SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549



                                   FORM 10-Q

                 Quarterly Report Under Section 13 or 15(d) of
                      The Securities Exchange Act of 1934


For Quarter Ended  September 30, 1996    Commission File Number   1-3429


                       MAINE PUBLIC SERVICE COMPANY                
              (Exact name of registrant as specified in its charter)




                        MAINE                         01-0113635       
         (State or other jurisdiction of          (I.R.S. Employer
          incorporation or organization)           Identification No.)




    209 State Street, Presque Isle, Maine                    04769     
   (address of principal executive offices)                (Zip Code)



Registrant's telephone number, including area code      207-768-5811   

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.  Yes X  No___.


                    (APPLICABLE ONLY TO CORPORATE ISSUERS:)

     Indicate the number of shares outstanding of each of the issuer's
classes
of common stock, as of the close of the period covered by this report.

            Common Stock, $7.00 par value - 1,617,250 shares                  
                                                 

                                                             Form 10-Q

                        PART 1.  FINANCIAL INFORMATION

Item 1.   Financial Statements

          See the following exhibits - Maine Public Service Company and       
          Subsidiary Condensed Consolidated Financial Statements, including
          a statement of consolidated operations for the three and nine months
          ended September 30, 1996 and for the corresponding period of the
          preceding year; a consolidated balance sheet as of September 30,
          1996, and as of December 31, 1995, the end of the Company's preceding
          fiscal year; and a statement of consolidated cash flows for the period
          January 1 (beginning of the fiscal year) through September 30,
          1996, and for the corresponding period of the preceding year.

          In the opinion of management, the accompanying unaudited condensed
          consolidated financial statements present fairly the financial
          position of the companies at September 30, 1996 and December 31,
          1995, and the results of their operations for the three and nine    
          months ended September 30, 1996 and their cash flows for the nine   
          months ended September 30, 1996.































                                      -2-
                      MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
                        STATEMENTS OF CONSOLIDATED OPERATIONS
                                    (Unaudited)
                    (Dollars in Thousands Except Per Share Amounts)

                                      Three Months Ended      Nine Months Ended
                                        September 30,           September 30,
                                       1996        1995        1996      1995


Operating Revenues                   $12,584     $12,265     $43,168   $40,591
Operating Expenses
   Purchased Power                     8,250       7,970      24,198    23,460
   Other Operation and Mainten         3,198         944       9,572     5,600
   Depreciation and Amortization         959       1,070       3 018     3,210
   Taxes Other Than Income               386         363       1,247     1,197
   Provision for Income Taxes           (345)        502       1,319     2,071
        Total Operating Expens        12,448      10,849      39,354    35,538
Operating Income                         136       1,416       3,814     5,053
Other Income (Deductions)
   Equity in Income of Associated Cos.    81          91         263       267
   Allowance for Equity Funds Used 
      During Construction                  1           1           6         3
Other Income Taxes                       (64)        (14)        (85)      (67)
   Other - Net                            67          33          56        33
Total                                     85         111         240       236
Income Before Interest Charges           221       1,527       4,054     5,289
Interest Charges
   Long-Term Debt and Notes Pa           877         938       2,652     2,821
   Less Allowance for Borrowed Funds
      Used During Construction            (1)          0          (3)       (1)
Total                                    876         938       2,649     2,820
Net Income (Loss) Available for 
   Common Stock                        ($655)       $589      $1,405    $2,469

Average Shares Outstanding (000's)     1,617       1,617       1,617     1,617
Earnings (Loss) Per Share of 
    Common Stock                      ($0.40)      $0.36       $0.87     $1.53
Dividends Declared per Common Stock    $0.46       $0.46       $1.38     $1.38





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







                                 -3-

                                                  
               MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEETS
                        (Dollars in Thousands)
                                                   September 30  December 31,
                 ASSETS                                1996        1995
                                                   (Unaudited)
Utility Plant
   Electric Plant in Service                         $88,790    $88,648
   Less Accumulated Depreciation                      41,377     39,674
      Net Electric Plant in Service                   47,413     48,974
   Construction Work-in-Progress                       2 457        427
        Total                                         49,870     49,401
Investment in Associated Companies
   Maine Yankee Atomic Power Company                   3,583      3,576
   Maine Electric Power Company, Inc.                     65         65
        Total                                          3,648      3,641
        Net Utility Plant and Investments             53,518     53,042
Current Assets
   Cash and Temporary Investments                      1,541        976
   Deposits for Interest and Dividends                   805        744
   Accounts Receivable - Net                           4,443      6,226
   Unbilled Base Revenue                               1,195      1,472
   Deferred Fuel and Purchased Energy                    125        125
   Current Deferred Income Taxes                         159        232
   Inventory                                           1,255      1,244
   Prepayments                                         1,320        543
      Total                                           10,843     11,562
Other Assets
   Restricted Investment                               4,818          0
   Recoverable Seabrook Costs                         28,078     29,146
   Regulatory Asset - SFAS 109 & 106                  13,660     13,746
   Deferred Fuel and Purchased Energy                  3,607      2,575
   Other                                               3,535      4,003
      Total                                           53,698     49,470
Total Assets                                        $118,059   $114,074

               CAPITALIZATION AND LIABILITIES
Capitalization
   Common Shareholders' Equity
      Common Stock                                   $13,071    $13,071
      Paid-in Capital                                     38         38
      Retained Earnings                               30,735     31,562
      Treasury Stock, at cost                         (5,714)    (5,714)
         Total                                        38,130     38,957
      Long-Term Debt (less current maturities)        39,805     36,120
Current Liabilities
   Long-Term Debt Due Within One Year                  1,315      1,315
   Notes Payable                                       3,000      1,400
   Accounts Payable                                    4,140      5,231
   Dividends Declared                                    744        744
   Customer Deposits                                      66         79
   Interest and Taxes Accrued                            611      1,124
      Total                                            9,876      9,893
Deferred Credits
   Deferred Income Tax                                24,665     24,997
   Investment Tax Credits                                739        795
   Deferred Revenues                                     556        354
   Miscellaneous                                       4,288      2,958
      Total                                           30,248     29,104
Total Capitalization and Liabilities                $118,059   $114,074
The accompanying notes are an integral part of these financial statements.

                                        -4-













































             MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY
                Statements of Consolidated Cash Flows
                             (Unaudited)
                        (Dollars in Thousands)
                                                        Nine Months Ended
                                                          September 30, 
                                                          1996       1995
Cash Flow From Operating Activities
   Net Income                                           $1,405     $2,469

Adjustments to Reconcile Net Income to Net Cash
   Provided by Operations
   Depreciation and Amortization                         1,955      1,929
   Amortization of Seabrook Costs                        1,064      1,281
   Income on Tax Exempt Bonds-Restricted Funds             (68)         0
   Deferred Income Taxes                                  (317)     2,453
   AFUDC                                                    (9)        (3)
   Change in Deferred Fuel & Purchased Energy           (1,031)         0
   Change in Deferred Regulatory and Debt Issuance Costs   850     (1,976) 
   Change in Deferred Revenues                             202        213
   Change in Benefit Obligation                          1,038        201
   Change in Current Assets and Liabilities               (346)    (4,215)
   Other                                                   457        (65)
Net Cash Flow from Operating Activities                  5,200      2,287

