____________________________________________________________________

**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D. C. 20549**
___________________________________ 

**FORM 10-Q**
( / ) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
**FOR THE QUARTERLY PERIOD ENDED MARCH 31,2003**

-OR-

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

___________________________________ 

Commission File No. 1-3429

**MAINE PUBLIC SERVICE COMPANY**

A Maine Corporation

I.R.S. Employer Identification No. 01-0113635

209 STATE STREET, PRESQUE ISLE, MAINE 04769

(207) 768-5811

___________________________________ 
Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes X . No .

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

Common Stock, $7.00 par value - 1,574,322shares

___________________________________________________________________________

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements

See the following exhibits: (1) Maine Public Service Company and SubsidiariesCondensed Consolidated Financial Statements, including an unaudited statement ofconsolidated operations for the quarter ended March 31, 2003 and for thecorresponding period of the preceding year; (2) an unaudited consolidatedbalance sheet as of March 31, 2003; and (3) an audited consolidated balancesheet as of December 31, 2002, the end of the Company's preceding fiscal year;and (4) an unaudited statement of consolidated cash flows for the period January1 (beginning of the fiscal year) through March 31, 2003 and for thecorresponding period of the preceding year.

In the opinion of management, the accompanying unaudited, condensed andconsolidated financial statements present fairly the financial position of theCompany and Subsidiaries at March 31 2003 and December 31, 2002, and the resultsof their operations for the three months ended March 31, 2003 and their cashflows for the three months ended March 31, 2003, and for the correspondingperiod of the preceding year.
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MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED OPERATIONS

(Unaudited)

(Dollars in Thousands Except Per ShareAmounts)
Three Months EndedMarch 31,20032002Operating RevenuesRegulated$9,580$9,599Unregulated1,7881,400Unregulated SOS Margin0407Total Revenues11,36811,406Operating Expenses Unregulated Energy Supply1,4941,201Operation & MaintenanceRegulated2,7652,764Unregulated289325Total Operation & Maintenance3,0543,089Depreciation665655Amortization of Stranded Costs2,4482,461Amortization5159Taxes other than Income368357Provision for Income TaxesRegulated1,0911,348Unregulated(4)102Total Operating Expenses9,1679,272Operating Income 2,2012,134Other Income (Deductions)Equity in Income of Associated Companies 7188Allowance for Equity Funds Used During Construction014Provision for Income TaxesRegulated(11)(70)Unregulated(5)(3)Other - Net(260)86Total(205)115Income Before Interest Charges1,9962,249Interest ChargesLong-Term Debt & Notes Payable 355394Less Carrying Costs-Stranded Costs and Allowance for Borrowed Funds      used During Construction(299)(250)Total56144Net Income Available for Common Stock $1,940$2,105Average Shares Outstanding (000's)1,5741,574Basic & Diluted Earnings Per Share$1.23$1.34Dividends Declared per Common Share$0.37$0.35
The accompanying notes are an integral part of these financialstatements.

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MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

(Unaudited)
ASSETSMarch 31, 2003December 31, 2002Utility PlantElectric Plant in Service$87,928$88,072Less Accumulated Depreciation40,04039,432Net Electric Plant in Service47,88848,640Construction Work-in-Progress1,81296Total49,70048,736Investment in Associated CompaniesMaine Yankee Atomic Power Company2,5452,873Maine Electric Power Company, Inc.547525Total3,0923,398Net Utility Plant and Investments52,79252,134Current AssetsCash and Cash Equivalents3,2435,956Accounts Receivable - Net5,6255,429Unbilled Base Revenue1,2341,294Other Current Assets7741,041Total10,87613,720Regulatory AssetsUncollected Maine Yankee Decommissioning Costs21,42722,153Recoverable Seabrook Costs14,72114,999Regulatory Assets - SFAS 109 & 1067,1317,162Deferred Fuel and Purchased Energy Costs13,97813,132Regulatory Asset - Power Purchase Agreement Restructuring5,4415,804Unamortized Premium on Debt Redemptions1,6561,709Deferred Regulatory Costs (less accumulated amortization)1,3011,409Total65,65566,368Other AssetsUnamortized Debt Expense755823Restricted Investments4,0054,437Miscellaneous787655Total5,5475,915Total Assets$134,870$138,137CAPITALIZATION AND LIABILITIESCapitalizationCommon Shareholders' EquityCommon Stock$13,071$13,071Paid-in Capital5351Retained Earnings41,86140,503Treasury Stock, at cost(6,592)(6,596)Total48,39347,029Long-Term Debt (less current maturities)30,68030,680Current LiabilitiesLong-Term Debt Due Within One Year1,2853,085Notes Payable1002,800Accounts Payable and Accrued Liabilities3,9213,772Accrued Employee Benefits9591,336Dividends Declared582582Other Current Liabilities1,288225Total8,13511,800Deferred CreditsUncollected Maine Yankee Decommissioning Costs21,42722,153Deferred Income Tax22,22322,271Investment Tax Credits182189Deferred Gain & Related Accounts-Generating Asset Sale24469SFAS 87 Provision for Pension Benefits2,0571,956SFAS 106 Provision Other Post Employment Benefits1,3041,166Miscellaneous445424Total47,66248,628Total Capitalization and Liabilities $134,870$138,137
The accompanying notes are an integral part ofthese financial statements.

