGs"),
including cogeneration plants and small power producers.  These sources supplied
25 billion kilowatt-hours of electricity to Central Maine in 1999,  representing
24 percent of total  generation,  a  decrease  from 32 percent in 1998.  Central
Maine's contracts with non-utility generators,  however, which were entered into
pursuant  to the  mandates of PURPA and  vigorous  state  implementation  of its
policies,  contributed the largest part of Central  Maine's  increased costs and
resulting rate increases in the years immediately prior to implementation of the
ARP in 1995, and constitute the largest part of its stranded costs.

PURPA provided substantial economic incentives to NUGs by allowing  cogenerators
and small power producers to sell their entire  electrical output to an electric
utility at the utility's  avoided-cost  rate, which has often been substantially
higher  than  market  rates,   while   purchasing   their  own  electric  energy
requirements at the utility's  established  rate for that customer  class.  Thus
Central  Maine in a number of cases has been  required to pay a higher price for
energy  purchased  from a NUG  than the NUG,  which  in some  cases  was a large
customer of Central Maine, paid Central Maine for the NUG's energy requirements.

Central   Maine  has  reduced  its  NUG  costs  by   implementing   buyouts  and
restructurings  of its NUG  contracts,  whenever  practicable.  As a result,  in
accordance  with prior MPUC policy and the ARP, since January 1992 $84.5 million
of buyout or  restructuring  costs have been  included in  Deferred  Charges and
Other Assets on Central  Maine's  balance  sheet and were being  amortized  over
their  respective  fuel savings  periods.  A  significant  portion of these were
written off in March 1, 2000 per the rate case  settlement.  Central  Maine will
continue to seek  opportunities  to reduce its NUG costs,  but the most feasible
buyouts and restructurings  have been carried out, so the Company cannot predict
what level of  additional  savings  it will be able to  achieve.  Central  Maine
offered  to sell  its NUG  power  entitlements  as  part of the  auction  of its
generating assets, but the offer attracted  insufficient interest to be included
in the April 1999 sale.

"Year 2000" Computer Issues

CMP Group recognized the potential for adverse consequences related to the "Year
2000  computer  problem" and,  through  Central  Maine,  initiated its Year-2000
remediation  efforts in 1996. CMP Group developed and executed a broad-based and
comprehensive  project  plan,  at a cost  of $4  million,  for  identifying  and
addressing any Year-2000  related  problems.  CMP Group systems continued to run
smoothly before, during, and after the Year 2000 transition,  with no disruption
of electric  service to customers and with no negative  financial or operational
impacts.

Financing and Related Considerations

The 1997 expansion of Central Maine's  medium-term  note program to a maximum of
$500 million in principal amount  outstanding at any one time was implemented to
increase  Central  Maine's  financing  flexibility in  anticipation  of industry
restructuring  and increased  competition.  For a discussion of Central  Maine's
1999  financing  activity and its available  financing  facilities,  see Item 7,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"-"Liquidity and Capital Resources," below.

Environmental Matters

Federal,  state and local environmental laws and regulations cover air and water
quality,  land  use,  power  plant  and  transmission  line  siting,  noise  and
aesthetics,   solid  and  hazardous  waste  and  other  environmental   matters.
Compliance  with  these  laws and  regulations  impacts  the  manner and cost of
electric  service by requiring,  among other  things,  changes in the design and
operation of existing facilities and changes or delays in the location,  design,
construction and operation of new facilities.  In the past, these  environmental
regulations   most   significantly   affected  Central  Maine's  electric  power
generating facilities,  which were sold to FPL Group in April 1999, as discussed
above. In addition,  certain  environmental  proceedings under federal and state
hazardous  substance and hazardous waste  regulations (such as the Comprehensive
Environmental  Response,  Compensation,  and  Liability Act  ("CERCLA")  and the
Resource  Conservation and Recovery Act ("RCRA") and similar state statutes) are
discussed  below under Item 3, "Legal  Proceedings" -  "Environmental  Matters."
Central Maine estimates that its capital expenditures for improvements needed to
comply with  environmental  laws and regulations were approximately $9.9 million
for the five years from 1995 through 1999.

Employee Information

A local  union  affiliated  with the  International  Brotherhood  of  Electrical
Workers  (AFL-CIO)  represents  operating and  maintenance  employees in each of
Central Maine's operating divisions,  and certain office and clerical employees.
At December 31,  1999,  Central  Maine had 1,388  full-time  employees,  of whom
approximately  45 percent were represented by the union. The number of employees
and union  members  have been  reduced as a result of the April 1999  generation
asset sale.

In April 1998 Central  Maine and the union agreed to a two-year  labor  contract
extension  that  provided  for an annual wage  increase of 2.5 percent on May 1,
1998 and 2.5 percent on May 1, 1999.  Negotiations have commenced on a successor
agreement to be effective May 1, 2000.

Item 2.   PROPERTIES.
------    ----------

Existing Facilities

Central Maine's  electric  properties form a single  integrated  system which is
connected at 345 kilovolts and 115  kilovolts  with the lines of Public  Service
Company of New Hampshire at the  southerly end and at 115 kilovolts  with Bangor
Hydro-Electric  Company at the northerly end of Central Maine's system.  Central
Maine's  system is also  connected  with the system of The New  Brunswick  Power
Corporation  and with Bangor  Hydro-Electric  Company,  in each case through the
345-kilovolt interconnection constructed by MEPCO, a 78 percent-owned subsidiary
of Central Maine. At December 31, 1999,  Central Maine had  approximately  2,288
circuit-miles  of overhead  transmission  lines,  19,754  pole-miles of overhead
distribution lines and 155 miles of underground and submarine cable.

Prior  to  April  1999,  Central  Maine  operated  32  hydroelectric  generating
stations,  of which 31 were owned fully by Central Maine,  with an estimated net
capability  of 373  megawatts,  and it purchased an  additional  74 megawatts of
non-utility  hydroelectric  generation in Maine. Central Maine also operated two
oil-fired  steam-electric  generating  stations,  William  F.  Wyman  Station in
Yarmouth, Maine and Mason Station in Wiscasset,  Maine. Central Maine's share of
William F. Wyman Station had an estimated net capability of 594 megawatts. Mason
Station had five units  totaling  145  megawatts  although  two of the units (42
megawatts) were retired.  These facilities were sold to FPL Group in April 1999.
Central  Maine  also  had  internal  combustion  generating  facilities  with an
estimated  aggregate  net  capability  of 42 megawatts  which was sold to FPL on
March 1, 2000.

Central  Maine  still  has  ownership   interests  in  five  nuclear  generating
facilities in New England,  three of which have permanently  ceased  operations.
The  largest is a  38-percent  interest in Maine  Yankee  Atomic  Power  Company
("Maine  Yankee") which, as discussed above, has permanently shut down its plant
in Wiscasset,  Maine.  In addition,  the Company owns a 9.5 percent  interest in
Yankee Atomic Electric Company  ("Yankee  Atomic"),  discussed below,  which has
permanently  shut down its plant  located  in Rowe,  Massachusetts,  a 6 percent
interest in  Connecticut  Yankee  Atomic Power Company  ("Connecticut  Yankee"),
discussed  below,   which  has  permanently  shut  down  its  plant  in  Haddam,
Connecticut,   and  a  4  percent  interest  in  Vermont  Yankee  Nuclear  Power
Corporation ("Vermont Yankee"), which owns an operating plant in Vernon, Vermont
(collectively,  with Maine Yankee, the "Yankee  Companies").  In addition to the
four Yankee Companies,  pursuant to a joint-ownership agreement, the Company has
a 2.5  percent  direct  ownership  interest  in the  Millstone  3  nuclear  unit
("Millstone 3") in Waterford, Connecticut.
<TABLE>
<S>                     <C>                 <C>                  <C>                  <C>                  <C>

                              Maine               Yankee             Connecticut            Vermont             Millstone
                              Yankee              Atomic               Yankee               Yankee               Unit 3
                              ------              ------               -------              -------              ------

Ownership Share         38%                 9.5%                 6%                   4%                   2.5%

Operating Status        Permanently shut    Permanently shut     Permanently shut     Operating            Operating
                        down August 6,      down February 26,    down December 4,
                        1997                1992                 1996

Location                Wiscasset, Maine    Rowe, Massachusetts  Haddam, Connecticut  Vernon,              Waterford,
                                                                                      Vermont              Connecticut

Capacity Share          N/A                 N/A                  N/A                  19 MW                29 MW

Equity Interest at
December 31, 1999       $28.3 million       $1.6 million         $6.3 million         $2.1 million         N/A
</TABLE>

Maine  Yankee.  In August 1997,  the Board of  Directors of Maine Yankee  Atomic
Power Company voted to permanently  shut down and  decommission the Maine Yankee
plant. The Plant had experienced a number of operational and regulatory problems
and did not operate after  December 6, 1996. The decision to close the Plant 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. On June 1,  1999,  the FERC  approved a  settlement  of the
issues  raised by  intervenors  in a  contested  rate  proceeding.  For  further
discussion of issues relating to the Maine Yankee Plant, see Item 1 "Business" -
"Permanent Shutdown of the Maine Yankee Plant," above.

Connecticut  Yankee.  In December  1996,  the Board of Directors of  Connecticut
Yankee Atomic Power Company voted to permanently  shut down and decommission the
Connecticut  Yankee plant for economic reasons.  The plant did not operate after
July 22, 1996.  Central  Maine  estimates  its share of the cost of  Connecticut
Yankee's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing  the plant to be  approximately
$25.1 million and has recorded a corresponding regulatory asset and liability on
the consolidated  balance sheet.  Central Maine is currently  recovering through
rates an amount adequate to recover these expenses. Contested issues relating to
Connecticut Yankee's decommissioning rates, as well as the prudence of operating
that plant and the decision to cease operations, remain pending before the FERC.

Yankee  Atomic.  In 1993 the FERC  approved  a  settlement  agreement  regarding
recovery  of  decommissioning  costs and plant  investment,  and all issues with
respect to the prudence of the decision to  discontinue  operation of the Yankee
Atomic plant.  Central Maine estimates its remaining share of the cost of Yankee
Atomic's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing the plant, to be  approximately
$2.4  million.  This  estimate  has been  recorded  as a  regulatory  asset  and
liability on Central  Maine's  balance sheet.  Central  Maine's current share of
costs related to the shutdown of Yankee Atomic is being recovered through rates.

Vermont Yankee. The Vermont Yankee plant is an operating unit. Its NRC operating
license is  scheduled to expire in the year 2012.  On October 15, 1999,  Vermont
Yankee  agreed to sell the  Vermont  Yankee  plant for $22  million,  subject to
certain adjustments, to AmerGen Energy Company LLC ("AmerGen").  AmerGen agreed,
among other commitments, to assume the decommissioning cost of the unit after it
is taken out of service,  and the Vermont  Yankee  sponsors,  including  Central
Maine,  agreed to fund the uncollected  decommissioning  cost up to a negotiated
amount at the time of the closing of the sale.  The sponsors  also agreed either
to enter into a new  purchased-power  agreement  with AmerGen or to buy out such
future power payment  obligations by making a fixed payment to AmerGen.  Central
Maine elected to enter into a twelve-year  purchased-power agreement and intends
to sell its power  entitlement at the market rate.  The sponsors'  obligation to
consummate the sale is conditioned  upon the receipt of satisfactory  regulatory
approvals.

Millstone Unit 3. Pursuant to a joint ownership  agreement,  Central Maine has a
2.5  percent  direct  ownership  interest  in the  Millstone  3 nuclear  unit in
Waterford,  Connecticut, which is operated by Northeast Utilities. This facility
was off-line  from March 31, 1996, to July 1998,  due to NRC concerns  regarding
license requirements.  For a discussion of a lawsuit and arbitration claim filed
by Central Maine and other minority  owners of Millstone 3 against the operators
of the unit, see Item 3 "Legal  Proceedings"-"Millstone  Unit No. 3 Litigation,"
below.

Central  Maine is  obligated  to pay its  proportionate  share of the  operating
expenses,  including  depreciation and a return on invested capital,  of each of
the Yankee Companies  referred to above for periods expiring at various dates to
2012.  Pursuant to the joint ownership  agreement for Millstone 3, Central Maine
is similarly  obligated to pay its proportionate share of the operating costs of
Millstone 3. Central  Maine is also  required to pay its share of the  estimated
decommissioning  costs of each of the  Yankee  Companies  and  Millstone  3. The
estimated  decommissioning  costs are paid as a cost of  energy  in the  amounts
allowed in rates by the FERC and passed through to Central Maine's ratepayers as
a component of its transmission-and-distribution revenue requirement approved by
the MPUC.

MEPCO.  MEPCO owns and  operates a  345-kilovolt  transmission  interconnection,
extending from Central  Maine's  substation at Wiscasset to the Canadian  border
where  it  connects  with a line of The New  Brunswick  Power  Corporation  ("NB
Power") under an  interconnection  agreement.  MEPCO  transmits power between NB
Power and various New England  utilities under MEPCO's Open Access  Transmission
Tariff.

New England Power Pool/Hydro-Quebec Facilities.  NEPOOL, of which the Company is
a member,  contracted in connection with its  Hydro-Quebec  projects to purchase
power from  Hydro-Quebec.  The contracts entitle Central Maine to 44.5 megawatts
of capacity credit in the winter and 127.25  megawatts of capacity credit during
the summer.  Central Maine also entered into  facilities-support  agreements for
its share of the related transmission facilities,  with its share of the support
responsibility and of associated  benefits being  approximately 7 percent of the
totals.  Central Maine is making  facilities-support  payments on  approximately
$23.8  million,  its  share  of  the  construction  cost  for  the  transmission
facilities incurred through December 31, 1999.

Maine Yankee Spent Fuel

Maine  Yankee's  spent  fuel is  currently  stored in the spent fuel pool at the
Plant site.  Federal  legislation  enacted in December  1987 directed the DOE to
proceed with the studies necessary to develop and operate a permanent high-level
waste (spent fuel) disposal site at Yucca Mountain, Nevada. The legislation also
provided for the possible development of a Monitored Retrievable Storage ("MRS")
facility and abandoned plans to identify and select a second permanent  disposal
site. An MRS facility would provide temporary storage for high-level waste prior
to  eventual  permanent  disposal.  The DOE has  indicated  that  the  permanent
disposal site is not expected to open before 2010, although originally scheduled
to open in  1998.  The  United  States  Congress  has  been  unable  to agree on
legislation to reform the federal spent nuclear fuel program.

In 1994 several nuclear utilities other than Maine Yankee filed suit against the
DOE. The utilities  sought a declaration from the United States Court of Appeals
for the District of Columbia  Circuit that the Nuclear  Waste Policy Act of 1982
required the DOE to take  responsibility for spent nuclear fuel in 1998. In July
1996 the court held that the DOE was  obligated  "to start  disposing  of [spent
nuclear  fuel] no later  than  January  31,  1998."  The DOE did not  appeal the
decision,  but announced in December 1996 that it anticipated it would be unable
to start  accepting spent nuclear fuel for disposal by January 31, 1998. A large
number of nuclear utilities and state regulators filed a new lawsuit against the
DOE in January  1997 seeking to force the DOE to honor its  obligation  to store
spent nuclear fuel and seeking other appropriate relief.

In November 1997 the U.S. Court of Appeals for the District of Columbia  Circuit
confirmed the DOE's  obligation.  In February 1998 Maine Yankee filed a petition
in the same court  seeking to compel the DOE to take Maine  Yankee's  spent fuel
from the Plant site "as soon as physically possible," alleging that removing the
spent fuel on the DOE's indicated  schedule would delay the  decommissioning  of
the Maine  Yankee  Plant  indefinitely.  In May 1998 the Court  dismissed  Maine
Yankee's  lawsuit,  as well as that of the  other  nuclear  utilities  and state
regulators,  saying  that  petitioners'  failure  to pursue  remedies  under the
standard contract rendered their appeal not appropriate at that time for review.
In June 1998 Maine Yankee filed a claim for money  damages in the U.S.  Court of
Federal Claims for the costs  associated with the DOE's failure to begin to take
fuel in 1998. In November 1998 the Court  granted  summary  judgment in favor of
Maine Yankee, ruling that the DOE had violated its contractual obligations,  but
leaving the amount of damages  incurred by Maine Yankee for later  determination
by the Court.  Since then,  the Court has stayed further action pending a ruling
from the Court of Federal Appeals as to the  jurisdiction of the Court of Claims
over  the  matter.  Maine  Yankee  intends  to  pursue  its  claim  for  damages
vigorously, but as an alternative to DOE disposal is planning construction of an
independent spent-fuel storage installation on the Plant site.

Maine Yankee Low-Level Waste Disposal

The federal Low-Level Radioactive Waste Policy Amendments Act (the "Waste Act"),
enacted in 1986,  required  states  either  alone or in  multistate  compacts to
provide for the disposal of low-level  radioactive  waste generated within their
borders.  Subsequently,  the states of Maine,  Texas and Vermont  entered into a
compact for the disposal of low-level  waste at a then-planned  facility in west
Texas. In return, Maine would be required to pay $25 million,  assessed to Maine
Yankee by the State of Maine, payable in two equal installments, the first after
ratification  by Congress and the second upon  commencement  of operation of the
Texas facility. As a possible alternative, the states could agree to a financing
arrangement  for the payment,  in which case Maine  Yankee's  share,  along with
interest,  could be paid out over an extended period of time. In addition, Maine
Yankee  would be  assessed a total of $2.5  million for the benefit of the Texas
county in which the facility would be located and would also be responsible  for
its pro-rata share of the Texas governing commission's operating expenses.

The bill providing for  ratification of the compact was before several  sessions
of the Congress  before finally being approved in September  1998.  However,  in
October 1998, the Texas Natural Resources Conservation  Commission voted to deny
a permit for the proposed west Texas site for the facility and  construction  of
such a facility in Texas is uncertain.

Since the Maine Yankee Plant has permanently  stopped operating,  the compact is
less  beneficial  to Maine  Yankee  than it would  have  been if the  Plant  had
remained in operation,  due to the new schedule for Maine Yankee's shipments and
the  uncertainty  associated  with the  schedule  for opening a Texas  facility.
Although other potential  sites in Texas have been proposed by various  parties,
we cannot  predict  whether or when a facility  in Texas  will be  licensed  and
built.  Maine Yankee intends to utilize its on-site storage  facility as well as
dispose of low-level  waste at an active South Carolina site or other  available
sites in the  interim  and  continue  to  cooperate  with the  State of Maine in
pursuing all appropriate options.

Nuclear Insurance

The  Price-Anderson  Act is a federal statute  providing,  among other things, a
limit on the maximum  liability for damages  resulting from a nuclear  incident.
Coverage for the  liability is provided for by existing  private  insurance  and
retrospective  assessments for costs in excess of those covered by insurance, up
to $88.095  million for each reactor  owned,  with a maximum  assessment  of $10
million per reactor in any year. However,  after appropriate exemptive action by
the NRC Maine  Yankee,  and  therefore its  sponsors,  are not  responsible  for
retrospective  assessments  resulting from any event or incident occurring after
January  7,  1999.  Based on  Central  Maine's  stock  ownership  in the  Yankee
companies  and its 2.5 percent  direct  ownership  interest  in the  Millstone 3
nuclear unit,  Central Maine's  retrospective  premium for post-January 7, 1999,
events or incidents could be as high as $6 million in any year, for a cumulative
total of $52.9 million.

In addition to the  insurance  required by the  Price-Anderson  Act, the nuclear
generating  facilities mentioned above carry additional nuclear  property-damage
insurance.  This additional  insurance is provided from  commercial  sources and
from the  nuclear  electric  utility  industry's  insurance  company  through  a
combination  of current  premiums  and  retrospective  premium  adjustments.  In
recognition  of the reduced risk posed by the shutdown of the Maine Yankee Plant
and its defueled reactor, Maine Yankee substantially reduced its property-damage
coverage effective January 19, 1999.

Construction Program

Central Maine's plans for improvements and expansion of its facilities are under
continuing review.  Actual construction  expenditures depend on the availability
of capital and other resources,  load forecasts,  customer growth, the number of
merchant generating plants constructed in Central Maine's service territory, and
general  business  conditions.  As  discussed  above,  Central  Maine  sold  its
non-nuclear  generation assets in April 1999 in preparation for the commencement
of retail  choice of energy  suppliers  on March 1, 2000.  During the  five-year
period ended December 31, 1999,  Central  Maine's  construction  and acquisition
expenditures  amounted to $259 million  (including  investment in  jointly-owned
projects and excluding MEPCO).  Approximately $24 million of those  expenditures
was for  generation  projects,  a  category  of  expenditures  that  will not be
incurred in the future.

Beginning in 1999  Central  Maine  incurred  significant  capital  expenditures,
approximately  $23 million,  to upgrade its  transmission  network to handle the
increased power flows from new merchant  plants.  The merchant plant  developers
are  currently  responsible  for  providing  cash to  Central  Maine to fund the
associated  transmission network  enhancements.  As of December 31, 1999 Central
Maine had collected  approximately  $22 million of deposits from merchant  plant
developers.  FERC is currently  finalizing  its rules  regarding  the funding of
network upgrades to accommodate merchant plants. Central Maine could be required
to fund  some of the  network  upgrades,  in  which  case  some of the  deposits
collected could be returned to developers, requiring significant refinancing. In
that event,  transmission  rates would increase to recover the upgraded  network
costs over time.  If the current  rules  continue to apply,  Central Maine would
credit developer deposits to the respective plant accounts. Central Maine cannot
predict what the FERC decision on funding network  upgrades  expected later this
year will be.

Central Maine  currently  estimates its overall  construction  program to be $92
million in 2000. Network upgrades associated with five merchant plants, totaling
1670 MW, that are currently under  construction,  account for $42 million of the
total.  For the period 2001 through 2004,  the overall  construction  program is
estimated  to range from $212  million,  if no  additional  merchant  plants are
constructed,  to $274 million (excluding MEPCO projects), if all four additional
merchant  plant  projects  that are  currently  proposed  (2000 MW) are actually
constructed.

Central  Maine  estimates  that  the  developers  of the  five  merchant  plants
currently under  construction  will fund from $38 million to $66 million related
to  network  upgrade  costs  over  the  1999 to 2001  time  period.  Refunds  to
developers  of prior  deposits  could  amount to $0 to $28 million  depending on
FERC's decision regarding cost  responsibility.  If all four additional merchant
plant  projects  that are  currently  proposed  are  actually  constructed,  CMP
estimates that  developers  will fund from $31 million to $62 million of the $62
million of related network upgrade costs over the 1999 to 2004 time period.

The following table sets forth Central Maine's  estimated  capital  expenditures
for the next five years as discussed above (excluding MEPCO).

(dollars in millions)             2000          2001-2004          Total
                                  ----          ---------          -----

Transmission                      $45            $14 to 76       $59 to 121
Distribution                       32                  135              167
General facilities and other       15                   63               78
                                   --          -----------        ---------

Total construction                $92          $212 to 274      $304 to 366
                                   ==           ==========       ==========

Energy Conservation

Central Maine's energy conservation  initiatives have included programs aimed at
residential,  commercial and industrial customers. Among the residential efforts
have been  programs  that offer free or low-cost  weatherization,  water  heater
wraps and  energy-efficient  light bulbs.  Among the  commercial  and industrial
efforts, in addition to operating programs that offer energy-efficient  lighting
products  and  water-heater  wraps,  Central  Maine has provided  incentives  to
customers  who  install  conservation  measures  of any kind that  increase  the
efficiency of the use of electricity.

NEPOOL and Regional Open-Access Transmission

In 1996 the FERC issued Order No. 888, which requires all public  utilities that
own,  control or operate  facilities  used for  transmitting  electric energy in
interstate commerce to file open access non-discriminatory  transmission tariffs
that offer both load-based, network and contract-based,  point-to-point service,
including  ancillary service to eligible customers  containing minimum terms and
conditions of non-discriminatory service. This service must be comparable to the
service they provide themselves at the wholesale level; in fact, these utilities
must themselves take the wholesale  transmission  service they provide under the
filed  tariffs.  The  order  also  permits  public  utilities  and  transmitting
utilities  the  opportunity  to  recover  legitimate,   prudent  and  verifiable
wholesale stranded costs associated with providing open access and certain other
transmission  services.  It further  requires  public  utilities to functionally
separate  transmission from generation  marketing  functions and communications.
The intent of this order is to promote the  transition  of the electric  utility
industry to open  competition.  Order No. 888 also  clarifies  federal and state
jurisdiction over transmission in interstate commerce and local distribution and
provides for deference of certain issues to state recommendations.

In 1996 the FERC also issued Order No. 889, which requires  public  utilities to
functionally separate their wholesale power marketing and transmission operation
functions and to obtain  information about their  transmission  system for their
own wholesale power  transactions  in the same way their  competitors do through
the Open Access Same-time Information System ("OASIS"). The rule also prescribed
standards of conduct and protocols for obtaining the information.  The standards
of conduct are  designed to prevent  employees  of a public  utility  engaged in
marketing functions from obtaining preferential information.

NEPOOL is a voluntary  organization  open to any entity  engaged in the electric
business, such as investor-owned utilities, municipal and cooperative utilities,
power marketers,  brokers and load  aggregators.  On December 31, 1996,  NEPOOL,
responding  to  the  FERC  orders  on  behalf  of  its  participants,   filed  a
restructuring  proposal with FERC.  The NEPOOL  proposal was the product of over
two years of  discussions  and  negotiations  among the over 130  NEPOOL  member
participants and many non-participants,  including New England state regulators.
The key elements of the NEPOOL restructuring proposal were the implementation of
a regional  NEPOOL  open  access  transmission  tariff  ("NEPOOL  Tariff"),  the
creation of an independent  system operator ("ISO"),  and the restatement of the
NEPOOL Agreement to establish a broader  governance  structure for NEPOOL and to
develop a more open competitive market structure.

The  NEPOOL  Tariff,   which  became   effective  on  March  1,  1997,   ensures
non-discriminatory open access to the regional transmission network by providing
a single rate for all transactions that utilize NEPOOL's bulk power transmission
facilities.  The NEPOOL  Tariff  promotes  competition  in the New England power
market through its single  transmission  rate  structure.  All regional  service
within  NEPOOL,  except for  wheeling  through or out,  is to be  provided  as a
network service.

In June 1997 FERC issued an order conditionally authorizing the establishment of
an ISO by NEPOOL ("ISO-New England"), effective July 1, 1997, affirming that the
transfer  of  control of  transmission  facilities  owned by the public  utility
members  of NEPOOL to the ISO was  consistent  with the  public  interest  under
Section 203 of the Federal Power Act.

In April 1998 FERC accepted the NEPOOL Tariff conditioned on NEPOOL's compliance
with a number  of issues  raised  by FERC.  On July 22,  1998,  NEPOOL  made its
compliance  filing at FERC.  The NEPOOL  Tariff  changes and  amendments  to the
Restated NEPOOL  Agreement  included in the filing effected  compliance with the
FERC's  April 1998  Order.  While  there  were a large  number of changes in the
filing,  the  principal  areas of change  related to the  addition in the NEPOOL
Tariff of a separately available internal  point-to-point  service, the addition
of a mechanism to allocate costs to update the regional transmission system, and
the   replacement  of  a  non-use  charge  with  an  in-service   charge  across
interconnections.  The FERC issued its order accepting a settlement in July 1999
and a compliance filing was completed in September 1999.

To  give  market  participants  more  choice  and  to  foster  competition,  the
restructured  NEPOOL  proposed the unbundling of electric  service in the NEPOOL
control area. The restructured  NEPOOL called for the development of competitive
wholesale  markets  for  installed  capability,   operable  capability,  energy,
automatic  generation  control,  and  reserves.  These  wholesale  products  are
market-priced,  being  based on  bid-clearing  pricing  rather  than the earlier
cost-based  pricing.  Market  participants meet their  responsibility  for these
products by buying or selling those services through  bilateral  transactions or
through the regional  power  exchange  administered  through the ISO. In October
1997 FERC issued an order permitting  implementation of the installed capability
market, which commenced in April of 1998. On April 6, 1999, FERC issued an order
approving  market rules,  and on May 1, 1999,  the remaining  markets  (operable
capability,  energy,  automatic generation control and the reserve markets) were
implemented.  In February 2000 FERC accepted an amendment to the Restated NEPOOL
Agreement that  terminated the operable  capability  market  effective  March 1,
2000.

On May 13,  1999,  the FERC  issued a notice of proposed  rulemaking  that would
amend FERC's regulations under the Federal Power Act to facilitate the formation
of regional transmission  organizations  ("RTO"). On December 20, 1999, the FERC
issued Order No. 2000,  which requires all public utilities that own, operate or
control  interstate  electric  transmission  to  file a  proposal  for an RTO by
October 15, 2000,  or, in the  alternative,  a description of any efforts by the
utility to  participate  in an RTO,  the reasons for not  participating  and any
obstacles  to  participation,  and  any  plans  for  further  work  toward  such
participation. Order No. 2000 anticipates operational RTOs by December 15, 2001.
Central  Maine is reviewing  the order to determine,  among other  matters,  its
effects on Central Maine's operations as a transmission-and-distribution utility
and the  extent to which  changes in the  structure  and  operations  of ISO-New
England may be required.

On  December  30,  1999,  NEPOOL  submitted  to FERC a  proposed  plan to manage
congestion on the NEPOOL transmission system. NEPOOL is considering revisions to
its proposal,  which, if a consensus of its members can be achieved, it plans to
file by March 31, 2000,  for FERC's  consideration.  Congestion  management  has
become a complex issue in the new  transmission  environment  due in part to the
large number of merchant  generating  plants under  construction  or proposed at
various sites in New England, including sites in Central Maine's service area.

Item 3. LEGAL PROCEEDINGS.

Environmental  Matters. CMP Group, Central Maine and certain of their affiliates
are subject to regulation by federal and state  authorities  with respect to air
and water quality,  the handling and disposal of toxic  substances and hazardous
and solid  wastes,  and the  handling  and use of  chemical  products.  Electric
utility  companies  generally  use or  generate in their  operations  a range of
potentially  hazardous  products  and  by-products  that  are the  focus of such
regulation. CMP Group and Central Maine believe that their current practices and
operations  are in compliance  with all existing  environmental  laws except for
such  non-compliance  as  would  not have a  material  adverse  effect  on their
financial  positions.  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 or
modification  of  transmission  and  distribution  lines,  substations and other
facilities, and could raise operating costs significantly.  As a result, Central
Maine may incur significant additional environmental costs, greater than amounts
reserved,  in connection  with the  transmission of electricity and the storage,
transportation  and disposal of by-products  and wastes.  Central Maine may also
encounter  significantly  increased costs to remedy the environmental effects of
prior  waste  handling  activities.  The  cumulative  long-term  cost  impact of
increasingly   stringent   environmental   requirements   cannot  accurately  be
estimated.

Central  Maine  has  recorded  a  liability,   based  upon  currently  available
information,  for what it believes are the estimated  environmental  remediation
costs that it expects to incur for  identified  waste  disposal  sites.  In most
cases,   additional  future  environmental  cleanup  costs  are  not  reasonably
estimatable  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 December 31, 1999, the liability  recorded by Central Maine for its
estimated  environmental  remediation  costs  amounted  to $2.7  million,  which
management  has  determined to be the most  probable  amount within the range of
$2.1 million to $8.5 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.

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

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

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

As a result of the  settlement,  Central  Maine made payments to the IRS and the
State of Maine totaling $11.8 million for the 1992 to 1994 tax deficiencies,  as
well  as $6.0  million  in  associated  interest.  Substantially  all of the tax
impacts were normalized, as Central Maine will be deducting any disallowed costs
for tax  purposes  in  future  years.  Of the  $6.0  million  interest  payment,
approximately  $1 million was previously  accrued,  and $1.8 million  associated
with the FEV facility was deferred consistent with regulatory practice. Interest
income of $3.1 million was accrued for the years 1995 through December 1999. Net
income for 1999 was therefore reduced by less than $0.1 million.

Due to the materiality of the amounts involved,  approval of the settlement from
the Congress's  Joint  Committee on Taxation was required,  which was granted in
February 2000.

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

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

Millstone  Unit No. 3 Litigation  - In August 1997  Central  Maine and the other
minority  owners of Millstone  Unit No. 3 filed suit in  Massachusetts  Superior
Court against Northeast Utilities and its trustees, and initiated an arbitration
claim against two of its subsidiaries, alleging mismanagement of the unit by the
defendants.  The minority owners are seeking to recover their  additional  costs
resulting from such  mismanagement,  including  their  replacement  power costs.
Since the  filing of the suit and  arbitration  claim,  the  parties  engaged in
resolving  preliminary  issues  and  in  extensive  pre-hearing  discovery.  The
arbitration hearing began on November 16, 1999.

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

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

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

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

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





                                     PART II

Item 5     MARKET FOR THE REGISTRANT'S COMMON EQUITY
           AND RELATED STOCKHOLDER MATTERS.

CMP Group's  common stock has been traded on the New York Stock  Exchange  since
September  1, 1998.  Prior to that date the  numbers in the table below refer to
Central Maine's common stock. As of December 31, 1999, there were 30,134 holders
of record of CMP Group common stock.