Cash Flow From Financing Activities
   Dividend Payments                                    (2,232)    (2,232)
   Tax Exempt Bond Issuance Costs                         (399)         0
   Issuance of Tax-Exempt Bonds                         15,000          0
   Drawdown on Tax Exempt Bonds Proceeds                   250          0
   Retirements on Long-Term Debt                       (11,315)       (65)
   Short-Term Borrowings, Net                            1,600      1,000
Net Cash Flow Provided By(Used For)Financing Activities  2,904     (1,297)

Cash Flow Used For Investing Activities
   Investment in Electric Plant                         (2,539)    (2,721)
   Investment in Restricted Funds                       (5,000)         0
   Net Cash Used For Investment Activities              (7,539)    (2,721)

Increase (Decrease) in Cash and Temporary Investments      565     (1,731)
Cash and Temporary Investments at Beginning of Year        976      2,618
Cash and Temporary Investments at End of Period         $1,541       $887

Change in Current Assets and Liabilities Providing
   Cash From Operating Activities
      Accounts Receivable                               $1,782       $364
      Unbilled Revenue                                     277        546
      Inventory                                            (11)        12
      Deferred Fuel and Purchased Energy Costs               0     (4,225)
      Other Current Assets                                (777)      (664)
      Accounts Payable & Accrued Expenses               (1,604)      (242)
      Other Current Liabilities                            (13)        (6)
   Total Change                                          ($346)   ($4,215)

Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Year For:
   Interest                                             $3,219     $3,353
   Income Taxes                                         $2,371       $396

 The accompanying notes are an integral part of these financial statements.
                                   -5-
















































    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   The accompanying unaudited consolidated financial statements include the 
   accounts of the Company and its wholly-owned Canadian subsidiary, Maine 
   and New Brunswick Electrical Power Company, Limited (the Subsidiary).

   The Company is subject to the regulatory authority of the Maine Public  
   Utilities Commission (MPUC) and, with respect to wholesale rates, the   
   Federal Energy Regulatory Commission (FERC).

   The accompanying unaudited consolidated financial statements should be  
   read in conjunction with the 1995 Annual Report, an integral part of Form 
   10-K.  Certain financial statement disclosures have been condensed or   
   omitted but are an integral part of the 1995 Form 10-K.  These statements 
   reflect all adjustments that are, in the opinion of management, necessary 
   to a fair statement of results for interim periods presented.  All such 
   adjustments are of a normal recurring nature.  The Company's significant 
   accounting policies are described in the Notes to Consolidated Financial 
   Statements of the Company's Annual Report filed with the Form 10-K.  For 
   interim reporting purposes, these same accounting policies are followed.

   For purposes of the statements of consolidated cash flows,the Company
   considers all highly liquid securities to be cash equivalents.



2.  IMPLEMENTATION OF MULTI-YEAR RATE PLAN

   As explained in the legal proceedings section of the Form 10-Q, item    
   1(b), the MPUC approved a four-year rate plan on November 13, 1995.  The 
   Company wrote off approximately $8,340,000, net of income taxes, in 1995. 
   The write-offs consisted of $4,846,000, net of income taxes, of the     
   Company's investment in the Seabrook nuclear power project previously   
   allocated to the wholesale customers and $1,390,000, net of income taxes, 
   of other wholesale plant and regulatory assets, classified as           
   extraordinary items.  In addition, $2,104,000, net of income taxes, of  
   deferred retail fuel representing replacement power costs incurred during 
   the 1995 Maine Yankee outage, were also charged to operations.  Item    
   1(b) also details the significant accounting orders that became effective 
   January 1, 1996 concerning the deferral of $902,000, net of income taxes, 
   annually of Wheelabrator-Sherman purchases, the five year amortization of 
   the Company's $1.3 million, net of income taxes, share of the Maine     
   Yankee sleeving repair costs, the $638,000, net of income taxes,        
   amortization over ten years of deferred post-retirement benefits other  
   than pensions (SFAS 106).  In addition, Item 1(b) discusses the five year 
   amortization of the $139,000 deferral of pension expenses and $92,000   
   deferral of early retirement expenses, both net of income taxes, related 
   to the lay-up of the Caribou Steam Units and the four year amortization 
   of $300,000, net of tax, of deferred fuel from the December 31, 1995    
   balance.
                                   -6-


   The elimination of the fuel clause reconciliation with the associated   
   fuel revenue accounting mechanism complicates quarter-to-quarter        
   earnings comparisons for 1996 to 1995.  The prior fuel revenue accounting 
   mechanism smoothed the recognition of fuel expenses over the annual fuel 
   reconciliation period.  With higher winter rates for our commercial and 
   industrial customers and the elimination of the fuel clause, earnings   
   will be higher during the winter months than during the summer months   
   when rates charged to those customers are approximately 25% lower.
 
   The recoverable Seabrook costs represent costs to be charged to retail  
   customers, in accordance with previous rate orders.  They are as follows:

                        Retail                              $ 43,136
                        Accumulated Amortization              15,058
                        Retail, Net                           28,078
                        Wholesale                             10,051
                        Accumulated Amortization              (3,826)
                        Write-0ff                             (6,225)
                        Wholesale, Net                            - 
                          Total                             $ 28,078

3.  INCOME TAXES                                                        
      
   A summary of Federal and State income taxes charged (credited) to income 
   is presented below. For accounting and ratemaking purposes, income tax  
   provisions included in "Operating Expenses" reflect taxes applicable to 
   revenues and expenses allowable for ratemaking purposes.  The tax effect 
   of items not included in rate base is allocated as "Other Income        
   (Deductions)".

      (Dollars in Thousands)        Three Months Ended   Nine Months Ended
                                     September 30,        September 30,  
                                       1996       1995     1996      1995
      Current income taxes          $  (211)  $  (440)  $ 1,721   $  (315)
      Deferred income taxes             (51)      976      (261)    2,511
      Investment credits                (19)      (20)      (56)      (58)
      Total income taxes            $  (281)  $   516   $ 1,404   $ 2,138 

      Allocated to:
      Operating Income              $  (345)  $   502   $ 1,319   $ 2,071
      Other income                       64        14        85        67 
      Total                         $  (281)  $   516   $ 1,404   $ 2,138 
  
   The following summarizes accumulated deferred income taxes established on 
   temporary differences under SFAS 109 as of September 30, 1996 and       
   December 31, 1995.
                                            (Dollars in Thousands)
                                          September 30,   December 31,
                                               1996            1995
      Seabrook                              $15,892         $16,071
      Property                                8,535           8,396
      Regulatory expenses                     1,125             915        
      Deferred fuel and purchased energy        990           1,027
      Investment tax credits                   (528)           (528)
      Pension and postretirement
       benefits                                (631)           (262)
      Other                                    (718)           (622)
      Net accumulated deferred income 
       taxes                                $24,665         $24,997 



                                    -7-













































4.  REFINANCING

   On April 4, 1991, the Maine Public Utilities Financing Bank (MPUFB)     
   issued $10 million of tax-exempt bonds (the "1991 Series") on behalf of 
   the Company.  Pursuant to a letter of credit and reimbursement agreement, 
   the Company caused a Direct Pay Letter of Credit for a term of five years 
   to be issued by Barclays Bank PLC, New York Branch (Barclays Bank) for  
   the benefit of the holders of such bonds.  To secure the Company's      
   obligations under the reimbursement agreement, the Company issued a     
   second mortgage bond to Barclays Bank as collateral for the Company's   
   obligation to repay Barclays Bank the $10 million principal amount of the 
   bonds plus 195 days of interest on the bonds.  The bonds had a coupon   
   rate of 7.875% and, after considering the enhancement fees and other    
   costs, the annual cost to the Company was approximately 8.725%.