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MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES

Statements of Consolidated Cash Flows

(Unaudited)

(Dollars in Thousands)
Three Months EndedMarch 31,20032002Cash Flow From Operating ActivitiesNet Income$1,940$2,105Adjustments to Reconcile Net Income to Net Cash Provided By Operations    Depreciation 665655Amortization 329336Amortization of Deferred Gain from Asset Sale (443)(1,046)Amortization of W/S Upfront Payment363363Income on Tax Exempt Bonds-Restricted Funds (4)(17)Deferred Income Taxes - Net (56)263AFUDC 0(18)Change in Deferred Fuel & Purchased Energy(846)679Change in Deferred Regulatory and Debt Issuance Costs 231(80)Change in Deferred Regulatory Liability - Transition Costs(3)(4)Change in Deferred Regulatory Liability - NEIL Refund 0(1,005)Change in Benefit Obligation 308176Change in Current Assets and Liabilities966999Other 41251Net Cash Flow Provided By Operating Activities 3,4913,657Cash Flow From Financing ActivitiesDividend Payments (582)(551)Retirements on Long-Term Debt (1,800)(25)Short-Term Borrowings (Repayments), Net (2,700)(2,600)Net Cash Flow Used For Financing Activities (5,082)(3,176)Cash Flow From Investing ActivitiesDrawdown of Tax Exempt Bonds Proceeds436620Stock Redemption from Associated Company2240Investment in Electric Plant (1,782)(1,166)Net Cash Flow Used For Investing Activities(1,122)(546)Decrease in Cash and Cash Equivalents(2,713)(65)Cash and Cash Equivalents at Beginning of Period5,9565,496Cash and Cash Equivalents at End of Period$3,243$5,431Change in Current Assets and Liabilities Providing (Utilizing)Cash From Operating ActivitiesAccounts Receivable ($196)$112Unbilled Revenue 60(84)Other Current Assets 26773Accounts Payable 149(238)Accrued Employee Benefits(377)79Other Current Liabilities 1,0631,057Total Change$966$999Supplemental Disclosure of Cash Flow Information:Cash Paid During the Period For:Interest$275$307Income Taxes $0$328
The accompanying notes are an integral part of these financialstatements.

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**NOTES TO CONSOLIDATED STATEMENTS**

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include theaccounts of Maine Public Service Company (the "Company"), its wholly-owned,unregulated energy marketing subsidiary, Energy Atlantic, LLC (EA) and itswholly-owned inactive Canadian subsidiary, Maine and New Brunswick ElectricalPower Company, Limited (ME&NB).

The Company is subject to the regulatory authority of the Maine PublicUtilities Commission (MPUC) and, with respect to wholesale rates, the FederalEnergy Regulatory Commission (FERC).

The accompanying unaudited consolidated financial statements should be readin conjunction with the 2002 Annual Report, that includes Form 10-K. Certainfinancial statement disclosures have been condensed or omitted but are anintegral part of the 2002 Form 10-K. These statements reflect all adjustmentsthat are, in the opinion of management, necessary to a fair statement of resultsfor interim periods presented. All such adjustments are of a normal recurringnature. The Company's significant accounting policies are described in the Notesto Consolidated Financial Statements of the Company's Annual Report filed withthe Form 10-K. For interim reporting purposes, these same accounting policiesare followed.