                  Price Range of and Dividends on Common Stock

                                  Market Price             Dividends
                              High            Low          Declared

1999

First Quarter                $19-9/16      $16-1/4           $0.225
Second Quarter                26-3/4        17-3/4            0.225
Third Quarter                 27            26                0.225
Fourth Quarter                27-15/16      26-1/4            0.225

1998

First Quarter                $17-13/16     $15 1/4           $0.225
Second Quarter                20-3/8        17-1/16           0.225
Third Quarter                 20-1/2        16-15/16          0.225
Fourth Quarter                20            16-3/4            0.225

Under the terms of Central Maine Articles of  Incorporation,  no dividend may be
paid on the common stock of Central Maine if such dividend would reduce retained
earnings below $29.6 million.  At December 31, 1999,  Central  Maine's  retained
earnings  were $100.8  million,  of which $71.2  million was not so  restricted.
There are  currently  no such  restrictions  on the payment of  dividends by CMP
Group.  Future dividend  decisions will be subject to future earnings levels and
the  financial  condition  of CMP Group and Central  Maine and will  reflect the
evaluation by their Board of Directors of then existing circumstances.

Item 6.   SELECTED FINANCIAL DATA.
------    -----------------------

The following table sets forth selected consolidated financial data of CMP Group
and Central Maine for the five years ended December 31, 1995 through 1999.  This
information  should be read in  conjunction  with  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations" and the consolidated
financial statements and related notes thereto included in Items 7 and 8 hereof.
The selected  consolidated  financial data for the years ended December 31, 1995
through 1999 are derived from the audited  consolidated  financial statements of
Central Maine and CMP Group.

Selected Consolidated Financial Data

(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<S>                              <C>             <C>           <C>          <C>              <C>           <C>           <C>

                                          CMP Group                                      Central Maine

                                    1999           1998          1999           1998           1997          1996          1995
                                    ----           ----          ----           ----           ----          ----          ----

Electric operating revenue       $  953,711      $  938,739    $  953,501   $  938,561       $  954,176    $  967,046    $  916,016
Net income (loss)                    54,854          52,910        68,740       54,823           13,422        60,229        37,980
Long-term obligations               122,542         346,281       120,186      343,834          400,923       587,987       622,251
Redeemable preferred stock              910          18,910           910       18,910           39,528        53,528        67,528
Total assets                      2,047,260       2,262,884     2,001,834    2,223,480        2,298,966     2,010,914     1,992,919
Earnings (loss) per common
share                                 $1.69           $1.63         $2.10        $1.56            $0.16         $1.57         $0.86
Dividends declared per
common share                          $0.90           $0.90        $1.305        $0.675*          $0.90         $0.90         $0.90
</TABLE>

*1998  fourth  quarter  dividend  of $0.225 per share was  declared  and paid in
January 1999.

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------     ------------------------------------------------------------
           AND RESULTS OF OPERATIONS OF CMP GROUP ANDCENTRAL MAINE POWER COMPANY

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

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

Formation of Holding Company

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.

Results of Operations
<TABLE>
<S>           <C> <C>                          <C>            <C>                     <C>        <C>

                                               CMP
                                              Group                              Central Maine
                                              -----                              -------------
                                                         (dollars in millions)
Net income (loss) Twelve months ended:

     December 31, 1999                         $54.9          $1.69/share             $68.7
     December 31, 1998                          52.9          $1.63/share             $54.8
                                                ----                                   ----
     Increase                                 $  2.0                                  $13.9

Earnings (loss) applicable to common
stock
   Twelve months ended:

     December 31, 1999                           N/A                                  $65.4          $2.10/share
     December 31, 1998                           N/A                                  $50.0          $1.56/share
                                                                                       ----
     Increase                                                                         $15.4
</TABLE>

Consolidated  net  income  for CMP Group in 1999 was $54.9  million or $1.69 per
share,  compared  to $52.9  million or $1.63 per share for 1998.  Central  Maine
provided approximately 96 percent of CMP Group's revenues in 1999 or $65 million
of net income.  Central  Maine's  earnings  applicable to common stock increased
$15.4 million over 1998.

Other subsidiary operations and the costs of the pending merger with Energy East
account for the remaining decrease in CMP Group net income. The most significant
portion  of the other  consolidated  subsidiaries  operations  is a $10  million
non-cash loss associated with the MaineCom  subsidiary's 38 percent  interest in
Northeast Optic Network, Inc.

Central  Maine's  operating  income was $131  million in 1999  compared  to $127
million in 1998. Service area sales were up significantly over 1998, as detailed
below,  reflecting the return to normal levels of electric service usage,  which
were depressed in 1998 due to a severe January ice storm and economic  growth in
the region during 1999. These forces contributed to an overall revenue growth of
3.5 percent before  consideration of a negotiated rate case  settlement,  or 1.4
percent after giving effect to the settlement.

The rate case settlement  resolved  several  ratemaking  issues  associated with
finalizing  Central Maine's revenue  requirements  and prices for operating as a
non-generating  transmission-and-distribution  utility upon the advent of retail
customer choice of energy supplier on March 1, 2000. The  introduction of retail
choice and the 1999  divestiture of Central  Maine's  generation  were among the
requirements of the Maine electric utility industry  restructuring  statute that
became law in 1997.

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

Operating expenses  increased less than 1 percent,  primarily as a result of the
sale of generation  assets and prudent cost  controls.  On April 7, 1999 Central
Maine completed the sale of its non-nuclear  generating  assets to affiliates of
FPL Group, for $846 million.

The generation sale proceeds  substantially exceeded the remaining book value of
the assets.  The gain  resulting  from the sale has been deferred as required by
the MPUC. The deferred gain will be amortized in future years providing  Central
Maine  with  the   opportunity   to  reduce  its   stranded   costs  and  reduce
transmission-and-distribution  rates  for  customers.  Central  Maine  used cash
proceeds  from the sale to reduce  long-term  debt,  thereby  reducing  interest
costs.  Remaining cash proceeds were invested and contributed interest income to
the 1999 results.  Overall  earnings  applicable to common stock was $15 million
higher than 1998.

The  future  impact of the  state-mandated  sale of  generation  assets  and the
settlement  of the  rate  case,  which  established  prices  for  the  remaining
transmission-and-distribution services, will be lower overall costs and revenues
for Central  Maine.  In the future,  energy  charges will not be part of Central
Maine revenues,  except for the standard offer service for large customers,  but
will be revenues of the competitive  energy providers'  operation.  The MPUC set
Central  Maine's  authorized  return on common equity at 10.5  percent,  with an
equity component of 47 percent of total capital.

As a result of the  generation  asset sale and the  resulting  rate  treatments,
Central Maine estimates that  residential  and small general service  customers,
who comprise  about 90 percent of the company's  accounts,  will see  total-bill
savings for both energy (provided by competitive  energy providers) and delivery
charges  (provided  by Central  Maine) of about 10 percent  after March 1, 2000.
Because the third party standard  offer energy  service for large  customers was
priced higher than the service for  residential  and  small-business  customers,
Central Maine projects that total-bill  savings for large customers will be less
than 5 percent  unless  they  select a  competitive  energy  provider.  Further,
because energy-supply competition has been slow to develop, Central Maine expect
that  total-bill  savings  for  customers  will,  for a  limited  time at least,
primarily   reflect   reductions  in  its  delivery   charges   rather  than  in
energy-supply services.

Operating Revenues

CMP Group's electric operating revenue increased by $15.0 million or 1.6 percent
to $953.7 million in 1999, and decreased by $15.4 million or 1.6 percent in 1998
to $938.7  million.  Higher sales volume due to positive  growth in all customer
classes,  except  wholesale,  and electricity sales to some former Central Maine
generating  facilities,  now owned by FPL, helped to increase  revenues in 1999.
Wholesale  customers became  customers of FPL at the time of the sale.  Revenues
would  have  been  $20  million  higher,  were it not for the  earnings  sharing
adjustment  in the rate  case  settlement.  See Note 3 of Notes to  Consolidated
Financial Statements for more information. The major components of the change in
electric operating revenue are as follows:

                                                          1999        1998

Revenue from Central Maine service-area kwh sales        $ 30.3      $(20.2)
Rate case settlement (Note 3)                             (20.0)        -
Revenues from non-territorial sales                        (3.7)        6.2
Other operating revenue                                     6.1         4.5
MEPCO and other subsidiaries                                2.3        (5.9)
                                                           ----        ----
                                                         $ 15.0      $(15.4)
                                                           ====        ====

Service  Area Kwh  Sales.  Central  Maine's  service-area  sales of  electricity
totaled  approximately  9.21 billion  kilowatt-hours for the year ended December
31, 1999, up from the 9.05 billion kilowatt-hour level of a year ago.

Central Maine's  service-area  sales for the years 1999, 1998 and 1997 are shown
in the following table:

         (Kilowatt-hours in millions)
                                1999              1998              1997
                                ----              ----              ----
                                       %                %                 %
                           KWH       change   KWH     change    KWH     change
                           ---       ------   ---     ------    ---     ------
Residential ............. 2,859       3.6%   2,761     (2.0)%  2,817     (0.4)%
Commercial .............. 2,701       5.4    2,563      1.3    2,529      1.6
Industrial .............. 3,568       2.3    3,487     (7.8)   3,784      2.6
Wholesale and
  lighting ..............    83     (65.7)     242      6.1      228      5.3
                          -----              -----             -----
Total Service-
  Area Sales ............ 9,211       1.8%   9,053     (3.2)%  9,358    1.5 %
                          =====              =====             =====


The primary factors in the service-area  kilowatt-hour sales overall increase in
1999  were (1) the  absence  of an  ice-storm  in 1999 of the kind  that  caused
widespread customer outages in January 1998, (2) an unusually warm summer, (3) a
cold 1998-1999  winter season,  and (4) a strong Maine economy and the company's
marketing efforts.

The average number of residential customers increased by 5,864 in 1999, 4,607 in
1998 and 4,822 in 1997, while average usage per residential  customer  increased
2.3 percent in 1999, decreased 3.0 percent in 1998 and 1.5 percent in 1997.

The 1999 electricity  sales to some former Central Maine  generating  facilities
now owned by FPL helped to boost sales to the  commercial  sector.  In addition,
increased  sales in the retail  trade and service  sectors  which  comprise  the
largest  percentage  of  commercial  sales,  were due to  continued  strength in
Maine's economy.

Industrial   sales   levels  are   significantly   affected   by  sales  to  the
pulp-and-paper  industry,  which has accounted for  approximately  56 percent of
industrial sales and approximately 22 percent of total service-area sales. Sales
to the  pulp-and-paper  sector increased by 1.4 percent in 1999,  decreased 14.4
percent in 1998 and  increased by 0.8 percent in 1997.  The increase in 1999 was
due primarily to a strong economy. The decrease in 1998 was due primarily to the
closing of two pulp and paper mills and the  expiration  of a buy-sell  contract
with a third paper mill. In addition,  weakness in Asian economies progressively
impacted Maine's  manufacturing sector in 1998, resulting in lower than expected
kwh sales in the  industrial  sector.  The decrease in 1997 was due primarily to
the  permanent  shutdown  of one  paper  mill.  Sales  to all  other  industrial
customers as a group  increased 3.5 percent in 1999, 2.2 percent in 1998 and 8.2
percent in 1997.

Operating Expenses

The sale of  Central  Maine's  generating  assets  had a  significant  effect on
operating expenses when comparing 1999 to 1998. Fuel used for company generation
decreased by $20 million,  as these expenses were no longer applicable after the
sale.  Purchased power - energy  increased by $23.5 million after the effects of
several factors. Energy purchases increased after the asset sale due to the need
to purchase  power from FPL and higher  sales  volume.  This was offset by lower
non-utility  generator  purchases,  lower oil costs  and $27.9  million  allowed
amortization of incremental power supply costs from the asset sale.

Purchased power - capacity expense increased by $26.6 million in 1999 over 1998.
Capacity charges were $20 million higher due to the greater volume of purchases.
Contract   restructuring  of  non-utility  energy  providers  accounted  for  an
additional  $20 million in increased  costs versus  1998.  Partially  offsetting
these were  decreases in nuclear  costs,  mostly  associated  with Maine Yankee,
amounting to $13.4 million, due to lower operating costs.

Other  operations  expense for CMP Group increased $25.2 million.  Approximately
$27 million was due to reporting  differences for subsidiary  operations in 1999
versus 1998. Subsidiary operations were fully consolidated in 1999, but for 1998
results reflect  consolidations from September forward.  Prior to September 1998
subsidiaries   were  accounted  for  on  an  equity  basis  as  the  results  of
consolidating the subsidiaries was deemed immaterial.  Power production expenses
decreased by $6.6  million due to the asset sale.  Nuclear  production  expenses
reflects  a  decrease  of $4.8  million  as a result  of the  settlement  of the
Millstone Unit 3 litigation.  Transmission  expenses  increased by approximately
$10.7 million due to continuing  costs for the ISO and NEPOOL for  transitioning
to deregulation. Distribution expenses increased by approximately $4 million due
to temporary  increased  costs caused by Central  Maine's  operations  personnel
working in a  maintenance  capacity  and to  subsequent  clean-up  efforts  that
resulted from the 1998 ice storm. Maintenance expenses reflect the corresponding
decrease of $3.7 million.  Other  decreases in operating  expenses  include $2.1
million in  uncollectible  account  charge-offs,  and $1.5 million in low-income
program amortization costs which ended in December, 1998.

CMP Group's  maintenance  expense  decreased by $7.8 million,  mainly due to the
asset sale.  Other  activity  included an  increase of $1.1  million  related to
merchant plant activity,  and the $3.7 million  decrease related to the 1998 ice
storm as described above.

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 $12.4
million  compared to 1998 as a result of higher  pre-tax  earnings in 1999.  The
effective tax rate for the year ended  December 31, 1999 was 48.2  percent.  The
flowthrough  of ITC and ARAM  significantly  decreased the effective tax rate by
approximately  15%. This was offset by the  non-provided  deferred  taxes on the
generation  assets sold which increased the effective tax rate by  approximately
24%.  Another  factor causing the effective rate to be higher than the statutory
rate was the reversal of book interest  expense related to carrying costs on the
deferred  gain on sale of generating  assets,  which is not  deductible  for tax
purposes.

Other Income and Expense

Equity in Earnings  of  Associated  Companies  for CMP Group  decreased  by $8.9
million for the year ended December 31, 1999,  compared to 1998. The decrease is
due  primarily  to losses  associated  with NEON of $10.6  million,  which is an
equity investment of MaineCom, a CMP Group subsidiary.

CMP Group's  gain on sale of  investments  and  properties  decreased in 1999 by
$17.0  million  and by $12.6  million  for Central  Maine.  The  decrease is due
primarily to the following:

                                                         Change 1999/1998
   (Dollars in millions)                             CMP Group     Central Maine
                                                     ---------     -------------

   Sale of New England Fibre by MaineCom in 1998        $(9.5)      $   -
   Sale of stock in NEON in 1998                         (3.1)          -
   Gas pipeline easement sales net of reversals          (6.8)         (6.8)
   Sale of land in 1998                                  (3.6)         (3.6)
   Union-Water generating asset sale                      5.1           -
   Other - miscellaneous                                   .9          (2.2)
                                                       ------        ------
                                                       $(17.0)       $(12.6)
                                                        ======        ======

In 1999,  the MPUC ruled that gains from the sales of easements to gas companies
in 1998 and 1999  should be shared  between  ratepayers  and  shareholders.  CMP
recorded  these  gains as  income  in 1998  based on its  interpretation  of the
appropriate  rate  treatment.  Ratepayers will receive 90 percent of the benefit
amortized  over 5 years,  while  shareowners  received 10 percent of the benefit
immediately.  The gas pipeline  reversals detailed above reflect compliance with
the new MPUC ruling for the 1998 easement sales.

A portion of the gain on sale of  generation  assets  amounting to $28.5 million
was allowed in 1999 by the MPUC to offset the  property  tax timing  differences
for which deferred taxes were never provided.  A corresponding  charge to income
tax expense  resulted in no impact to net income.  See Note 2 "Income  Taxes" of
Notes to Consolidated Financial Statements for more details.

Interest income  increased by $12.8 million due to investments  from proceeds of
the generation asset sale.

CMP Group's Other Interest Expense  increased by $19.1 million for the year 1999
as compared to 1998.  The  increase was due  primarily  to interest  accruing to
ratepayers of $16.3 million  associated with the deferred gain of $536.4 million
relating to Central Maine's generation asset sale to FPL and $4.9 million due to
the interest  expense on the settlement of a tax liability for tax years 1992 to
1994 with the IRS. This increase was offset by lower debt levels and  associated
interest costs after proceeds from the generation asset sale were used to redeem
pollution control bonds and medium-term notes.

Other  interest  expense  increased  in 1998 over 1997  primarily  due to higher
levels of borrowing on Central Maine's revolving credit facility to meet working
capital needs.

On October 1, 1999 Central  Maine  redeemed $18 million of its 7.999%  Preferred
Stock,  reducing  dividends by  approximately  $592  thousand for the year ended
December 31, 1999, compared to 1998. On July 1, 1998, Central Maine redeemed the
final $7 million of its 8 7/8% Preferred Stock under the mandatory  sinking-fund
provision,  reducing  dividends in total by approximately $932 thousand for 1998
compared to 1997.  On April 1, 1998  Central  Maine  redeemed  all of its 7 7/8%
Preferred Stock ($30 million),  reducing dividends by approximately $1.8 million
for the year ended December 31, 1998,  compared to 1997. On June 8, 1998,  $11.6
million of the  outstanding  7.999%  Preferred  Stock was  repurchased,  further
reducing  dividends by  approximately  $697 thousand for the year ended December
31, 1998, compared to 1997.

Proposed Merger with Energy East

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

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

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

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

Alternative Rate Plan

Central  Maine's ARP was in effect from  January 1, 1995,  through  December 31,
1999.  Instead of rate changes based on the level of costs  incurred and capital
investments,  the ARP provided for one annual  adjustment of an  inflation-based
cap on each of  Central  Maine's  rates,  with no  separate  reconciliation  and
recovery of fuel and purchased-power costs. Under the ARP, the MPUC continued to
regulate Central Maine's  operations and prices,  provide for continued recovery
of  deferred  costs,  and  specify  a range  for its  rate of  return.  The MPUC
confirmed  in its order  approving  the ARP that the ARP was  intended to comply
with the  provisions  of  Statement of Financial  Accounting  Standards  No. 71,
"Accounting for the Effects of Certain Types of Regulation."

The ARP contained a mechanism that provided price caps on Central Maine's retail
rates  to be  adjusted  annually  on  each  July 1,  commencing  in  1995,  by a
percentage combining (1) a price index, (2) a productivity offset, (3) a sharing
mechanism,  and (4) flow-through items and mandated costs. The price cap applied
to all of Central Maine's retail rates.

A specified  standard  inflation  index was the basis for each annual  price-cap
change. The inflation index was reduced by the sum of two productivity  factors,
a general  productivity offset of 1.0 percent, and a second formula-based offset
that started in 1996 and was intended to reflect the limited effect of inflation
on Central Maine's  purchased-power  costs during the five-year  initial term of
the ARP.

The sharing  mechanism could adjust the subsequent  year's July price-cap change
in the event Central  Maine's  earnings were outside a range of 350 basis points
above or below Central Maine's  allowed return on equity  (starting at the 10.55
percent  allowed  return in 1995 and  indexed  annually  for  changes in capital
costs).  Outside  that  range,  profits  and losses  could be shared  equally by
Central Maine and its customers in computing the price-cap  adjustment.  The ROE
used for earnings sharing was increased to 11.5 percent  effective with the July
1999 price change.

The ARP also  provided for partial  flow-through  to  ratepayers of cost savings
from non-utility  generator  contract  buy-outs and  restructuring,  recovery of
energy-management  costs,  and penalties for failure to attain  customer-service
and  energy-efficiency  targets.  The ARP also generally  defined mandated costs
that would be recoverable by Central Maine notwithstanding the index-based price
cap. To receive such  treatment,  the annual  revenue  requirement  related to a
mandated cost must have exceeded $3 million and have a  disproportionate  effect
on Central Maine or the electric-power industry.

The components of the last three ARP price increases are as follows:

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

 Inflation Index                            .89%        1.78%        2.12%
 Productivity Offset                      (1.00)       (1.00)       (1.00)
 Qualifying Facility Offset                 .04         (.29)        (.42)
 Earnings Sharing                           -           1.12             -
 Flowthrough and Mandated Items             .12         (.28)         .40
                                          -----         ----        -----
                                            .05%        1.33%        1.10%
                                          =====         ====         ====

The 1997 and 1998 price increases were approved by the MPUC and implemented.

Central Maine elected not to increase prices in 1999.

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

Electric-Utility Industry Restructuring

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sale of Generation Assets

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

Central Maine recorded a pre-tax  deferred gain of $518.8 million net of selling
costs and certain  non-normalized income tax impacts from the sale of generation
assets by  establishing a regulatory  liability in 1999,  which  eliminated most
income  recognition.  Central  Maine did record an income  impact  from the sale
amounting  to $18 million  associated  with the related  unamortized  investment
credits and excess  deferred  tax  reserves as required by the IRS  regulations.
Central Maine also recorded curtailment and special termination deferred charges
of $5.2 million  associated  with pension and  postretirement  benefit  costs of
employees  leaving the company as a result of the  generation-asset  sale. These
deferred charges are being amortized over a three-year period beginning March 1,
2000, as required by the MPUC. The regulatory liability for the asset sale gain,
including interest, amounted to approximately $548 million at December 31, 1999,
and is being  amortized  over an 8.5 year period  beginning  March 1, 2000.  The
amortization will vary from year to year.

With the cash proceeds of the sale Central Maine  redeemed the remaining  $118.7
million of its outstanding General and Refunding Mortgage Bonds on May 10, 1999,
and paid at maturity  $47 million of its  medium-term  notes on May 4, 1999.  On
June 1, 1999,  Central Maine redeemed $180 million of its medium-term  notes, as
well as all of the  outstanding $10 million Town of Yarmouth  Pollution  Control
Revenue  Bonds,  which  had been  issued  in 1977 and  1978.  On  August  31 and
September  9, 1999  Central  Maine  paid at  maturity  another  $40  million  of
medium-term  notes.  Approximately  $293.5 million of the proceeds were required
for federal and state income taxes resulting from the sale and $45.4 million for
incremental  energy purchases to meet Central Maine's  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.

As required by the Maine  restructuring  legislation,  on July 30, 1999, Central
Maine  offered  at  auction  its  rights to the  capacity  and  energy  from its
undivested generation assets and generation-related business. Upon completion of
the auctions, in December 1999 Central Maine contracted to sell such rights with
respect  to  its  undivested  nuclear  generation  assets  (Vermont  Yankee  and
Millstone Unit No. 3) and its NUG contract entitlements to the successful bidder
for a two-year period commencing March 1, 2000. Central Maine also auctioned its
Hydro-Quebec  entitlement to a different  buyer for the same period.  All of the
auction results were approved by the MPUC.

Expansion of Lines of Business

General.  CMP  Group  has been  expanding  its  business  opportunities  through
investments that capitalize on core competencies.  CMP International Consultants
(d/b/a  CNEX),  a wholly owned  subsidiary  of CMP Group,  provides  management,
planning,  consulting  and  research  and  information  services  to foreign and
domestic utilities and government agencies. TeleSmart, a wholly owned subsidiary
of CMP Group, which provided accounts receivable management services for utility
clients  was closed by CMP Group on  February  14,  2000,  after a review of the
subsidiary's prospects. The Union Water-Power Company, a wholly owned subsidiary
of CMP Group,  provides  utility  construction  and support  services (On Target
division);   energy  efficiency  performance  contracting  and  energy  use  and
management  services (Combined Energies  division);  and real estate development
services (UnionLand Services division).

Telecommunications.  MaineCom  Services,  which is  wholly  owned by CMP  Group,
provides  telecommunications  services,  including  point-to-point  connections,
private  networking,  consulting,  private  voice  and data  transport,  carrier
services, and long-haul transport.  MaineCom Services also holds, through wholly
owned New  England  Business  Trust,  an  approximately  38-percent  interest in
NorthEast  Optic  Network,   Inc.  ("NEON"),  a  facilities-based   provider  of
technologically advanced, high-bandwidth,  fiber optic transmission capacity for
communications  carriers on local loop,  inter-city,  and interstate facilities.
NEON owns and operates and is expanding a fiber optic network in New England and
New York,  utilizing primarily electric utility rights of way, including some of
Central Maine's and some owned by other electric utilities  including  Northeast
Utilities, another substantial minority stockholder.

On November 23, 1999, NEON announced two major agreements, one with Consolidated
Edison  Communications,  Inc. ("CEC"), a wholly owned subsidiary of Consolidated
Edison,  Inc.,  and the other with  Excelon,  a wholly owned  subsidiary of PECO
Energy,  Inc.  The  agreements  effectively  expand the reach of the  network to
include  the  Philadelphia,  Baltimore  and  Washington,  D.C.,  areas.  As  the
agreements  are  implemented,  CEC  will  obtain  an  approximately  ten-percent
interest in NEON and Excelon an interest of approximately nine percent.

In August 1998 NEON completed  initial public offerings of $48 million of common
stock and $180 million of senior  notes.  As part of the  common-stock  offering
Central  Maine sold some of the  shares it then owned in NEON for  approximately
$3.1  million.   With  some  of  the  proceeds  of  the  offerings  NEON  repaid
approximately   $18  million   Central  Maine  had  advanced  under  an  earlier
construction loan agreement.

On February  15,  2000,  CMP Group  announced  that New England  Business  Trust
intended to sell  approximately  2.5 million  shares of its  6.177-million-share
common-stock holding in NEON through an underwritten public offering expected to
be completed  during the second  calendar  quarter of 2000.  Although the market
value of NEON's  common  stock has  increased  substantially  since  NEON's 1998
initial  public  offering,  CMP Group cannot  accurately  estimate the amount of
proceeds to be realized through the planned offering.

CMP Group  believes that  although  NEON operated at a loss in 1999,  there is a
need for the fiber optic network it is constructing in the  northeastern  United
States.  CMP  Group,  however,  cannot  predict  the  future  results  of NEON's
operations.

Natural Gas Distribution.  New England Gas Development Corporation ("New England
Gas"),  which is a wholly owned  subsidiary of CMP Group,  held  approximately a
twenty-two  percent  interest at December  31, 1999 in CMP Natural  Gas,  L.L.C.
("CMP Natural  Gas").  CMP Natural Gas is a joint venture of New England Gas and
Energy East  Enterprises,  a wholly owned subsidiary of Energy East. CMP Natural
Gas was formed to construct,  own and operate a natural gas distribution  system
to serve certain areas of Maine that did not have gas service, utilizing natural
gas delivered to Maine through new interstate pipeline facilities.

CMP Natural Gas began  construction  of its first local  distribution  system in
Windham,  Maine,  in early 1999 and began serving its first  customer in May. On
July 8, 1999,  CMP  Natural  Gas and  Calpine  Corporation,  a  California-based
independent  power company,  announced the signing of a 20-year contract for CMP
Natural  Gas to provide  natural  gas  delivery  service to  Calpine's  proposed
540-megawatt  natural  gas-fired  power plant under  construction  in Westbrook,
Maine. CMP Natural Gas expects to commence service to the plant by June 1, 2000,
after MPUC approval and  construction  of a two-mile  lateral  pipeline along an
existing  Central  Maine  right  of way  that  would  interconnect  with the new
interstate  pipeline  facilities.  On December 13, 1999, the MPUC authorized CMP
Natural Gas to provide  service to the Calpine  plant,  as well as the  unserved
areas in the town of Gorham and on  February  18,  2000,  the MPUC  approved  an
affiliated-interest  transaction  allowing  CMP  Natural  Gas to  construct  the
pipeline on Central Maine's transmission corridor.

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

Permanent Shutdown of Maine Yankee Plant

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

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

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

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

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

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

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

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

Interests in Other Nuclear Plants

Connecticut  Yankee.  In December  1996,  the Board of Directors of  Connecticut
Yankee Atomic Power Company voted to permanently  shut down and decommission the
Connecticut  Yankee plant for economic reasons.  The plant did not operate after
July 22, 1996.  Central  Maine  estimates  its share of the cost of  Connecticut
Yankee's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing  the plant to be  approximately
$25.1 million and has recorded a corresponding regulatory asset and liability on
the consolidated  balance sheet.  Central Maine is currently  recovering through
rates an amount adequate to recover these expenses. Contested issues relating to
Connecticut Yankee's decommissioning rates, as well as the prudence of operating
that plant and the decision to cease operations, remain pending before the FERC.

Yankee  Atomic.  In 1993 the FERC  approved  a  settlement  agreement  regarding
recovery  of  decommissioning  costs and plant  investment,  and all issues with
respect to the prudence of the decision to  discontinue  operation of the Yankee
Atomic plant.  Central Maine estimates its remaining share of the cost of Yankee
Atomic's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing the plant, to be  approximately
$2.4  million.  This  estimate  has been  recorded  as a  regulatory  asset  and
liability on Central  Maine's  balance sheet.  Central  Maine's current share of
costs related to the shutdown of Yankee Atomic is being recovered through rates.

Vermont Yankee. The Vermont Yankee plant is an operating unit. Its NRC operating
license is  scheduled to expire in the year 2012.  On October 15, 1999,  Vermont
Yankee  agreed to sell the  Vermont  Yankee  plant for $22  million,  subject to
certain adjustments, to AmerGen Energy Company LLC ("AmerGen").  AmerGen agreed,
among other commitments, to assume the decommissioning cost of the unit after it
is taken out of service,  and the Vermont  Yankee  sponsors,  including  Central
Maine,  agreed to fund the uncollected  decommissioning  cost up to a negotiated
amount at the time of the closing of the sale.  The sponsors  also agreed either
to enter into a new  purchased-power  agreement  with AmerGen or to buy out such
future power payment  obligations by making a fixed payment to AmerGen.  Central
Maine elected to enter into a twelve-year  purchased-power agreement and intends
to sell its power  entitlement at the market rate.  The sponsors'  obligation to
consummate the sale is conditioned  upon the receipt of satisfactory  regulatory
approvals.

Millstone Unit 3. Pursuant to a joint ownership  agreement,  Central Maine has a
2.5  percent  direct  ownership  interest  in the  Millstone  3 nuclear  unit in
Waterford,  Connecticut, which is operated by Northeast Utilities. This facility
was off-line  from March 31, 1996, to July 1998,  due to NRC concerns  regarding
license requirements. In August 1997 Central Maine and the other minority owners
of  Millstone  Unit No. 3 filed suit in  Massachusetts  Superior  Court  against
Northeast Utilities and its trustees, and initiated an arbitration claim against
two of its subsidiaries,  alleging  mismanagement of the unit by the defendants.
The minority owners are seeking to recover their additional costs resulting from
such mismanagement, including their replacement power costs. Since the filing of
the suit and arbitration  claim,  the parties  engaged in resolving  preliminary
issues and in extensive pre-hearing discovery.  The arbitration hearing began on
November 16, 1999.

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

Central  Maine is  obligated  to pay its  proportionate  share of the  operating
expenses,  including  depreciation and a return on invested capital,  of each of
the Yankee Companies  referred to above for periods expiring at various dates to
2012.  Pursuant to the joint ownership  agreement for Millstone 3, Central Maine
is similarly  obligated to pay its proportionate share of the operating costs of
Millstone 3. Central  Maine is also  required to pay its share of the  estimated
decommissioning  costs of each of the  Yankee  Companies  and  Millstone  3. The
estimated  decommissioning  costs are paid as a cost of  energy  in the  amounts
allowed in rates by the FERC and passed through to Central Maine's ratepayers as
a component of its transmission-and-distribution revenue requirement approved by
the MPUC.




Non-Utility Generators

In   accordance   with  prior  MPUC  policy  and  the  ARP,   $84.5  million  of
power-purchase  contract buy-out or  restructuring  costs incurred since January
1992 are  included  in  Deferred  Charges  and Other  Assets on Central  Maine's
balance  sheet and were being  amortized  over  their  respective  fuel  savings
periods. A significant  portion of these costs were written off on March 1, 2000
per the rate case settlement.

During  1999  Central  Maine  purchased  or  restructured  three  power-purchase
contracts  which  it  expects  will  result  in  savings  to its  customers  the
equivalent of approximately $30.3 million in net present value.

NEPOOL and Regional Open-Access Transmission

In 1996 the FERC issued Order No. 888, which requires all public  utilities that
own,  control or operate  facilities  used for  transmitting  electric energy in
interstate commerce to file open access non-discriminatory  transmission tariffs
that offer both load-based, network and contract-based,  point-to-point service,
including  ancillary service to eligible customers  containing minimum terms and
conditions of non-discriminatory service. This service must be comparable to the
service they provide themselves at the wholesale level; in fact, these utilities
must themselves take the wholesale  transmission  service they provide under the
filed  tariffs.  The  order  also  permits  public  utilities  and  transmitting
utilities  the  opportunity  to  recover  legitimate,   prudent  and  verifiable
wholesale stranded costs associated with providing open access and certain other
transmission  services.  It further  requires  public  utilities to functionally
separate  transmission from generation  marketing  functions and communications.
The intent of this order is to promote the  transition  of the electric  utility
industry to open  competition.  Order No. 888 also  clarifies  federal and state
jurisdiction over transmission in interstate commerce and local distribution and
provides for deference of certain issues to state recommendations.