   Barclays Bank notified the Company that it would not renew the Direct Pay 
   Letter of Credit for this issue.  With the expiration of the Direct Pay 
   Letter of Credit on April 4, 1996, the entire $10 million principal     
   amount of the bonds was redeemed at par on April 1, 1996 in accordance  
   with the indenture.  To meet its reimbursement obligation that resulted 
   from the draw on the Barclays Direct Pay Letter of Credit prior to its  
   expiration, the Company borrowed $10,000,000 under a refunding note from 
   Fleet Bank of Maine with interest at LIBOR plus .75% and a facility fee 
   of $25,000.  For the term of the note, the effective interest rate was  
   7.27%.

   On June 19, 1996, the Maine Public Utilities Financing Bank (MPUFB)     
   issued $15 million of its tax-exempt bonds due April 1, 2021 (the "1996 
   Series") on behalf of the Company.  The proceeds of the new 1996 Series 
   were used to refund the 1991 Series through the payment of the refunding 
   note from Fleet Bank of Maine and provides $5 million for the acquisition 
   of qualifying property, of which $4.8 million remains in trust as of    
   September 30, 1996.  Pursuant to the long-term note issued under a loan 
   agreement between the Company and the MPUFB, the Company has agreed to  
   make payments to the MPUFB for the principal and interest on the bonds. 
   Concurrently, pursuant to a letter of credit and reimbursement          
   agreement, the Company caused a Direct Pay Letter of Credit for an      
   initial term of three years to be issued by the Bank of New York for the 
   benefit of the holders of such bonds.  To secure the Company's          
   obligations under the letter of credit and reimbursement agreement, the 
   Company issued a second mortgage bond to the Bank of New York, as Agent, 
   under the reimbursement agreement, in the amount of $15,875,000.  The   
   Company has the option of selecting weekly, monthly, annual or term     
   interest rate periods for the 1996 Series, and has initially selected the 
   weekly interest period.  After considering issuance costs and credit    
   enhancement fees, the effective interest rates to date have ranged from 
   4.61% to 5.96% per annum.

5.  DISCONTINUANCE OF SFAS 71 FOR WHOLESALE BUSINESS SEGMENT
   The wholesale market for electric power is now competitive, as evidenced 
   by the Company's loss of a major wholesale customer, Houlton Water      
   Company. The rates that the Company is now charging its remaining       
   wholesale customers are based on market pricing and not rate base/rate of 
   return regulatory formulas.  For this reason, the Company has           
   discontinued the application of Statement of Financial Accounting       
   Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain Types 
   of Regulation," for its wholesale business jurisdiction.  These write-  
   offs taken in November, 1995 were classified as extraordinary items     
   associated with the discontinuance. 

                                    -8-















































6.  EARLY RETIREMENT PROGRAM

   In March 1996, the Company offered an early retirement program to       
   selected employees.  All eligible employees will participate in the     
   program.  As a result, in accordance with Statement of Financial        
   Accounting Standards No. 88 (SFAS 88), "Employers' Accounting for       
   Settlements and Curtailments of Defined Benefit Pension Plans and for   
   Termination Benefits,"  the Company recognized a first quarter charge of 
   $258,000, net of taxes.












































                                      -9-
                                                              Form 10-Q
                        PART 1.  FINANCIAL INFORMATION

Item 2.   Management's Analysis of Quarterly Income           
          Statements
                    Results of Operations

          Earnings (loss) per share and net income (loss)
          available for common stock for the three months
          ended September 30, 1996 along with the
          corresponding information for the previous year are
          as follows:
                                        Three Months Ended
                                          September 30      

                                        1996      1995      

          Earnings (loss) per share     $(.40)    $ .36     

          Net income (loss)
          available for Common
          Stock - in Thousands          $(655)    $ 589     

          For the third quarter of 1996 compared to the same
          quarter last year, the decrease in consolidated
          earnings per share (EPS) of $.76 is attributable to
          the following:
                                                         EPS                  
                                                       Increase
                                                      (Decrease) 

          Increase in fuel expenses                    $ (.60)

          Increase in Maine Yankee capacity expenses     (.19)

          Decrease due to loss of Houlton Water Company  (.14)

          Increase in retail revenues due to rate
            increases effective January 1, 1996
            and a 1.5% increase in retail sales           .16

          Other                                           .01 
               Total                                   $ (.76)
          Under terms of a four-year rate plan approved by the Maine Public
          Utilities Commission (MPUC), the fuel clause was eliminated with the
          exception of the annual deferral of $902,000, net of income
          taxes, of the costs of its purchases from Wheelabrator-Sherman (WS),
          an independent power producer.  The elimination of the fuel clause
          reconciliation with the associated fuel revenue accounting mechanism
          complicates quarter-to-quarter earnings comparisons for 1996 to 1995. 
          The prior fuel accounting mechanism smoothed the recognition
          of fuel expenses over the annual fuel reconciliation period.  With
          higher winter rates for our commercial and industrial customers 
                                     -10-

                                                             Form 10-Q
                        PART 1.  FINANCIAL INFORMATION

Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          and the elimination of the fuel clause, earnings will be
          higher during the winter months than during the
          summer months when rates charged to those customers
          are approximately 25% lower.  After considering the
          WS deferral and the effects of fuel accounting in
          1995, fuel expenses for the third quarter of 1996
          were $.60 per share more than for the same quarter
          in 1995.  Maine Yankee capacity expenses, including
          the amortization of the 1995 resleeving expenses,
          increased in 1996 and further reduced earnings by
          $.19 per share.  The loss of Houlton Water Company
          as a wholesale customer, due to competitive
          bidding, also reduced earnings for the third
          quarter of 1996 by $.14 per share compared to the
          same period in 1995.  Partially offsetting these
          decreases was a $.16 per share increase as a result
          of the rate increase effective on January 1, 1996
          and a 1.5% increase in retail sales. The January 1,
          1996 increase in retail rates was approved by the
          Maine Public Utilities Commission (MPUC) under the
          terms of a four-year rate plan.  
               
          Consolidated operating revenues for the quarter
          ended September 30, 1996 and 1995, are as follows:

                                   1996                  1995

(Dollars in Thousands)          $       MWH     $         MWH

Retail                       10,425   113,381     9,936  111,765 
Sales for Resale                460    10,664     1,590   26,344
Total Primary Sales          10,885   124,045    11,526  138,109
Secondary Sales               1,118    49,699       163    5,603
Other Revenues/Rev. Adjust.     581                 576 
         
Total Operating Revenues     12,584   173,744    12,265  143,712










                                     -11-
   

                                                              Form 10-Q
                        PART 1.  FINANCIAL INFORMATION

Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)


          Primary sales in the third quarter of 1996 were
          124,045 MWH, a decrease of 14,064 MWH from the
          same period last year.  Sales for resale decreased
          15,680 MWH due to the loss of the Company's
          largest wholesale customer, Houlton Water Company
          (HWC).  HWC began purchasing their energy from
          Central Maine Power on January 1, 1996, resulting
          from HWC's solicitation for competitive prices in
          late 1994.  In 1995, HWC represented 11.1% of the
          Company's consolidated MWH sales and 8.4% of
          consolidated operating revenues.  Secondary sales
          increased by  44,096 MWH, reflecting the
          availability of Maine Yankee for approximately
          one-half of the third quarter of 1996 and an
          increase in power marketing activities.  Maine
          Yankee experienced an unscheduled six-week outage
          during the third quarter of 1996, while the plant
          was out of service for the entire quarter in 1995.
          