For purposes of the statements of consolidated cash flows, the Companyconsiders all highly liquid securities with a maturity, when purchased, of threemonths or less to be cash equivalents.

Certain reclassifications have been made to the 2002 financial statementamounts in order to conform to the 2003 presentation.

2. ENERGY ATLANTIC (EA)

EA's net income for the first quarter of 2003 was $2,343 compared to a netincome of $164,581 for the first quarter of last year. The reduction in netincome reflects the expiration of EA's sales of the Standard Offer Service tocustomers in CMP's service territory on February 28, 2002 as describedbelow.

Energy Atlantic's sales can be classified into two general categories:Standard Offer Service (SOS) sales in CMP's service territory which expiredFebruary 28, 2002, and Competitive Energy Supply (CES) sales to individualretail customers within the State of Maine. Except as stated below, theelectricity for those sales within ISO New England was provided entirely under aWholesale Power Sales Agreement (the "Agreement") with Engage Energy America,LLC (Engage), which also expired February 28, 2002. Under this Agreement, allrevenues from both SOS and CES sales were paid directly to an Escrow Agent thatdisbursed funds in accordance with instructions from Engage. For SOS sales, EAreceived reimbursement for certain expenses and a portion of the net profit thatwas reported as SOS margin. EA is currently in the process of negotiating newwholesale power agreements in connection with future retail sales it may make incentral and southern Maine.

EA has a contract for 40% of the output of the Wheelabrator-Sherman (W-S)energy facility for the two years beginning March 1, 2002. The output from thistake-or-pay contract amounts to approximately 55,000 MWH annually and will beused to provide electricity for CES sales in MPS's service territory. Thiscontract is a take-or-pay contract, which carries more counterparty risk thanothers entered into by EA. To mitigate this risk, EA has entered into a contractwith NB Power, whereby NB Power will buy W-S output in excess of loadrequirements in the Company's service territory at a rate indexed to the priceof 3% Sulphur Max No. 6 residential oil into New York Harbor, which is intendedto reflect NB Power's avoided cost, subject to a floor and ceiling. Currently,all output has been sold to CES customers, therefore limiting the risk thatenergy will be sold to NB Power. In addition, NB Power will sell electricity toEA when load exceeds W-S output at a fixed on and off-peak rate. 

In addition, EA has a power supply relationship with Duke Energy Trading andMarketing ("DETM") for electricity in CMP's service area. In connection withthis relationship, and certain transactions between EA and DETM, MPS provides acontractual guarantee on behalf of EA in an aggregate amount of one milliondollars ($1,000,000). This guarantee was related specifically to the deliveryand/or receipt of electric power between 

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EA and DETM. This guarantee was renewed in September of 2002 for anadditional year. Effective March 21, 2003, DETM has agreed to waive this creditrequirement in lieu of EA's commitment to maintain a $1 million ($1,000,000)minimum bank account balance.

The following illustrates each type of EA's risk exposure related to thesecontracts for supply and sales:

- Counterparty risk includes the possibility of the other parties failure tofulfill their contractual obligations to EA such as:

a) Deliverability risk, referring to EA not being able to serve contractedload due to the supplier's failure to provide energy.

b) Transmission risk, indicating EA's reliance on the utilities, such as theCompany, Central Maine Power and Bangor Hydro-Electric, to physically transportenergy to EA's customers.

c) Credit risk exposure, depending on EA's customers ability to pay, whichmay deteriorate during a general economic downturn or when a commercial customerexperiences financial difficulty.

- Market liquidity risk encompasses the risk of being forced to buy or sellenergy on the open market. This would occur if: (1) energy is not available fromW-S, NB Power or other energy supply arrangements, while the contracted customerload must still be satisfied or (2) the existing customer load deteriorated andNB Power could not buy the excess power from WS, as contracted.

- Forecasting risk exposure includes possible inaccuracy in the estimation ofenergy supply requirements. One of EA's suppliers requires a 24-month forecastof load for each commitment to a 1 MW block of energy. Although there is nopenalty for not using all of the energy, EA is assessed a penalty for using morethan the amount contracted.

- Market-based cost risk is exposure to transactions tied to market indexes,such as the arrangement to sell excess W-S power to NB Power at a currentmarket-indexed rate.