In 1996 the FERC also issued Order No. 889, which requires  public  utilities to
functionally separate their wholesale power marketing and transmission operation
functions and to obtain  information about their  transmission  system for their
own wholesale power  transactions  in the same way their  competitors do through
the Open Access Same-time Information System ("OASIS"). The rule also prescribed
standards of conduct and protocols for obtaining the information.  The standards
of conduct are  designed to prevent  employees  of a public  utility  engaged in
marketing functions from obtaining preferential information.

NEPOOL is a voluntary  organization  open to any entity  engaged in the electric
business, such as investor-owned utilities, municipal and cooperative utilities,
power marketers,  brokers and load  aggregators.  On December 31, 1996,  NEPOOL,
responding  to  the  FERC  orders  on  behalf  of  its  participants,   filed  a
restructuring  proposal with FERC.  The NEPOOL  proposal was the product of over
two years of  discussions  and  negotiations  among the over 130  NEPOOL  member
participants and many non-participants,  including New England state regulators.
The key elements of the NEPOOL restructuring proposal were the implementation of
a regional  NEPOOL  open  access  transmission  tariff  ("NEPOOL  Tariff"),  the
creation of an independent  system operator ("ISO"),  and the restatement of the
NEPOOL Agreement to establish a broader  governance  structure for NEPOOL and to
develop a more open competitive market structure.

The  NEPOOL  Tariff,   which  became   effective  on  March  1,  1997,   ensures
non-discriminatory open access to the regional transmission network by providing
a single rate for all transactions that utilize NEPOOL's bulk power transmission
facilities.  The NEPOOL  Tariff  promotes  competition  in the New England power
market through its single  transmission  rate  structure.  All regional  service
within  NEPOOL,  except for  wheeling  through or out,  is to be  provided  as a
network service.

In June 1997 FERC issued an order conditionally authorizing the establishment of
an ISO by NEPOOL ("ISO-New England"), effective July 1, 1997, affirming that the
transfer  of  control of  transmission  facilities  owned by the public  utility
members  of NEPOOL to the ISO was  consistent  with the  public  interest  under
Section 203 of the Federal Power Act.

In April 1998 FERC accepted the NEPOOL Tariff conditioned on NEPOOL's compliance
with a number  of issues  raised  by FERC.  On July 22,  1998,  NEPOOL  made its
compliance  filing at FERC.  The NEPOOL  Tariff  changes and  amendments  to the
Restated NEPOOL  Agreement  included in the filing effected  compliance with the
FERC's  April 1998  Order.  While  there  were a large  number of changes in the
filing,  the  principal  areas of change  related to the  addition in the NEPOOL
Tariff of a separately available internal  point-to-point  service, the addition
of a mechanism to allocate costs to update the regional transmission system, and
the   replacement  of  a  non-use  charge  with  an  in-service   charge  across
interconnections.  The FERC issued its order accepting a settlement in July 1999
and a compliance filing was completed in September 1999.

To  give  market  participants  more  choice  and  to  foster  competition,  the
restructured  NEPOOL  proposed the unbundling of electric  service in the NEPOOL
control area. The restructured  NEPOOL called for the development of competitive
wholesale  markets  for  installed  capability,   operable  capability,  energy,
automatic  generation  control,  and  reserves.  These  wholesale  products  are
market-priced,  being  based on  bid-clearing  pricing  rather  than the earlier
cost-based  pricing.  Market  participants meet their  responsibility  for these
products by buying or selling those services through  bilateral  transactions or
through the regional  power  exchange  administered  through the ISO. In October
1997 FERC issued an order permitting  implementation of the installed capability
market, which commenced in April of 1998. On April 6, 1999, FERC issued an order
approving  market rules,  and on May 1, 1999,  the remaining  markets  (operable
capability,  energy,  automatic generation control and the reserve markets) were
implemented.  In February 2000 FERC accepted an amendment to the Restated NEPOOL
Agreement that  terminated the operable  capability  market  effective  March 1,
2000.

On May 13,  1999,  the FERC  issued a notice of proposed  rulemaking  that would
amend FERC's regulations under the Federal Power Act to facilitate the formation
of regional transmission  organizations  ("RTO"). On December 20, 1999, the FERC
issued Order No. 2000,  which requires all public utilities that own, operate or
control  interstate  electric  transmission  to  file a  proposal  for an RTO by
October 15, 2000,  or, in the  alternative,  a description of any efforts by the
utility to  participate  in an RTO,  the reasons for not  participating  and any
obstacles  to  participation,  and  any  plans  for  further  work  toward  such
participation. Order No. 2000 anticipates operational RTOs by December 15, 2001.
Central  Maine is reviewing  the order to determine,  among other  matters,  its
effects on Central Maine's operations as a transmission-and-distribution utility
and the  extent to which  changes in the  structure  and  operations  of ISO-New
England may be required.

On  December  30,  1999,  NEPOOL  submitted  to FERC a  proposed  plan to manage
congestion on the NEPOOL transmission system. NEPOOL is considering revisions to
its proposal,  which, if a consensus of its members can be achieved, it plans to
file by March 31, 2000,  for FERC's  consideration.  Congestion  management  has
become a complex issue in the new  transmission  environment  due in part to the
large number of merchant  generating  plants under  construction  or proposed at
various sites in New England, including sites in Central Maine's service area.


"Year 2000" Computer Issues

CMP Group recognized the potential for adverse consequences related to the "Year
2000  computer  problem" and,  through  Central  Maine,  initiated its Year-2000
remediation  efforts in 1996. CMP Group developed and executed a broad-based and
comprehensive  project  plan,  at a cost  of $4  million,  for  identifying  and
addressing any Year-2000  related  problems.  CMP Group systems continued to run
smoothly before, during, and after the Year 2000 transition,  with no disruption
of electric  service to customers and with no negative  financial or operational
impacts.

Liquidity and Capital Resources

From 1995 through 1999 increases in Central Maine's retail rates were limited by
Central  Maine's ARP.  For a discussion  of the features of the ARP, see Note 3,
"Regulatory Matters" - "Alternative Rate Plan."

Approximately $105.6 million and $119.6 million of cash were provided during the
year ended December 31, 1999 for CMP Group and Central Maine, respectively, from
net income before  non-cash  items,  primarily  depreciation,  amortization  and
deferred income taxes. During that period  approximately $44.5 million and $36.6
million of cash were used for fluctuations in certain assets and liabilities and
from other operating  activities for CMP Group and Central Maine,  respectively.
In addition  $38.4  million of  incremental  power costs was incurred due to the
sale of generation assets.

The major components include the following:

CMP Group investing activities provided approximately $500.5 million of cash for
the year ended  December 31, 1999. The major  components  include the following:
proceeds of $850.6 million from the generation asset sale, utilization of $291.9
million for tax payments and $17.9 million for selling expenses  associated with
the sale,  proceeds of $14 million from the sale of investments  and properties,
and construction expenditures, which utilized $72.2 million in cash for the year
ended  December 31, 1999.  Central Maine received $13.9 million in deposits from
customers  relating to pending  merchant plant activity.  Central Maine could be
required in the future to refund some or all of the customer deposits associated
with  merchant  plant  pending   finalization   of  FERC  rules   regarding  the
responsibility for funding associated network upgrades.  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 forecasts and its power-supply sources are under a process
of  continuing  review.   Actual  construction   expenditures  depend  upon  the
availability of capital and other  resources,  load forecasts,  customer growth,
the number of  merchant  plants  constructed  in Central  Maine  territory,  and
general business conditions. The ultimate nature, timing and amount of financing
for   Central   Maine's   total   construction   programs,    refinancing,   and
energy-management  capital  requirements  will be  determined in light of market
conditions, earnings and other relevant factors.

During 1999 CMP Group paid  dividends  on common stock of $29.2  million,  while
preferred-stock dividends, paid by Central Maine, utilized $3.2 million of cash.

Central Maine's Articles of Incorporation limit the unsecured  indebtedness that
may be  outstanding  to 20 percent of  capitalization,  as defined,  without the
consent of the holders of Central Maine's preferred stock; 20 percent of defined
capitalization  amounted to $119  million as of  December  31,  1999.  Unsecured
indebtedness,  as defined,  amounted to $57  million as of  December  31,  1999.
Central  Maine's $500 million  medium-term  note  program,  having  received the
consent of Central Maine's  preferred  stockholders in May 1997, is not included
in  "unsecured  indebtedness"  for  purposes of the  20-percent  limitation.  On
December  31,  1999,  Central  Maine had $70  million of its  medium-term  notes
outstanding.

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

To support its short-term capital  requirements,  in October 1996, Central Maine
entered  into  a  $125  million  Credit  Agreement  with  several  banks,   with
BankBoston, N.A., and The Bank of New York acting as agents for the lenders. The
arrangement  originally  had  two  credit  facilities:  a $75  million,  364-day
revolving  credit facility and a $50-million,  3-year revolving credit facility.
Effective  December 15, 1998, the banks'  commitments under the 364-day facility
were reduced  from $75 million to $25 million by  agreement of the parties,  and
other  provisions  were amended to reflect the  reorganization  of Central Maine
into a  holding-company  structure  and recognize  other changed  circumstances.
Central Maine terminated the two facilities on October 21, 1999.

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

On February  15,  2000,  CMP Group  announced  that New England  Business  Trust
intended to sell  approximately  2.5 million  shares of its  6.177-million-share
common-stock holding in NEON through an underwritten public offering expected to
be completed  during the second  calendar  quarter of 2000.  Although the market
value of NEON's  common  stock has  increased  substantially  since  NEON's 1998
initial  public  offering,  CMP Group cannot  accurately  estimate the amount of
proceeds to be realized through the planned offering.

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

For further  details on the financing  activities of Central Maine and CMP Group
during 1999, see Item 8, "Notes to Consolidated Financial Statements" - Note 10,
"Capitalization and Interim Financing," below.

Environmental Matters

CMP Group  and its  subsidiaries  assess  compliance  with laws and  regulations
related to hazardous substance  remediation on an ongoing basis. At December 31,
1999,  Central  Maine had an accrued  liability of $2.7 million for  remediation
costs at  various  sites.  The costs at  identified  sites may be  significantly
higher if, among other things,  other  potentially  responsible  parties are not
financially  able to contribute to these costs or identified  possible  outcomes
change. See Note 4, "Commitments and  Contingencies." - "Legal and Environmental
Matters" for further discussion.

Storm Damage Central Maine's System

In January 1998, a severe ice storm 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.  In January 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,  amounting to $50.7  million plus accrued
carrying costs.

In the  spring  of  1998,  the  U.S.  Congress  appropriated  $130  million  for
Presidentially   declared  disasters  in  1998,   including   storm-damage  cost
reimbursement  for  electric  utilities.  On November 5, 1998 the United  States
Department  of Housing and Urban  Development  ("HUD")  announced  that of those
funds $2.2 million had been awarded to Maine,  with none  designated for utility
infrastructure,  which  Central  Maine  and the Maine  Congressional  delegation
protested as inadequate and inconsistent with  Congressional  intent.  HUD later
announced  that Maine  would  receive  additional  funds and on October 6, 1999,
Central Maine received  payment in the amount of $19.6 million from HUD. Central
Maine is  recovering  the $34.1  million  balance of the deferred  storm-related
costs, including $3.9 million of carrying costs, through rates over a three-year
period commending March 1, 2000.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

CMP Group is exposed to interest  rate risk  through the use of  fixed-rate  and
variable-rate debt and preferred stock as sources of capital. As of December 31,
1999,  Central  Maine had $70  million of  medium-term  notes  outstanding,  $10
million of which were floating, LIBOR-based rates.

                                   Variable Long Term          Fixed Long Term

Weighted Average Rates                          9.12%                   7.16%

Balance at December 31, 1999                  $35,010                $195,950

Maturity Period                             2001-2019               2000-2021




Item 8. FINANCIAL STATEMENTS AND
           SUPPLEMENTARY DATA.

Index to Financial Statements and Financial Statement Schedules

Management report on responsibility for financial reporting                51

Report of Independent Accountants                                          52

Consolidated Financial Statements                                          53

CMP Group, Inc.

     Consolidated  Statement of Earnings for the three years
     ended  December 31, 1999, 1998 and 1997                               53

     Consolidated Balance Sheet as of December 31, 1999 and 1998           54

     Consolidated  Statement  of  Capitalization  and  Interim
     Financing  as of December 31, 1999 and 1998                           56

     Consolidated  Statement  of Changes in  Stockholders'  Equity
     for the three years ended December 31, 1999, 1998 and 1997            57

     Consolidated Statement of Cash Flows for the three years
     ended December 31, 1999, 1998 and 1997                                58

Central Maine Power Company

     Consolidated  Statement of Earnings for the three years ended
     December 31, 1999, 1998 and 1997                                      59

     Consolidated Balance Sheet as of December 31, 1999 and 1998           60

     Consolidated  Statement  of  Capitalization  and  Interim
     Financing  as of December 31, 1999 and 1998                           62

     Consolidated  Statement  of Changes in  Stockholders'
     Equity for the three years ended December 31, 1999, 1998 and 1997     63

     Consolidated Statement of Cash Flows for the three years ended
     December 31, 1999, 1998 and 1997                                      64

     Notes to Consolidated  Financial  Statements - CMP Group,
     Inc. and Central Maine Power Company                                  65

Financial Statement Schedule:

Central Maine Power Company

     Schedule II - Valuation and Qualifying Accounts                      140


                              Report of Management

The  Managements  of CMP Group and its  subsidiaries  ("CMP  Group") and Central
Maine Power Company and its subsidiaries  ("Central  Maine") are responsible for
the  consolidated  financial  statements and the related  financial  information
appearing  in this annual  report.  The  financial  statements  are  prepared in
conformity  with generally  accepted  accounting  principles and include amounts
based  on  informed  estimates  and  judgments  of  management.   The  financial
information  included elsewhere in this report is consistent,  where applicable,
with the financial statements.

CMP Group and Central Maine  maintain a system of internal  accounting  controls
that are designed to provide reasonable assurance that the respective assets are
safeguarded,   transactions   are  executed  in  accordance  with   management's
authorization,  and  the  financial  records  are  reliable  for  preparing  the
financial  statements.  While no  system of  internal  accounting  controls  can
prevent the  occurrence of errors or  irregularities  with  absolute  assurance,
management's  objective is to maintain a system of internal  accounting controls
that meets their goals in a cost-effective manner.

CMP Group and Central Maine have policies and procedures in place to support and
document  the  internal  accounting  controls  that are revised on a  continuing
basis.  Internal  auditors conduct reviews,  provide ongoing  assessments of the
effectiveness  of selective  internal  controls,  and report their  findings and
recommendations for improvement to management.

The Board of Directors of CMP Group has established an Audit Committee, composed
entirely of outside directors, which oversees the financial reporting process on
behalf of the Board of Directors.  The Audit Committee meets  periodically  with
management,  internal auditors, and the independent public accountants to review
accounting,  auditing,  internal  accounting  controls,  and financial reporting
matters.  The internal auditors and the independent public accountants have full
and free  access to meet with the Audit  Committee,  with or without  management
present, to discuss auditing or financial reporting matters.

PricewaterhouseCoopers LLP, independent public accountants, has been retained to
audit CMP Group and  Central  Maine's  consolidated  financial  statements.  The
accompanying  report of independent  public accountants is based on their audit,
conducted in accordance with auditing standards generally accepted in the United
States, including a review of selected internal accounting controls and tests of
accounting procedures and records.

David T. Flanagan                           Sara J. Burns
CMP Group, Inc.                             Central Maine Power Company
President and Chief Executive Officer       President

Arthur W. Adelberg                          Curtis I. Call
CMP Group, Inc.                             Central Maine Power Company
Chief Financial Officer                     Treasurer


                        Report of Independent Accountants

To the Shareholders and Directors of
   CMP Group, Inc. and the Shareholders and
   Directors of Central Maine Power Company

In our opinion, the accompanying consolidated financial statements listed in the
accompanying  index present fairly, in all material  respects,  the consolidated
financial  position of CMP Group,  Inc. and its  subsidiaries  ("CMP  Group") at
December 31, 1999 and 1998, and the consolidated results of their operations and
their cash flows for each of the three years in the period  ended  December  31,
1999 and the consolidated  financial position of Central Maine Power Company and
its  subsidiaries  ("Central  Maine") at  December  31,  1999 and 1998,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. In addition, in our opinion,
the financial  statement  schedule  listed in the  accompanying  index  presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  These financial
statements and financial statement schedule are the responsibility of management
of CMP Group and Central Maine; our  responsibility  is to express an opinion on
these financial statements and financial statement schedule based on our audits.
We  conducted  our  audits  of these  statements  in  accordance  with  auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.

PricewaterhouseCoopers LLP
Portland, Maine

January 27, 2000





                       CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S>                                                                         <C>             <C>              <C>

                        CMP Group, Inc. and Subsidiaries
                       Consolidated Statement Of Earnings
                 For the years ended December 31, 1999, 1998 and
                  1997 (Dollars in thousands, except per-share
                                    amounts)

                                                                              1999             1998            1997

Revenues (Notes 1 and 3)
     Electric operating revenues                                            $953,711        $938,739         $954,176
     Other non-utility revenues                                               38,945          11,588            2,070
                                                                            --------        --------        ---------
        Total Revenues                                                       992,656         950,327          956,246
                                                                             -------         -------          -------

Operating Expenses

     Fuel used for company generation (Notes 1 and 9)                         10,842          30,898           34,946
     Purchased power
        Energy (Notes 1 and 9)                                               392,878         369,411          419,144
        Other (capacity) (Note 9)                                            111,871          85,321          112,810
     Other operation                                                         238,703         213,489          210,513
     Maintenance                                                              33,180          41,051           33,973
     Depreciation and amortization (Note 1)                                   50,593          56,493           54,132
     Taxes other than income taxes                                            22,374          27,783           28,303
                                                                            --------        --------         --------
        Total Operating Expenses                                             860,441         824,446          893,821
                                                                             -------         -------          -------

Operating Income                                                             132,215         125,881           62,425
                                                                             -------         -------         --------

Other Income (Expense)

     Equity in earnings of associated companies (Note 9)                      (8,945)            (60)           6,260
     Allowance for equity funds used during construction (Note 1)                716             653              642
     Interest income                                                          15,877           3,089            4,411
     Recovery of non-provided deferred income taxes on asset sale
     (Note 2)                                                                 28,480               -                -
     Other, net                                                               (7,793)         (1,706)            (772)
     Minority interest in consolidated net income                               (719)           (205)            (233)
     Gain on sale of investments and properties, net                           5,901          22,912              418
                                                                           ---------        --------       ----------
        Total Other Income (Expense)                                          33,517          24,683           10,726
                                                                            --------        --------         --------

Interest Charges

     Long-term debt (Note 10)                                                 26,353          43,276           44,346
     Other interest (Note 10)                                                 27,425           8,366            7,660
     Allowance for borrowed funds used during construction (Note 1)             (307)           (495)            (439)
                                                                          ----------      ----------       ----------
        Total Interest Charges                                                53,471          51,147           51,567
                                                                            --------        --------         --------

Income Before Income Taxes and Preferred Dividends                           112,261          99,417           21,584
     Income taxes (Notes 2 and 3)                                             54,092          41,698            8,162
     Dividends on Preferred Stock of Subsidiary                                3,315           4,809            8,209
                                                                           ---------       ---------        ---------
Net Income                                                                 $  54,854       $  52,910       $    5,213
                                                                            ========        ========        =========

Weighted Average Number Of Shares Of Common

     Stock Outstanding                                                    32,442,552      32,442,685       32,442,752

Earnings Per Share Of Common Stock - Basic                                     $1.69           $1.63            $0.16
Earnings Per Share Of Common Stock - Diluted                                   $1.68           $1.63            $0.16

Dividends Declared Per Share Of Common Stock                                   $0.90           $0.90            $0.90
</TABLE>

The accompanying notes are an integral part of these financial statements


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


                        CMP Group, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                           December 31, 1999 and 1998
                             (Dollars in thousands)

                                    ASSETS                                               1999             1998
                                                                                         ----             ----

Current Assets

    Cash and cash equivalents                                                       $   129,950      $    30,540
    Accounts receivable, less allowance for uncollectible accounts of $2,904
    in 1999 and $3,136 in 1998
       Service   - billed                                                                86,599           81,169
                 - unbilled (Notes 1 and 3)                                              51,124           53,296
       Other accounts receivable                                                         21,662           13,753
    Inventories, at average cost
       Fuel oil                                                                             177            5,879
       Materials and supplies                                                            10,390           13,126
    Prepayments and other current assets                                                  9,716           10,269
                                                                                   ------------      -----------
          Total Current Assets                                                          309,618          208,032
                                                                                     ----------       ----------

Electric Property, at original cost (Notes 9 and 10)                                  1,335,674        1,750,837
    Less: Accumulated depreciation (Notes 1 and 9)                                      551,014          694,410
                                                                                     ----------       ----------
          Net electric property in service                                              784,660        1,056,427
                                                                                     ----------        ---------

    Construction work in progress (Note 4)                                               33,681           19,538
    Nuclear fuel, less accumulated amortization of $9,996 in 1999 and $9,316
    in 1998                                                                               1,418            1,147

Property, non utility                                                                    18,487           23,244
    Less: Accumulated Depreciation                                                        5,574            6,802
                                                                                   ------------     ------------
          Net non-utility property                                                       12,913           16,442
                                                                                    -----------      -----------
          Total net property                                                            832,672        1,093,554

Investments In Associated Companies, at equity (Notes 1 and 9)                           51,059           71,880
                                                                                    -----------      -----------
    Total Net Property and Investments in Associated Companies                          883,731        1,165,434
                                                                                     ----------        ---------

Deferred Charges And Other Assets

    Recoverable costs of Seabrook 1 and abandoned projects, net (Note 1)
                                                                                         73,052           78,539
    Yankee Atomic purchased-power contract (Note 9)                                       2,350            7,761
    Connecticut Yankee purchased-power contract (Note 9)                                 25,054           29,913
    Maine Yankee purchased-power contract (Note 9)                                      242,907          273,895
    Regulatory assets-nuclear impairment                                                 77,489                -
    Regulatory assets - deferred taxes (Note 2)                                         204,994          235,451
    Other deferred charges and other assets (Notes 1 and 3)                             228,065          263,859
                                                                                     ----------       ----------
          Deferred Charges and Other Assets, Net                                        853,911          889,418
                                                                                     ----------       ----------

          Total Assets                                                               $2,047,260       $2,262,884
                                                                                      =========        =========
</TABLE>

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



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


                        CMP Group, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                           December 31, 1999 and 1998
                             (Dollars in thousands)

                   STOCKHOLDERS' EQUITY AND LIABILITIES                                1999               1998
                                                                                       ----               ----

Current Liabilities and Interim Financing

    Interim financing (see separate statement) (Note 10)                         $     60,199         $  297,173
    Sinking-fund requirements (Note 10)                                                11,937             12,638
    Accounts payable                                                                  104,581             90,960
    Dividends payable                                                                   7,412              7,304
    Accrued interest                                                                    2,678              7,524
    Accrued income taxes (Note 2)                                                           -             19,911
    Miscellaneous current liabilities                                                  16,731             15,909
                                                                                  -----------        -----------
       Total Current Liabilities and Interim Financing                                203,538            451,419
                                                                                   ----------         ----------

Commitments and Contingencies (Notes 4 and 9)

Reserves and Deferred Credits

    Accumulated deferred income taxes (Note 2)                                         66,472            376,043
    Unamortized investment tax credits (Note 2)                                        13,926             29,064
    Yankee Atomic purchased-power contract (Note 9)                                     2,350              7,761
    Connecticut Yankee purchased-power contract (Note 9)                               25,054             29,913
    Maine Yankee purchased-power contract (Note 9)                                    242,907            273,895
    Regulatory liabilities-deferred taxes (Note 2)                                     60,564             58,376
    Deferred gain on generation asset sale (Note 3)                                   536,368                  -
    Other reserves and deferred credits (Note 5)                                      194,162            116,805
                                                                                   ----------         ----------
       Total Reserves and Deferred Credits                                          1,141,803            891,857
                                                                                    ---------         ----------

Long-Term Debt (see separate statement) (Note 10)

    Mortgage debt                                                                           -            117,683
    Other long-term obligations                                                       122,542            228,598
                                                                                   ----------         ----------
       Total Long-Term Obligations                                                    122,542            346,281
                                                                                   ----------         ----------

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

Stockholders' Equity (see separate statement) (Note 10)
    Common-stock                                                                      162,213            162,213
    Other paid in capital                                                             284,330            285,835
    Reacquired common stock                                                              (642)              (827)
    Retained earnings                                                                  97,038             71,668
    Preferred stock                                                                    35,528             35,528
                                                                                  -----------        -----------
       Total Stockholders' Equity                                                     578,467            554,417
                                                                                   ----------         ----------

       Total Stockholders' Equity and Liabilities                                  $2,047,260         $2,262,884
                                                                                    =========          =========

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


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


                        CMP Group, Inc. and Subsidiaries

         CONSOLIDATED STATEMENT OF CAPITALIZATION AND INTERIM FINANCING

                             (Dollars in thousands)

                                                                                   December 31
                                                                                   -----------
                                                                           1999                          1998
                                                                           ----                          ----
                                                                  Amount            %           Amount           %
                                                                  ------            -           ------           -
Capitalization (Note 10)
Common-Stock Investment:
Common stock, par value $5 per share:
    Authorized - 80,000,000 shares
    Outstanding - 32,442,552 shares in 1999
    and in 1998                                                    $162,213                     $   162,213
Other paid-in capital                                               284,330                         285,835
Reacquired common stock, at cost (39,418 shares)                       (642)                           (827)
Retained earnings                                                    97,038                          71,668
                                                                   --------                     -----------
Total Common-Stock Investment                                       542,939        71.2%            518,889     42.6%
                                                                    -------       -----          ----------   ------
Preferred Stock - not subject to mandatory redemption
                                                                     35,528         4.7              35,528      2.9
                                                                   --------       -----         -----------   ------
Redeemable Preferred Stock - subject to mandatory

redemption                                                            9,910                          27,910
Less: current sinking fund requirements                               9,000                           9,000
                                                                  ---------                    ------------
Redeemable Preferred Stock - subject to mandatory

redemption                                                              910          .1              18,910      1.6
                                                                 ----------       -----         -----------   ------
Long-Term Obligations:
Mortgage bonds                                                            -                         118,717
Less: unamortized debt discount                                           -                           1,034
                                                              --------------                   ------------
Total Mortgage Bonds                                                      -                         117,683
                                                              --------------                     ----------
Total Medium-Term Notes                                              70,000                         327,000
                                                                   --------                      ----------
Other Long-Term Obligations:
Lease obligations                                                    31,040                          32,773
Pollution-control facility and other notes                           84,439                         154,463
                                                                   --------                      ----------
Total Other Long-Term Obligations                                   115,479                         187,236
                                                                    -------                      ----------
Less: Current Sinking Fund Requirements and Current
Maturities                                                           62,937                         285,638
                                                                   --------                      ----------
Total Long-Term Obligations                                         122,542        16.1             346,281     28.5
                                                                    -------       -----          ----------   ------
Total Capitalization                                                701,919        92.1             919,608     75.6
                                                                    -------       -----          ----------   ------
Interim Financing (Note 10):
Short-term obligations                                                  199                          15,000
Current maturities of long-term obligations                          60,000                         282,173
                                                                   --------                      ----------
Total Interim Financing                                              60,199         7.9             297,173     24.4
                                                                   --------      ------          ----------   ------
Total Capitalization and Interim Financing                         $762,118       100.0%         $1,216,781    100.0%
                                                                    =======       =====           =========    =====

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


<TABLE>

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


                        CMP Group, Inc. and Subsidiaries

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                             (Dollars in thousands)

                                       For the three years ended December 31, 1999
                                                            Other     Reacquired
                                               Amount at   paid-in      common    Retained                Preferred
                                      Shares   par value   capital      stock     earnings       Shares      Stock      Total
                                      ------   ---------   -------      -----     --------       ------      -----      -----


Balance - December 31, 1996       32,422,752    $162,214     $276,818  $     -       $72,546     655,713     $65,571    $577,149
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Net Income                                                                            13,422                              13,422
Dividends declared:
    Common stock                                                                     (29,199)                            (29,199)
    Preferred stock                                                                   (8,209)                             (8,209)
Reacquired preferred stock                                        348                   (348)                                  -
Capital stock expense                                               2                                                          2
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Balance - December 31, 1997       32,422,752     162,214      277,168        -        48,212     655,713      65,571     553,165
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Net Income                                                                            52,910                              52,910
Dividends declared:
    Common stock                                                                     (29,198)                            (29,198)
Common stock                            (200)         (1)          (2)                    (1)                                 (4)
Reacquired common stock                                                      (827)                                          (827)
Increase in equity of investee
(Note 8)                                                        9,413                                                      9,413
Preferred stock                                                                                (300,430)     (30,043)    (30,043)
Reacquired preferred stock                                       (771)                  (255)                             (1,026)
Capital stock expense                                              27                                                         27
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Balance - December 31, 1998       32,442,552     162,213      285,835        (827)    71,668     355,283      35,528     554,417
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Net Income                                                                            54,854                              54,854
Dividends declared:
    Common stock                                                                     (29,197)                            (29,197)
Reacquired common stock                                                    (1,021)                                        (1,021)
Shares issued-employee incentive
plans                                                            (578)      1,206                                            628
Loans to employees for exercising
stock options                                                  (1,214)                                                    (1,214)
Reacquired preferred stock                                        287                   (287)                              -
                                  ----------    --------     --------     -------    -------     -------     -------    --------

Balance - December 31, 1999       32,442,552    $162,213     $284,330     $  (642)   $97,038     355,283     $35,528    $578,467
                                  ==========    ========     ========     =======    =======     =======     =======    ========


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


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





                                 CMP Group, Inc. and Subsidiaries

                               CONSOLIDATED STATEMENT OF CASH FLOWS

                                      (Dollars in thousands)

                                                                                 Year ended December 31
                                                                                 ----------------------
                                                                             1999         1998           1997



CASH FROM OPERATION

    Net income                                                            $  54,854      $ 52,910      $  5,213
    Items not requiring (not providing) cash:
       Depreciation                                                          39,245        47,130        44,170
       Amortization                                                          41,187        38,873        34,291
       Deferred income taxes and investment tax credits, net                (28,984)       20,016        (2,204)
       Allowance for equity funds used during construction                     (716)         (653)         (642)
    Preferred stock dividends of subsidiary                                   3,315         4,809         8,209
    Gain on sale of investments and properties                               (5,901)      (19,108)            -
    Power supply costs recovered with asset sale                            (38,434)            -             -
    Changes in certain assets and liabilities:
       Accounts receivable                                                  (11,167)       (2,999)        1,257
       Other current assets                                                   1,390        (1,158)          390
       Inventories                                                             (120)       (1,836)        4,259
       Accounts payable                                                       9,729        (9,785)        4,617
       Accrued taxes                                                        (22,059)       16,910         3,265
       Accrued interest                                                      (4,846)       (3,677)         (409)
       Miscellaneous current liabilities                                        549           147        (5,580)
    Deferred ice storm cost                                                  20,462       (52,433)            -
    Changes in deferred balances and related carrying costs                  36,114        (2,615)       (1,940)
    Restructuring of purchased power contract                                     -       (22,500)            -
    Maine Yankee outage accrual                                                   -             -       (10,350)
    MaineCom equity losses in subsidiaries                                   10,555         6,664           568
    Other, net                                                                6,441         6,530         7,096
                                                                          ---------      --------      --------
          Net Cash Provided by Operating Activities                         111,614        77,225        92,210
                                                                            -------       -------       -------

INVESTING ACTIVITIES

       Construction expenditures                                            (72,162)      (42,405)      (40,306)
       Customer deposits for construction                                    13,940             -             -
       Investments in and loans to affiliates                                     -       (17,800)       (4,769)
       Repayment of loan by affiliates                                            -        17,800             -
       Central Maine sale of assets                                         850,561             -             -
       Tax payments related to sale of assets                              (291,900)            -             -
       Selling expense for sale of generation assets                        (17,884)            -             -
       Proceeds from sale of investments and properties                      14,018        21,347             -
       Changes in accounts payable - investing activities                     3,892         3,665          (734)
                                                                          ---------      --------     ---------
          Net Cash Provided (Used) by Investing Activities                  500,465       (17,393)      (45,809)
                                                                            -------        -------      --------

FINANCING ACTIVITIES
    Issuances:

       Revolving credit agreement                                                 -        50,000        52,500
       Medium-term notes                                                          -       302,000             -
       Short-term obligations, net                                                -        10,000             -
    Redemptions:
       Mortgage bonds                                                      (118,717)     (302,283)            -
       Preferred stock                                                      (18,000)      (48,618)      (14,000)
       Medium-term notes                                                   (257,000)      (18,000)      (25,000)
       Revolving credit agreement                                           (50,000)            -             -
       Finance Authority of Maine                                            (8,000)       (7,400)       (6,800)
       Other long-term obligations                                          (13,758)       (6,049)         (645)
       Short-term obligations, net                                          (14,973)      (55,000)            -
    Funds on deposit with trustee                                                 -        61,693        (2,182)
    Purchase of treasury stock                                                  185          (827)            -
    Dividends:
       Common stock                                                         (29,198)      (28,943)      (29,220)
       Preferred stock of subsidiary                                         (3,208)       (6,706)       (8,520)
                                                                          ---------      ---------     --------
          Net Cash Used by Financing Activities                            (512,669)      (50,133)      (33,867)
                                                                            -------       --------      -------
          Net Increase in Cash                                               99,410         9,699        12,534

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                               30,540        20,841         8,307
                                                                             ------        ------         -----
CASH AND CASH EQUIVALENTS,  END OF  PERIOD                                 $129,950      $ 30,540      $ 20,841

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

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


                       CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S>                                                                     <C>            <C>             <C>

                  Central Maine Power Company and Subsidiaries
                       Consolidated Statement Of Earnings
              For the years ended December 31, 1999, 1998 and 1997
                (Dollars in thousands, except per-share amounts)

                                                                         1999           1998            1997
                                                                         ----           ----            ----
Revenues (Notes 1 and 3)
     Electric operating revenues                                        $953,501       $938,561        $954,176
     Other non-utility revenues                                              962          2,969           2,070
                                                                      ----------      ---------       ---------
        Total Revenues                                                   954,463        941,530         956,246
                                                                         -------        -------         -------

Operating Expenses

     Fuel used for company generation (Notes 1 and 9)                     10,842         30,898          34,946
     Purchased power
        Energy (Notes 1 and 9)                                           392,878        369,411         419,144
        Other (capacity) (Note 9)                                        111,871         85,321         112,810
     Other operation                                                     203,479        204,286         210,513
     Maintenance                                                          32,150         40,961          33,973
     Depreciation and amortization (Note 1)                               49,517         56,257          54,132
     Taxes other than income taxes                                        22,291         27,747          28,303
                                                                        --------       --------        --------
        Total Operating Expenses                                         823,028        814,881         893,821
                                                                         -------        -------         -------

Operating Income                                                         131,435        126,649          62,425
                                                                         -------        -------        --------

Other Income (Expense)

     Equity in earnings of associated companies (Note 9)                   2,399          1,762           6,260
     Allowance for equity funds used during construction (Note 1)            716            653             642
     Interest Income                                                      15,462          2,954           4,411
     Recovery of non-provided deferred income taxes on asset sale
     (Note 2)                                                             28,480              -               -
     Other, net                                                           (4,477)          (857)           (772)
     Minority interest in consolidated net income                           (719)          (205)           (233)
     Gain on sale of investments and properties, net                         709         13,314             418
                                                                       ----------      --------      ----------
        Total Other Income (Expense)                                      42,570         17,621          10,726
                                                                         -------       --------        --------

Interest Charges

     Long-term debt (Note 10)                                             26,160         43,223          44,346
     Other interest (Note 10)                                             27,322          8,286           7,660
     Allowance for borrowed funds used during construction (Note 1)         (307)          (495)           (439)
                                                                       ---------     ----------      ----------
        Total Interest Charges                                            53,175         51,014          51,567
                                                                         --------      --------        --------

Income Before Income Taxes                                               120,830         93,256          21,584
     Income taxes (Notes 2 and 3)                                         52,090         38,433           8,162
                                                                        --------       --------       ---------
Net Income                                                                68,740         54,823          13,422
     Dividends on Preferred Stock                                          3,315          4,809           8,209
                                                                       ---------      ---------       ---------
Earnings Applicable to Common  Stock                                   $  65,425      $  50,014      $    5,213
                                                                        ========       ========       =========

Weighted Average Number Of Shares Of Common

     Stock Outstanding                                                31,211,471     32,113,357      32,442,752

Earnings Per Share Of Common Stock (Basic and Diluted)                     $2.10          $1.56           $0.16

Dividends Declared Per Share Of Common Stock                              $1.305         $0.675*          $0.90
</TABLE>

*1998  fourth  quarter  dividend  of $0.225 per share was  declared  and paid in
January 1999.