          Retail revenues for the third quarter of 1996 were
          $10,425,000 compared to $9,936,000 for the same
          period of 1995, reflecting the new retail rates
          effective January 1, 1996 and a 1.5% increase in
          retail sales.   For 1995, an element of revenues
          was determined using seasonal fuel revenue
          accounting associated with the prior fuel clause,
          eliminated with the rate plan, which smoothed the
          recognition of fuel expenses and the element of
          revenues over the reconciliation period.  Sales
          for resale revenues decreased in 1996 due to the
          loss of HWC as discussed above.

          As discussed above, during approximately one-half
          of the third quarter of 1996, secondary sales of
          the Company's Wyman Unit No. 4 and Maine Yankee
          entitlements for varying lengths of time were made
          at prevailing market rates, representing the
          Company's power marketing activities.  Since Maine
          Yankee was not available for the same period in
          1995, secondary sales for the quarter were limited
          to Wyman No. 4 entitlements.




                                     -12-
                        PART 1.  FINANCIAL INFORMATION         FORM 10Q

Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)


          For the third quarters ended September 30, 1996
          and 1995, total operating expenses were
          $12,448,000 and $10,849,000, respectively.  The
          changes in operating expenses and energy sources
          are as follows:
                                               
                                             Increase/(Decrease)
          (Dollars in Thousands)                 $        MWH
          Purchased Power Expenses 
               Maine Yankee                    668      42,646 
               Wheelabrator-Sherman            777       5,064 
               NB Power                     (1,286)    (50,013)
               Other Purchases                 121       8,275 
                                               280       5,972 
          Deferred Fuel                      2,005
          Generating Expenses                 (189)     22,889  
          Other Operation & Maint. Expenses    438  
          Depreciation and Amortization   
            Expenses                          (111)
          Income Taxes                        (847)
          Taxes Other than Income               23      
               Total                         1,599      28,861  
          
          Maine Yankee was out of service for all of the
          third quarter of 1995, while it operated at a 90-
          percent level of operation for approximately one-
          half of the third quarter of 1996.  Reference is
          made to the Company's 1995 Annual Report,
          "Analysis of Financial Condition and Review of
          Operations - 1995, Maine Yankee", for further
          discussion of the 12-month outage for sleeving
          repairs to the plant's steam generator tubes.  For
          an update on Maine Yankee, please see the
          following section titled, "Maine Yankee Status". 
          The 42,646 MWH increase in Maine Yankee
          production, a 25,331 MWH increase in hydro
          production (144% of normal for the third quarter
          of 1996) and a 5,064 MWH increase in purchases
          from Wheelabrator-Sherman allowed the Company to
          reduce purchases from NB Power by 50,013 MWH. 
          These increases also provided the energy for the
          44,096 MWH increase in secondary sales mentioned
          above.  During July and August of 1996, with
          cooler temperatures assisting their production, WS
          increased production over the comparable period
          for 1995, resulting in a decrease in 1996
 
                                     -13-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          earnings of approximately $.16 per share compared to the
          same nine-month period of 1995.  However, since WS
          will reach its contractual limit in early October,
          purchases then will be substantially lower than
          for the same month last year, and will result in
          a positive impact of $.16 per share for October
          earnings.  With the implementation of the rate
          plan, the change in deferred fuel expenses
          reflects the elimination for 1996 of the fuel
          revenue accounting associated with the prior fuel
          clause, as discussed previously and in the "Legal
          Proceedings" section of this Form 10-Q, item 1(b). 
          During the third quarter of 1996, under the same
          rate plan, the Company has deferred $375,000 ($1.5
          million annually) of its Wheelabrator-Sherman
          purchased power costs.  Generating expenses
          decreased by $189,000, primarily due to the Steam
          Units at Caribou being placed on inactive status
          on January 1, 1996.  See "Caribou Units" below for
          further discussion.  Other operation and
          maintenance expenses increased by $438,000 with
          $183,000 of the increase in wheeling expenses
          representing increased power marketing activities
          and an additional $131,000 in transmission and
          distribution expenses, primarily due to increased
          tree trimming activities.

          Maine Yankee Status
          Reference is made to the Company's 1995 Annual
          Report, "Analysis of Financial Condition and
          Review of Operations - 1995, Maine Yankee", for
          discussion of the 12-month outage for sleeving
          repairs to the plant's steam generator tubes and
          Maine Yankee's return to service at 90% of the
          plant's capacity on January 22, 1996.

          On June 7, 1996, the Nuclear Regulatory Commission
          (NRC) formally notified Maine Yankee that it
          planned to conduct an "Independent Safety
          Assessment" (ISA) of the Maine Yankee plant in
          conjunction with the State of Maine to provide an
          independent evaluation of the safety performance
          of Maine Yankee and as a "follow-up" to the NRC's
          Office of Inspector General (OIG) report.  The NRC
          stated that the overall goals and objectives of
          the ISA were:  "(a) provide an independent assessment 
          of conformance to the design andlicensing basis; (b) 
          provide an independent assessment of operational safety performance; 
          (c) evaluate the effectiveness of license self-
                                     -14-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          assessments, corrective actions and improvement
          plans and; (d) determine root cause(s) of safety
          significant findings and conclusions."  The NRC
          further informed Maine Yankee that the ISA would
          be carried out of a team of NRC personnel and
          contractors who were "independent of any recent or
          significant involvement with the licensing,
          regulation or inspection of Maine Yankee."

          On October 7, 1996, the NRC released the ISA
          report, which dealt with each of its stated goals. 
          In evaluating Maine Yankee's conformance to its
          licensing basis, the report concluded that Maine
          Yankee was in general conformance with its
          licensing basis although significant items of
          nonconformance were identified.

          With respect to conformance to the plant's design
          basis, the ISA report found that the quality and
          availability of design-basis information were good
          overall.  The report concluded that despite
          uncorrected and previously undiscovered design
          problems specified in the report, the design basis
          and compensatory measures adequately supported
          operation of the plant at a power level of 2440
          MWth (the 90-percent operating level).  The ISA
          team further stated in its report that because of
          issues relating to the containment spray pumps and
          the component cooling water system, it could not
          conclude that the design basis supported operation
          of the plant at 2700 MWth (the 100-percent
          operating level).

          Addressing its operational safety goal, the ISA report 
          stated that overall, performance in the area of operations 
          was very good.  The report identified specific operational 
          strengths in operator performance during routine and 
          transient operating conditions, shift turnovers, use of 
          risk Information, and the involvement of managers in
          day-to-day operations.  Weaknesses noted involved the need 
          for operators to work around certain problems with Maine 
          Yankee equipment during shutdown and startup, manual actions 
          under certain transient operating conditions required by
          compensatory measures intended to address design weaknesses,        
          log-keeping, and reviews of events following a trip to one 
          of Maine Yankee's instruments or systems.  The report also 
          concluded that Maine Yankee maintenance was good overall,
          but that testing was weak.  

                                     -15-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          Particular maintenance strengths were described.   
          The report stated that although the condition of Maine 
          Yankee material was considered good overall, a decline 
          in material condition following the 1995 outage for 
          sleeving the steam-generator tubes and other significant
          material condition deficiencies were noted by the ISA 
          team.  With respect to testing, the report stated that 
          the team identified inadequacies in the scope and rigor 
          of testing and in the evaluation of test results.  The 
          ISA report also addressed the quality of engineering work,
          concluding that it was mixed, but good overall, and  
          indicated specific strengths and weaknesses in that area.