With the expiration of EA's sales of SOS in CMP's service territory, EA'srevenues and net income will be adversely impacted by the decrease in revenuesand, correspondingly, earnings. In 2002, EA realized SOS margin in CMP's serviceterritory of approximately $5.8 million.. The Company continues to review EA'scurrent and future business model, which may include a possible exit from theCES market in part or in whole, a refinement of its market area, and/orexpansion into other product and service lines. On February 24, 2003. EAannounced its intent to withdraw from retail electricity markets in northernMaine due to concerns over a lack of profitability in that market, the lack ofprice differentiated electric products within the Maritimes and the regionadministered by the Northern Maine Independent System Administrator, and anoverall illiquidity of the wholesale power market in the region, as well asother factors. EA will continue to serve its existing customer contracts innorthern Maine until they expire by their terms on February 28, 2004. CES salesin northern Maine were approximately $5 million in 2002. EA believes that, inaddition to minimizing its risk profile, this action will substantially relieveany underlying regulatory concerns that may exist or arise in connection withthe issue of employee sharing and energy marketing activities conducted by EAwithin the Company's service territory. In connection with MPS's proposedreorganization (discussed below in Item 4, "Regulatory Matters,") the Companyfiled with the MPUC on February 21, 2003, an "Application for Exemption ofChapter 304" to exempt the Company and EA from certain management restrictionsthat have arisen due to this aspect of the corporate relationship and expects aruling on the application during calendar year 2003.

The Company operates in two segments, with Maine Public Service Company (MPS)providing regulated transmission and distribution services and EA performingunregulated power marketing services as described above. The segments activitywith Operations & Maintenance expense reported between regulated andunregulated activity, for the three months ended March 31, 2003 and 2002 issummarized in the table below.

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3. SEGMENT INFORMATION

The Company's reportable segments include the electric utility portion of thebusiness, consisting of Maine Public Service Company (MPS) and Maine and NewBrunswick Electrical Power Company, Limited, (ME&NB), and the energymarketing portion of the business, consisting of Energy Atlantic, LLC. Theaccounting policies of the segments are the same as those described in Note 1,"Summary of Significant Accounting Policies." The Company provides certainadministrative support services to EA, which are billed to that entity at cost,based on a combination of direct charges and allocations. The Company isorganized on the basis of products and services.

Three Months Ended

(Dollars in Thousands)
03/31/0303/31/02TotalTotalEAMPSCompanyEAMPSCompanyOperating Revenues$1,788$9,580$11,368$1,400$9,599$10,999EA Standard Offer Service Margin0004070407Total Revenues1,7889,58011,3681,8079,59911,406Unregulated Energy Supply1,49401,4941,20101,201Other Operations & MaintenanceUnregulated28902893250325Regulated02,7652,76502,7642,764Depreciation, Amortization, Other153,5173,532323,5003,532Income Taxes(4)1,0911,0871021,3481,450Total Operating Expenses1,7947,3739,1671,6607,6129,272Operating Income(6)2,2072,2011471,9872,134Other Income & Deductions8(213)(205)1897115Income Before Interest Charges21,9941,9961652,0842,249Interest Charges056560144144Net Income$2$1,938$1,940$165$1,940$2,105Total Assets$6,342$128,528$134,870$5,970$133,080$139,050
4. REGULATORY MATTERS

Maine Public Utilities Commission, Request for Approval of Reorganization ofthe Company Into a 

Holding Company Structure, Docket No. 02-676

On October 31, 2002, the Company filed a request for Commission approval ofthe formation of a Maine-based holding company structure. Under this structure,the Company, EA and ME&NB, as well as other affiliates which might becreated at a later date, will become subsidiaries of a holding company (HoldCo).In its application, the Company stated that the corporate restructuring will beaccomplished through a "reverse triangular merger," similar to the one employedin Central Maine Power Company Application for Approval of Reorganization, ofTransactions with Affiliated Interests, and Transfer of Assets, Docket No.97-930.

The proposed restructuring constitutes a reorganization requiring Commissionapproval pursuant to the provisions of 35-A M.R.S.A.  708. In addition to theproposed reorganization, the Company also requested the approval of certainstock issuances and affiliated interest transactions. 