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


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


                  Central Maine Power Company and Subsidiaries
                           Consolidated Balance Sheet
                           December 31, 1999 and 1998
                             (Dollars in thousands)

                                    ASSETS                           1999          1998
                                                                     ----          ----

Current Assets

    Cash and cash equivalents ................................   $  112,872   $   22,628
    Accounts receivable, less allowance for
    uncollectible accounts of $2,904
    in 1999 and $3,136 in 1998
       Service ..- billed                                            86,455       81,082
                 - unbilled (Notes 1 and 3) ..................       51,124       53,110
       Other accounts receivable .............................       19,647       12,698
    Inventories, at average cost
       Fuel oil ..............................................          177        5,879
       Materials and supplies ................................        9,927       12,755
    Prepayments and other current assets .....................        8,393       10,162

          Total Current Assets ...............................      288,595      198,314


Electric Property, at original cost (Notes 9 and 10) .........    1,335,670    1,750,777
    Less: Accumulated depreciation (Notes 1 and 9) ...........      550,990      694,463

          Net electric property in service ...................      784,680    1,056,314


    Construction work in progress (Note 4) ...................       32,357       19,483
    Nuclear fuel, less accumulated amortization of $9,996
    in 1999 and $9,316 in 1998 ...............................        1,418        1,147

Property, non utility ........................................       10,430       15,895
    Less: Accumulated Depreciation ...........................        3,069        4,150

          Net non-utility property ...........................        7,361       11,745

          Total net property .................................      825,816    1,088,689

Investments In Associated Companies, at equity (Notes 1 and 9)       38,236       48,406

    Total Net Property and Investments in Associated Companies      864,052    1,137,095


Deferred Charges And Other Assets

    Recoverable costs of Seabrook 1 and abandoned projects,
    net (Note 1)                                                     73,052       78,539
    Yankee Atomic purchased-power contract (Note 9) ..........        2,350        7,761
    Connecticut Yankee purchased-power contract (Note 9) .....       25,054       29,913
    Maine Yankee purchased-power contract (Note 9) ...........      242,907      273,895
    Regulatory asset-nuclear impairment ......................       77,489         --
    Regulatory assets - deferred taxes (Note 2) ..............      204,994      235,451
    Other deferred charges and other assets (Notes 1 and 3) ..      223,341      262,512

          Deferred Charges and Other Assets, Net .............      849,187      888,071


          Total Assets .......................................   $2,001,834   $2,223,480

</TABLE>

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

<TABLE>
<S>                                                  <C>   <C>                   <C>
                  Central Maine Power Company and Subsidiaries
                           Consolidated Balance Sheet
                           December 31, 1999 and 1998

                             (Dollars in thousands)

                   STOCKHOLDERS' EQUITY AND LIABILITIES            1999              1998

Current Liabilities and Interim Financing

    Interim financing (see separate statement) (Note 10)   $      60,000         $  297,000
    Sinking-fund requirements (Note 10)                           11,937             12,638
    Accounts payable                                             107,600             93,012
    Dividends payable                                                112                  5
    Accrued interest                                               2,678              7,491
    Income taxes payable to parent company (Note 2)                    -             20,822
    Miscellaneous current liabilities                             15,855             15,455
       Total Current Liabilities and Interim Financing           198,182            446,423

Commitments and Contingencies (Notes 4 and 9)

Reserves and Deferred Credits

    Accumulated deferred income taxes (Note 2)                    63,792            372,243
    Unamortized investment tax credits (Note 2)                   13,926             29,064
    Yankee Atomic purchased-power contract (Note 9)                2,350              7,761
    Connecticut Yankee purchased-power contract (Note 9)          25,054             29,913
    Maine Yankee purchased-power contract (Note 9)               242,907            273,895
    Regulatory liabilities-deferred taxes (Note 2)                60,564             58,376
    Deferred gain on generation asset sale (Note 3)              536,368                  -
    Other reserves and deferred credits (Note 5)                 181,348            111,506
       Total Reserves and Deferred Credits                     1,126,309            882,758

Long-Term Debt (see separate statement) (Note 10)
    Mortgage debt                                                      -            117,683
    Other long-term obligations                                  120,186            226,151
       Total Long-Term Obligations                               120,186            343,834

Redeemable Preferred Stock                                           910             18,910

Stockholders' Equity (see separate statement) (Note 10)
    Common-stock                                                 162,213            162,213
    Other paid in capital                                        276,709            276,422
    Reacquired common stock                                      (19,000)           (19,000)
    Retained earnings                                            100,754             76,349
    Preferred stock                                               35,571             35,571
       Total Stockholders' Equity                                556,247            531,555

       Total Stockholders' Equity and Liabilities             $2,001,834         $2,223,480
</TABLE>

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


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



                  Central Maine Power Company and Subsidiaries
         CONSOLIDATED STATEMENT OF CAPITALIZATION AND INTERIM FINANCING
                             (Dollars in thousands)

                                                                                   December 31
                                                                           1999                          1998
                                                                  Amount            %           Amount           %
Capitalization (Note 10)
Common-Stock Investment:
Common stock, par value $5 per share:
    Authorized - 80,000,000 shares
    Outstanding - 31,211,471 shares in 1999 and 1998               $162,213                     $   162,213
Other paid-in capital                                               276,709                         276,422
Reacquired common stock (1,231,081 shares)                          (19,000)                        (19,000)
Retained earnings                                                   100,754                          76,349
Total Common-Stock Investment                                       520,676        70.6%            495,984     41.6%
Preferred Stock - not subject to mandatory redemption
                                                                     35,571         4.8              35,571      3.0
Redeemable Preferred Stock - subject to mandatory

redemption                                                            9,910                          27,910
Less: current sinking fund requirements                               9,000                           9,000
Redeemable Preferred Stock - subject to mandatory

redemption                                                              910          .1              18,910      1.6
Long-Term Obligations:
Mortgage bonds                                                            -                         118,717
Less: unamortized debt discount                                           -                           1,034
Total Mortgage Bonds                                                      -                         117,683
Total Medium-Term Notes                                              70,000                         327,000
Other Long-Term Obligations:
Lease obligations                                                    31,040                          32,773
Pollution-control facility and other notes                           83,266                         152,016
Total Other Long-Term Obligations                                   114,306                         184,789
Less: Current Sinking Fund Requirements and Current
Maturities                                                           64,120                         285,638
Total Long-Term Obligations                                         120,186        16.3             343,834     28.9
Total Capitalization                                                677,343        91.8             894,299     75.1
Interim Financing (Note 10):
Short-term obligations                                                    -                          15,000
Current maturities of long-term obligations                          60,000                         282,000
Total Interim Financing                                              60,000         8.2             297,000     24.9
Total Capitalization and Interim Financing                         $737,343       100.0%         $1,191,299    100.0%
</TABLE>

The accompanying notes are an integral part of these financial statements

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


                  Central Maine Power Company and Subsidiaries
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                             (Dollars in thousands)

                                                 For the three years ended December 31, 1999
                                                          Other     Reacquired
                                           Amount at     paid-in       common      Retained                  Preferred
                              Shares       par value     capital      stock        earnings       Shares       Stock        Total

Balance - December 31, 1996  32,442,752      $162,214     $276,818  $               $ 72,546      655,713       $65,571   $577,149
                             ----------      --------     --------     --------     --------      -------       -------   --------
Net income                                                                            13,422                                13,422
Dividends declared:
    Common stock                                                                     (29,199)                              (29,199)
    Preferred stock                                                                   (8,209)                               (8,209)
Reacquired preferred stock                                     348                      (348)                                    -
Capital stock expense                                            2                                                               2
                             ----------      --------     --------     --------     --------      -------       -------   --------

Balance - December 31, 1997  32,442,752       162,214      277,168                    48,212      655,713        65,571    553,165
                             ----------      --------     --------     --------     --------      -------       -------   --------

Net income                                                                            54,823                                54,823
Dividends declared:
    Common stock                                                                     (21,622)                              (21,622)
    Preferred stock                                                                   (4,809)                               (4,809)
Common stock - Retired             (200)           (1)          (2)                       (1)                                   (4)
Reacquired common stock      (1,231,081)                                (19,000)                                           (19,000)
Preferred stock                                                                                  (300,000)      (30,000)   (30,000)
Reacquired preferred stock                                    (771)                     (254)                               (1,025)
Capital stock expense                                           27                                                               27
                             ----------      --------     --------     --------     --------      -------       -------   --------

Balance - December 31, 1998  31,211,471       162,213      276,422      (19,000)      76,349      355,713        35,571    531,555
                             ----------      --------     --------     --------     --------      -------       -------   --------
Net income                                                                            68,740                                68,740
Dividends declared:
    Common stock                                                                     (40,731)                              (40,731)
    Preferred stock                                                                   (3,315)                               (3,315)
Reacquired preferred stock                                     287                      (289)                                   (2)
                             ----------      --------     --------     --------     --------      -------       -------   --------
Balance - December 31, 1999  31,211,471      $162,213     $276,709     $(19,000)    $100,754      355,713       $35,571   $556,247
                             ==========      ========     ========     ========     ========      =======       =======   ========

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


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


                           Central Maine Power Company and Subsidiaries

                               CONSOLIDATED STATEMENT OF CASH FLOWS
                                      (Dollars in thousands)
                                                                                 Year ended December 31
                                                                                1999          1998         1997
CASH FROM OPERATION
    Net income                                                            $  68,740     $  54,823     $  13,422
    Items not requiring (not providing) cash:
       Depreciation                                                          38,186        47,130        44,170
       Amortization                                                          41,171        38,868        34,291
       Deferred income taxes and investment tax credits, net                (27,795)       19,653        (2,204)
       Allowance for equity funds used during construction                     (716)         (653)         (642)
    Gain on sale of investments and properties                                 (709)       (9,545)            -
    Power supply costs recovered with asset sale                            (38,434)            -             -
    Changes in certain assets and liabilities:
       Accounts receivable                                                  (10,336)         (513)        1,257
       Other current assets                                                   1,687        (1,051)          390
       Inventories                                                              (28)       (1,465)        4,259
       Accounts payable                                                      10,696        (7,764)        4,617
       Accrued taxes                                                        (22,071)       17,821         3,265
       Accrued Interest                                                      (4,813)       (3,710)         (409)
       Miscellaneous current liabilities                                        127          (307)       (5,580)
    Deferred ice storm costs                                                 20,462       (52,433)            -
    Changes in deferred balances and related carrying costs                  36,114        (2,615)       (1,940)
    Maine Yankee outage accrual                                                   -             -       (10,350)
    Restructuring of purchased power contract                                     -       (22,500)            -
    Other, net                                                                5,452         1,016         7,664
                                                                             -------        ------        ------
       Net Cash Provided by Operating Activities                             117,733        76,755        92,210
                                                                             -------        ------        ------

INVESTING ACTIVITIES
       Construction expenditures                                            (68,982)      (42,384)      (40,306)
       Customer deposits for construction                                    13,940             -             -
       Sale of generating assets                                            850,561             -             -
       Tax payments related to sale of assets                              (291,900)            -             -
       Selling expense for sale of generation assets                        (17,884)            -             -
       Investments in loans to affiliates                                         -       (18,661)       (4,769)
       Repayment of loan by affiliates                                            -        17,800             -
       Sale of subsidiaries to CMP Group, Inc.                                    -        20,093             -
       Proceeds from sale of investments and properties                       7,813        10,347             -
       Changes in accounts payable - investing activities                     3,892         3,696          (734)
                                                                            -------        ------        ------
          Net Cash Provided (Used) by Investing Activities                  497,440        (9,109)      (45,809)
                                                                            -------        ------        ------
FINANCING ACTIVITIES
    Issuances:
       Revolving credit agreement                                                 -        50,000        52,500
       Medium-term notes                                                          -       302,000             -
       Short-term obligations, net                                                -        10,000             -
    Redemptions:
       Mortgage bonds                                                      (118,717)     (302,283)            -
       Preferred stock                                                      (18,000)      (48,618)      (14,000)
       Medium-term notes                                                   (257,000)      (18,000)      (25,000)
       Finance Authority of Maine                                            (8,000)       (7,400)       (6,800)
       Other long-term obligations                                          (13,666)       (3,602)         (645)
       Revolving credit agreement                                           (50,000)            -             -
       Short-term obligations, net                                          (15,000)      (55,000)            -
    Funds on deposit with trustee                                                 -        61,693        (2,182)
    Treasury stock                                                                -       (19,000)            -
    Dividends:
       Common stock                                                         (41,338)      (28,943)      (29,220)
       Preferred stock                                                       (3,208)       (6,706)       (8,520)
                                                                            -------        ------        ------
          Net Cash Used by Financing Activities                            (524,929)      (65,859)      (33,867)
                                                                            -------        ------        ------
          Net Increase  in Cash                                              90,244         1,787        12,534
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                               22,628        20,841         8,307
                                                                            -------        ------        ------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                   $112,872     $  22,628     $  20,841
                                                                           ========     =========     =========
</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


Notes to Consolidated Financial Statements

Note 1:  Summary of Significant Accounting Policies

General Description

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

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

Financial Statements

CMP Group's consolidated  financial statements include the accounts of CMP Group
and its wholly  owned and  controlled  subsidiaries,  including  Central  Maine.
Central Maine's  consolidated  financial statements include its accounts as well
as those of its wholly owned and  controlled  subsidiaries.  Certain  immaterial
majority owned subsidiaries,  which were previously  accounted for on the equity
method,  have  been  consolidated  since  September  1,  1998.  Central  Maine's
financial  position and results of operations  account for  substantially all of
CMP Group's consolidated  financial position and results of operations.  For all
periods  prior to  September  1, 1998,  the  historical  financial  position and
results of operations of CMP Group  reflect the activity of Central  Maine.  All
intercompany  accounts and transactions have been eliminated in the consolidated
financial statements. The preparation of financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.

Stock-Based Compensation

CMP Group accounts for employee stock-based compensation in accordance with SFAS
No. 123,  "Accounting for Stock-Based  Compensation".  This statement encourages
companies  to adopt a fair value  approach to valuing  stock  options that would
require  compensation  cost to be  recognized  based on the fair  value of stock
options  granted.  CMP Group has  elected,  as  permitted  by the  standard,  to
continue to follow the  intrinsic  value based  method of  accounting  for stock
options  consistent  with APB Opinion No. 25,  "Accounting  for Stock  Issued to
Employees." Under the intrinsic  method,  compensation cost for stock options is
measured as the  excess,  if any, of the quoted  market  price of the  company's
stock at the measurement date over the exercise price.

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 twelve months ending December 31, 1999.  These  incremental  shares were
not material in the periods  presented and caused diluted  earnings per share to
differ from basic earnings per share by $.01 in 1999, and no difference in 1998.

Reclassification

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

Impact of New Accounting Standards

FAS  No.  131   "Disclosures   about  Segments  of  an  Enterprise  and  Related
Information"  became  effective for periods  beginning  after December 15, 1997.
This  pronouncement  provides  disclosure  requirements  as well as guidance for
determining  reportable  segments.  Based  on the  operating  results  regularly
reviewed by the entities' chief operating decision-makers, CMP Group and Central
Maine have determined that there are no material reportable segments.

In June 1998,  the FASB issued  SFAS No. 133,  Accounting  for  Derivatives  and
Hedging  Activities.  The new standard  applies to all entities and is effective
for all fiscal  quarters of fiscal years  beginning  after June 15,  2000,  with
earlier adoption encouraged.  It requires companies to record derivatives on the
balance  sheet  at  their  fair  value  depending  on  the  intended  use of the
derivative.  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.

Regulation

The rates, operations,  accounting, and certain other practices of Central Maine
and MEPCO are  subject  to the  regulatory  authority  of the MPUC and the FERC.
Restructuring  of  the  electric  utility  industry  in  Maine  resulted  in the
deregulation  of generation  services  effective March 1, 2000 (see Note 3). CMP
Natural Gas is also subject to MPUC regulation.

Electric Operating Revenues

Electric  operating revenues include amounts billed to customers and an estimate
of unbilled sales, for services rendered but not yet billed.

Utility Plant

Utility  plant  is  stated  at  original  cost of  construction.  The  costs  of
replacements  of property  units are  capitalized.  Maintenance  and repairs and
replacements  of minor items are  expensed as  incurred.  The  original  cost of
property  retired,  net of salvage  value,  and the related costs of removal are
charged to accumulated depreciation.

Central  Maine and its  subsidiaries  utility plant in service as of December 31
was as follows:

                                                                      Average
                                                       Average       Remaining
                                                       Service      Service Life
(Dollars in thousands)       1999           1998         Life*         12/31/99

Generation** .......     $  102,779     $  535,550     37.6 years     3.5 years
Transmission .......        278,623        282,677     41.6 years     16.6 years
Distribution .......        739,863        724,224     37.7 years     26.5 years
General ............        214,405        208,326     18.6 years     9.0 years
                         ----------     ----------
                         $1,335,670     $1,750,777
                         ==========     ==========

 *Based  on  Central  Maine's  last  depreciation  represcription  study  as of
  December 31, 1992.
**Generation plant includes the book value of Central Maine's
  share of Millstone Unit 3 of $98.9 million.

This asset is considered  impaired,  and therefore the depreciation  reserve was
increased to $97.4 million to reflect the impaired value.

Depreciation

Depreciation of electric property is calculated using the straight-line  method.
The weighted average composite rate was 2.8 percent in 1999, 3.1 percent in 1998
and 3.0 percent in 1997.

Allowance for Funds Used During Construction (AFC)

Central Maine and its subsidiaries capitalize AFC as part of construction costs.
AFC represents the composite  interest and equity costs of capital funds used to
finance that  portion of  construction  costs not yet eligible for  inclusion in
rate base. AFC is capitalized in "Utility plant" with offsetting noncash credits
to "Other income" and "Interest." The composite AFC rates were 9.0 percent,  8.8
percent, and 9.7 percent in 1999, 1998, and 1997, respectively.

Deferred Charges and Other Assets

CMP  Group  defers  and  amortizes  certain  costs in a manner  consistent  with
authorized or probable  ratemaking  treatment.  CMP Group  capitalizes  carrying
costs  as a part of  certain  deferred  charges,  principally  energy-management
costs,  and classifies such carrying costs as other income.  The following table
depicts the  components  of deferred  charges and other  assets at December  31,
1999, and 1998:

(Dollars in thousands)                                        1999         1998
NUG contract buy-outs and restructuring (Note 9) .....     $ 84,547     $ 98,753
1998 ice storm costs .................................       34,122       52,433
Energy-management costs ..............................       23,582       28,418
Postretirement benefits (Note 5) .....................       18,069       19,604
Financing costs ......................................       15,651       17,121
Environmental site clean-up costs (Note 4) ...........        9,828        8,766
Property taxes .......................................        2,623        4,349
Workers compensation .................................        3,950        4,650
Millstone decommissioning fund .......................        4,088        3,512
Employee transition and curtailment ..................        5,215         --
Interest receivable - IRS ............................        3,110         --
Sale of generation ...................................        1,229        5,962
NEPOOL reorganization cost ...........................        3,145        3,120
Other ................................................       14,182       15,824
                                                           --------     --------
  Sub-Total Central Maine ............................      223,341      262,512
CMP Group - Other ....................................        4,724        1,347
                                                           --------     --------
  Total - CMP Group ..................................     $228,065     $263,859
                                                           ========     ========


Certain costs are being  amortized  and recovered in rates over periods  ranging
from three to 30 years.  The December 31, 1999 balance of the regulatory  assets
to be  written  off  March  1,  2000 in  conjunction  with the  MPUC  rate  case
settlement  was $95.2  million.  This  amount was  written  off against the gain
realized on the  generation  asset sale,  which was also deferred on the balance
sheet. Amortization expense for the next five years is shown below:

(Dollars in thousands)                  Amount
2000                                    $25,154
2001                                     22,287
2002                                     20,867
2003                                      9,171
2004                                      6,847

Recoverable Costs of Seabrook I and Abandoned Projects

The recoverable  after-tax  investments in Seabrook I and abandoned projects are
reported as assets, pursuant to May 1985 and February 1991 MPUC rate orders. CMP
Group is  allowed a current  return on these  assets  based on  Central  Maine's
authorized rate of return.  In accordance  with these rate orders,  the deferred
taxes related to these  recoverable  costs are amortized over periods of four to
10 years. As of December 31, 1999,  substantially  all deferred taxes related to
Seabrook I have been amortized.  The recoverable  investments as of December 31,
1999, and 1998 are as follows:

                                                December 31         Recovery
(Dollars in thousands)                      1999          1998   periods ending
Recoverable costs of:
Seabrook I ..............................$ 141,084     $ 141,084     2015*
Other Projects ..........................   57,491        57,491     2001*
                                         ---------     ---------
                                           198,575       198,575
                                         ---------     ---------
Less: accumulated amortization ..........  125,687       119,861
Less: related income taxes ..............     (164)          175
                                         ---------     ---------
  Total Net Recoverable Investment ......$  73,052     $  78,539
                                         =========     =========


*Effective  March 1, 2000 these costs were written off and an offsetting  amount
were amortized  from the gain on the generation  asset sale that was deferred in
1999.

Note 2:  Income Taxes

The  components  of federal and state  income-tax  provisions  reflected  in CMP
Group's Consolidated Statement of Earnings are as follow:

                                                   Year ended December 31.
(Dollars in thousands)                         1999          1998         1997
Federal:
Current .................................   $ 268,010    $  17,640    $   8,534
Deferred ................................    (205,602)      14,837       (5,922)
Investment tax credits, net .............     (15,137)      (1,469)      (1,455)
Regulatory deferred .....................     (17,638)       2,054        5,390
                                            ---------    ---------    ---------
  Total Federal Taxes ...................      29,633       33,062        6,547
                                            ---------    ---------    ---------
State:
Current .................................   $  78,485    $   4,052    $   1,831
Deferred ................................     (39,019)       3,933       (1,720)
Regulatory deferred .....................     (15,007)         651        1,504
                                            ---------    ---------    ---------
  Total State Taxes .....................      24,459        8,636        1,615
                                            ---------    ---------    ---------
  Total Federal and State Income Taxes ..   $  54,092    $  41,698    $   8,162
                                            =========    =========    =========


Current and deferred federal and state income taxes increased significantly over
1998 due primarily to the taxable gain associated with the April 1999 generation
asset sale to FPL. Tax timing  differences  that were not normalized in the past
associated  with  generation  assets  flowed  through in 1999.  The MPUC allowed
amortization of an offsetting amount ($28.5 million) of the asset sale gain that
is included in Other Income in 1999.  Additionally,  the Company  flowed through
all unamortized  investment tax credits and excess tax reserves  associated with
the generation assets sold consistent with a Private Letter Ruling sought by the
Company at the request of the MPUC and  affirmed by the MPUC in its  approval of
the negotiated rate case settlement on January 27, 2000.

Federal income tax,  excluding federal regulatory  deferred taxes,  differs from
the amount of tax  computed  by  multiplying  income  before  federal tax by the
statutory  federal rate. The following  table  reconciles the statutory  federal
rate to a rate  determined by dividing the total federal  income-tax  expense by
income before that expense:

<TABLE>
<S>                                                   <C>              <C>       <C>              <C>       <C>              <C>
                                                                           Year ended December 31
                                                                1999                       1998                      1997
                                                       Amount           %         Amount           %         Amount           %
(Dollars in thousands)
Income tax expense at statutory federal
rate ..............................................   $ 30,731         35.0      $ 31,773         35.0%     $  6,990         35.0%
Permanent differences:
Investment tax-credit amortization ................    (15,137)       (17.2)       (1,469)        (1.6)       (1,469)        (7.3)
Dividend-received deduction and equity
in earnings (losses) of associated
companies .........................................      3,288          3.7           394           .4        (1,911)        (9.6)
Nondeductible merger costs ........................      1,535          1.7           --            --           --            --
Officer stock payout-value differential ...........       (393)        (0.4)          --            --           --            --
Other, net ........................................       (122)        (0.1)          168          0.2           (80)         (.4)

                                                        19,902         22.7        30,866         34.0         3,530         17.7

Effect of timing differences for items
which receive flow through treatment:

Tax-basis repairs .................................       (876)        (1.0)         (559)        (0.6)       (1,020)        (5.1)
Depreciation differences flowed through
in prior years ....................................      2,440          2.8         3,127          3.4         2,923         14.6
Accelerated flowback of deferred taxes
on loss on abandoned generating projects ..........      1,673          1.9         1,673          1.8         1,673          8.4
Benefits related to Section 1245 Losses ...........       (875)        (1.0)       (1,210)        (1.3)       (1,818)        (9.1)
Asset sale carrying costs .........................      5,709          6.5           --            --           --            --
IRS audit resolution regarding
depreciation methods ..............................        --            --           --            --           852          4.3
Loss on Reacquired Debt ...........................        472          0.5           436          0.5           540          2.7
Flowback of Excess Federal Deferred
Taxes due to TRA86 ................................     (5,002)        (5.7)       (1,129)        (1.2)       (1,005)        (5.0)
Generating asset sale-book over tax
basis (state impact) ..............................      9,424         10.7           --            --           --            --
Exempt interest ...................................     (1,532)        (1.7)          --            --           --            --
State Impact on Federal ...........................       (378)         (.4)          179           .2           301          1.5
Other, net ........................................     (1,324)        (1.5)         (321)         (.4)          571          2.8

  Federal Income Tax Expense and
  Effective Rate ..................................   $ 29,633         33.8%     $ 33,062         36.4%     $  6,547         32.8%

</TABLE>


CMP Group and Central  Maine record  deferred  income-tax  expense in accordance
with regulatory authority; they also defer investment and energy tax credits and
amortize them over the estimated lives of the assets that generated the credits.

A valuation  allowance has not been recorded at December 31, 1999,  and 1998, as
CMP Group  expects that all  deferred  income tax assets will be realized in the
future.
<TABLE>
<S>                                                              <C>          <C>

Accumulated deferred income taxes consisted of the following in 1999 and 1998:

(Dollars in thousands)                                              1999         1998
Deferred tax assets resulting from:
   Investment tax credits, net ...............................   $   9,599    $  20,034
   Regulatory liabilities ....................................      46,296       29,081
   Alternative minimum tax ...................................        --          6,135
   Deferred gain-generation asset sale .......................     211,705         --
   All other .................................................      50,420       35,073
                                                                   318,020       90,323
Deferred tax liabilities resulting from:

   Property ..................................................     238,242      300,996
   Abandoned plant ...........................................      50,356       54,138
   Regulatory assets .........................................      95,730      111,407
                                                                   384,328      466,541
   Accumulated deferred income taxes, end of year, net .......   $  66,308    $ 376,218

Accumulated deferred income taxes, recorded as:

   Accumulated deferred income taxes .........................      66,472    $ 376,043
   Recoverable costs of Seabrook 1 and abandoned projects, net        (164)         175
                                                                 $  66,308    $ 376,218
</TABLE>

Note 3:  Regulatory Matters

Proposed Merger with Energy East

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

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

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

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

Alternative Rate Plan

Central  Maine's ARP was in effect from  January 1, 1995,  through  December 31,
1999.  Instead of rate changes based on the level of costs  incurred and capital
investments,  the ARP provided for one annual  adjustment of an  inflation-based
cap on each of  Central  Maine's  rates,  with no  separate  reconciliation  and
recovery of fuel and purchased-power costs. Under the ARP, the MPUC continued to
regulate Central Maine's  operations and prices,  provide for continued recovery
of  deferred  costs,  and  specify  a range  for its  rate of  return.  The MPUC
confirmed  in its order  approving  the ARP that the ARP was  intended to comply
with the  provisions  of  Statement of Financial  Accounting  Standards  No. 71,
"Accounting for the Effects of Certain Types of Regulation."

The ARP contained a mechanism that provided price caps on Central Maine's retail
rates  to be  adjusted  annually  on  each  July 1,  commencing  in  1995,  by a
percentage combining (1) a price index, (2) a productivity offset, (3) a sharing
mechanism,  and (4) flow-through items and mandated costs. The price cap applied
to all of Central Maine's retail rates.

A specified  standard  inflation  index was the basis for each annual  price-cap
change. The inflation index was reduced by the sum of two productivity  factors,
a general  productivity offset of 1.0%, and a second  formula-based  offset that
started in 1996 and was  intended to reflect the limited  effect of inflation on
Central Maine's  purchased-power  costs during the five-year initial term of the
ARP.

The sharing  mechanism could adjust the subsequent  year's July price-cap change
in the event Central  Maine's  earnings were outside a range of 350 basis points
above or below Central Maine's allowed return on equity  (starting at the 10.55%
allowed  return in 1995 and  indexed  annually  for  changes in capital  costs).
Outside that range,  profits and losses could be shared equally by Central Maine
and its  customers  in  computing  the  price-cap  adjustment.  The ROE used for
earnings  sharing  was  increased  to 11.5%  effective  with the July 1999 price
change.

The ARP also  provided for partial  flow-through  to  ratepayers of cost savings
from non-utility  generator  contract  buy-outs and  restructuring,  recovery of
energy-management  costs,  and penalties for failure to attain  customer-service
and  energy-efficiency  targets.  The ARP also generally  defined mandated costs
that would be recoverable by Central Maine notwithstanding the index-based price
cap. To receive such  treatment,  the annual  revenue  requirement  related to a
mandated cost must have exceeded $3 million and have a  disproportionate  effect
on Central Maine or the electric-power industry.


The components of the three ARP price increases are as follows:

                                                1999        1998        1997

Inflation Index ............................     .89%       1.78%       2.12%
Productivity Offset ........................   (1.00)      (1.00)      (1.00)
Qualifying Facility Offset .................     .04        (.29)       (.42)
Earnings Sharing ...........................      --        1.12          --
Flowthrough and Mandated Items .............     .12        (.28)        .40
                                                 .05%       1.33%       1.10%

The 1997 and 1998 price increases were approved by the MPUC and implemented.