          After evaluating Maine Yankee's self-assessments,
          corrective actions and improvement plans as part of the 
          ISA, the ISA team identified weaknesses in the areas of
          problem identification and resolution.  The report noted 
          that while Maine Yankee self-assessments were generally 
          good, they occasionally failed to identify weaknesses or
          incorrectly characterized the significance of the findings.
          Further, the report stated that some corrective actions 
          were not timely and others were ineffective, leading to 
          repetitive problems.  The report recognized the general 
          effectiveness of planning, but stated that some weaknesses 
          in implementing improvement plans existed due to resource 
          limitations.

          The ISA team report concluded that overall performance at 
          Maine Yankee was adequate for operation of the plant, and 
          that the deficiencies noted in the report stemmed from two 
          closely related root causes.  The report indicated that
          the root causes were:  (1) that economic pressure to be a 
          low-cost energy provider that limited available resources 
          to address corrective actions and some improvements; and 
          (2) that a questioning culture was lacking, which had re-
          sulted in a failure to identify or promptly correct
          significant problems in areas perceived by Maine Yankee 
          to be of low safety significance.

          The ISA report also identified certain deficiencies and 
          stated that they would be addressed as part of a separate 
          NRC follow-up to clarify NRC expectations for the nuclear 
          power industry.  On October 10, 1996, Maine Yankee re-
          ceived from the NRC a 





                                     -16-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          generic letter that had been sent to substantially all 
          nuclear plant licensees in the United States requesting
          information to be used to verify compliance with the 
          terms and conditions of the plant's operating license 
          and NRC regulations, and that the plant's updated final 
          safety analysis report properly describes the facilities, 
          as well as to determine if other inspection activities or 
          enforcement action should be taken.  The written response 
          must be under oath or affirmation and must be submitted
          within 120 days of receipt of the generic letter. Maine 
          Yankee believes that it will submit a response satisfying 
          the requirements of the NRC's request within the allotted 
          time period.

          A letter to Maine Yankee from Shirley Ann Jackson, the Chair 
          of the NRC, accompanying the ISA report noted that overall 
          performance at Maine Yankee was considered adequate for 
          operation, but that a number of significant weaknesses and          
          deficiencies identified in the report would result in
          violations.  The letter directed Maine Yankee to provide to 
          the NRC its plan for addressing the root causes of the 
          deficiencies identified by the ISA and stated that the NRC's 
          Region I and Office of Nuclear Reactor Regulation will be 
          responsible for overseeing corrective actions relating to
          issues identified in the ISA report and for taking any 
          appropriate enforcement actions against Maine Yankee.  The 
          NRC held a public meeting on October 10, 1996, in Wiscasset, 
          Maine, at which it discussed the conclusions of the ISA and 
          responded to questions.

          The current allowed operating level for Maine Yankee may be 
          limited to 90% of capacity until completion of the plant's 
          next planned refueling outage, which is now scheduled for 
          September, 1997.  The Company cannot predict, however,
          whether or when Maine Yankee will attain a 100-percent 
          operating level, or the results of the ongoing NRC and U.S. 
          Department of Justice investigations and reviews.

          On July 20, 1996, Maine Yankee brought the plant off line to 
          add pressure relief capacity to the primary component cooling 
          system ("PCCS").  The need to add this relief capacity was 
          determined during a comprehensive review by Maine Yankee of
          plant systems and equipment.  During this review, Maine Yankee 






                                     -17-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)


          found a possible inadequacy in the ability of the PCCS to 
          allow sufficient pressure to be relieved from the PCCS under        
          design-basis postulated accident conditions.  The plant
          remained shut down following the discovery that a high 
          pressure safety injection pump would not auto-start from 
          the stand-by mode in response to a safety injection 
          actuation signal.  A relay was found missing, which led 
          to an expedited review of safety-related logic circuits 
          to determine if there was any other testing that was re-
          quired before start-up.  On September 2, 1996, the plant
          returned to service, attaining the 90 percent capacity 
          limit.  Purchase power replacement costs are approximately 
          $500,000 to $600,000 per month while the plant is out of 
          service.

          Caribou Units 

          Reference is made to the Company's Form 8-K dated July 13, 
          1995 in which the Company reported that, at a regular 
          meeting on July 7, 1995, the Board of Directors authorized 
          placing on inactive status Steam Units 1 and 2 of the 
          Company's Caribou Generating Facility in Caribou, Maine.  
          The Company inactivated the Units on January 1, 1996 and 
          expects that they will remain inactive for five years or 
          longer.  These two units, which represent 23 MW of capacity, 
          have become surplus to the Company's needs due to the closure 
          of Loring Air Force Base and the loss in 1996 of the Company's 
          largest customer, the Houlton Water Company.  During the Units'     
          inactive period, the plant equipment will be protected and 
          maintained by the installation of a dehumidification system
          that will permit the plant to return to service in
          approximately six months.

          Placing Steam Units 1 and 2 on inactive status will save the 
          Company approximately $3.5 million over the next five years.  
          These savings result primarily from a savings in operation and
          maintenance expense.  The Company eliminated 12 positions at 
          the plant and conducted a voluntary early retirement program 
          that avoided involuntary termination of employees whose 
          positions at the units have been eliminated.  The expenses of 
          the voluntary early retirement plan of approximately $231,000, 
          net of income taxes, as well as the expenses to lay-up the 
          Steam Units will be amortized over five years in accordance 
          with the rate plan.  The rate plan allows the Company to




                                     -18-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)


          continue rate base treatment for unrecovered plant costs and
          depreciation on the Caribou Steam Units, which had a net book 
          value of approximately $718,000 as of January 1, 1996.

          Steam Unit No. 1 went into operation in the early 1950s and 
          Unit No. 2, in the mid 1950s.  The Company still has a diesel       
          generation station of approximately 7 MW and a hydro facility 
          of approximately 1 MW and will continue to employ 11 employees 
          at the Caribou facility.


                    Financial Condition

          The accompanying Statements of Consolidated Cash Flows reflect 
          the Company's liquidity and the net cash flows generated by or      
          required for operating, financing and investing activities.  
          For purposes of the Statements of Consolidated Cash Flows, the
          Company considers all highly liquid securities to be cash 
          equivalents.

          Net cash flows from operating activities were $5,200,000 for 
          the first nine months of 1996.  The $2,913,000 increase in 
          net cash flow from  operating activities reflects the 
          additional replacement power costs required in 1995 due to
          the extended resleeving outage at Maine Yankee.  In 1991, 
          $10,000,000 of tax-exempt bonds were issued and in June, 
          1996, were refinanced with a new $15,000,000 issue, with the 
          remaining  $5,000,000 deposited with the trustee to be
          withdrawn based on qualified property additions and for 
          issuance costs of $250,000.  See "New Financing" below for 
          further discussion.  For the period, $2,539,000 was invested 
          in electric plant, $2,232,000 was paid in dividends and 
          $1,315,000 was used to reduce long-term debt.  Short-term
          borrowings increased by $1,600,000 for working capital and          
          construction requirements.  A  draw down from the tax-exempt 
          bond proceeds of approximately $2 million based on qualifying
          property is expected between late November and early January 
          to offset these short-term borrowings.     