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Specifically, the Company requested Commission approval of the followingtransactions and arrangements:

1. the creation of a corporation (HoldCo) that will become the parent companyof MPS through its 

ownership of all outstanding company stock of MPS;

2. the creation of a corporation (MergeCo) whose only purpose will be tofacilitate the corporate 

reorganization and which, when organized, will be a wholly-owned subsidiaryof HoldCo and 

which will cease to exist once it has served its purpose;

3. the conversion and exchange of all the outstanding shares of the Company'scommon stock into an equal

number of shares of HoldCo's common stock (to the degree that the conversionand exchange of MPS stock to be effected in that transaction is deemed toconstitute an issuance of utility stock within the meaning of 35-A 

M.R.S.A.  901and 902);

4. the merger of MergeCo into the Company, with the Company as the survivingcorporation, and the resulting 

conversion of the outstanding shares of MergeCo common stock into a number ofshares of the common stock of 

the Company equal to the number of shares of the Company's common stockoutstanding immediately prior to the share conversion described in item 3 above,which will be deemed issued by the Company for this purpose;

5. the dividend by Maine Public Service of its limited liability companyinterests in Energy Atlantic to HoldCo pursuant to 35-A M.R.S.A.  708, 901 and902;

6. the execution and delivery of the Managerial and Support ServicesAgreement and approval of the 

cost manual submitted in conjunction therewith pursuant to 35-A M.R.S.A.707;

7. the winding up and dissolving of Me&NB at such future time as MPSmight deem appropriate 

pursuant to 35-A M.R.S.A.  708; and,

8. the transfer, after the merger date, (i) of assets that are not "necessaryor useful" within the 

meaning of Section 1101 of title 35-A, from MPS to any MPS affiliate, and(ii) the transfer of all 

other assets from MPS to HoldCo or any non-MPS HoldCo subsidiary in the totalamount of up to 

$1,000,000 over the three-year period beginning upon the merger date.

The Company also requested that the Commission authorize the creation ofHoldCo and MergeCo within thirty days of the date of its filing. This "interimapproval" would be for the limited purpose of making necessary filings with theSecurities and Exchange Commission under the Public Utility Holding Company Actand for executing a registration statement under federal securities law. As partof this request for interim approval, the Company also represented that shouldthe Commission deny its petition for reorganization, or if for any other reasontheir organization does not occur, it will dissolve both HoldCo and MergeCo.

Subsequent to its filing, the Company received and responded to severalrequests for information from the MPUC and Office of Public Advocate, anintervenor in the proceeding, and met on several occasions with interestedparties. The parties settled all issues in the proceeding, and entered a signedStipulation formally approved by the MPUC on March 26, 2003. Please see the textof the MPUC Order, Docket No. 2002-676 on Pages O-1 to O-21 of the Form 10-K forDecember 31, 2002. The Company has also filed, on March 11, 2003, a Form S-4Registration Statement with the Securities and Exchange Commission for "Maine& Maritimes Corporation" the entity designated as "HoldCo" in thisdisclosure. The filing, which was made effective by the SEC on April 18, 2003,is reviewable on the SEC's website at "http://www.sec.gov/edgar" or on the MPSInvestor Relations page at "http://www.mainepublicservice.com."

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Maine Public Utilities Commission, Request for Approval of Alternative RatePlan

On March 6, 2003, following a series of informal meetings with the Office ofPublic Advocate and the MPUC, the Company submitted its formal "Request forApproval of Alternate Rate Plan" (MPUC Docket 2003-85). The proposal (ARP) is aseven-year rate plan for its distribution delivery services with a targetimplementation date on or before July 1, 2003. The ARP is an alternative form ofregulating MPS's distribution assets, similar to the performance rate plans theMPUC has adopted for Central Maine Power Company and Bangor Hydro-ElectricCompany. The ARP has numerous components, all of which have been designed to fittogether as an integrated whole that will allow the Company to continue to meetthe unique needs of its northern Maine customers. Its key components include: aninflation index and productivity offset; an adjustment for the treatment ofextraordinary costs the Company may incur; an interest expense adjustment; aneconomic conditions adjustment; a shareholder earnings sharing mechanism;pricing flexibility; reliability safety and service quality indices; and asharing mechanism for non-core revenues. The Company believes that the ARP willbenefit customers by: (1) ensuring that customer's electric service does notsuffer under the plan through the use of the above-described mechanisms; (2)providing predictable and stable rates; (3) providing an acceptable risk sharingenvironment; and (4) encouraging the Company to minimize its costs whereverpossible. The Company is in the process of responding to information requestsfrom parties that have intervened in the proceeding and expects to resolve thefiling during calendar year 2003. At this time the Company cannot predict thenature or the outcome of any decision or ruling by the MPUC in this proceeding.