Central Maine elected not to increase prices in 1999.

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

Electric-Utility Industry Restructuring

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sale of Generation Assets

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

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

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

Storm Damage to Central Maine's System

In January 1998, a severe ice storm 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.  In January 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,  amounting to $50.7  million plus accrued
carrying costs.

In the  spring  of  1998,  the  U.S.  Congress  appropriated  $130  million  for
Presidentially   declared  disasters  in  1998,   including   storm-damage  cost
reimbursement  for  electric  utilities.  On November 5, 1998 the United  States
Department  of Housing and Urban  Development  ("HUD")  announced  that of those
funds $2.2 million had been awarded to Maine,  with none  designated for utility
infrastructure,  which  Central  Maine  and the Maine  Congressional  delegation
protested as inadequate and inconsistent with  Congressional  intent.  HUD later
announced  that Maine  would  receive  additional  funds and on October 6, 1999,
Central Maine received  payment in the amount of $19.6 million from HUD. Central
Maine is  recovering  the $34.1  million  balance of the deferred  storm-related
costs, including $3.9 million of carrying costs, through rates over a three-year
period commencing March 1, 2000.

Meeting the Requirements of SFAS No. 71

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

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

The 1997  legislation  enacted in Maine  providing  for  industry  restructuring
addressed the issue of cost recovery of regulatory  assets  stranded as a result
of industry restructuring. Specifically, the legislation requires the MPUC, 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. Central Maine discontinued
SFAS No. 71 for any remaining  generation segment of its business in 1999, based
on current generally accepted  accounting  principles.  Management believes that
SFAS  No.  71  will  continue  to  apply  to  the  regulated   distribution  and
transmission  segments  of  its  business.  Future  regulatory  rules  or  other
circumstances  could cause the  application  of SFAS No. 71 to be  discontinued,
which could result in a non-cash write-off of previously  established regulatory
assets.

Note 4: Commitments and Contingencies

Construction Program

Central  Maine's plans for improving  and  expanding  generating,  transmission,
distribution  facilities,  and power-supply sources are under continuing review.
Actual  construction  expenditures  will depend upon the availability of capital
and other  resources,  load  forecasts,  customer  growth,  the  construction of
merchant  generating  plants in Central Maine's service  territory,  and general
business  conditions.  FERC is  currently  finalizing  its rules  regarding  the
funding of network upgrades to accommodate merchant plant developers.

The  amount  Central  Maine will be  required  to fund is  therefore  not known.
Central  Maine's  current  forecast of capital  expenditures  for the  five-year
period 2000 through 2004, is as follows:

(Dollars in millions)                                2000  2001-2004      Total
Type of Facilities:
Transmission ...................................      $45    $14-76      $59-121
Distribution ...................................       32       135          167
General facilities and other ...................       15        63           78

Total Estimated Capital Expenditures ...........      $92    $212-274   $304-366

Central Maine  currently  estimates its overall  construction  program to be $92
million in 2000. Network upgrades associated with five merchant plants, totaling
1670 MW, that are currently under  construction,  account for $42 million of the
total.  For the period 2001 through 2004,  the overall  construction  program is
estimated  to range from $212  million,  if no  additional  merchant  plants are
constructed,  to $274 million (excluding MEPCO projects), if all four additional
merchant  plant  projects  that are  currently  proposed  (2000 MW) are actually
constructed.

Operating Lease Obligations

Central Maine has a number of  operating-lease  agreements  primarily  involving
computer and other office  equipment,  land, and  telecommunications  equipment.
These leases are noncancelable and expire on various dates through 2007.

Following is a schedule by year of future minimum rental payments required under
the operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1999:

(Dollars in thousands)                      Amount
                              2000         $ 3,891
                              2001           3,621
                              2002           3,484
                              2003           3,418
                              2004           3,401
                              Thereafter       512
                                           $18,327

Rent expense under all operating  leases was  approximately  $6.8 million,  $6.3
million,  and $6.1 million for the years ended December 31, 1999, 1998 and 1997,
respectively.

Legal and Environmental Matters

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

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

Central  Maine  has  recorded  a  liability,   based  upon  currently  available
information,  for what it believes are the estimated  environmental  remediation
costs that it expects to incur for  identified  waste  disposal  sites.  In most
cases,   additional  future  environmental  cleanup  costs  are  not  reasonably
estimatable  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 December 31, 1999, the liability  recorded by Central Maine for its
estimated  environmental  remediation  costs  amounted  to $2.7  million,  which
management  has  determined to be the most  probable  amount within the range of
$2.1 million to $8.5 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.

Tax Settlement

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

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

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

As a result of the  settlement,  Central  Maine made payments to the IRS and the
State of Maine totaling $11.8 million for the 1992 to 1994 tax deficiencies,  as
well  as $6.0  million  in  associated  interest.  Substantially  all of the tax
impacts were normalized, as Central Maine will be deducting any disallowed costs
for tax  purposes  in  future  years.  Of the  $6.0  million  interest  payment,
approximately  $1 million was previously  accrued,  and $1.8 million  associated
with the FEV facility was deferred consistent with regulatory practice. Interest
income of $3.1 million was accrued for the years 1995 through December 1999. Net
income for 1999 was therefore reduced by less than $0.1 million.

Due to the materiality of the amounts involved,  approval of the settlement from
the Congress's  Joint  Committee on Taxation was required,  which was granted in
February 2000.

Nuclear Insurance

The  Price-Anderson  Act is a federal statute  providing,  among other things, a
limit on the maximum  liability for damages  resulting from a nuclear  incident.
Coverage for the  liability is provided for by existing  private  insurance  and
retrospective  assessments for costs in excess of those covered by insurance, up
to $88.095  million for each reactor  owned,  with a maximum  assessment  of $10
million per reactor in any year. However,  after appropriate exemptive action by
the NRC Maine  Yankee,  and  therefore its  sponsors,  are not  responsible  for
retrospective  assessments  resulting from any event or incident occurring after
January  7,  1999.  Based on  Central  Maine's  stock  ownership  in the  Yankee
companies  and its 2.5 percent  direct  ownership  interest  in the  Millstone 3
nuclear unit,  Central Maine's  retrospective  premium for post-January 7, 1999,
events or incidents could be as high as $6 million in any year, for a cumulative
total of $52.9 million.

In addition to the  insurance  required by the  Price-Anderson  Act, the nuclear
generating  facilities mentioned above carry additional nuclear  property-damage
insurance.  This additional  insurance is provided from  commercial  sources and
from the  nuclear  electric  utility  industry's  insurance  company  through  a
combination  of current  premiums  and  retrospective  premium  adjustments.  In
recognition  of the reduced risk posed by the shutdown of the Maine Yankee Plant
and its defueled reactor, Maine Yankee substantially reduced its property-damage
coverage effective January 19, 1999.

Natural Gas Distribution

New England Gas Development  Corporation ("New England Gas"),  which is a wholly
owned subsidiary of CMP Group, held  approximately a twenty-two percent interest
at December 31, 1999 in CMP Natural Gas, L.L.C. ("CMP Natural Gas"). CMP Natural
Gas is a joint venture of New England Gas and Energy East Enterprises,  a wholly
owned  subsidiary of Energy East.  CMP Natural Gas was formed to construct,  own
and operate a natural gas  distribution  system to serve  certain areas of Maine
that did not have gas service,  utilizing natural gas delivered to Maine through
new interstate pipeline facilities.

CMP Natural Gas began  construction  of its first local  distribution  system in
Windham,  Maine,  in early 1999 and began serving its first  customer in May. On
July 8, 1999,  CMP  Natural  Gas and  Calpine  Corporation,  a  California-based
independent  power company,  announced the signing of a 20-year contract for CMP
Natural  Gas to provide  natural  gas  delivery  service to  Calpine's  proposed
540-megawatt  natural  gas-fired  power plant under  construction  in Westbrook,
Maine. CMP Natural Gas expects to commence service to the plant by June 1, 2000,
after MPUC approval and  construction  of a two-mile  lateral  pipeline along an
existing  Central  Maine  right  of way  that  would  interconnect  with the new
interstate  pipeline  facilities.  On December 13, 1999, the MPUC authorized CMP
Natural Gas to provide  service to the Calpine  plant,  as well as the  unserved
areas in the town of Gorham and on  February  18,  2000,  the MPUC  approved  an
affiliated-interest  transaction  allowing  CMP  Natural  gas to  construct  the
pipeline on Central Maine's transmission corridor.

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

Note 5:  Pension and Other Benefits

Pension Benefits

CMP Group has two separate  non-contributory,  defined-benefit  plans that cover
substantially all of its union and non-union employees. CMP Group funding policy
is to contribute  amounts to the separate  plans that are sufficient to meet the
funding  requirements set forth in the Employee  Retirement  Income Security Act
(ERISA),  plus  such  additional  amounts  as  CMP  Group  may  determine  to be
appropriate.  Plan  benefits  under the non-union  retirement  plan are based on
average  final  earnings,  as defined  within the plan,  and length of  employee
service;  benefits under the union plan are based on average career earnings and
length of employee service.

A  curtailment  occurred due to the sale of Central  Maine's  generation  assets
effective April 7, 1999. In addition, special termination benefits were provided
to  certain  employees  affected  by the sale.  A portion  of the  impact of the
curtailment and special termination  benefits,  $(1.0 million),  was deferred in
connection  with  the gain on the sale of  assets.  Refer to Note 3  "Regulatory
Matters".

A summary of the  components of net periodic  pension cost for the non-union and
union defined-benefit plans in 1999, 1998 and 1997 follows:
<TABLE>
<S>                                      <C>            <C>             <C>             <C>             <C>            <C>

                                                1999                            1998                           1997
                                         Non-                            Non-                           Non-
(Dollars in thousands)                   union          Union           union           Union           union          Union

Service cost                             $2,646         $1,888          $2,791          $1,969          $2,375         $1,694
Interest cost                             6,213          4,440           6,170           4,170           5,727          3,973
Expected return on plan
   assets                                (7,575)        (4,923)         (6,364)         (3,987)         (5,734)        (3,519)
Amortization on
   unrecognized transition
   (asset)/obligation                        26           (270)             29            (270)             29           (270)
Amortization of
   unrecognized prior
   service cost                             141            114             155             129             155            129
Amortization of
   unrecognized (gain)/
   loss                                    (283)          -                  -               -             (14)             -
Net periodic
   pension cost                           1,168          1,249           2,781           2,011           2,538          2,007
Gain/loss recognition due
   to curtailment                        (2,851)        (1,912)              -               -               -              -
Special termination
   benefit cost                           4,136          3,088               -               -               -              -
Curtailment and special
termination deferred                        522           482                -               -               -              -
Total net periodic
   Pension cost                          $2,975         $2,907          $2,781          $2,011          $2,538         $2,007

Assumptions used in accounting for the non-union and union defined-benefit plans
in 1999, 1998 and 1997 are as follows:
</TABLE>

                                                       1999     1998     1997
Weighted average discount rate ......................  7.75%    6.50%    7.00%
Rate of increase in future compensation levels ......  4.50%    4.50%    4.50%
Expected long-term return on assets .................  8.75%    8.75%    8.75%
Remeasurement discount rate as of May 1, 1999 .......  6.75%      --       --

The following table sets forth the change in benefit obligations,  the change in
plan assets,  and the funded  status on CMP Group  balance sheet at December 31,
1999, and 1998:

<TABLE>

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

                                                            Non-Union                   Union
(Dollars in thousands)                                 1999          1998         1999         1998

Change in Benefit Obligation

Projected Benefit Obligation at Beginning of Year   $ 101,620    $  87,607    $  68,686    $  60,807
Service Cost ....................................       2,646        2,791        1,888        1,969
Interest Cost ...................................       6,213        6,170        4,440        4,170
Effects of Curtailment ..........................      (3,066)        --         (2,113)        --
Special Termination Benefits ....................       4,136         --          3,088         --
Actuarial (Gain)/Loss ...........................     (21,948)       9,812      (11,871)       4,839
Benefits Paid ...................................      (4,917)      (4,760)      (3,373)      (3,099)
Projected Benefit Obligation at End of Year .....   $  84,684    $ 101,620    $  60,745    $  68,686

Change in Plan Assets

Fair Value of Assets at Beginning of Year .......   $  99,612    $  85,707    $  65,960    $  54,803
Actual Return on Plan Assets ....................      12,961       15,698        8,677       10,249
Employer Contributions ..........................       2,420        2,967        2,371        4,007
Benefits Paid ...................................      (4,917)      (4,760)      (3,372)      (3,099)
Fair Value of Assets at End of Year .............   $ 110,076    $  99,612    $  73,636    $  65,960

Funded Status at December 31 ....................   $  25,392    $  (2,008)   $  12,891    $  (2,726)
Unrecognized Transition (Asset)/Obligation ......          65          105         (864)      (1,134)
Unrecognized Prior Service Cost .................       1,132        1,474          908        1,223
Unrecognized (Gain)/Loss ........................     (42,587)     (15,537)     (21,931)      (6,307)
Net Amount Recognized - Accrued Benefit Cost ....   $ (15,998)   $ (15,966)   $  (8,996)   $  (8,944)
</TABLE>

Savings Plan

CMP  Group  offers an  employee  savings  plan to all  eligible  employees.  The
non-union  plan allows  participants  to invest from 2% to 15% of their salaries
among several alternatives. The employer contribution equals 60% of the first 5%
(total of 3%) of the employees' contribution.

As part of the collective bargaining agreement, effective in May 1997, the union
plan allows  maximum  deferrals  of up to 16% of their  salaries  among  several
alternatives.  The employer  contribution  equals 60% of the first 5% and 50% of
the next 2% invested,  bringing the maximum  employer  contribution  to 4% if an
employee defers 7% of compensation.

CMP Group's  contributions  to the savings plan trust were $2.0 million in 1999,
$1.9 million in 1998 and $1.8 million in 1997.

Post-Retirement Benefits

In addition to pension and  savings-plan  benefits,  CMP Group provides  certain
health-care and  life-insurance  benefits for  substantially  all of its retired
employees.

The MPUC approved a rulemaking on SFAS No. 106,  effective  July 20, 1993,  that
adopted the accrual  method of accounting for the expected cost of such benefits
during the employees'  years of service,  and authorized the  establishment of a
regulatory  asset for the deferral of such costs until they are  "phased-in" for
ratemaking  purposes.  The  effect  of the  change  can be  reflected  in annual
expenses  over the active  service  life of  employees  or a period of 20 years,
rather than in the year of adoption.

The MPUC  prescribes the maximum  amortization  period of the average  remaining
service  life of active  employees  or 20 years,  whichever  is longer,  for the
transition  obligation.  CMP Group is utilizing a 20 year  amortization  period.
Segregation  in an external  fund is required  for amounts  collected  in rates.
Central Maine (CMP Group was not formed until  September 1998) funded $3 million
in 1997,  1998, and 1999 and plans to monitor and fund the same amount  annually
in order to meet its obligation.

As a result of the MPUC order,  CMP Group records the cost of these  benefits by
charging   expense  in  the  period   recovered   through   rates.   The  annual
post-retirement  benefit  expense is  currently  included in rates as well as an
amount designed to recover the deferred  balance over a period of 20 years.  The
amounts  included  in rates in 1999,  1998 and 1997 were  $10.6,  $11.3 and $9.7
million,  respectively.  With the  reduction  in the  deferred  account  of $1.5
million  in 1999 and,  $1.5  million in 1998,  the total  amount  deferred  as a
regulatory  asset as of December  31, 1999 and 1998 was $18.1  million and $19.6
million, respectively. A curtailment occurred due to the sale of Central Maine's
generation  assets  effective  April 7, 1999. In addition,  special  termination
benefits were provided to certain  employees  affected by the sale. A portion of
the impact of the curtailment and special  termination  benefits,  $5.1 million,
was deferred in connection with the gain on the sale of assets.  Refer to Note 3
"Regulatory Matters". A summary of the components of net periodic postretirement
benefit cost for the plan in 1999, 1998 and 1997 follows:

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

(Dollars in thousands)                                  1999        1998        1997
Service cost .....................................   $  1,937    $  1,867    $  1,201
Interest cost ....................................      5,554       5,438       4,702
Expected return on plan assets ...................       (655)       (360)       --
Amortization of unrecognized transition obligation      3,348       3,704       3,704
Amortization of unrecognized (gain)/loss .........        (79)        (80)     (1,029)
Curtailment and special termination ..............      5,674        --          --
Curtailment and special termination deferred .....     (5,099)       --          --
Postretirement Benefit Expense Recognized in the
  Statement of Earnings ..........................   $ 10,680    $ 10,569    $  8,578
</TABLE>

The following table sets forth the change in benefit obligation,  change in plan
assets and the funded status of the plan,  and the  liability  recognized on CMP
Group's balance sheet at December 31, 1999 and 1998:

(Dollars in thousands)                                     1999           1998

Change in Benefit Obligation

Benefit obligation at beginning of year ............     $ 86,952      $ 69,749
Service cost .......................................        1,937         1,867
Interest cost ......................................        5,554         5,438
Curtailment ........................................         (512)         --
Special termination benefits .......................       (1,145)         --
Estimated benefits paid ............................       (6,031)       (6,334)
Actuarial (gain)/loss ..............................      (13,279)       16,232
Benefit obligation at end of year ..................       73,476        86,952

Change in Plan Assets

Fair value of plan assets at beginning of year .....        6,502         3,025
Actual return on plan assets .......................        1,145           711
Employer contribution ..............................        9,031         9,100
Estimated benefits paid ............................       (6,031)       (6,334)
Fair value of plan assets at end of year ...........       10,647         6,502

Funded Status ......................................      (62,829)      (80,450)
Unrecognized transition (asset)/obligation .........       41,181        51,859
Unrecognized prior service cost ....................            2             4
Unrecognized actuarial (gain)/loss .................      (17,408)       (3,718)
Accrued benefit cost ...............................     $(39,054)     $(32,305)

The assumed  health-care  cost-trend  rate was an average gross medical trend of
approximately  6% for 1999 reducing to 5% overall in the year 2020.  Rates range
from 5.3% to 5.9% for 1999  reducing to 5.0%  overall over a period of 25 years.
Rates range from 5.5% to 6.3% for 1998, reducing to 5.0% overall,  over a period
of 25  years.  The  effect of a  one-percentage-point  increase  in the  assumed
health-care cost-trend rate for each future year would increase the aggregate of
the service and  interest-cost  components  of the net  periodic  postretirement
benefit  cost  by  $1.2  million  and  the  accumulated  postretirement  benefit
obligation  ("APBO")  by $9.4  million.  The  effect  of a  one-percentage-point
decrease in the assumed  healthcare  cost-trend  rate for each future year would
decrease the  aggregate of the service and  interest-cost  components of the net
periodic  postretirement  benefit  cost by $974  thousand  and the  APBO by $8.0
million.  Additional  assumptions  used in  accounting  for  the  postretirement
benefit plan in 1999, 1998 and 1997 are as follows:

                                                       1999     1998     1997
Weighted-average discount rate ......................  7.75%    6.50%    7.00%
Rate of increase in future compensation levels ......  4.50%    4.50%    4.50%

CMP Group is exploring  alternatives  for mitigating the cost of  postretirement
benefits and for funding its obligations.  These alternatives include mechanisms
to fund the obligation prior to actual payment of benefits,  plan-design changes
to limit future expense increases,  and additional cost-control and cost-sharing
programs.

Note 6:  Incentive Compensation

The Company has a Long-Term  Incentive  Plan in which officers and key employees
participate.  The Plan includes a stock option component and a performance share
component. The Plan is intended to focus attention more sharply on a performance
objective  that is designed to increase  value to  shareholders  over the longer
term.

Stock options granted are exercisable at the market price of the common stock on
the date of the grant.  They expire seven years from their grant date. 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.

Stock option activity was as follows:
<TABLE>
<S>                                    <C>         <C>          <C>         <C>

                                             1999                     1998
                                                  Weighted                  Weighted
                                                   Average                   Average
                                       Shares   Exercise Price  Shares    Exercise Price

Outstanding at beginning of year       241,996     $17.3750
Granted during the year                262,480     $18.1875     253,925     $17.375
Expired/canceled during the year        16,813     $17.7701      11,929     $17.375
Exercised during the year               57,343     $17.3750                 $

Outstanding at end of year             430,320     $17.8550     241,996     $17.375
Exercisable at end of year             260,784     $17.6391                 $
</TABLE>


The outstanding options expire at various dates through April, 2005.

The stock options were granted with a grant date fair value of $2.28 in 1998 and
$2.92 in 1999.  The fair  value was  estimated  using the  Black-Scholes  option
pricing model with the following weighted average assumptions:

                                                   1999              1998

Expected option life .........................    7 Years          7 Years
Risk free interest rate ......................       5.41%            6.00%
Expected volatility ..........................       0.204%           0.154%
Dividend yield ...............................       4.98%            5.10%

CMP Group  uses the  intrinsic  value  based  method to  recognize  compensation
expense related to stock options. No compensation expense was recognized in 1999
or 1998 related to stock options granted, since they contained an exercise price
equal to the fair market value on the date of the grant. Had compensation  costs
for stock options been determined based on the fair value at the grant dates for
awards  under  this plan  consistent  with the method of SFAS No.  123,  the CMP
Group's net income and  earnings  per share  would have been  reduced to the pro
forma amounts indicated as follows:

                                                1999                1998
Net Income:
    As Reported ........................     $   54,854          $   52,910
    Pro Forma ..........................     $   54,635          $   52,801
Earnings Per Share:
    As Reported ........................     $     1.69          $     1.63
    Pro Forma ..........................     $     1.68          $     1.63

Performance Shares - Performance shares are shares of CMP Group stock granted at
the end of a 3-year performance cycle, based on achievement of performance goals
that are 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.
Contingently issuable performance shares for the three year periods beginning in
1997, 1998 and 1999 totaled 59,125,  64,518 and 67,150,  respectively.  In 1999,
88,691 performance  shares were issued to employees,  which represented a payout
of 150% per the Plan objectives.

CMP Group is accruing the compensation expense associated with these shares over
the applicable three year period.  The total expense recognized in 1999 and 1998
was approximately $3.6 million and $743 thousand, respectively.

Note 7:  Transactions with Affiliated Companies

Central  Maine  provides  certain  services  to CMP Group and its  subsidiaries,
including  administrative  support  services  and pension and  employee  benefit
arrangements.  Charges related to those services have been determined based on a
combination  of direct  charges  and  allocations  designed  to recover  Central
Maine's cost.  These  assessments  are reflected as an offset to Central Maine's
expenses  and  totaled  approximately  $7.2  million and $3 million for the year
ended December 31, 1999 and 1998, respectively.

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  $14.8  million and $1.2  million for the year ended  December 31,
1999 and 1998, respectively.

In addition,  a subsidiary of CMP Group provides  certain real estate and (prior
to April 7, 1999) 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 $5.3  million for the year ended
December 31, 1999.

As of December  31,  1999,  Central  Maine's  accounts  receivable  and accounts
payable balances include the following balances with affiliated companies:

                                             (dollars in thousands)
                                     Accounts Receivable    Accounts Payable

CMP Group ...........................      $3,043             $7,939
CNEX ................................          65                 23
MaineCom ............................          37               --
TeleSmart ...........................          46                 39
Union Water .........................         888                398
New England Gas .....................           1               --
                                           $4,080             $8,399

Note 8:  Telecommunications Investment

MaineCom   Services,   which   is   wholly   owned   by  CMP   Group,   provides
telecommunications  services,  including  point-to-point  connections,   private
networking,  consulting, private voice and data transport, carrier services, and
long-haul  transport.  MaineCom  Services also holds,  through  wholly owned New
England Business Trust,  approximately  38% interest in NorthEast Optic Network,
Inc.  ("NEON"),  a  facilities-based   provider  of  technologically   advanced,
high-bandwidth, fiber optic transmission capacity for communications carriers on
local loop, inter-city, and interstate facilities. NEON owns and operates and is
expanding a fiber optic network in New England and New York, utilizing primarily
electric  utility rights of way including some of Central Maine's and some owned
by other electric utilities including Northeast  Utilities,  another substantial
minority stockholder.

On November 23, 1999, NEON announced two major agreements, one with Consolidated
Edison  Communications,  Inc. ("CEC"), a wholly owned subsidiary of Consolidated
Edison,  Inc.,  and the other with  Excelon,  a wholly owned  subsidiary of PECO
Energy,  Inc.  The  agreements  effectively  expand the reach of the  network to
include  the  Philadelphia,  Baltimore  and  Washington,  D.C.,  areas.  As  the
agreements  are  implemented,  CEC  will  obtain  an  approximately  ten-percent
interest in NEON and Excelon an interest of approximately nine percent.

In August 1998 NEON completed  initial public offerings of $48 million of common
stock and $180 million of senior  notes.  As part of the  common-stock  offering
Central  Maine sold some of the  shares it then owned in NEON for  approximately
$3.1  million.   With  some  of  the  proceeds  of  the  offerings  NEON  repaid
approximately   $18  million   Central  Maine  had  advanced  under  an  earlier
construction loan agreement.

In  accordance  with the SEC's  Staff  Accounting  Bulletins  ("SAB")  51 and 84
MaineCom  increased  additional paid in capital by $9.4 million and deferred tax
reserve  liability  by $6.5  million.  CMP  Group's  accounting  policy for such
transactions is to recognize a gain in income.  However,  the above  transaction
was reflected in additional paid in capital as required by the SEC SAB's.

On February  15,  2000,  CMP Group  announced  that New England  Business  Trust
intended to sell  approximately  2.5 million  shares of its  6.177-million-share
common-stock holding in NEON through an underwritten public offering expected to
be completed  during the second  calendar  quarter of 2000.  Although the market
value of NEON's  common  stock has  increased  substantially  since  NEON's 1998
initial  public  offering,  CMP Group cannot  accurately  estimate the amount of
proceeds to be realized through the planned offering.

MaineCom's  equity  losses in NEON were $10.6  million,  $6.7  million  and $0.6
million for 1999, 1998 and 1997, respectively.

Note 9:  Capacity Arrangements

Power Agreements

Central Maine, through certain equity interests, is entitled to a portion of the
generating capacity and energy production of four nuclear generating  facilities
(the Yankee  companies),  three of which have been permanently shut down, and is
obligated  to  pay  its  proportionate  share  of  costs,  which  include  fuel,
depreciation,  operation-and-maintenance expenses, a return on invested capital,
and the estimated cost of decommissioning the nuclear plants.

Pertinent data related to these power agreements as of December 31, 1999, are as
follows:
<TABLE>
<S>                                          <C>               <C>         <C>              <C>

(Dollars in thousands)                         Maine Yankee      Vermont       Connecticut     Yankee Atomic
                                                                 Yankee          Yankee

Ownership share                                        38%              4%             6%             9.5%
Operating Status                              Permanently       Operating    Permanently      Permanently
                                              shutdown                       shutdown         shutdown
                                              August 6, 1997                 December 4,      February 26,
                                                                             1996             1992
Contract expiration date                             2008            2012           1998             2000
Capacity (MW)                                           -             531              -                -
Company's share of: Capacity (MW)                       -              19              -                -
1999 energy and capacity costs                  $  26,634        $  7,483       $  3,400         $  4,604
Long-term obligations and redeemable
preferred stock                                 $  77,647        $  8,245       $  8,064                -
Estimated decommissioning obligation             $242,907         $15,142        $25,054         $  2,350
Accumulated decommissioning fund                $  68,816        $  8,385        $12,271          $15,201
</TABLE>

Under the terms of its  agreements,  Central Maine pays its ownership  share (or
entitlement  share) of estimated  decommissioning  expense to each of the Yankee
companies and records such payments as a cost of purchased power.

Permanent Shutdown of Maine Yankee Plant

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

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

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

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

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

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

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

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

Condensed  financial  information  on Maine Yankee  Atomic  Power  Company is as
follows:

(Dollars in thousands)                           1999         1998        1997
Earnings:
Operating revenues .........................  $   69,439  $  110,608  $  238,586
Operating income ...........................      12,689      13,430      18,170
Net income .................................       6,198       6,295       9,037
Earnings applicable to common stock ........       4,863       4,916       7,613

Central Maine's Equity Share of Net Earnings  $    1,848  $    1,868  $    2,893
Investment:
Net electric property and nuclear fuel .....  $      685  $      687  $   17,938
Current assets .............................      23,086      20,896      71,098
Deferred charges and other assets ..........   1,068,179   1,161,715   1,279,107
Total Assets ...............................   1,091,950   1,183,298   1,368,143
Less:
Redeemable preferred stock .................      15,000      16,800      17,400
Long-term obligations ......................     193,535     201,614     270,299
Current liabilities ........................      22,163      15,122      35,518
Reserves and deferred credits ..............     786,858     870,856     966,561
Net Assets .................................  $   74,394  $   78,906  $   78,365
Company's Equity in Net Assets .............  $   28,270  $   29,984  $   29,779

Other Investments

Connecticut  Yankee.  In December  1996,  the Board of Directors of  Connecticut
Yankee Atomic Power Company voted to permanently  shut down and decommission the
Connecticut  Yankee plant for economic reasons.  The plant did not operate after
July 22, 1996.  Central  Maine  estimates  its share of the cost of  Connecticut
Yankee's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing  the plant to be  approximately
$25.1 million and has recorded a corresponding regulatory asset and liability on
the consolidated  balance sheet.  Central Maine is currently  recovering through
rates an amount adequate to recover these expenses. Contested issues relating to
Connecticut Yankee's decommissioning rates, as well as the prudence of operating
that plant and the decision to cease operations, remain pending before the FERC.

Yankee  Atomic.  In 1993 the FERC  approved  a  settlement  agreement  regarding
recovery  of  decommissioning  costs and plant  investment,  and all issues with
respect to the prudence of the decision to  discontinue  operation of the Yankee
Atomic plant.  Central Maine estimates its remaining share of the cost of Yankee
Atomic's  continued  compliance  with regulatory  requirements,  recovery of its
plant  investment,  decommissioning  and closing the plant, to be  approximately
$2.4  million.  This  estimate  has been  recorded  as a  regulatory  asset  and
liability on Central  Maine's  balance sheet.  Central  Maine's current share of
costs related to the shutdown of Yankee Atomic is being recovered through rates.

Vermont Yankee. The Vermont Yankee plant is an operating unit. Its NRC operating
license is  scheduled to expire in the year 2012.  On October 15, 1999,  Vermont
Yankee  agreed to sell the  Vermont  Yankee  plant for $22  million,  subject to
certain adjustments, to AmerGen Energy Company LLC ("AmerGen").  AmerGen agreed,
among other commitments, to assume the decommissioning cost of the unit after it
is taken out of service,  and the Vermont  Yankee  sponsors,  including  Central
Maine,  agreed to fund the uncollected  decommissioning  cost up to a negotiated
amount at the time of the closing of the sale.  The sponsors  also agreed either
to enter into a new  purchased-power  agreement  with AmerGen or to buy out such
future power payment  obligations by making a fixed payment to AmerGen.  Central
Maine elected to enter into a twelve-year  purchased-power agreement and intends
to sell its power  entitlement at the market rate.  The sponsors'  obligation to
consummate the sale is conditioned  upon the receipt of satisfactory  regulatory
approvals.

Millstone Unit 3. Pursuant to a joint ownership  agreement,  Central Maine has a
2.5  percent  direct  ownership  interest  in the  Millstone  3 nuclear  unit in
Waterford,  Connecticut, which is operated by Northeast Utilities. This facility
was off-line  from March 31, 1996, to July 1998,  due to NRC concerns  regarding
license requirements.

Central  Maine is  obligated  to pay its  proportionate  share of the  operating
expenses,  including  depreciation and a return on invested capital,  of each of
the Yankee Companies  referred to above for periods expiring at various dates to
2012.  Pursuant to the joint ownership  agreement for Millstone 3, Central Maine
is similarly  obligated to pay its proportionate share of the operating costs of
Millstone 3. Central  Maine is also  required to pay its share of the  estimated
decommissioning  costs of each of the  Yankee  Companies  and  Millstone  3. The
estimated  decommissioning  costs are paid as a cost of  energy  in the  amounts
allowed in rates by the FERC and passed through to Central Maine's ratepayers as
a component of its transmission-and-distribution revenue requirement approved by
the MPUC.

MEPCO.  MEPCO owns and  operates a  345-kilovolt  transmission  interconnection,
extending from Central  Maine's  substation at Wiscasset to the Canadian  border
where  it  connects  with a line of The New  Brunswick  Power  Corporation  ("NB
Power") under an  interconnection  agreement.  MEPCO  transmits power between NB
Power and various New England  utilities under MEPCO's Open Access  Transmission
Tariff.