          For the nine months ended September 30, 1995, net cash flows 
         from operating activities were $2,287,000.  For the first nine 
         months of 1995, the Company invested $2,721,000 in electric 






                                     -19-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)


          plant, paid $2,232,000 in dividends, and reduced long term 
          debt by $65,000.  Short-term borrowings of $1 million were 
          required to fund the previously mentioned replacement power 
          purchases during the Maine Yankee outage.

          See "Legal Proceedings", paragraph 1(b) of this Form 10-Q 
          for a description of the multi-year rate plan approved by 
          the Maine Public Utilities Commission in November, 1995, 
          effective January 1, 1996.  The rate plan will assist the 
          Company in dealing with the economic uncertainties that 
          lay ahead with the loss of Loring and Houlton.  The Plan 
          provides stable, predictable rates for our customers, 
          economic development rates to encourage investment in our 
          service territory, and competitive returns for our share-
          holders.

          New Financing

          On June 19, 1996, the Maine Public Utilities Financing Bank 
          (MPUFB) issued $15 million of its tax-exempt bonds due April 1, 
          2021 (the "1996 Series") on behalf of the Company.  The pro-
          ceeds of the new 1996 Series were used to refund the $10
          million 1991 tax-exempt Series through the payment of a 
          refunding note from Fleet Bank of Maine and provides $5 million 
          for the acquisition of qualifying property.  Pursuant to the 
          long-term note issued under a loan agreement between the
          Company and the MPUFB, the Company has agreed to make payments 
          to the MPUFB for the principal and interest on the bonds.           
          Concurrently, pursuant to a letter of credit and reimbursement      
          agreement, the Company caused a Direct Pay Letter of Credit
          for an initial term of three years to be issued by the Bank 
          of New York for the benefit of the holders of such bonds.  
          To secure the Company's obligations under the letter of credit 
          and reimbursement agreement, the Company issued a second 
          mortgage bond to the Bank of New York, as Agent, under the          
          reimbursement agreement, in the amount of $15,875,000.  The 
          Company has the option of selecting weekly, monthly, annual 
          or term interest rate periods for the 1996 Series.  The
          initial interest period selected by the Company was weekly 
          and, after considering issue costs and credit enhancement 
          fees, the effective interest rates to date have ranged from 
          4.61% to 5.96% per annum.  Please see further 






                                     -20-

                        PART 1.  FINANCIAL INFORMATION          Form 10-Q
Item 2.   Management's Analysis of Quarterly Income Statements
          Results of Operations (Continued)

          discussion in Footnote 4 of the financial statements 
          accompanying this Form 10-Q.














































                                     -21-


                                                 FORM 10-Q

                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

          (a)  Maine Public Utilities Commission, Re:  Electric Utility 
               Industry Restructuring Study, Docket No. 95-462.

               In 1995, the Maine Legislature passed Resolve 89 "To   
               Require a Study of Retail Competition in the Electric 
               Utility Industry" (the "Resolve"), to begin a process 
               for developing recommendations on the future structure 
               of the electric utility industry in Maine.  The process 
               included the appointment of a Work Group on Electric 
               Utility Restructuring to develop a plan for the orderly        
               transition to a competitive market for retail purchases 
               and sales of electricity.  The Company participated in
               this Work Group, which was unable to reach a consensus 
               on a recommended plan by its reporting deadline.

               The Resolve also directed the Maine Public Utilities 
               Commission (MPUC) to conduct a study to develop at 
               least two plans for the orderly transition to retail 
               competition in the electric utility industry in Maine 
               and to submit a report of its findings by January 1,
               1997.  One plan would be designed to achieve "... full 
               retail market competition for purchases and sales of 
               electric energy by the year 2000" and the other to 
               achieve a more limited form of competition.  The 
               Resolve also stated that the MPUC's findings would
               have no legal effect, but would "... provide the 
               Legislature with information in order to allow the 
               Legislature to make informal decisions when it 
               evaluates these plans."

               On December 12, 1995, the MPUC issued a  Notice of 
               Inquiry (the "Notice") initiating its study.  In the 
               Notice, the MPUC solicited detailed proposals and plans 
               for achieving retail competition in Maine by the year 
               2000 and requested the proposals include specific
               plans for an orderly transition to a more competitive 
               market.  The Notice required that plans and proposals 
               be filed with the MPUC by interested parties no later 
               than January 31, 1996, and outlined a schedule calling 
               for submittal of a final report to the Legislature in 
               December, 1996.

               On January 30, 1996, the Company filed its restructuring 
               proposal with the MPUC.  The major elements of this 
               proposal are:


                                     -22-

                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               (a)  The separation of the Company's generation 
               assets (including contracts and entitlements) from 
               its transmission and distribution assets.  The 
               Company suggested this separation could be  
               accomplished by either a functional separation of 
               generation from distribution and transmission 
               within the Company's existing corporate structure 
               or by separating generation, on the one hand, and
               distribution and transmission, on the other, into 
               two wholly-owned subsidiaries.  The Company 
               strongly opposes any recommendation that it be 
               required to divest itself of its generation assets.

               (b)  The economic and resource planning regulation 
               of generation would cease.  The FERC would continue 
               to regulate transmission, and distribution would 
               remain a franchised monopoly subject to continued 
               regulation by the MPUC.  The owner of the 
               distribution system would be obligated to connect
               all willing customers.

               (c)  If certain necessary changes in the operation 
               and management of the regional transmission grid 
               are in place, all retail customers in Maine would, 
               by the year 2000, be entitled to purchase electric 
               energy directly from any entity that wished to
               supply it to them.

               (d)  The Company would be entitled to full recovery 
               of all its stranded costs.  This recovery would be 
               accomplished by a charge on the distribution system 
               that would apply to all retail customers.  In its 
               filing, the Company estimates that its stranded 
               costs could be as high as $68 million.  This amount
               consists primarily of the above-market costs of the 
               Company's contract with Wheelabrator-Sherman, a 
               non-utility generator, estimated at $44 million and 
               deferred regulatory assets, such as its Seabrook 
               investment of $24 million.

               The Company's proposal, however, was only one of over 
               a dozen received by the MPUC in response to its Notice, 
               some of which take positions on these matters that vary
               substantially from the Company's.  

               On July 19, 1996, the MPUC issued its Draft Plan in this 
               matter, which, in its own terms, represents the MPUC's         
               "preliminary view" on how to restructure Maine's electric 
                                     -23-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               utility industry.  The Draft Plan recommends the
               following:

                    .    As of January, 2000, all Maine consumers would 
                    have the option to choose an electric power supplier.

                    .    As of January, 2000, Maine would not regulate, 
                    as public utilities, companies producing or selling 
                    electric power.

                    .    Regulated public utilities would continue to 
                    provide electric transmission and distribution 
                    services.

                    .    As of January, 2000, the Company, Central 
                    Maine Power Company (CMP) and Bangor Hydro-Electric 
                    Company (BHE), the State's three largest electric
                    utilities, would be required to structurally 
                    separate their generation assets and functions from       
                    transmission and distribution functions.  CMP and
                    BHE would be required to fully divest themselves 
                    of their generation assets by 2006.  The Draft Plan 
                    does not recommend generation divestiture for the 
                    Company.  Instead, the MPUC requested additional 
                    comment "on whether MPS should be required to
                    divest its generation assets as described [in this 
                    Draft Plan], by  another method, or not at all."