Maine Public Utilities Commission Notice of Inquiry

On February 11, 2003, the MPUC initiated a formal Notice of Inquiry (NOI)into the status of the competitive market for electricity supply in northernMaine (MPUC Docket No. 2003-82). The NOI is not directed at the Company or anyspecific party or entity but is a general inquiry designed to gather informationabout the adequacy of existing market structures, rules and laws in light of thelimited number of supplier/generator participants in the region. The MPUC'sinquiry is for the purpose of identifying potential concerns related to northernMaine's supply and market situation, and to explore possible solutions. Incontrast to the rest of Maine, which is part of the Independent System Operator- New England (ISO-NE) region, northern Maine is electrically interconnected tothe Canadian Maritimes region, which also includes the electric loads andgeneration of New Brunswick, as well as Nova Scotia and Prince Edward Island.Load and generation in northern Maine, which comprises the Company's serviceterritory, are interconnected to the rest of Maine and New England only bytransmission through New Brunswick. The Northern Maine Independent SystemAdministrator (NMISA) operates the bulk power and transmission systems for theregion. The divestiture of generation assets in connection with the MaineElectric Industry Restructuring Act eliminated rate regulation for theproduction and sale of electricity supply as of March 1, 2000. During thesubsequent period of time, the retail and wholesale markets have experienced alimited number of participants. In furtherance of the MPUC's inquiry, itrequested comments on a number of issues related to these unique marketconditions. The Company has provided comments for the MPUC's consideration andresponded to additional MPUC requests for information. At this time the Companycannot predict the nature or the outcome of any finding, decision or ruling bythe MPUC in this proceeding.

Federal Energy Regulatory Commission (FERC) Open Access Transmission Tariff(OATT) Filing

Pursuant to Section 2.5 of the Settlement Agreement filed on June 30, 2000,in Docket No. ER00-1053-000, and accepted by the Federal Energy RegulatoryCommission (FERC) on September 15, 2000, MPS provided parties and FERC staffproposed changes to its Open Access Transmission Tariff (OATT) Formula Rateduring March 2003. In general, the Company is seeking a slight modification toits rate formula under its transmission tariff. The Company has conferred withthe parties and FERC staff to informally resolve outstanding issues in thefiling with the objective of reaching agreement on the OATT "Formula Rate" priorto May 30, 2003. If MPS, the parties and FERC staff are unable to reachagreement, the Company shall submit by May 30, 2003, under section 205 of theFederal Power Act, 16 U.S.C.  824d, a unilateral filing with the FERC restatingor revising the Formula Rate. The probability of success of this collaborativeeffort is unknown at this time.

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5. INCOME TAXES

A summary of Federal and State income taxes charged to income is presentedbelow. For accounting and ratemaking purposes, income tax provisions included inOperating Expenses reflect taxes applicable to revenues and expenses allowablefor ratemaking purposes, with the exception of Energy Atlantic activity, whichis above the line and not allowable for ratemaking purposes. The tax effect ofitems not included in rate base is allocated as Other Income (Deductions). 
(Dollars in Thousands)Three Months EndedMarch 31,20032002Current income taxes$1,158$1,205 Deferred income tax(48)325Investment credits(7)(7)Total income taxes$1,103$1,523Allocated to:Operating Income- Regulated$1,091$1,348- Unregulated(4)102Other income1673Total$1,103$1,523
For the three months ended March 31, 2003 and 2002, the effective income taxrates were 36.26 % and 41.9%, respectively. The principal reasons for theeffective tax rates differing from the US federal income tax rate areflowthrough items, principally Seabrook amortization required by regulation, andstate income taxes. 

The following summarizes accumulated deferred income taxes established ontemporary differences under SFAS 109 as of March 31, 2003 and December 31,2002.
(Dollars in Thousands)March 31December 3120032002 Seabrook$8,381 $8,428 Property7,072 7,084 Flexible Pricing Revenue540567Deferred Fuel4,3924,162Generating asset sale 200(178)W.S Upfront Payment2,1712,315Pension and post-retirement benefits(570)(478)Other37371Net accumulated deferred income taxes$22,223 $22,271 
6. MAINE YANKEE

The Company owns 5% of the Common Stock of Maine Yankee, which operated an860 MW nuclear power plant (the "Plant) in Wiscasset, Maine. On August 6, 1997,the Board of Directors of Maine Yankee voted to permanently cease poweroperations and to begin decommissioning the Plant.