Central Maine had  approximately a 60% ownership  interest in the jointly owned,
Company-operated,  620-megawatt  oil-fired  W. F.  Wyman Unit No. 4. Wyman 4 was
sold to FPL group as part of its sale of generation assets on April 7, 1999. See
Note 3, "Regulatory  Matters" - "Sale of Generation  Assets." Central Maine also
has a 2.5% ownership interest in the Millstone Unit No. 3 nuclear plant operated
by Northeast Utilities,  and is entitled to approximately a 29-megawatt share of
that  unit's  capacity.   Central  Maine's  plant  in  service,   nuclear  fuel,
decommissioning  fund, and related  accumulated  depreciation  and  amortization
attributable to these units as of December 31, 1999, and 1998 were as follows:

                                         Wyman 4                  Millstone 3
(Dollars in thousands)             1999           1998        1999          1998
Plant in service, nuclear
 fuel and decommissioning fund  $    -        $116,075    $114,696      $112,907
Accumulated depreciation
and amortization                     -          69,028     111,728        45,433

Power-Pool Agreements

The New England Power Pool, of which Central Maine is a member,  has  contracted
in its Hydro-Quebec Projects to purchase power from Hydro-Quebec.  The contracts
entitle  Central  Maine to 44.5  megawatts of capacity  credit in the winter and
127.25 megawatts of capacity credit during the summer. Central Maine has entered
into  facilities-support  agreements  for its share of the related  transmission
facilities.   Central  Maine's  share  of  the  support  responsibility  and  of
associated benefits is approximately 7%.

Central  Maine is making  facilities-support  payments  on  approximately  $23.8
million,  its remaining share of the  construction  cost for these  transmission
facilities  incurred through December 31, 1999. These  obligations are reflected
on  the  Company's  consolidated  balance  sheet  as  lease  obligations  with a
corresponding charge to electric property.

Non-Utility Generators

Central Maine has entered into a number of long-term,  non-cancelable  contracts
for the purchase of capacity and energy from non-utility  generators  (NUG). The
agreements  generally  have  terms of five to 17 years,  with  expiration  dates
ranging from 2000 to 2016.  They require Central Maine to purchase the energy at
specified prices per  kilowatt-hour,  which are often above market prices. As of
December 31, 1999,  facilities having 587 megawatts of capacity covered by these
contracts were  in-service.  The costs of purchases under all of these contracts
amounted to $207.8 million in 1999,  $265 million in 1998, and $306.4 million in
1997.

Central Maine's estimated  contractual  obligations with NUGs as of December 31,
1999, are as follows:

(Dollars in millions)        Amount

     2000                     $    269
     2001                          252
     2002                          257
     2003                          261
     2004                          261
     2005 - 2016                 1,523
                                $2,823

The aggregate above market costs associated with these contracts is estimated to
be approximately $1 billion, based on one of many market price assumptions.

Note 10:  Capitalization and Interim Financing

Retained Earnings

Under  terms  of the  most  restrictive  test in  Central  Maine's  Articles  of
Incorporation,  no dividend may be paid on the common stock of Central  Maine if
such dividend would reduce  retained  earnings below $29.6 million.  At December
31, 1999, Central Maine's retained earnings were $100.8 million,  of which $71.2
million were not so  restricted.  There are no such  restrictions  on CMP Group.
Future  dividend  decisions  will be subject to future  earnings  levels and the
financial  condition  of CMP  Group  and  Central  Maine  and will  reflect  the
evaluation by their Board of Directors of then existing circumstances.

Mortgage Bonds

Substantially  all of Central Maine's  electric-utility  property and franchises
were  subject  to the lien of the  General  and  Refunding  Mortgage  until  its
discharge on July 27, 1999.

Mortgage Bonds outstanding as of December 31, 1999, and 1998 were as follows:

Central Maine Power Company
General and Refunding Mortgage Bonds:
                                                      Interest
                      Series        Maturity            rate     1999     1998
(Dollars in thousands)
                         P    Redeemed April 7, 1999    7.66%     -    $  43,717
                         Q    Redeemed April 7, 1999    7.05      -       75,000
Total Mortgage Bonds                                          $   -     $118,717

During 1999,  Central  Maine  redeemed the  following  principal  amounts of its
General and  Refunding  Mortgage  Bonds:  on May 10,  $43.7  million of Series P
7.66%,  Due 2000;  on the same day $75 million of Series Q 7.05%,  Due 2008.  No
premiums were paid by Central Maine for the bonds.

Limitations on Unsecured Indebtedness

Central Maine's Articles of Incorporation  limit certain unsecured  indebtedness
that may be outstanding to 20 percent of capitalization, as defined, without the
consent of the holders of Central Maine's preferred stock; 20 percent of defined
capitalization  amounted to $119  million as of  December  31,  1999.  Unsecured
indebtedness,  as defined,  amounted to $57  million as of  December  31,  1999.
Central  Maine's $500 million  medium-term  note  program,  having  received the
consent of Central Maine's  preferred  stockholders in May 1997, is not included
in "unsecured indebtedness" for purposes of the 20-percent limitation.

Medium-Term Notes

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 in 1989.  As of December 31, 1999,  $70 million of  medium-term  notes
were  outstanding.  Interest  on  fixed-rate  notes  is  payable  on March 1 and
September  1,  while  interest  on  floating-rate  notes is payable on the dates
indicated thereupon.

Medium-Term Notes outstanding as of December 31, 1999, and 1998 were as follows:

(Dollars in thousands)
Maturity                                  Interest rate      1999         1998
Series A:
2000                                           9.65%       $  5,000    $   5,000
Series C:
2000-2001                               6.38% - 7.21%        40,000      127,000
Series D:
2000                                           6.50%         25,000      205,000
Medium-Term Notes                                            70,000      337,000
   Less:  Amount Due Within One Year                         60,000       10,000
Total Medium-Term Notes                                     $10,000     $327,000

Pollution-Control Facility and Other Notes

Pollution-control  facility and other notes outstanding as of December 31, 1999,
and 1998 were as follows:

<TABLE>
<S>                                                  <C>       <C>                         <C>        <C>
(Dollars in thousands)
Series                                         Interest rate            Maturity          1999          1998
Central Maine Power Company:
Yarmouth Installment Notes                           6 3/4%    Redeemed June 1, 1999       $    -     $   9,330
Yarmouth Installment Notes                           6 3/4     Redeemed June 1, 1999            -         1,000
Industrial Development
  Authority of the State of

  New Hampshire Notes                                7 3/8     May 1, 2014                 19,500        19,500
Finance Authority of Maine                            8.16     January 1, 2005             37,929        45,929
Revolving Credit Agreement                       Variable*     October 22, 1999                 -        50,000
Maine Electric Power Company, Inc.:
Promissory Notes                                   Variable**  November 1, 2000                 -           420
NORVARCO: Promissory Note                            10.48     November 1, 2020            22,973        24,090
NORVARCO: Senior Note                                 7.05     November 1, 2020             1,681         1,747
Union Water Power Company-Bank Notes                  7.99     December 2011                1,110         1,163
Union Water Power Company-Bank Notes              Variable***  October 2018                 1,246         1,284
Total Pollution-Control Facility and Other Notes                                          $84,439      $154,463

  *The average rate was 6.1125% in 1998.
 **The average rate was 6.48% in 1998.
***The average rate was 7.75% in 1999 and 8.25% in 1998.
</TABLE>

The bonds  issued by the  Industrial  Development  Authority of the State of New
Hampshire  are  supported  by loan  agreements  between  Central  Maine  and the
Authority. The bonds are subject to redemption at the option of Central Maine at
their principal amount plus accrued interest and premium, beginning in 2001.

On October  26,  1994,  FAME  issued  $79.3  million of  Taxable  Electric  Rate
Stabilization  Revenue Notes Series 1994A (FAME  notes).  FAME and Central Maine
entered into a loan  agreement  under which Central Maine issued FAME a note for
approximately  $66.4  million,  evidencing a loan in that amount.  The remaining
$12.9  million of  FAME-notes  proceeds  over the $66.4  million was placed in a
capital-reserve  account. The amount in the capital-reserve  account is equal to
the highest  amount of  principal  and  interest on the FAME notes to accrue and
come due in any year the FAME notes are outstanding. The amounts invested in the
capital reserve account are initially invested in government securities designed
to generate  interest  income at a rate equal to the interest on the FAME notes.
Under the terms of the loan agreement,  Central Maine is also responsible for or
receives the benefit from the interest rate  differential  and investment  gains
and losses on the capital reserve account.

NORVARCO,  a wholly owned  subsidiary  of Central  Maine,  owns a  fifty-percent
interest in Chester SVC  Partnership.  In December 1990,  Chester entered into a
non-recourse  long-term debt financing of $33 million at a fixed annual interest
rate of 10.48%,  payable  monthly over a 30-year  term.  The debt is  redeemable
commencing  December 20, 2000, at its principal amount plus accrued interest and
a yield  maintenance  premium  based  on  market  interest  rates at the time of
redemption.  In 1995,  Chester  entered into an agreement with the existing note
holder to finance $2.1 million in construction commitments.  That note agreement
requires  principal and interest  payments on a monthly basis over the remaining
years of the  original  financing  agreement  and has a fixed  interest  rate of
7.05%. Central Maine's share of the loan payments is 7.1 percent under a support
agreement with other utilities that use the facility.

Capital Lease Obligations

CMP Group leases some of its buildings and equipment  under lease  arrangements,
and accounts for certain transmission agreements as capital leases using periods
expiring  between 2006 and 2021.  The net book value of property  under  capital
leases was $27.5  million and $29.4  million at  December  31,  1999,  and 1998,
respectively.  Assets  acquired  under  capital  leases are recorded as electric
property at the lower of fair-market  value or the present value of future lease
payments,  in accordance  with practices  allowed by the MPUC, and are amortized
over their  contract  terms.  The  related  obligation  is  classified  as other
long-term  debt.  Under the terms of the lease  agreements,  executory costs are
excluded from the minimum lease payments.

Estimated  future minimum lease payments for the five years ending  December 31,
2004,  together  with the present value of the minimum  lease  payments,  are as
follows:

(Dollars in thousands)                                            Amount
2000                                                              $ 5,093
2001                                                                4,924
2002                                                                4,755
2003                                                                4,587
2004                                                                4,418
Thereafter                                                         42,842
Total minimum lease payments                                       66,619
Less: amounts representing interest                                35,579
Present Value of Net Minimum Lease Payments                       $31,040

Sinking-Fund Requirements

Consolidated  sinking-fund  requirements  for long-term  obligations,  including
capital  lease  payments  and maturing  debt  issues,  for the five years ending
December 31, 2004, are as follows:

                              (Dollars in thousands)
                Sinking fund       Maturing debt         Total
2000             $  2,937             $60,000            $62,937
2001               11,547              10,000             21,547
2002               12,258                   -             12,258
2003               13,071                   -             13,071
2004               12,915                   -             12,915

Disclosure of Fair Value of Financial Instruments

The methods  and  assumptions  used to estimate  the fair value of each class of
financial  instruments  for which it is  practicable  are discussed  below.  The
carrying  amounts  of cash and  temporary  investments  approximate  fair  value
because of the short maturity of these investments. The fair value of redeemable
preferred  stock and  pollution-control  facility  and  other  notes is based on
quoted  market  prices  as of  December  31,  1999 and 1998.  The fair  value of
long-term  obligations  is based on quoted market prices for the same or similar
issues,  or on the current rates offered to the particular  company based on the
weighted average life of each class of instruments.

The  estimated  fair  values  of the CMP  Group's  financial  instruments  as of
December 31, 1999, and 1998 are as follows:
<TABLE>
<S>                                          <C>        <C>        <C>        <C>

                                                    1999                  1998
                                             Carrying              Carrying
(Dollars in thousands)                        amount   Fair value   amount   Fair value
Redeemable preferred stock ...............   $  9,910   $  9,712   $ 27,910   $ 28,747
Mortgage bonds ...........................       --         --      118,717    120,782
Medium-term notes ........................     70,000     70,402    327,000    326,226
Pollution-control facility and other notes     84,439     91,006    154,463    157,771
</TABLE>

Cumulative Preferred Stock

Preferred-stock  balances  outstanding  as of December 31, 1999 and 1998 were as
follows:

                                                   (Dollars in thousands,
                                                  except per-share amounts)
                                             Current shares
                                              outstanding      1999      1998
Preferred Stock - Not Subject to
Mandatory Redemption:
$25 par value - authorized 2,000,000
  shares; outstanding:                             None     $     -  $      -
$100 par value noncallable -authorized
  5,713 shares; outstanding 6% voting             5,713         571       571
$100 par value callable - authorized
  2,300,000* shares; outstanding:
3.50% series (redeemable at $101)               220,000      22,000    22,000
4.60% series (redeemable at $101)                30,000       3,000     3,000
4.75% series (redeemable at $101)                50,000       5,000     5,000
5.25% series (redeemable at $102)                50,000       5,000     5,000
6% stock owned by CMP Group, Inc.                   533         (43)      (43)
Total                                                       $35,528   $35,528
Redeemable Preferred Stock - Subject to
  Mandatory Redemption:
Flexible Money Market Preferred Stock,
Series A - 7.999% (99,100 shares in 1999,
279,100 shares in 1998)                           9,910       9,910    27,910
Total                                                      $  9,910   $27,910

*Total  authorized  $100  par  value  callable  is  2,300,000   shares.   Shares
outstanding are classified as Not Subject to Mandatory Redemption and Subject to
Mandatory Redemption.

In  connection  with the Central  Maine  common  stock  conversion,  a number of
holders  of the 6%  preferred  stock  requested  payment at fair value for their
shares pursuant to section 910 of the Maine Business  Corporation Act. CMP Group
purchased  533 shares from various  shareholders  of Central  Maine 6% preferred
stock.

Sinking-fund provisions for the Flexible Money Market Preferred Stock, Series A,
7.999%,  require  Central Maine to redeem all shares at par plus an amount equal
to  dividends  accrued  to the  redemption  date on the basis of  90,000  shares
annually  beginning in October 1999.  Central Maine also has the  non-cumulative
right to redeem up to an equal number of shares  annually  beginning in 1999, at
par plus an amount  equal to  dividends  accrued  to the  redemption  date.  The
Company  redeemed  $18  million of these  shares at par  October  1,  1999.  The
sinking-fund  requirement  for  2000 is $9  million  with a final  sinking  fund
requirement of $910 thousand in 2001.

Interim Financing and Credit Agreements

Central Maine uses funds obtained from  short-term  borrowing to provide initial
financing for construction and other corporate purposes.

To support its short-term capital  requirements,  in October 1996, Central Maine
entered  into  a  $125  million  Credit  Agreement  with  several  banks,   with
BankBoston, N.A., and The Bank of New York acting as agents for the lenders. The
arrangement  originally  had  two  credit  facilities:  a $75  million,  364-day
revolving  credit facility and a $50-million,  3-year revolving credit facility.
Effective  December 15, 1998, the banks'  commitments under the 364-day facility
were reduced  from $75 million to $25 million by  agreement of the parties,  and
other  provisions  were amended to reflect the  reorganization  of Central Maine
into a  holding-company  structure  and recognize  other changed  circumstances.
Central Maine terminated the two facilities on October 21, 1999.

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

CMP Group and its subsidiaries had a total of $0.2 million outstanding,  made up
of short-term financings as of December 31, 1999.

Note 11:  Quarterly Financial Data (Unaudited)

CMP Group's unaudited,  consolidated  quarterly financial data pertaining to the
results of operations are shown below.

(Dollars in thousands, except per-
   share amounts)                                 Quarter ended
                                     March 31   June 3  September 30 December 31
1999

Electric operating revenues ........ $270,694  $214,686   $238,898   $229,433
Operating income ...................   66,882    14,327     30,417     20,589
Net income (loss) ..................   33,257     4,041      8,703      8,853
Earnings (loss) per common share ...     1.03       .12        .27        .27

1998

Electric operating revenues ........ $248,745  $208,216   $234,056   $247,722
Operating income ...................   39,934    14,326     26,370     45,251
Net income (loss) ..................   16,398       572     17,440     18,500
Earnings (loss) per common share* ..      .51       .02        .54        .57

*Same  results as  Central  Maine for first two  quarters.  CMP Group was formed
September 1, 1998.

Central Maine's unaudited,  consolidated  quarterly financial data pertaining to
the results of operations are shown below.
<TABLE>
<S>                                 <C>         <C>          <C>          <C>

(Dollars in thousands, except per-
   share amounts)                                    Quarter ended
                                     March 31     June 30   September 30  December 31
1999

Electric operating revenues .....   $ 270,570   $ 214,737    $ 238,887    $ 229,307
Operating income ................      67,133      14,064       29,691       20,547
Net income (loss) ...............      37,647       3,254       12,928       14,911
Earnings (loss) per common share*        1.18         .07          .38          .46

1998

Electric operating revenues .....   $ 248,745   $ 208,216    $ 234,027    $ 247,573
Operating income ................      39,934      14,326       25,753       46,636
Net income (loss) ...............      18,295       1,646       13,135       21,747
Earnings (loss) per common share*         .51         .02          .38          .67

1997

Electric operating revenues .....   $ 268,367   $ 210,074    $ 226,134    $ 249,601
Operating income ................      27,513       8,881        7,394       19,491
Net income (loss) ...............      16,027      (2,539)      (5,845)       5,779
Earnings (loss) per common share*         .43        (.15)        (.24)         .12

*Earnings per share are  computed  using the  weighted-average  number of common
  shares outstanding during the applicable quarter.
</TABLE>

Material  adjustments  of $11  million  made  during the fourth  quarter of 1999
relate  primarily to the  negotiated  settlement  with the MPUC, as disclosed in
Footnote 3, "MPUC Proceeding on Stranded Costs, Revenue  Requirements,  and Rate
Design."

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         Not applicable.

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Executive  Officers of CMP Group,  Inc. The following are the present  executive
officers of CMP Group with all positions  and offices held.  There are no family
relationships   between  any  of  them,  nor  are  there  any   arrangements  or
understandings pursuant to which any were selected as officers.

Name, Age, and Year First
     Became Officer                            Office

David M. Jagger, 58, 1998      Chairman of the Board of Directors

Charles H. Abbott, 64, 1998    Vice Chairman of the Board of Directors

David T. Flanagan, 52, 1998    President and Chief Executive Officer

Arthur W. Adelberg, 48, 1998   Executive Vice President and Chief Financial
                                Officer

F. Michael McClain, 50, 1998   Vice President, Corporate Development

Anne M. Pare, 46, 1998         Treasurer, Corporate Counsel and Secretary

Executive Officers of Central Maine Power Company. The following are the present
executive  officers of Central Maine with all positions and offices held.  There
are no family relationships  between any of them, nor are there any arrangements
or understandings pursuant to which any were selected as officers.

 Name, Age, and Year First
       Became Officer                        Office

David M. Jagger, 58, 1996        Chairman of the Board of Directors

Charles H. Abbott, 64, 1996      Vice Chairman of the Board of Directors

Sara J. Burns, 44, 1997          President

Michael R. Cutter, 46, 1997      Vice President

Curtis I. Call, 46, 1997         Treasurer

Anne M. Pare, 46, 1996           Secretary

Each of the  executive  officers of CMP Group and Central Maine has for the past
five years  been an officer or  employee  of CMP  Group,  Central  Maine,  or an
affiliate company,  except Messrs. Jagger and Abbott, who have been non-employee
directors  since 1988,  and Mr.  McClain.  Mr.  McClain  joined Central Maine on
February 23, 1998. Prior to his employment with Central Maine, he was Group Vice
President and Chief Operating Officer,  Petroleum Group, Dead River Company from
1981 to 1996.

Directors.  The Board of  Directors  of CMP Group has  twelve  members,  and the
Central Maine Board has thirteen  members.  All Central Maine Board members also
serve on the Board of  Directors  of CMP Group,  other than Sara J.  Burns,  the
President of Central  Maine,  who serves only on the Central  Maine  Board.  The
Boards of Directors  of CMP Group and Central  Maine are each divided into three
classes,  with one class of CMP Group and Central Maine  directors being elected
at the respective annual meetings of shareholders for a three-year term.

Set forth  below is  information  about each  director.  The class  designations
listed are for CMP Group and Central Maine, respectively.

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

                                         Principal Occupations and Business

                                        Experience During Past Five Years and            First Became a       Term
      Name and Age                    Current Directorships of Public Companies              Director       Expires

Class II/I:

Charles H. Abbott (64)        Skelton, Taintor & Abbott, P.A., Auburn, Maine                   1988            2000
                                (Attorneys); Vice Chairman of the Boards of CMP Group
                                and Central Maine

William J. Ryan (56)          Chairman, President and Chief Executive Officer, Peoples         1996            2000
                                Heritage Financial Group, Inc., Portland, Maine

Kathryn M. Weare (51)         Owner and Manager, The Cliff House, Ogunquit, Maine              1992            2000
                                (Resort and conference center)

Lyndel J. Wishcamper (57)     President, Wishcamper Properties, Inc., Portland, Maine          1996            2000
                                (Real estate)

Class III/II:

Lawrence A. Bennigson (62)    Executive Director, Toffler Associates, Boston,                  1999            2001
                                Massachusetts (strategic management advising) (1998);
                                Senior Fellow, Harvard Business School Executive
                                Development Center (executive education) (1998);
                                independent management consultant (1994 through 1997);
                                Director, SBS Technologies, Inc.

Sara J. Burns (44)            President (from September 1, 1998) and Chief Operating           1998            2001
                                Officer, Distribution Services (from May 1, 1997) of
                                Central Maine; prior thereto, held various
                                non-executive positions with Central Maine

Duane D. Fitzgerald (60)      Non-executive Chairman of the Board, Bath Iron Works             1996            2001
                                Corporation, Bath, Maine (Shipbuilding) (from March 1,
                                1996); Corporate Vice President, General Dynamics
                                Corporation (September 1995 to March 1, 1996);
                                President and Chief Executive Officer, Bath Iron Works
                                Corporation (September 1991 to March 1, 1996)

David M. Jagger (58)          President and Treasurer, Jagger Brothers, Inc.,                  1988            2001
                                Springvale, Maine (Textiles); Chairman of the Boards
                                of CMP Group and Central Maine

Lee M. Schepps (59)           Retired (1998) President, The Julius Schepps Co.,                1999            2001
                                Dallas, Texas (Wholesale beverage distribution and
                                real estate management)

Class I/III:

Charleen M. Chase (51)        Executive Director, Community Concepts, Inc., South              1985            2002
                                Paris, Maine (Community action agency)

David T. Flanagan (52)        President and Chief Executive Officer of CMP Group, from         1994            2002
                                September 1, 1998; President and Chief Executive
                                Officer of Central Maine from January 1, 1994

Robert H. Gardiner (55)       President, Maine Public Broadcasting Corporation,                1992            2002
                                Lewiston, Maine (Public television)

Peter J. Moynihan (56)        Retired (1999) Senior Vice President and Chief                   1995            2002
                                Investment Officer, UNUM (now UNUMProvident)
                                Corporation, Portland, Maine (Insurance)
</TABLE>

Section 16(a) Beneficial Reporting Compliance.  After review, CMP Group believes
that during 1999 all filing  requirements  under Section 16(a) of the Securities
Exchange Act were satisfied by the directors and executive officers.

Item 11.     EXECUTIVE COMPENSATION.

<TABLE>
<S>                                <C>        <C>         <C>         <C>              <C>           <C>            <C>   <C>
                                                SUMMARY COMPENSATION TABLE

                                             Annual Compensation                 Long-Term Compensation

                                                                              Awards               Payouts
                                                                     Restricted
                                                                        Stock                       LTIP         All Other
                                                          Bonus       Award(s)     Securities      Payouts      Compensation
            Name and                                       ($)          ($)        Underlying        ($)
       Principal Position           Year   Salary ($)      (5)          (6)        Options (#)       (7)            ($)

David T. Flanagan                  1999       348,994     174,497     232,678          74,764        911,547        8,166 (8)
President and Chief                1998       335,571      70,195      31,648          78,983              0        2,720
Executive Officer,                 1997       315,000     218,531      97,125               0              0        2,603
CMP Group

Arthur W. Adelberg                 1999       228,338      68,501      91,328          17,470        196,383        7,154 (9)
Executive Vice President           1998       213,993      31,654      14,271          17,988              0        5,121
and Chief Financial Officer,       1997       189,818      79,125      35,167               0              0        5,037
CMP Group (1)

F. Michael McClain                 1999       182,000      54,600      72,793          13,925              0            0
Vice President, Corporate          1998       150,527      25,102      11,306          14,711              0        9,765
Development, CMP Group (2)

Anne M. Pare                       1999       121,399      45,525      20,240           7,740         93,905            0
Treasurer, Corporate               1998       116,730      17,441       7,863           8,177              0            0
Counsel and Secretary,             1997       109,000      22,500      10,029               0              0            0
CMP Group; Secretary,
Central Maine

David E. Marsh                     1999       218,824     102,752      45,678          17,470        196,383      802,483 (10)
Former Chief Financial             1998       213,993      31,654      14,271          17,988              0       12,589
Officer, CMP Group (3)             1997       189,818      79,125      35,167               0              0        4,387

Gerald C. Poulin                   1999       175,024      65,748      58,438          13,973        163,528      647,149 (11)
Former Vice President,             1998       175,610      25,976      11,697          14,762              0        3,861
Generation, CMP Group (4)          1997       158,200      61,935      27,527               0              0        3,571

Sara J. Burns                      1999       212,714      63,815      84,552          16,275        143,683        6,400 (12)
President, Central Maine           1998       175,000      28,239      12,727          14,711              0        3,063
                                   1997       139,000      56,250      25,000               0              0        2,601

Michael R. Cutter                  1999       145,600      43,680      57,884          11,140        126,098        5,728 (13)
Vice President, Central            1998       140,000      16,735      22,649          11,769              0        3,025
Maine                              1997       120,820      25,000      33,352               0              0        2,869

Curtis I. Call                     1999       123,767      30,942      40,991           7,891         89,551        4,951 (14)
Treasurer, Central Maine           1998       112,515       9,527      12,904           7,882              0        3,376
                                   1997       104,000      22,000      29,341               0              0        3,120
</TABLE>

(1)  Mr.  Adelberg  was elected to the  additional  position of Chief  Financial
     Officer effective December 16, 1999.

(2)  Mr. McClain's employment began on February 23, 1998.

(3)  Mr. Marsh's employment terminated effective December 15, 1999.

(4)  Mr. Poulin's employment terminated effective December 16, 1999.

(5)  Amounts are performance-based cash awards under the Annual Incentive Plan.

(6)  Amounts are  performance-based  awards in the form of restricted  shares of
     CMP Group common  stock under the Annual  Incentive  Plan.  At December 31,
     1999, the number and value of the aggregate  restricted  stock holdings for
     each of the named executive officers were as follows:  Mr. Flanagan,  7,744
     shares and $213,444;  Mr. Adelberg,  2,968 shares and $81,806; Mr. McClain,
     656 shares and $18,081;  Ms. Pare,  1,065  shares and $29,354;  Mr.  Marsh,
     2,968 shares and $81,806;  Mr. Poulin, 2,353 shares and $64,855; Ms. Burns,
     2,259 shares and $62,264;  Mr.  Cutter,  3,341 shares and $92,086;  and Mr.
     Call,  2,532 shares and $69,788.  All shares listed in the Restricted Stock
     Awards column will vest on the date of  consummation  of the pending merger
     between CMP Group and Energy East.  Dividends on shares of restricted stock
     are  earned at the same rate as  dividends  on  unrestricted  shares of CMP
     Group common stock and are reinvested in additional  shares of common stock
     that are subject to the same  restrictions as the shares on which dividends
     are earned.

(7)  Amounts  are  performance-based  awards  in the form of shares of CMP Group
     common stock under the Long-Term Incentive Plan.

(8)  Includes $6,400 Company  matching  contribution  under the Employee Savings
     and  Investment  Plan for Non-Union  Employees  ("401(k)  Plan") and $1,766
     value of term life insurance  premium paid under a universal life insurance
     policy whose cash value was intended, if certain conditions were satisfied,
     to offset  retirement  benefits payable by CMP Group under the Supplemental
     Executive  Retirement  Plan ("SERP").  Effective as of the end of 1999, CMP
     Group cancelled Mr. Flanagan's  universal life insurance policy and similar
     policies for Messrs.  Adelberg, Marsh and Poulin (with respect to each, the
     "Cancelled  Policy") and the participation of these four executive officers
     in the SERP. See "Employment  and  Termination of Employment  Arrangements"
     for a description of current  retirement  and life  insurance  benefits for
     these four executive officers.

(9)  Includes  $6,400 Company  matching  contribution  under the 401(k) Plan and
     $754 value of term life insurance premium under the Cancelled Policy.

(10) Includes $761,797  severance payment after termination of employment due to
     Change of Control as defined in Mr. Marsh's employment  agreement,  $19,028
     non-compete  installment  payment  under  a  provision  of  his  employment
     agreement,  $13,998 in lieu of accrued vacation time,  $1,260 value of term
     life  insurance  premium under the  Cancelled  Policy,  and $6,400  Company
     matching contribution under the 401(k) Plan.

(11) Includes $613,778  severance payment after termination of employment due to
     Change of Control as defined in Mr. Poulin's employment agreement,  $15,220
     non-compete  installment  payment  under  a  provision  of  his  employment
     agreement,  $10,496 in lieu of accrued vacation time,  $1,728 value of term
     life  insurance  premium under the  Cancelled  Policy,  and $5,928  Company
     matching contribution under the 401(k) Plan.

(12) Company matching contribution under the 401(k) Plan.

(13) Company matching contribution under the 401(k) Plan.

(14) Company matching contribution under the 401(k) Plan.
<TABLE>
<S>                                   <C>                 <C>            <C>          <C>  <C>     <C>          <C>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

                                                                                                 Potential Realizable Value
                                                                                                         at Assumed
                                                                                                    Annual Rates of Stock
                                                                                                   Price Appreciation for
                                                                         Individual                      Option Term (2)
                                            Grants

              (a)                      (b)                (c)             (d)          (e)           (f)           (g)
                                    Number of         % of Total
                                    Securities       Options/SARs      Exercise
                                    Underlying        Granted to        or Base
                                   Options/SARs      Employees in        Price      Expiration
             Name                   Granted (#)       Fiscal Year       ($/Sh)       Date (1)      5% ($)        10% ($)

David T. Flanagan                     74,764              29.40%         18.1875      1/12/06      553,560      1,290,038

Arthur W. Adelberg                    17,470               6.87%         18.1875      1/12/06      129,350        301,441

F. Michael McClain                    13,925               5.47%         18.1875      1/12/06      103,102        240,273

Anne M. Pare                           7,740               3.04%         18.1875      1/12/06       57,308        133,552

David E. Marsh                        17,470               6.87%         18.1875      1/12/06      129,350        301,441

Gerald C. Poulin                      13,973               5.49%         18.1875      1/12/06      103,457        241,101

Sara J. Burns                         16,275               6.40%         18.1875      1/12/06      120,502        280,822

Michael R. Cutter                     11,140               4.38%         18.1875      1/12/06       82,482        192,218

Curtis I. Call                         7,891               3.10%         18.1875      1/12/06       58,426        136,158
</TABLE>

(1)   The options  grant  provided for vesting in increments of one-third on the
      first,  second and third anniversaries of the January 12, 1999 grant date.
      Under  the  merger  agreement  between  CMP  Group and  Energy  East,  all
      outstanding   options   will  be  cancelled   immediately   prior  to  the
      consummation  of the merger,  and upon  consummation  of the merger,  each
      option holder will be entitled to the payment of $11.3125, less applicable
      withholding  taxes,  for each option held.  This amount is the  difference
      between the merger  consideration  of $29.50 per share of CMP Group common
      stock and the $18.1875  exercise  price of the options  granted on January
      12, 1999.

(2)   See note 1 to the  Option/SAR  Grants table above for  information  on the
      option  term and  maximum  value in  connection  with the  pending  merger
      between CMP Group and Energy East.
<TABLE>
<S>                                 <C>             <C>                         <C>                              <C>

                                     AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                            AND FISCAL YEAR-END OPTION/SAR VALUES

             (a)                     (b)             (c)                      (d)                              (e)
                                                                Number of Securities Underlying      Value of Unexercised
                                   Shares           Value         Unexercised Options/SARs at      In-the-Money Options/SARs
                                 Acquired on      Realized            Fiscal Year-End (#)          at Fiscal Year-End ($) (1)
            Name                Exercise (#)          ($)          Exercisable/Unexercisable        Exercisable/Unexercisable

David T. Flanagan                        0                0                78,983/74,764                   804,639/700,913

Arthur W. Adelberg                       0                0                17,988/17,470                   183,253/163,781

F. Michael McClain                  14,711          148,200                     0/13,925                         0/130,547

Anne M. Pare                             0                0                  8,177/7,740                     83,303/72,563

David E. Marsh                      17,988          181,213                     0/17,470                         0/163,781

Gerald C. Poulin                    14,762          148,714                     0/13,973                         0/130,997

Sara J. Burns                            0                0                14,711/16,275                   149,868/152,578

Michael R. Cutter                    2,000           20,148                 9,769/11,140                    99,522/104,438

Curtis I. Call                       7,882           79,404                      0/7,891                          0/73,978

(1)  Options  are "in the money" if the  market  value of the  underlying  stock
     exceeds the exercise or base price of the option.