                    .    All contracts between the utilities and any 
                    qualifying facilities under PURPA will remain with 
                    the transmission and distribution companies.

                    .    The utilities should be provided a reasonable        
                    opportunity to fully recover its generation-related 
                    stranded costs.  All of the Company's anticipated
                    stranded costs are generation-related.

               The MPUC has received numerous comments on its Draft Plan.  
               These comments could result in the MPUC's modification of 
               its preliminary recommendations.  Moreover, because the
               MPUC's final recommendation will not have any binding 
               legal effect, this issue must ultimately be resolved by 
               the Maine Legislature.  Many parties to this proceeding
               have taken positions that vary 




                                     -24-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued


               substantially from those set forth in this Draft 
               Plan and those parties can be expected to advocate
               their positions before the Legislature.  The
               Company cannot, therefore, predict what form the 
               restructuring of Maine's electric utility industry 
               will ultimately take or what effect that re-
               structuring will have on the Company's business 
               operations or financial results.

          (b)  Multi-year Rate Plan is Approved for the Company by 
               the MPUC in Maine Public Service Company Re: Proposed 
               Increase in Retail Rates, MPUC Docket No. 95-052

               On May 1, 1995, Maine Public Service Company filed with 
               the Maine Public Utilities Commission a proposed in-
               crease in the rates it charges its retail customers.  
               The Company at the same time filed a five-year rate 
               plan requesting new rates beginning in January, 1996 
               as detailed below.  Reference is made to the Company's 
               Form 10-Q for the quarter ended June 30, 1995 for a 
               complete description of the Company's filed rate plan.

               After extensive negotiations, the Company, the MPUC 
               Staff and the Public Advocate filed  a Stipulation 
               with the Commission on November 6, 1995, which 
               established a four-year rate plan for the Company.  
               The one remaining party to this proceeding, McCain 
               Foods, Inc., opposed this Stipulation.  After a 
               hearing on November 13, 1995, the MPUC approved this
               Stipulation over the objection of McCain Foods, Inc.

               Under the terms of the Stipulation, the Company has 
               the right to receive the following increases:

               January 1, 1996          4.4%           $2.1 million
               February 1, 1997         2.9%            1.4 million
               February 1, 1998         2.75%           1.4 million
               February 1, 1999         2.75%           1.4 million

               These increases will be subject to increases or decreases      
               resulting from the operation of the profit-sharing 
               mechanism, as well as the mandated costs and plant outage      
               provisions described below.  The Company agreed that it
               will seek no other increases, for either base or fuel 
               rates, except as provided under the terms of the rate 


                                     -25-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued


               plan.  There will be no fuel clause adjustments 
               during the term of the plan.

               The Company also agreed to write off, in 1995, and 
               not collect in retail rates the following amounts:

                    (a)  $4,845,812, net of income taxes, of its 
                    investment in Seabrook previously allocated 
                    to wholesale sales.

                    (b)  $1,390,000, net of income taxes, in other 
                    plant investment, i.e. rate base, except 
                    transmission plant, previously associated with 
                    the wholesale customers.

                    (c)  $3,500,000 ($2,104,000, net of income taxes) 
                    in deferred fuel.

               The total amount of the write-offs, net of income taxes, 
               in 1995 are approximately $8,340,000, or approximately 
               $5.16 per share of common stock.
          
               As a condition of the Stipulation, the Company requested 
               waivers for interest coverage tests under its revolving 
               credit arrangement and the Letter of Credit supporting 
               the public utility revenue bonds, 1991 series.  Unless 
               these write-offs were considered extraordinary for 
               purposes of the interest coverage tests, the Company 
               would have been in violation of these interest coverage 
               tests.  The waivers were received from the various  
               lenders prior to the MPUC's issuance of its order in 
               this proceeding.

               The Company will also be permitted to defer an amount 
               of $1.5 million annually of the costs of the Wheelabrator-
               Sherman (WS) purchases over the term of the rate plan. 
               The approved rate plan provides that the Company can seek      
               recovery of this deferred amount (up to a total of $6 
               million) in rates beginning in the year 2001, after the 
               current term of the WS contract has expired.  The
               Company will further amortize over the four years of the 
               rate plan, $300,000, net of income taxes, in deferred fuel 
               with the remainder, approximately $1.3 million, net of
               income taxes, being deferred until the year 2000.



                                     -26-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               The approved rate plan further provides for the 
               following treatment of the Maine Yankee steam 
               generator sleeving costs:  the Company will 
               amortize its share of these costs in equal 
               amounts over a five-year period beginning on 
               January 1, 1996.  At the expiration of the rate 
               plan, the remaining one-fifth of the costs will 
               be amortized in 2000 subject to rate treatment 
               at that time.

               The approved rate plan contains a profit-sharing 
               mechanism based upon a target return of equity (ROE) 
               of 11%, calculated according to retail ratemaking 
               mechanisms.  This profit-sharing mechanism will apply 
               only to the last two rate increases scheduled to 
               occur on February 1, 1998 and February 1, 1999.  As 
               part of this review process, the target ROE will be 
               subject to adjustment based on an index by averaging 
               over a twelve-month period the dividend yields on 
               Moody's group of 24 electric utilities and Moody's
               utility bond yields.  The profit-sharing mechanism 
               works as follows:

               If the Company's ROE exceeds the target ROE by less 
               than 300 basis points, this gain accrues entirely 
               to shareholders.  Similarly,  any deficiency of up 
               to 300 basis points below the target ROE is borne 
               entirely by the shareholders.

               All deficiencies of 300 or more basis points below the 
               target ROE will be shared equally by share-holders and 
               customers.  All earnings of 300 or more basis points 
               above the target ROE must first be applied to reduce 
               any of deferred WS costs described above.  Any re-
               maining excess earnings will be shared equally by 
               customers and shareholders.

               The plan also allows the Company to terminate the rate 
               plan and file for rate increases under traditional rate        
               application procedures if its earnings fall 500 or more 
               basis points below the target ROE during any twelve-
               month period during the term of the plan.

               The method agreed to by the parties for measuring earned 
               ROE for the purpose of the profit-sharing mechanism and 
               rate termination provision described  above, allocates 
               various revenues and expenses between the wholesale
               and retail jurisdictions using allocators that, in part, 
                                     -27-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               reflect the Company's 1994 allocations.  With the loss 
               of sales to Houlton Water Company in 1996, the Company
               estimates that the use of the agreed-upon allocators 
               will produce a calculation of earnings for the profit-
               sharing and termination mechanisms that could be as 
               much as 400 basis points above the Company's actual 
               financial ROE.  Because of this disparity, the 
               Stipulation provides that the agreed-upon allocation 
               methodology will not apply if the use of those 
               allocators will require the Company to write off any
               additional assets in accordance with Generally Accepted        
               Accounting Principles (GAAP).  In that event, the 
               parties have agreed to develop a different method for
               calculating profit-sharing and termination that will 
               not require the Company to write off any additional assets.

               The plan also provides that if either Maine Yankee or 
               WS cease operation for more than six months, the Company 
               shall be allowed to adjust its allowed rate increases by 
               50% of the net costs or net savings resulting from the 
               outage, together with any carrying costs on the balance 
               deferred.  Any net costs or net savings during the first 
               six months of the outage would accrue entirely to
               shareholders.