</TABLE>


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


              LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR

                                                                                 Estimated Future Payouts
                                                                             under Non-Stock Price-Based Plans

             (a)                       (b)                (c)               (d)             (e)             (f)
                                                      Performance
                                    Number of          or Other
                                  Shares, Units      Period Until
                                    or Other         Maturation or       Threshold         Target         Maximum
             Name                Rights (#) (1)        Payout (2)           (#)              (#)            (#)

David T. Flanagan                      19,742            1999-2001            9,871         19,742         29,613
Arthur W. Adelberg                      4,613            1999-2001            2,307          4,613          6,920
F. Michael McClain                      3,677            1999-2001            1,839          3,677          5,516
Anne M. Pare                            2,044            1999-2001            1,022          2,044          3,066
David E. Marsh                          4,613            1999-2001            2,307          4,613          6,920
Gerald C. Poulin                        3,690            1999-2001            1,845          3,690          5,535
Sara J. Burns                           4,297            1999-2001            2,149          4,297          6,446
Michael R. Cutter                       2,942            1999-2001            1,471          2,942          4,413
Curtis I. Call                          2,084            1999-2001            1,042          2,084          3,126
</TABLE>

(1)   Performance   shares  are  granted  at  the   beginning  of  a  three-year
      performance  period and are paid out in the form of CMP Group common stock
      if performance  goals established for that three-year period are attained.
      For the performance period from January 1, 1999 through December 31, 2001,
      performance  is measured by reference to total  shareholder  return and by
      the  ranking  of  Central  Maine  compared  to  other  electric  utilities
      represented in the EEI Index. All outstanding performance shares will vest
      on the date of  consummation  of the pending  merger between CMP Group and
      Energy East.

(2)   See  note 1 to  the  Long-Term  Incentive  Plan  Awards  table  above  for
      information on the vesting of the  performance  shares in connection  with
      the pending merger between CMP Group and Energy East.


                 PENSION PLAN TABLE AND EMPLOYMENT ARRANGEMENTS

Basic Pension Plan.  CMP Group and Central Maine make payments to the Retirement
Income Plan for Non-Union  Employees  (the "Basic  Pension  Plan") for full-time
non-union  employees,   including  the  executive  officers.   Estimated  annual
retirement benefits payable under the Basic Pension Plan, assuming retirement on
December 31, 1999 at age 65, for average  salary  levels and  credited  years of
service  specified in the following Basic Pension Plan Table are as set forth in
the Table.


Average Annual
  Salary for
  5 Highest
 Consecutive
    Years
Preceding                        Years of Service
Retirement       15         20          25          30          35

$125,000    $ 28,344    $ 37,793    $ 47,241    $ 56,689    $ 58,637
 150,000      34,719      46,293      57,866      69,439      72,012
 175,000      37,269      49,693      62,116      74,539      77,362
 200,000      37,269      49,693      62,116      74,539      77,362
 225,000      37,269      49,693      62,116      74,539      77,362
 250,000      37,269      49,693      62,116      74,539      77,362
 275,000      37,269      49,693      62,116      74,539      77,362
 300,000      37,269      49,693      62,116      74,539      77,362
 325,000      37,269      49,693      62,116      74,539      77,362
 350,000      37,269      49,693      62,116      74,539      77,362
 375,000      37,269      49,693      62,116      74,539      77,362
 400,000      37,269      49,693      62,116      74,539      77,362
 425,000      37,269      49,693      62,116      74,539      77,362
 450,000      37,269      49,693      62,116      74,539      77,362
 475,000      37,269      49,693      62,116      74,539      77,362
 500,000      37,269      49,693      62,116      74,539      77,362
 525,000      37,269      49,693      62,116      74,539      77,362
 550,000      37,269      49,693      62,116      74,539      77,362
 575,000      37,269      49,693      62,116      74,539      77,362
 600,000      37,269      49,693      62,116      74,539      77,362

For Ms.  Pare and  Messrs.  Cutter and Call,  compensation  covered by the Basic
Pension Plan consists of base salary,  including base salary shown in the Salary
column of the Summary  Compensation  Table.  Because the amount of  compensation
that could be taken into account in  determining  retirement  benefits under the
Basic Pension Plan was limited by federal tax law to $160,000 in 1999,  the 1999
covered  compensation  under  the  Basic  Pension  Plan  for  Messrs.  Flanagan,
Adelberg,  McClain, Marsh and Poulin and Ms. Burns was limited to that amount of
their  respective  base  salaries.  Years of service  for  purposes of the Basic
Pension Plan are as follows: Mr. Flanagan, 15 years; Mr. Adelberg, 14 years; Mr.
Marsh,  26 years;  Mr. Poulin,  29 years;  Ms. Burns, 12 years;  Mr. Cutter,  23
years; Mr. Call, 13 years; and Ms. Pare, 12 years.  Benefits listed in the Basic
Pension  Plan Table are payable as a single  life  annuity and reflect an offset
for estimated Social Security benefits payable upon attainment of age 65.

Employment and Termination of Employment Arrangements

Existing  Employment  Agreements.  All  of the  named  executive  officers  have
employment  agreements that provide for a specified  minimum base salary and for
participation  in compensation and benefit plans in accordance with the terms of
those plans.  Each  agreement  provides for severance  benefits if the executive
officer's  employment is terminated without cause after a change of control.  In
addition,  the  agreements  for  Messrs.  Flanagan,  Adelberg,  Marsh and Poulin
provide for  retirement  benefits that are  incremental to those provided in the
Basic Pension Plan. These incremental  retirement benefits replace benefits that
would  have  been  payable  under the  Supplemental  Executive  Retirement  Plan
("SERP"), which was terminated by CMP Group with respect to these four executive
officers at the end of 1999.  To replace the term life  insurance  available  in
connection  with the  SERP,  CMP Group has also  purchased  term life  insurance
policies in an equivalent  amount for these four executive  officers on which it
will pay premiums for a specified period.

The employment agreements for Messrs.  Flanagan,  Adelberg,  McClain,  Marsh and
Poulin  provide  severance  benefits  if,  within  36  months  after a change of
control,  CMP  Group  terminates  their  employment  other  than  for  cause  or
disability or they terminate their  employment for any of the reasons  specified
in their agreements.  Under the agreements,  shareholder  approval of the merger
between  CMP  Group  and  Energy  East  constituted  a change  of  control.  The
employment  agreements for these five executive  officers  provide the following
severance  benefits for a termination after a change of control:  (1) 1.99 times
their  respective base salaries and 2.99 times the three-year  average of annual
incentive compensation, (2) continuation of medical and other benefits available
under group benefit plans, and (3) limited outplacement services. When change of
control severance payments are triggered under these agreements, these executive
officers also receive an amount equal to their respective  annual base salaries,
paid in 12 equal  monthly  installments,  as reasonable  compensation  for their
agreement  not to compete,  subject to  forfeiture  if they compete  during that
12-month period. Pursuant to their employment agreements, both Messrs. Marsh and
Poulin  received the  severance  benefits set forth in the Summary  Compensation
Table in connection with CMP Group's  termination of their  employment after the
occurrence  of a change of control  due to  shareholder  approval  of the merger
between CMP Group and Energy East.

Under his  employment  agreement,  Mr.  Flanagan is  entitled to an  incremental
retirement benefit, beginning at age 55, that, when added to the benefit payable
to him under the Basic Pension  Plan,  provides an aggregate  annual  retirement
benefit of 65 percent of his base salary earned  during the 12 months  preceding
the termination of his employment for reasons other than death or cause plus the
three-year average of annual incentive compensation,  not to exceed $200,000 per
year.  Mr.  Flanagan's  retirement  benefit will be fully funded through a rabbi
trust upon the closing of the pending  merger between CMP Group and Energy East.
Mr.  Flanagan will also be entitled to retiree  medical  benefits equal to those
available under Central Maine's retiree medical benefits plan.

The  retirement  benefit for Mr.  Adelberg  vests if he continues his employment
until June 30, 2000. In that case, the benefit paid to Mr.  Adelberg,  beginning
at the later of age 55 or termination of employment,  will be the greater of (i)
2.6 percent of his average base salary over a three-year  period times his years
of service, offset by benefits payable under the Basic Pension Plan, or (ii) the
benefits he would have received under the SERP. Mr. Marsh's employment agreement
provides  that he will  receive,  beginning  at age 55, a  benefit  equal to the
greater  of (i) 50  percent  of the  average  of his final  three  years of base
salary,  offset  by  benefits  payable  under the Basic  Pension  Plan,  or (ii)
intended SERP benefits.  Based on the provisions of his employment agreement and
his  termination  of employment  effective as of December 15, 1999,  Mr. Marsh's
total annual  retirement  benefit will be $132,491,  which is an amount equal to
intended  SERP  benefits.  Of this  amount,  $27,010 will be paid from the Basic
Pension Plan and the remainder under his employment agreement. Mr. Marsh is also
entitled to retiree  medical  benefits  equal to those  available  under Central
Maine's retiree medical  benefits plan. Mr. Poulin is entitled to an incremental
retirement  benefit  under  his  employment  agreement  equal to  intended  SERP
benefits.  Mr.  Poulin  elected to begin  receiving his  retirement  benefits on
January 1, 2000 in the form of a joint and survivor  annuity payable annually in
the amount of $145,461,  of which  $69,633  will be paid from the Basic  Pension
Plan. He is also entitled to retiree medical benefits.

If within 12 months following the  consummation of a change of control,  Central
Maine  terminates  the  employment of Ms. Burns,  Mr. Cutter or Mr. Call, or CMP
Group terminates Ms. Pare's employment,  other than for cause or disability,  or
they  terminate  their  employment  for any of the  reasons  specified  in their
employment agreements, Ms. Burns will be entitled to 1.99 times her base salary,
and the remaining named  executive  officers will be entitled to one times their
respective  base salaries,  plus the  continuation of medical and other benefits
under group benefit plans and limited outplacement  services. The closing of the
merger between CMP Group and Energy East would  constitute the consummation of a
change of control under these  agreements.  If these  executive  officers become
entitled  to change of control  severance  payments,  they will also  receive an
amount equal to one times their respective base salaries as non-compete payments
on the terms described above.

If severance  benefits paid in connection  with a change of control  constituted
"excess  parachute  payments"  under  federal tax law,  they would be reduced to
avoid the  imposition  of an excise tax on the executive  officer  receiving the
benefits,  but only if the amount of the  reduction was less than the excise tax
that the executive  would  otherwise be required to pay. No such  reductions are
anticipated for severance benefits paid to Mr. Poulin, but some reduction may be
required with regard to Mr. Marsh.

The  agreements  for Ms. Burns,  Mr.  Cutter,  Mr. Call and Ms. Pare provide for
retention payments equal to one-half of their then-current base salaries if they
continue  their  employment  until the  earlier of May 31,  2000 or a  specified
change of control event.

The  employment   agreements  for  all  of  the  named  executive  officers  are
automatically  extended  for  successive  one-year  periods  from their  initial
expiration  dates unless the employer or the  executive  officer gives notice of
non-renewal.  The agreements for Messrs. Flanagan,  Adelberg,  Marsh, Poulin and
McClain provide for one final three-year extension after a change of control. As
a result of the  occurrence  of a change of control  on October 7, 1999,  due to
shareholder  approval  of the  merger  between  CMP Group and Energy  East,  the
agreements for these five  executive  officers will expire no later than October
31, 2002. The agreements for the other named executive will remain in effect for
one year after the consummation of the change of control.

Energy  East and CMP Group have  entered  into new  employment  agreements  with
Messrs.  Flanagan,  Adelberg and McClain, and Energy East and Central Maine have
entered into a new agreement with Ms. Burns, that will become effective upon the
closing  of the  merger.  At that time,  these new  employment  agreements  will
replace  and  terminate  the  existing  employment  agreements  for  these  four
executive officers.  The rights and obligations of these four executive officers
will be governed by these new agreements after the completion of the merger.

New Employment  Agreements.  The term of Mr. Flanagan's new employment agreement
is three  years,  beginning  on the  effective  date of the merger,  and will be
automatically  extended  each month unless  either  Energy East or Mr.  Flanagan
gives notice that the  agreement  will not be  extended.  Under the terms of his
employment agreement,  Mr. Flanagan will become the president of Energy East and
the chairman, president and chief executive officer of CMP Group. Mr. Flanagan's
base salary will be $550,000  and may be  increased  by the Energy East board of
directors.  Mr.  Flanagan will also  participate in all incentive  compensation,
fringe benefit and employee  benefit plans on the same basis as other executives
and key  management  employees.  He will be entitled to receive a life insurance
benefit that is not less than two and one-half times his annual compensation and
will also be entitled to certain  other death and  disability  benefits.  Energy
East will also pay the premiums, up to $7,800 annually, on a term life insurance
policy with a face amount of $700,000.  The agreement  provides for a "gross-up"
payment to Mr. Flanagan if any payment,  benefit or distribution  constitutes an
"excess  parachute  payment"  under  federal  tax law on which Mr.  Flanagan  is
required to pay excise tax.

Under Mr.  Flanagan's  new employment  agreement,  Energy East, CMP Group or Mr.
Flanagan may terminate  his  employment at any time. If Energy East or CMP Group
terminates Mr. Flanagan's  employment other than for cause or disability,  or if
Mr. Flanagan terminates his employment for good reason, he will receive, for the
remainder of the term of his employment  agreement,  his base salary,  incentive
compensation  calculated  as specified in the  agreement,  and employee  welfare
benefits. He will also receive outplacement services costing up to $10,000 and a
payment equal to the value of fringe benefits he would have received through the
term of his employment agreement.

If Mr. Flanagan voluntarily  terminates his employment on or after June 1, 2001,
or if Energy East  terminates his employment  without cause, he is entitled to a
fully vested guaranteed minimum annual retirement  benefit,  taking into account
any other  retirement  benefits  provided  by Energy  East or CMP  Group,  of 45
percent of his base  salary.  This  amount is  payable  as a joint and  survivor
annuity  and is reduced by any  proceeds  of the  $700,000  term life  insurance
policy.

The term of the new employment  agreements for Messrs.  Adelberg and McClain and
Ms. Burns is also three years, and each agreement will be automatically extended
each month unless the employer or the executive  gives notice that the agreement
will not be extended.  Mr. Adelberg's employment agreement provides that he will
become the chief  financial  officer and a senior vice  president of Energy East
and will serve on the board of directors  of CMP Group.  His base salary will be
$425,000.  Mr.  McClain will serve as the  president of one or more  non-utility
subsidiaries  of Energy East and/or CMP Group at a base salary of $200,000.  Ms.
Burns will continue to serve as Central Maine's  president,  and her base salary
will be $300,000.  The base salaries of these three  executives may be increased
by the Energy East board.  They will participate in all incentive  compensation,
fringe benefit and employee  benefit plans on the same basis as other executives
and key management employees.

Under the employment agreements for Messrs.  Adelberg and McClain and Ms. Burns,
the employer or the executive may  terminate the  executive's  employment at any
time. If the employer  terminates the employment of the executive other than for
cause or disability or the executive  terminates  his or her employment for good
reason, he or she will receive the same benefits,  in amounts  reflecting his or
her compensation,  as would be provided to Mr. Flanagan in those  circumstances.
Messrs.  Adelberg  and McClain  and Ms.  Burns are also  entitled to  "gross-up"
payments on the terms described for Mr. Flanagan.

Mr. Adelberg is entitled to additional benefits under his employment  agreement.
If Energy  East  requires  him to spend  more than half of his  working  time in
Portland,  Maine,  he will be entitled to relocation  benefits.  Mr. Adelberg is
also  entitled to a life  insurance  benefit that is not less than two times his
annual  compensation  and to certain  other death and  disability  benefits.  In
addition,  if he is employed by Energy  East or CMP Group on June 30,  2000,  he
will have a fully vested right to a guaranteed minimum annual retirement benefit
of 2.6  percent of his  average  base salary for the three prior years times his
years of service with Energy East and CMP Group,  which will be paid in the form
of a joint and survivor annuity.

             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Overview.   The  objectives  of  the  Compensation  and  Benefits  Committee  in
administering  executive  compensation  programs for CMP Group and Central Maine
executives are to assure that total  compensation  opportunities are competitive
with those  available in the utility  industry and general  industry and contain
significant  pay-for-performance elements to align more closely the interests of
the executive officers and shareholders by supporting and increasing shareholder
value.

The  Committee  believes  that the three  existing  components  of total  direct
compensation for executive officers,  namely, base salary, annual incentives and
long-term incentives, are appropriate means of achieving these objectives. These
items  of  compensation  are  designed  to  be  leveraged  for  performance  and
shareholder  value enhancement and to be more competitive in a changing business
environment.  This  performance-oriented  compensation  approach  is designed to
support the attainment of CMP Group's  strategic  goals and to balance the focus
on short and long-term performance goals.

On an overall  basis,  the  elements of direct  compensation  are aligned with a
competitive  market that  includes  electric  utilities  in the Edison  Electric
Institute  ("EEI") Index of  Investor-Owned  Electrics  used in the  performance
graph below and companies from general industry selected from a published survey
compiled  by  the  Committee's  independent  compensation  consultant  based  on
business diversity and complexity,  competitive  similarities,  revenue size and
geography.  This blended market takes into account that Central Maine's electric
utility  business is the principal  business of its holding  company  parent CMP
Group and also reflects the formation of the holding  company to facilitate  the
pursuit of appropriate  non-utility  business  ventures.  The Committee believes
that this expanded  market better enables CMP Group and Central Maine to attract
and retain executive talent that is essential in aggressively  managing changing
business requirements in a competitive climate.

Total  compensation  opportunities  provided  by  base  salary  and  annual  and
long-term  incentives  are designed to reflect  median  compensation  levels for
positions with comparable  responsibilities  in the targeted blended market. The
mix of these  compensation  elements  is  performance  leveraged  to support and
enhance  shareholder  value  by  tying  earnings  opportunities  to  performance
results.

Base Salary. Base salaries of the executive officers are measured against median
base salary levels for positions with comparable functional  responsibilities in
the identified market,  adjusted to take into account  individual  abilities and
skills  in light of the  business  challenges  requiring  those  attributes.  In
setting 1999 base salaries for the executive  officers,  the Committee relied on
the EEI executive  compensation  survey of comparable  positions and information
from its independent  compensation  consultant.  Based on this process and after
taking into account individual factors, the Committee adjusted the base salaries
of the executive  officers other than Mr.  Flanagan and Ms. Burns an average 5.7
percent to bring their salaries  within 90 to 95 percent of the market for their
positions.  The Committee  adjusted Mr.  Flanagan's base salary by approximately
6.5 percent, which maintained the average 80 percent variance between the salary
for his position and the higher salary level for the blended utility and general
industry market.  Ms. Burns received a 22 percent salary increase to reflect her
assumption  of additional  duties when she became  President of Central Maine in
September 1998 as part of the holding company restructuring of Central Maine.

Annual  Incentives.  In 1999,  the annual  incentive  compensation  program  for
executive  officers,   including  Mr.  Flanagan,   reflected  several  important
strategic  corporate  objectives  focused on (i) the  transition to  competition
resulting from federal and state  regulatory and  legislative  initiatives  that
have opened the generation and transmission  markets to competition and (ii) the
enhancement of shareholder  value through a business alliance or combination and
through  investments  in  non-utility  businesses.  These  objectives  and their
weighting were as follows:  completing  Central Maine's  generation  asset sale,
40%;  developing and obtaining Board approval of a strategy designed to maximize
the value of CMP Group's electric transmission and distribution  business,  40%;
developing  and obtaining  Board  approval of a  performance-based  rate plan to
replace the  Alternative  Rate Plan,  which expired at the end of 1999, 10%; and
achieving   specified   earnings  levels  relating  to  investments  in  certain
subsidiaries,  10%. The Committee  determined that all of these  objectives were
fully achieved.

In addition to these four corporate goals, a combination of return on equity and
share  prices was used to  determine  the  percentage  of the target  award pool
available  for  awards.  Based on return on equity and share  price  performance
levels previously  established by the Committee,  the Committee  determined that
the maximum of two times the target pool would be available for awards.

The result of these combined performance levels and performance under individual
goals was that the  maximum of 200  percent  of  targeted  short-term  incentive
compensation  was earned under the plan by each of the named executive  officers
in 1999.  Targeted annual incentive  compensation for Mr. Flanagan is 50 percent
of his base  salary.  Based on 1999  performance  results,  he received an award
equal to one times his base salary.  Targeted annual incentive  compensation for
the  other  executive  officers  ranges  from 25 to 30  percent  of  their  base
salaries.  For 1999, these executive officers received awards ranging from 50 to
60 percent of their base salaries.

Awards  under the Annual  Incentive  Plan are paid in cash for 75 percent of the
total award, and 25 percent in the form of CMP Group common stock purchased at a
25 percent discount for the remaining portion.  Plan participants may also elect
to take up an additional  25 percent of the total award in stock,  which is also
purchased at a 25 percent discount.

Long-Term  Incentive  Compensation.  The Long-Term  Incentive Plan ("LTIP"),  in
which the executive  officers  participate,  is intended to focus attention more
sharply  on  shareholder  value  enhancement.   Target  long-term   compensation
opportunities range from 168 percent of base salary for Mr. Flanagan and from 50
to 60 percent of base salary for the other executive officers.

The first three-year  performance period under the LTIP was completed at the end
of 1999. The  performance  measure  previously  established by the Committee for
that  period  was that  Central  Maine  must  rank at the  median  of the  other
utilities  in the EEI Index,  which ranks  utilities  based on their  cumulative
total shareholder  return. The Committee also established  threshold and maximum
performance  levels  for that  three-year  performance  cycle.  Central  Maine's
cumulative  total  shareholder  return of 163 percent for that period  placed it
second in rank in the EEI Index. For this reason,  the Committee  awarded shares
of CMP Group common  stock at the maximum  level of 150 percent of the number of
performance  shares granted at target performance levels at the beginning of the
three-year period.

In 1999, both  performance  shares for a three-year  performance  period running
until the end of the year 2001 and stock  options were granted to the  executive
officers  as  shown  on the  Long-Term  Incentive  Plan  Awards  table  and  the
Option/SAR  Grants table above.  Performance  shares  represented  63 percent of
targeted long-term  incentive  compensation,  and stock options  represented the
remaining  37  percent.  These  proportions  reflect  the limit on the number of
available shares for awards under the LTIP approved by the shareholders.

Under the LTIP,  performance shares are paid out in the form of CMP Group common
stock if performance goals are attained. For the performance period from 1999 to
the end of 2001,  performance will be measured by reference to total shareholder
return and by the ranking of Central Maine compared to other electric  utilities
represented  in the EEI  Index  for  threshold,  target  and  maximum  levels of
performance.

Each option granted in 1999 represents the right to purchase one share of common
stock at the price of $18.1875  per share,  the market value of the common stock
on the  date of the  grant.  Under  the  LTIP,  the  options  vest in  one-third
increments on the first,  second and third  anniversaries of the grant. In 1999,
options  were granted  based on the Binomial  Option  Valuation  Model,  using a
binomial  value of 15.7  percent  of the market  value of the  stock,  which the
Committee  believes properly captures the value of an executive's right of early
exercise before the end of the option term.

Under the merger  agreement  between CMP Group and Energy East, all  outstanding
options will be cancelled  immediately  prior to the consummation of the merger,
and upon consummation of the merger,  each option holder will be entitled to the
payment of the difference  between the merger  consideration of $29.50 per share
of CMP Group common stock and the exercise price of the options. All outstanding
performance shares will also vest at the time of the consummation of the merger.

Other  Policies.  A provision  of federal tax law denies a tax  deduction to any
publicly-held  company for compensation paid to any named executive officer that
exceeds   one   million   dollars  in  a  taxable   year,   except  for  certain
performance-based  compensation. The Committee has not adopted a specific policy
with  respect to these  compensation  limits,  but notes that  awards  under the
Annual Incentive Plan and the LTIP are performance-based.

                              Compensation and Benefits Committee

                              Charles H. Abbott, Chair
                              Duane D. Fitzgerald
                              Peter J. Moynihan
                              Lyndel J. Wishcamper


                          SHAREHOLDER RETURN COMPARISON

The graph below compares the cumulative total  shareholder  return on the common
stock of CMP Group with the cumulative total return on the S&P 500 Index and the
Edison  Electric  Institute Index of  Investor-owned  Electrics ("EEI Index") at
December 31 for each of the last five fiscal years  (assuming the  investment of
$100 in CMP  Group's  common  stock,  the S&P 500  Index  and the EEI  Index  on
December 31, 1994, and the reinvestment of all dividends).

                                                  December 31
                               1994     1995     1996     1997     1998     1999

CMP Group ................     $100     $114     $ 99     $139     $180     $273
S&P 500 Index ............     $100     $137     $169     $226     $290     $351
EEI Index ................     $100     $131     $133     $169     $192     $157

                              DIRECTOR COMPENSATION

In accordance with the established  guidelines for the Board of Directors of CMP
Group,  the Chairman of the Board  receives an annual  retainer of $25,200,  the
Vice  Chairman  of the Board  receives an annual  retainer of $10,300,  and each
director  (other  than the  Chairman  or Vice  Chairman)  who is the  Chair of a
committee  of the Board and not an  executive  officer of CMP Group  receives an
annual  retainer  of $8,400.  Each other  outside  director  receives  an annual
retainer of $6,800. All retainers are payable quarterly. In addition to ordinary
travel  expenses,  all outside  directors  receive  $600 for each meeting of the
Board attended,  and all outside  directors  serving on a committee of the Board
receive  $300 for each  committee  meeting  attended on a day on which they have
also attended a meeting of the full Board or another  committee and $600 for any
other committee meeting attended. A fee of $150 is paid to outside directors for
participating  in a meeting of the Board or one of its  committees  by telephone
if, in the opinion of the person presiding at the meeting, substantial action is
taken or matters of importance are resolved.

Since  each  outside  director  serves on both the CMP Group and  Central  Maine
Boards and the same  committees of each Board,  the annual  retainer  applies to
service on both Boards and separate meeting fees for Central Maine are paid only
if a meeting of that Board or one of its committees is held on a day when no CMP
Group meeting is held.  The usual  practice is to hold meetings of the CMP Group
and Central Maine Boards, or their  committees,  on the same day so that meeting
fees are limited.

Outside  directors may  participate in a voluntary  deferred  compensation  plan
under which a director may elect to have all or part of his or her retainer (but
not meeting fees) credited to a deferred compensation account, maintained at the
election of the  director  either as a cash account or an account in units based
on the value of CMP Group common  stock  ("Compensation  Units").  The number of
Compensation  Units  credited to a director's  account is equal to the number of
shares of CMP Group common stock that could have been purchased as of the middle
of a calendar quarter with the amount of the retainer deferred for that quarter.
CMP Group matches  Compensation  Units in a director's account with one-half the
number of Compensation Units in the account.  Whenever dividends are paid on CMP
Group's common stock, each account  maintained in Compensation Units is credited
with additional Compensation Units equal to the number of shares that could have
been purchased if a cash dividend had been paid on the Compensation Units in the
account.

Effective  January 1, 1998, the Board terminated the retirement plan for outside
directors that had been in effect since  September  1991. With the assistance of
an  independent  compensation  consultant,  the Board adopted  amendments to its
deferred  compensation  plan that aligns the  interests  of the  directors  more
closely with the interests of shareholders by tying the Board's  compensation to
the  value  of CMP  Group  common  stock.  Accrued  benefits  under  the  former
retirement  plan were  converted  for all  directors  serving on the Board as of
January 1, 1998, to Compensation Units under the deferred  compensation plan. In
addition,  at the beginning of each year, each outside director receives a fixed
grant of 500 Compensation Units.  Dividend equivalents are added to Compensation
Units on dividend payment dates for CMP Group common stock.  There is no company
match for Compensation Units other than those representing deferred retainers.

The deferred compensation plan currently provides that all deferred compensation
is paid solely in cash  following  retirement  from the Board.  The value of the
Compensation Units in a director's account at the time a payment is made will be
equal to the market value of the same number of shares of CMP Group common stock
on the  payment  date.  The  number of  Compensation  Units in the  accounts  of
directors under the deferred  compensation plan as of March 1, 2000, is shown in
the table that appears in Item 12 below.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<S>                                 <C>                  <C>                   <C>                <C>

                                                                        Number of Shares
                                                        Shares         Beneficially Owned
                              Compensation Units   Beneficially Owned  Subject to Options     Total Shares
       Directors and Named          (as of              (as of          Exercisable as of     Beneficially
         Executive Officers     March 1, 2000)      March 1, 2000)         March 1, 2000            Owned

Charles H. Abbott                    19,705                7,281                     -              7,281
Lawrence A. Bennigson                   906                  300                     -                300
Sara J. Burns                             -               11,669                20,136             31,805
Charleen M. Chase                    11,127                1,432                     -              1,432
Duane D. Fitzgerald                   5,723                  500                     -                500
David T. Flanagan                         -               46,138               103,904            150,042
Robert H. Gardiner                   11,749                1,000                     -              1,000
David M. Jagger                      24,534                1,000                     -              1,000
Peter J. Moynihan                     7,088                1,390                     -              1,390
William J. Ryan                       2,378                1,000                     -              1,000
Lee M. Schepps                          906                1,500                     -              1,500
Kathryn M. Weare                     10,916                1,292                     -              1,292
Lyndel J. Wishcamper                  5,782                    -                     -                  -
Arthur W. Adelberg                        -               14,979                23,811             38,790
F. Michael McClain                        -               19,038                 4,642             23,680
Anne M. Pare                              -                1,801                10,757             12,558
David E. Marsh                            -               32,690                 5,823             38,513
Gerald C. Poulin                          -               29,623                 4,658             34,281
Michael R. Cutter                         -                8,544                13,482             22,026
Curtis I. Call                       -                    12,863                 2,630             15,493
All directors and executive
 officers as a group                100,814              194,040               189,843            383,883
</TABLE>

The number of shares of CMP Group common stock beneficially owned as of March 1,
2000 by each of the directors and named  executive  officers,  and the aggregate
number  beneficially owned as of that date by all of the directors and executive
officers of CMP Group and Central  Maine as a group,  constituted  less than 1.5
percent of the total shares of that class then outstanding. As of March 1, 2000,
Mr. Abbott's spouse held sole voting and investment power over 800 shares of the
total  number of shares  listed for Mr.  Abbott,  and all shares  listed for Ms.
Chase were held jointly.  Of the shares listed for Mr.  Poulin,  201 shares were
held  jointly as of that date.  The total  number of shares held jointly for all
directors  and  executive  officers  as a group as of March 1,  2000,  was 1,633
shares.

The following table sets forth the name and address of each shareholder believed
to be the beneficial owner of 5 percent or more of the outstanding shares of CMP
Group common stock, the number of shares  beneficially owned, and the percentage
of shares owned as of March 1, 2000.

                                          Shares of Common Stock    Percentage
                  Name and Address          Beneficially Owned       of Class

President and Fellows of Harvard College       3,200,000 (1)          9.86% (1)
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA  02210

The following table sets forth the name and address of each shareholder known to
be the  beneficial  owner of 5  percent  or more of the  outstanding  shares  of
Central Maine 6% Preferred Stock, the number of shares  beneficially  owned, and
the percentage of shares owned as of March 1, 2000.

                                     Shares of 6% Preferred Stock   Percentage
                  Name and Address          Beneficially Owned       of Class

Christine M. Nyhan, Trustee                     1,675                 29.31% (2)
1825 Spindrift Drive
La Jolla, CA  92037

CMP Group, Inc.                                   533                  9.3% (3)
83 Edison Drive
Augusta, ME  04336

(1)  Based  solely on a Schedule  13G dated  February 7, 2000.  The Schedule 13G
     indicated that the President and Fellows of Harvard  College had sole power
     to vote and dispose of all of these shares.

(2)  Shares held by Christine M. Nyhan, trustee,  represent 29.31 percent of the
     voting power of the Central Maine 6% Preferred Stock and  approximately .05
     percent of the combined voting power of the Central Maine common stock (all
     of which is held by CMP Group) and 6% Preferred Stock.

(3)  Shares held by CMP Group  represent  9.3 percent of the voting power of the
     6% Preferred  Stock. As a result of its ownership of all 31,211,471  issued
     and  outstanding  shares  of  Central  Maine  common  stock,   representing
     3,121,147  votes,  and its 533 shares of Central Maine 6% Preferred  Stock,
     representing 533 votes, CMP Group holds 99.8 percent of the combined voting
     power of the Central Maine common stock and 6% Preferred Stock.

On June 14, 1999,  CMP Group,  Energy East and EE Merger  Corp.  entered into an
Agreement and Plan of Merger,  dated as of June 14, 1999, providing for a merger
transaction  among CMP Group,  Energy East and EE Merger  Corp.  Pursuant to the
merger  agreement,  EE Merger Corp. will merge with and into CMP Group, with CMP
Group being the surviving corporation and becoming a wholly-owned  subsidiary of
Energy East.  After the merger is  completed,  the common stock of Central Maine
will continue to be directly owned by CMP Group.

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

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

Item 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-------      ----------------------------------------------

Indebtedness  of  Management.  On December  29,  1999,  CMP Group  entered  into
separate loan agreements with a current and two former executive officers of CMP
Group and two  executive  officers  of  Central  Maine.  These  loans  were made
pursuant to a loan program authorized by the Board of Directors of CMP Group for
the purpose of  providing  funds for the  exercise of stock  options  granted to
these executive officers under a performance incentive plan of CMP Group and for
the  payment  of  related  withholding  taxes.  The  amounts  borrowed  by these
executive officers,  excluding interest, which accrues at an annual rate of 5.74
percent,  are as  follows:  David E. Marsh,  $374,969.44;  F.  Michael  McClain,
$327,406.67;  Gerald C. Poulin,  $307,721.74;  Curtis I. Call, $164,304.49;  and
Michael R. Cutter,  $41,691.06.  These loans,  which are evidenced by promissory
notes, are secured with the shares of common stock of CMP Group acquired through
the exercise of the stock options.  CMP Group holds the stock  certificates  for
these  shares as well as a stock  power  executed by these  executive  officers.
Under the loan agreements,  the outstanding principal amounts of these loans and
all accrued interest are due upon the earliest to occur of the sale of the stock
collateral,  the  completion of the pending  merger between CMP Group and Energy
East, any termination of the merger agreement between CMP Group and Energy East,
and the first anniversary of the loan.


                                                                PART IV

Item 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
-------
             AND REPORTS ON FORM 8-K.

      (a)  List of documents filed as part of this report:

          (1)   Financial Statements and Supplementary Data

                See the Index to Financial Statements and Schedules under Item 8
                in Part II hereof, where these documents are listed, on page 56.

          (2)   Exhibits - see (c) below.

      (b) Reports on Form 8-K. The Company filed the  following  reports on Form
8-K during the last quarter of 1999 and thereafter to date:

Date of Report                                    Items Reported

January 27, 2000                                      Item 5

CMP Group and Central  Maine  reported  that on January 27, 2000,  CMP Group had
issued a  release  reporting  on (a) its 1999  operating  results  and a related
January 27, 2000,  settlement of an MPUC regulatory proceeding involving several
Central  Maine  ratemaking  issues,  and (b)  progress in  obtaining  regulatory
approvals for its planned merger with Energy East, and quoted  relevant parts of
the release..

Date of Report                                    Items Reported

February 17, 2000                                     Item 5

CMP Group reported that on February 17, 2000, it had issued a release announcing
a change in its annual  meeting date from May 18, 2000, to October 31, 2000, and
quoted the release.


                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrants  have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized.

                                               CMP GROUP, INC.



Date:   March 17, 2000                         By /s/ Arthur W. Adelberg
      ----------------                           -----------------------
                                                  Arthur W. Adelberg
                                                  Executive Vice President and
                                                  Chief Financial Officer
                                                  (Duly Authorized Officer)


                                               CENTRAL MAINE POWER COMPANY



Date:   March 17, 2000                           By /s/ Curtis I. Call
      ----------------                             -------------------
                                                    Curtis I. Call
                                                    Treasurer
                                                    (Duly Authorized Officer)




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the registrants and
in the capacities and on the dates indicated.

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

Signature                                   Title                                                 Date

CMP Group, Inc.:

/s/ David T. Flanagan                       President and Chief Executive Officer; Director       March 17, 2000
------------------------------
David T. Flanagan
(Principal Executive Officer)

 /s/ Arthur W. Adelberg                     Executive Vice President and Chief Financial Officer  March 17, 2000
----------------------------
Arthur W. Adelberg
(Principal Financial Officer)

 /s/ Michael W. Caron                                                                             March 17, 2000
-----------------------------
Michael W. Caron
(Principal Accounting Officer)


Central Maine Power Company:

 /s/ Sara J. Burns                          President; Director                                   March 17, 2000
-----------------------------------
Sara J. Burns
(Principal Executive Officer)

 /s/ Curtis I. Call                         Treasurer                                             March 17, 2000
-------------------------------------
Curtis I. Call
(Principal Financial Officer)

 /s/ Michael W. Caron                       Comptroller                                           March 17, 2000
------------------------------
Michael W. Caron
(Principal Accounting Officer)

CMP Group, Inc. and Central Maine Power Company:

 /s/ David M. Jagger                        Chairman of the Board of Directors                    March 17, 2000
--------------------------------
David M. Jagger

 /s/ Charles H. Abbott                      Vice Chairman of the Board of Directors               March 17, 2000
-------------------------------
Charles H. Abbott

 /s/ Lawrence A. Bennigson                  Director                                              March 17, 2000
--------------------------
Lawrence A. Bennigson

 /s/ Charleen M. Chase                      Director                                              March 17, 2000
------------------------------
Charleen M. Chase

 /s/ Duane D. Fitzgerald                    Director                                              March 17, 2000
-------------------------------
Duane D. Fitzgerald

 /s/ David T. Flanagan                      Director                                              March 17, 2000
-------------------------------
David T. Flanagan

 /s/ Robert H. Gardiner                     Director                                              March 17, 2000
-------------------------------
Robert H. Gardiner

 /s/ Peter J. Moynihan                      Director                                              March 17, 2000
------------------------------
Peter J. Moynihan

 /s/ William J. Ryan                        Director                                              March 17, 2000
-------------------------------
William J. Ryan

 /s/ Lee M. Schepps                         Director                                              March 17, 2000
------------------------------
Lee M. Schepps

 /s/ Kathryn M. Weare                       Director                                              March 17, 2000
----------------------------
Kathryn M. Weare

 /s/ Lyndel J. Wishcamper                   Director                                              March 17, 2000
-------------------------
Lyndel J. Wishcamper

</TABLE>


                                  EXHIBIT INDEX

The following designated exhibits, as indicated below, are either filed herewith
or have heretofore been filed with the Securities and Exchange  Commission under
the Securities  Act of 1933,  the Securities  Exchange Act of 1934 or the Public
Utility Holding Company Act of 1935 and are incorporated  herein by reference to
such  filings.  Reference  is made to Item 8 of this Form 10-K for a listing  of
certain financial information and statements incorporated by reference herein.

NOTE: In this exhibit  index the "Company" or "Central  Maine" refers to Central
Maine Power  Company.  "CMP Group"  refers to CMP Group,  Inc.  All exhibits are
Central Maine exhibits unless otherwise designated.
<TABLE>
<S>                   <C>                                                  <C>                               <C>

                                                                                                            Prior
      Exhibit                           Description of                                                     Exhibit
         No.                                Document                                SEC Docket                No.

     EXHIBIT 2:       PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT,
                      LIQUIDATION OR SUCCESSION

                      Not Applicable.
        2-1           Form Of Agreement And Plan Of Merger                 333-49677                          2
        2-2           Agreement and Plan of Merger dated as of June 14,    Current Report on Form 8-K         10
                      1999                                                 dated June 14, 1999
     EXHIBIT 3:       ARTICLES OF INCORPORATION AND BY-LAWS
                      Incorporated herein by reference:
        3-1           Articles of Incorporation, as amended.               Annual Report on Form 10-K        3.1
                                                                           for year ended December 31,
                                                                           1992

       3-1.1          Form of Articles of Amendment of CMP Group           333-49677                         3.1
        3-2           Bylaws, as amended.                                  Annual Report on Form 10-K        3.2
                                                                           for year ended December 31,
                                                                           1996

       3-2.1          Form of By laws of CMP Group                         333-49677                         3.2
     EXHIBIT 4:       INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
                      Incorporated herein by reference:
        4-1           General and Refunding Mortgage between the Company   2-58251                           2.18
                      and The First National Bank of Boston, as Trustee,
                      dated as of April 15, 1976, relating to the Series
                      A Bonds.
        4-2           First Supplemental Indenture dated as of March 15,   2-60786                           2.19
                      1977 to the General and Refunding Mortgage.
        4-3           Supplemental Indenture to the General and            Annual Report on Form 10-K         A
                      Refunding Mortgage Indenture dated as of October     for the year ended December
                      1, 1978 relating to the Series B Bonds.              31, 1978
        4-4           Supplemental Indenture to the General and            Quarterly Report on Form           A
                      Refunding Mortgage Indenture dated as of October     10-Q for the quarter ended
                      1, 1979, relating to the Series C Bonds.             September 30, 1979
        4.10          Supplemental Indenture to the General and            33-9232                           4.16
                      Refunding Mortgage Indenture dated as of December
                      1, 1986, relating to the Series I Bonds.
        4.14          Indenture, dated as of August 1, 1989, between the   33-29626                          4.1
                      Company and The Bank of New York, Trustee,
                      relating to the Medium-Term Notes.
        4.15          First Supplemental Indenture, dated as of August     Current Report on Form 8-K        4.15
                      7, 1989, relating to the Medium-Term Notes, Series   dated August 16, 1989
                      A, and supplementing the Indenture relating to the
                      Medium-Term Notes.
       4.15.1         Second Supplemental Indenture, dated as of January Current
                      Report  on  Form  8-K  4.1  10,  1992,   relating  to  the
                      Medium-Term  Notes,  dated  January 28, 1992 Series B, and
                      supplementing  the Indenture  relating to the  Medium-Term
                      Notes.

       4.15.2         Third Supplemental Indenture,  dated as of December Annual
                      Report on Form  10-K  4.15.2  15,  1994,  relating  to the
                      Medium-Term  Notes,  for year ended December 31, Series C,
                      and  supplementing  the  Indenture  relating  1994  to the
                      Medium-Term Notes.

       4.15.3         Fourth Supplemental Indenture, dated as of           333-35235                         4.4
                      February 26, 1998, relating to the Medium-Term
                      Notes, Series D, and supplementing the Indenture
                      relating to the Medium-Term Notes.
        4.17          Supplemental Indenture to the General and            Current Report on Form 8-K        4.1
                      Refunding Mortgage Indenture, dated as of            dated September 17, 1991
                      September 15, 1991, relating to the Series N Bonds.
        4.18          Supplemental Indenture to the General and            Current Report on Form 8-K        1.2
                      Refunding Mortgage Indenture, dated as of December   dated December 10, 1991
                      1, 1991, relating to the Series O Bonds.
        4.19          Supplemental Indenture to the General and            Annual Report on Form 10-K        4.19
                      Refunding Mortgage Indenture, dated as of December   for year ended December 31,
                      15, 1992, relating to the Series P Bonds.            1992
        4.20          Supplemental Indenture to the General and            Current Report on Form 8-K        4.1
                      Refunding Mortgage Indenture, dated as of February   dated March 1, 1993
                      15, 1993, relating to the Series Q Bonds.
        4.21          Supplemental Indenture to the General and            Current Report on Form 8-K        4.1
                      Refunding Mortgage Indenture, dated as of May 20,    dated May 20, 1993
                      1993, relating to the Series R Bonds.
        4.22          Supplemental Indenture to the General and            Current Report on Form 8-K        4.1
                      Refunding Mortgage Indenture, dated as of August     dated November 30, 1993
                      15, 1993, relating to the Series S Bonds.
        4.23          Supplemental Indenture to the General and            Current Report on Form 8-K        4.2
                      Refunding Mortgage Indenture, dated as of November   dated November 30, 1993
                      1, 1993, relating to the Series T Bonds.
        4.24          Supplemental Indenture to the General and            Annual Report on Form 10-K        4.24
                      Refunding Mortgage Indenture, dated as of April      for year ended December 31,
                      12, 1994, relating to the Series U Bonds.            1994
        4.26          Supplemental Indenture to the General and            Annual Report on Form 10-K        4.26
                      Refunding Mortgage Indenture, dated as of February   for year ended December 31,
                      15, 1996, evidencing the succession of State         1995
                      Street Bank and Trust Company as Trustee
     EXHIBIT 9:       VOTING TRUST AGREEMENT
                      Not applicable.
    EXHIBIT 10:       MATERIAL CONTRACTS
                      Incorporated herein by reference:
        10-1          Agreement dated April 1, 1968 between the Company    2-30554                           4.27
                      and Northeast Utilities Service Company relating
                      to services in connection with the New England
                      Power Pool and NEPEX.
        10-2          Form of New England Power Pool Agreement dated as    2-55385                           4.8
                      of September 1, 1971 as amended to November 1,
                      1975.
        10-3          Agreement setting forth Supplemental NEPOOL          2-50198                           5.10
                      Understandings dated as of April 2, 1973.
        10-4          Sponsor Agreement dated as of August 1, 1968 among   2-32333                           4.27
                      the Company and the other sponsors of Vermont
                      Yankee Nuclear Power Corporation.
        10-5          Power Contract dated as of February 1, 1968          2-32333                           4.28
                      between the Company and Vermont Yankee Nuclear
                      Power Corporation.
        10-6          Amendment to Exhibit 10.5 dated as of June 1, 1972.  2-46612                          13-21
        10-7          Capital Funds Agreement dated as of February 1,      2-32333                           4.29
                      1968 between the Company and Vermont Yankee
                      Nuclear Power Corporation.
        10-8          Amendment to Exhibit 10.7 dated as of March 12,      70-4611                           B-3
                      1968.

        10-9          Stockholder Agreement dated as of May 20, 1968       2-32333                           4.30
                      among the Company and the other stockholders of
                      Maine Yankee Atomic Power Company.
       10-10          Power Contract dated as of May 20, 1968 between      2-32333                           4.31
                      the Company and Maine Yankee Atomic Power Company.
      10-10.1         Amendment No. 1 to Exhibit 10-10 dated as of March   Annual Report on Form 10-K       10-1.1
                      1, 1984.                                             for the year ended December
                                                                           31, 1985 of Maine Yankee
                                                                           Atomic Power company (File
                                                                           No. 1-6554)
      10-10.2         Amendment No. 2 to Exhibit 10-10 dated as of         Annual Report on Form 10-K       10-1.2
                      January 1, 1984.                                     for the year ended December
                                                                           31, 1985 of Maine Yankee
                                                                           Atomic Power Company (File
                                                                           No. 1-6554)
      10-10.3         Amendment No. 3 to Exhibit 10-10 dated as of         Annual Report on Form 10-K       10-1.3
                      October 1, 1984.                                     for the year ended December
                                                                           31, 1985 of Maine Yankee
                                                                           Atomic Power Company (File
                                                                           No. 1-6554)
      10-10.4         Additional Power Contract between the Company and    Annual Report on Form 10-K       10-1.4
                      Maine Yankee Atomic Power Company dated February     for the year ended December
                      1, 1984.                                             31, 1985 of Maine Yankee
                                                                           Atomic Power Company (File
                                                                           No. 1-6554)
       10-11          Capital Funds Agreement dated as of May 20, 1968     2-32333                           4.32
                      between the Company and Maine Yankee Atomic Power
                      Company.
      10-11.1         Amendment No. 1 to Exhibit 10-11 dated as of         Annual Report on Form 10-K       10-2.1
                      August 1, 1985.                                      for the year ended December
                                                                           31, 1985 of Maine Yankee
                                                                           Atomic Power Company (File
                                                                           No. 1-6554)
       10-25          Agreement dated as of May 1, 1973 for Joint          2-48966                          13-57
                      Ownership, Construction and Operation of New
                      Hampshire Nuclear Units among Public Service
                      Company of New Hampshire and certain other
                      utilities, including the Company.
       10-42          Twentieth Amendment to Exhibit 10-25 dated as of     Annual Report on Form 10-K       10-42
                      September 19, 1986.                                  for the year ended December
                                                                           31, 1986
       10-46          Participation Agreement, dated June 20, 1969 among   2-35073                          4.23.1
                      Maine Electric Power Company, Inc., the Company
                      and certain other utilities.
       10-47          Power Purchase and Transmission Agreement dated      2-35073                          4.23.2
                      August 1, 1969, among Maine Electric Power
                      Company, Inc., the Company and certain other
                      utilities, relating to purchase and transmission
                      of power from The New Brunswick Electric Power
                      Commission.
       10-48          Agreement amending Exhibit 10-47 dated June 24,      2-37987                           4.41
                      1970.

       10-49          Agreement supplementing Exhibit 10-47 dated          2-51545                          5.7.4
                      December 1, 1971.
       10-50          Assignment Agreement dated March 20, 1972, between   2-51545                          5.7.5
                      Maine Electric Power Company, Inc., and the New
                      Brunswick Electric Power Commission.
       10-51          Capital Funds  Agreement  dated as of September 1, 2-24123
                      4.19.1 1964 among Connecticut Yankee Atomic Power Company,
                      the Company and certain other utilities.

       10-52          Power  Contract  dated as of July 1,  1964  among  2-24123
                      4.19.2  Connecticut  Yankee  Atomic  Power  Company,   the
                      Company and certain other utilities.

       10-53          Stockholder  Agreement  dated as of July 1,  1964  2-24123
                      4.19.3 among the stockholders of Connecticut Yankee Atomic
                      Power Company, including the Company.

       10-54          Connecticut Yankee Transmission Agreement dated as   2-24123                          4.19.4
                      of October 1, 1964 among the stockholders of
                      Connecticut Yankee Atomic Power Company, including
                      the Company.
       10-55          Agreements with Yankee Atomic Electric  Company each dated
                      June 30, 1959, as follows:

      10-55.1         Stock Agreement.                                     2-15553                          4.17.1
      10-55.2         Power Contract.                                      2-15553                          4.17.2
      10.55.3         Research Agreement.                                  2-15553                          4.17.3
       10-56          Transmission Agreement with Cambridge Electric       2-15553                           4.18
                      Light Company and other sponsoring stockholders of
                      Yankee Atomic Electric Company.
       10-57          Agreement for Joint Ownership, Construction and      2-52900                           5.16
                      Operation of Wyman Unit No. 4 dated November 1,
                      1974 among the Company and certain utilities.
       10-58          Amendment to Exhibit 10-57 dated as of June 30,      2-55458                           5.48
                      1975.

       10-59          Amendment to Exhibit 10-57 dated as of August 16,    2-58251                           5.19
                      1976.

       10-60          Amendment to Exhibit 10-57 dated as of December      2-68184                           5.31
                      31, 1978.

       10-61          Transmission Agreement dated November 1, 1974        2-54449                          13-57
                      among the Company and certain other utilities,
                      relating to Wyman Unit No. 4.
       10-62          Sharing Agreement--1979 Connecticut Nuclear Unit     2-50142                           2.43
                      dated September 1, 1973 among the Company and
                      certain other utilities, relating to Millstone
                      Unit No. 3.
       10-63          Amendment to Exhibit 10-62 dated as of August 1,     2-51999                           5.16
                      1974, relating to Millstone Unit
                      No. 3.
       10-64          Agreement dated as of February 25, 1977 among the    2-58251                           5.24
                      Company, the Connecticut Light and Power Company,
                      the Hartford Electric Light Company and Western
                      Massachusetts Electric Company, relating to
                      Millstone Unit No. 3.
       10-70          Project Agreement dated December 5, 1984 among the   Annual Report on Form 10-K       10-69
                      Company, the Cities of Lewiston and Auburn, Maine    for the year ended December
                      and certain other parties, relating to development   31, 1984
                      of hydro-electric plant.
       10-73          Trust Indenture dated as of June 1, 1977 between     2-60786                           5.27
                      the Town of Yarmouth and Casco Bank & Trust
                      Company, as trustee, relating to the Town of
                      Yarmouth's 6 3/4% Pollution Control Revenue Bonds
                      (Central Maine Power Company, 1977 Series A).
       10-74          Installment Sale Agreement dated as of June 1,       2-60786                           5.28
                      1977 between the Town of Yarmouth and the Company.
       10-75          Agreements Relating to $11,000,000 Floating/Fixed
                      Rate Pollution Control Revenue Refunding Bonds:
      10-75.1         Bond Purchase Agreement dated as of May 1, 1984.     Quarterly Report on Form          28.3
                                                                           10-Q for the quarter ended
                                                                           June 30, 1984
      10-75.2         Loan Agreement dated as of May 1, 1984.              Quarterly Report on Form          28.4
                                                                           10-Q for the quarter ended
                                                                           June 30, 1984
       10-76          Agreements Relating to $8,500,000 Floating/Fixed
                      Rate Pollution Control Revenue Bonds:
      10-76.1         Bond Purchase Agreement dated December 28, 1984.     Annual Report on Form 10-K      10-77.1
                                                                           for year ended December 31,
                                                                           1984
      10-76.2         Loan Agreement dated as of December 1, 1984.         Annual Report on Form 10-K      10-77.2
                                                                           for year ended December 31,
                                                                           1984
      10-77.1         Indenture of Trust dated as of March 14, 1988        Annual Report on Form 10-K       10-1.4
                      between Maine Yankee Atomic Power Company and        for year ended December 31,
                      Maine National Bank relating to decommissioning      1987, of Maine Yankee Atomic
                      trust funds.                                         Power Company (1-6554)
     10-77.1(a)       Amended and Restated Indenture of Trust dated as     Annual Report on Form 10-K       10-6.1
                      of January 1, 1993 between Maine Yankee Atomic       for year ended December 31,
                      Power Company and The Bank of New York relating to   1992, of Maine Yankee Atomic
                      decommissioning trust funds.                         Power Company (1-6554)
      10-77.2         Indenture of Trust dated as of October 16, 1985      Annual Report on Form 10-K        10-7
                      between the Company and Norstar Bank of Maine        for year ended December 31,
                      relating to the spent fuel disposal funds.           1985, of Maine Yankee Atomic
                                                                           Power Company (1-6554)
       10-78          Form of Agreement of Purchase and Sale dated         Annual Report on Form 10-K       10.79
                      February 19, 1986 between the Company and Eastern    for the year ended December
                      Utilities Associates, relating to the sale of the    31, 1985
                      Company's Seabrook Project interest.
       10-79          Addendum to Agreement of Purchase and Sale dated     Quarterly Report on Form          2.1
                      June 23, 1986, among the Company, Eastern            10-Q for the quarter ending
                      Utilities Associates and EUA Power Corporation,      June 30, 1986
                      amending Exhibit 10-78.
       10-80          Agreement, dated as of October 29, 1986, between     Quarterly Report on Form          2.1
                      the Company and EUA Power Corporation, relating to   10-Q for the quarter ended
                      the sale of the Company's interest in the Seabrook   September 30, 1986
                      Project.
       10-81          Credit Agreement, dated as of October 15, 1986,      Quarterly Report on Form          2.2
                      among the Company, various banks and Continental     10-Q for the quarter ended
                      Illinois National Bank and Trust Company of          September 30, 1986
                      Chicago, as agent, establishing the terms of a $40
                      million unsecured credit facility.
       10-86          Labor Agreement dated as of May 1, 1989 between      Annual Report on Form 10-K       10.86
                      the Company (Northern, Western and Southern          for the year ended December
                      Division) and Local 1837 of the International        31, 1989
                      Brotherhood of Electrical Workers.
      10-86.1         Agreement dated as of November 25, 1991 extending    Annual Report on Form 10-K      10.86.1
                      Labor Contract.                                      for year ended December 31,
                                                                           1991

       10-89          1987 Executive Incentive Plan, as amended January    Annual Report on Form 10-K       10.89
                      20, 1993.*                                           for year ended December 31,
                                                                           1992

       10-90          Deferred Compensation Plan for Non-Employee          Annual Report on Form 10-K       10.90
                      Directors, as amended and restated effective         for year ended December 31,
                      February 1, 1992.*                                   1992
       10-91          Retirement Plan for Outside Directors, as amended    Annual Report on Form 10-K       10.91
                      and restated effective April 24, 1991.*              for year ended December 31,
                                                                           1992

       10-93          Central Maine Power Company Long-Term Incentive      Annual Report on Form 10-K       10.93
                      Plan.*                                               for year ended December 31,
                                                                           1993.

      10-93.1         Transfer of 10-93 to CMP Group                       333-49643                          -
      10-94.1         Central Maine Power Company Supplemental Executive   Annual Report on Form 10-K      10-94.1
                      Retirement  Plan,  as Amended and Restated  Effective  for
                      year ended  December 31,  January 1, 1993,  and as further
                      Amended Effective 1995 January 1, 1996.*

       10-95          Competitive Advance and Revolving Credit Facility    Annual Report on Form 10-K       10.95
                      between the Company and Chemical Bank dated as of    for year ended December 31,
                      November 7, 1994.                                    1994
       10-98          Credit Agreement dated as of October 23, 1996,       Annual Report on Form 10-K       10-98
                      between the Company and certain banks.               for year ended December 31,
                                                                           1996

      10-98.1         Amendment of 10-98 dated as of December 15, 1998     Annual Report on Form 10-K      10-98.1
                                                                           for year ended December 31,
                                                                           1998

      10-98.2         Credit Agreement dated as of December 15, 1998,      Annual Report on Form 10-K      10-98.2
                      between Central Maine and certain banks              for year ended December 31,
                                                                           1998

      10-98.3         Credit Agreement dated as of December 23, 1999,      Filed herewith
                      between Central Maine and certain banks
       10-99          Asset Purchase Agreement, dated as of January 6,     333-35235                         99.2
                      1998, by and between the Company, other sellers,
                      and National Energy Holdings, Inc.
       10.100         Employment Agreement between CMP Group and David     Annual Report on Form 10-K       10.100
                      T. Flanagan dated December 31, 1997                  for year ended December 31,
                                                                           1997

      10-100.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and David T. Flanagan dated
                      December 31, 1997
       10.101         Employment Agreement between CMP Group and Arthur    Annual Report on Form 10-K       10.101
                      W. Adelberg dated January 1, 1998                    for year ended December 31,
                                                                           1997

      10-101.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and Arthur W. Adelberg dated
                      January 1, 1998
       10.102         Employment Agreement between CMP Group and David     Annual Report on Form 10-K       10.102
                      E. Marsh dated January 1, 1998                       for year ended December 31,
                                                                           1997

      10-102.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and David E. Marsh dated January
                      1, 1998

       10.103         Employment Agreement between CMP Group and Gerald    Annual Report on Form 10-K       10.103
                      C. Poulin dated January 1, 1998                      for year ended December 31,
                                                                           1997

      10.103.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and Gerald C. Poulin dated
                      January 1, 1998
       10.104         Employment Agreement between the Company and Sara    Annual Report on Form 10-K       10.104
                      J. Burns dated June 30, 1997                         for year ended December 31,
                                                                           1997

      10.104.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between Central Maine Power Company and Sara J.
                      Burns dated June 30, 1997
       10-105         Employment Agreement between CMP Group and F.        Annual Report on Form 10-K       10-105
                      Michael McClain dated August 26, 1998                for year ended December 31,
                                                                           1998

      10.105.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and F. Michael McClain dated
                      August 26, 1998
       10-106         Employment Agreement between Central Maine and       Annual Report on Form 10-K       10-106
                      Michael R. Cutter dated June 30, 1997                for year ended December 31,
                                                                           1998

      10-106.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between Central Maine Power Company and Michael R.
                      Cutter dated June 30, 1997
       10-107         Employment Agreement between Central Maine and       Annual Report on Form 10-K       10-107
                      Curtis I. Call dated June 30, 1997                   for year ended December 31,
                                                                           1998

      10.107.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between Central Maine Power Company and Curtis I.
                      Call dated June 30, 1997
       10-108         Employment Agreement between CMP Group and Anne M.   Annual Report on Form 10-K       10-108
                      Pare dated June 30, 1997                             for year ended December 31,
                                                                           1998

      10-108.1        First Amendment to the Employment Agreement          Filed herewith                     -
                      between CMP Group and Ann M. Pare dated June 30,
                      1997
*Management contract or compensatory plan or arrangement required to be filed in
response to Item 14(c) of Form 10-K.

    EXHIBIT 11:       STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
                      Not Applicable.
    EXHIBIT 12:       STATEMENTS RE COMPUTATION OF RATIOS
                      Not Applicable.
    EXHIBIT 13:       ANNUAL REPORT TO SECURITY HOLDERS, FORM 10-Q OR
                      QUARTERLY REPORT TO SECURITY HOLDERS
                      Not Applicable.
    EXHIBIT 16:       LETTER RE CHANGE IN CERTIFYING ACCOUNTANT
                      Not Applicable.
    EXHIBIT 18:       LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
                      Not Applicable.
    EXHIBIT 21:        SUBSIDIARIES OF THE REGISTRANTS                     Filed herewith
    EXHIBIT 22:       PUBLISHED REPORT CONCERNING MATTERS SUBMITTED TO
                      VOTE OF SECURITY HOLDERS
                      Not Applicable.
    EXHIBIT 23:       CONSENTS OF EXPERTS AND COUNSEL
        23-1          Consent of PricewaterhouseCoopers LLP to the         Filed herewith
                      incorporation by reference of their reports
                      included or incorporated by reference herein in
                      the Company's Registration Statements (File Number
                      33-36679, 33-39826, 33-44754, 33-51611, 33-56939
                      and 333-35235) and CMP Group's Registration
                      Statements (File Number 333-49677, 333-49643, and
                      33-39826).
    EXHIBIT 24:       POWER OF ATTORNEY
                      Not Applicable.
    EXHIBIT 27:       FINANCIAL DATA SCHEDULE                              Filed herewith
    EXHIBIT 28:       INFORMATION FROM REPORTS FURNISHED TO STATE
                      INSURANCE REGULATORY AUTHORITIES
                      Not Applicable.
    EXHIBIT 99:       ADDITIONAL EXHIBITS
                      To be filed under cover of a Form 10-K/A amendment of this
                      Form  10-K  within  180  days  after  December  31,  1999,
                      pursuant to Rule 15d-21 under the Securities  Exchange Act
                      of 1934:

    99-1              and -2  Information,  financial  statements  and  exhibits
                      required  by Form 11-K with  respect to  certain  employee
                      savings plans maintained by the Company.
</TABLE>


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

                                                 Central Maine Power Company
                                                      Form 10-K - 1999

                                                         Schedule II
                                                         Page 1 of 3

                           Central Maine Power Company

                        VALUATION AND QUALIFYING ACCOUNTS
                      For the Year Ended December 31, 1999
                             (Dollars in Thousands)


                                                                      Additions

                                                              Charged         Charged to
                                             Balance          to costs          other                             Balance
                                          at Beginning          and           accounts-         Deductions        at end
Description                                  of Period        Expenses         describe         -describe       of period

Reserves deducted from
assets to which they apply:

  Uncollectible accounts                         $3,136         $3,576     $                     $3,808 (A)         $2,904
                                                  =====          =====      =========             =====              =====

Reserves not applied against assets:

  Casualty and insurance                       $  2,363        $   666     $                     $1,029 (C)       $  2,000
  Workers' compensation                           8,494          1,548            467 (B)         2,015 (C)          8,494
  Hazardous material
   clean-up                                       1,928           (765)         1,535 (D)                            2,698
                                                -------         ------          -----         ----------           -------
    Total                                       $12,785         $1,449         $2,002            $3,044            $13,192
                                                 ======          =====          =====             =====             ======

Notes: (A) Amounts  charged off as  uncollectible  after  deducting  customers'
           deposits and  recoveries  of accounts  previously  charged off.
       (B) Amounts transferred to capital and billable accounts.
       (C) Principally  payments  for various  injuries  and damages and
           expenses  in  connection therewith.
       (D) Amounts charged to regulatory asset and regulatory liability
           accounts.

</TABLE>

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


                                                 Central Maine Power Company
                                                      Form 10-K - 1999

                                                         Schedule II
                                                         Page 2 of 3

                           Central Maine Power Company

                        VALUATION AND QUALIFYING ACCOUNTS
                      For the Year Ended December 31, 1998
                             (Dollars in Thousands)


                                                                      Additions
                                                              Charged         Charged to
                                             Balance          to costs          other                             Balance
                                          at Beginning          and           accounts-         Deductions        at end
Description                                 of Period         Expenses         describe         -describe        of period
-----------                                 ---------         --------         --------         ---------        ---------

Reserves deducted from
assets to which they apply:

  Uncollectible accounts                        $ 2,400          $5,644      $   -               $4,908(A)         $ 3,136
                                                 ======           =====       =======             =====             ======

Reserves not applied against assets:

  Casualty and insurance                        $ 1,500        $ 1,379       $                  $   516(C)         $ 2,363
  Workers' compensation                           8,494          1,485            294(B)          1,779(C)           8,494
  Hazardous material
   clean-up                                       2,108           (368)                            (188)(D)          1,928
                                                -------         ------         ------            ------            -------
    Total                                       $12,102         $2,496           $294            $2,107            $12,785
                                                 ======          =====            ===             =====             ======

Notes: (A) Amounts  charged off as  uncollectible  after  deducting  customers'
           deposits and recoveries of accounts previously charged off.
       (B) Amounts transferred to capital and billable accounts.
       (C) Principally  payments  for various  injuries  and damages and
           expenses in connection therewith.
       (D) Amounts charged to regulatory asset account.
</TABLE>


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


                                                   Central Maine Power Company
                                                        Form 10-K - 1999

                                                           Schedule II
                                                           Page 3 of 3

                           Central Maine Power Company

                        VALUATION AND QUALIFYING ACCOUNTS
                      For the Year Ended December 31, 1997
                             (Dollars in Thousands)


                                                                      Additions

                                                              Charged         Charged to
                                             Balance          to costs          other                             Balance
                                          at Beginning          and           accounts-         Deductions        at end
Description                                 of Period         Expenses         describe         -describe        of period
-----------                                 ---------         --------         --------         ---------        ---------

Reserves deducted from
assets to which they apply:

  Uncollectible accounts                        $ 4,177          $5,514      $   -               $7,291(A)         $ 2,400
                                                 ======           =====       =======             =====             ======

Reserves not applied against assets:

  Casualty and insurance                        $ 1,275        $ 1,862       $                  $ 1,637(C)         $ 1,500
  Workers' compensation                           7,994          1,692            423(B)          1,615(C)           8,494
  Hazardous material
   clean-up                                       3,639          1,069                            2,600(D)           2,108
                                                -------          -----        -------             -----            -------
    Total                                       $12,908         $4,623           $423            $5,852            $12,102
                                                 ======          =====            ===             =====             ======

Notes: (A) Amounts  charged off as  uncollectible  after  deducting  customers'
           deposits and recoveries of accounts previously charged off.
       (B) Amounts transferred to capital and billable accounts.
       (C) Principally payments for various injuries and damages and expenses
           in connection  therewith.
       (D) Amounts charged to regulatory asset account.
</TABLE>