               The plan further contains a mechanism for allocating the 
               savings resulting from any restructuring of the WS 
               contract during the term of the plan.  Any savings would 
               be allocated first to the WS deferred costs accumulating at 
               $1.5 million annually, then to the deferred fuel balance 
               as of December 31, 1995 being deferred until 2000, next to
               eliminate any on-going WS deferrals and finally, any 
               savings that remain will be  allocated 95% to customers 
               and 5% to shareholders.

               The plan provides that the Company can flow through to 
               customers at the time of the scheduled rate increases, 
               increases or decreases resulting from certain mandated
               costs, such as tax or accounting changes, but not costs 
               resulting from natural disasters. To qualify, a mandated 
               cost must receive MPUC approval, must be beyond the 
               control of the Company's management, must effect the 
               Company specifically or the electric utility generally 
               and must exceed $300,000 in annual revenue requirements.




                                     -28-
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                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               The Stipulation also provides for a number of accounting 
               orders.  Among these are orders: permitting the Company 
               to amortize deferred post-retirement benefits other than 
               pension (SFAS 106) expenses in equal amounts over a
               ten-year period beginning January 1, 1996, along with the      
               recovery of current year SFAS 106 costs; permitting the 
               Company to continue rate base treatment for unrecovered 
               plant costs and depreciation on the Caribou Steam Units 
               as well as the deferral and amortization over five years 
               of the reduction in force expenses (including pension 
               expenses under SFAS 88) resulting from the closing of
               those units; and continued deferral and amortization of        
               replacement power and capacity costs associated with 
               Maine Yankee scheduled outages.  Finally, the Stipulation
               clarifies that the rate plan is not deregulation for 
               accounting purposes and provides for the continuing 
               recovery in rates of certain "regulatory assets", such as 
               the retail portion of the Company's Seabrook investment,       
               previously allowed by the MPUC. 

               On January 2, 1996, McCain Foods, Inc., which had objected 
               to the Stipulation, appealed the MPUC's approval of the 
               rate plan to the Maine Supreme Judicial Court.  This action 
               was docketed as PUC 96-13.  On March 20, 1996, the Company 
               and McCain Foods filed with the Commission a Power Purchase    
               Agreement under which McCain agreed to purchase all its
               electrical requirements from the Company through 2000.  On 
               April 29, 1996, the MPUC approved the Agreement and McCain     
               dismissed its appeal shortly thereafter.

               In addition to the four-year rate plan, the MPUC, under this   
               docket, also approved the Company's proposal to develop 
               flexible rates to retain or attract new customers.  On
               October 23, 1995, the Company implemented a reduced Rate AH 
               for residential electric space heat.  Customers who have a     
               permanent electric space heat system that supplies at least 
               50% of their heating requirements have been offered a 
               discount up to 40% from October to April.

               On November 27, 1995, the MPUC approved two new rates that 
               became effective December 1, 1995.  The first, Rate F, 
               provides farmers with a discounted price for electricity 
               used in storage facilities, reducing their 





                                     -29-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

               winter electric rate ten percent from November through 
               March.  The second, Rate EDR, an  economic development 
               rate, provides a multi-year discount in the cost of 
               electric service for large commercial and industrial 
               customers who create new electrical load.  This reduced
               rate should encourage development in our electrical 
               service territory by providing an incentive rate while 
               a new business gets established or an existing business, 
               meeting certain criteria, completes expansion. Depending 
               on eligibility, the discount offered will range from 20% 
               the first year to 5% in the fourth year.  After the four-
               year period, EDR customers will be billed under the 
               Company's standard electric rates.


          (c)  Peoples Heritage Bank v. Maine Public Service Company  
               U.S. District Court (D. ME) Civil Action No. 95-0180-B

               On September 18, 1995, Peoples Heritage Bank filed 
               against the Company a civil action for declaratory and 
               monetary relief seeking recovery for response costs, 
               damages and attorneys fees incurred because of the
               release of hazardous substance at a site in Presque Isle, 
               Maine.  In 1992, Peoples Heritage purchased the property 
               and shortly thereafter discovered that the soil at the
               site was contaminated with polychlorinated biphenyls 
               (PCBs) which it now alleges originated with two 
               electrical transformers placed on the site by the Company.     
               Peoples Heritage claims to have spent in excess of
               $250,000 to remove the PCB contaminated soil and seeks         
               reimbursement of this amount.

               The suit is brought pursuant to the Comprehensive 
               Environmental Response, Compensation and Liability Act of 
               1980 (CERCLA), the Federal Declaratory Judgment Act and 
               under common law grounds of strict liability for abnormally    
               dangerous activities, negligence and trespass.
  
               The Company has denied liability in this matter but cannot     
               predict the outcome of this action.








                                     -30-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued

          (d)  Maine Public Service Company, Request For Open Access          
               Transmission Tariff, FERC Docket No. ER 95-836-000.

               On March 31, 1995, the Company filed an open access 
               transmission tariff with the Federal Energy Regulatory  
               Commission (FERC).  This tariff provides fees for 
               various types and levels of transmission and 
               transmission-related services that are required by
               transmission customers.  The tariff, as filed, 
               substantially increases some of the fees for 
               transmission services and provides separate fees for 
               various transmission-related services.  On May 31, 1995, 
               the FERC approved the filed tariff, subject to refund. 
               The filing has been vigorously contested by the Company's      
               wholesale customers.  In April, 1996, the FERC issued 
               Order 888, a final rule on open transmission access and 
               stranded cost recovery.  As a result, the Company refiled
               its tariff on July 9, 1996 to comply with the Order.  
               Utilities are required to file tariffs under which they 
               would provide transmission services, comparable to that
               which they provide themselves, to third parties on a           
               non-discriminatory basis.  A decision by the FERC is not 
               expected until later in 1996.  The Company cannot predict
               FERC's ultimate decision in this matter.


          (e)  Maine Public Service Company, Proposed Increase in Rates 
               (Rate Design), MPUC Docket No. 95-052.

               On June 15, 1995, the MPUC issued an order bifurcating the     
               Company's request for rate design from the revenue re-
               quirement portion of this docket (see item (b) above).  
               Based upon marginal cost of service principles, the
               Company has proposed a substantial redesign of its current 
               rates.  For example, under the Company's proposed rates 
               for large industrial customers would have decreased from 
               their current level by nearly 8%, while rates for 
               residential customers would have increased by over 8%.  
               The Company's proposals were vigorously contested by the 
               MPUC Staff and the Public Advocate, who propose only a 
               small decline for large industrial customers and a very 
               minor increase for residential.  Hearings were held on 
               this matter before the MPUC on March 14 and 15, 1996.  





                                     -31-
                                                 FORM 10-Q
                PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings - Continued


               On June 26, 1996, the MPUC issued its Order in this 
               matter.  The MPUC found that, despite some infirmities 
               in the Company's supporting data, the Company was en-
               titled to a more substantial reallocation of its rates 
               than advocated by the MPUC Staff and Public Advocate.  
               As a result, rates for large industrial customers will 
               decrease by approximately 4.5%, while rates for
               residential and commercial customers will increase by          
               approximately 1% and 3%, respectively.  These changes 
               became effective June 29, 1996.

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

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits - none.

          (b)  Reports on Form 8-K - none.


                         SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 
1934, the registrant has duly caused this report to be signed on its 
behalf by the undersigned thereunto duly authorized.

                                   MAINE PUBLIC SERVICE COMPANY
                                          (Registrant)


Date:  November 12, 1996           Larry E. LaPlante 
        
                                   Larry E. LaPlante, Vice President
                                   Finance, Administration and Treasurer







                                     -32-

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