On September 1, 1997, Maine Yankee estimated the sum of the future paymentsfor the closing, decommissioning and recovery of the remaining investment inMaine Yankee to be approximately $930 million, of which the Company's 5% 

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share would be approximately $46.5 million. In December 1998, June 1999,September 2000, February 2001, December 2001, March 2002, May 2002, and again inSeptember, 2002, Maine Yankee updated its estimate of decommissioning costsbased on the Settlement. Legislation enacted in Maine in 1997 calls forrestructuring the electric utility industry and provides for recovery ofdecommissioning costs, to the extent allowed by federal regulation, through therates charged by the transmission and distribution companies. Based on the Mainelegislation and regulation precedent established by the FERC in its opinionrelating to the decommissioning of the Yankee Atomic nuclear plant, the Companybelieves that it is entitled to recover substantially all of its share of suchcosts from its customers and, as of March 31, 2003 is carrying on itsconsolidated balance sheet a regulatory asset and a corresponding liability inthe amount of $21.43 million, which reflects the Company's 5% share of MaineYankee's September 2002 revised estimate of the remaining decommissioning costsless actual decommissioning payments made since then. 

The MPUC, on January 27, 2002, approved a Stipulation providing for therecovery of stranded investment, for a two-year period March 1, 2002 untilFebruary 29, 2004, which includes the Company's share of Maine Yankeedecommissioning expenses, Maine Yankee replacement power costs, and theremaining Maine Yankee investment. As of March 31, 2003, deferred fuel of $14million is reflected as a regulatory asset, which includes the Maine Yankeereplacement power costs, as well as deferred Wheelabrator-Sherman fuel costs.Additionally, the Company has deferred $21.4 million related to uncollectedMaine Yankee decommissioning costs.

In May 2000, Maine Yankee terminated its decommissioning operations contractwith Stone & Webster Engineering Corporation (Stone & Webster) pursuantto terms of the contract. Stone & Webster disputed Maine Yankee's groundsfor the termination. In June 2000 Stone & Webster filed a voluntary petitionunder Chapter 11 of the United States Bankruptcy Code with the United StatesBankruptcy Court for the District of Delaware. 

Upon the contract termination, Maine Yankee temporarily assumed the generalcontractor role and entered into interim agreements with Stone & Webster andobtained assignments of several subcontracts in order to allow decommissioningwork to continue and to avoid the adverse consequences of an abrupt orinefficient demobilization from the Plant site. After assessing its long-termalternatives for safely and efficiently completing the decommissioning,including evaluating proposals from prospective successor general contractors,on January 26, 2001, Maine Yankee announced that it would continue to manage theproject itself.

In June 2000, Federal Insurance Company (Federal), which had providedperformance and payment bonds in the amount of approximately $38.5 million eachin connection with the decommissioning operations contract, filed adeclaratory-judgment complaint against Maine Yankee in the Bankruptcy Court inDelaware, which was subsequently transferred to the United States District Courtin Maine. 

The complaint alleged that Maine Yankee had improperly terminated thedecommissioning operations contract with Stone & Webster and had failed togive proper notice of the termination to Federal under the contract, and thatFederal had no further obligations under the bonds. 

After extensive discovery and resolution of certain preliminary issues by thecourt, in December 2001 Maine Yankee and Federal entered into a settlementagreement pursuant to which Federal paid Maine Yankee $44 million on January 18,2002. The settlement was reflected on Maine Yankee's 2001 financial statements.That amount represents full payment under the performance bond, plus anadditional amount under the payment bond reflecting certain payments previouslymade by Maine Yankee to subcontractors and suppliers who had not been fully paidby Stone & Webster. Maine Yankee deposited the payment in itsdecommissioning trust fund to offset past and future expenses resulting from thefailures of Stone & Webster. 

Maine Yankee has continued to pursue its claim for damages that wasoriginally filed against Stone & Webster and its then parent corporations inAugust 2000 in the Bankruptcy Court in Delaware. After recognizing the paymentfrom Federal, Maine Yankee has asserted a right to recover an additional $21million in that court from the bankruptcy estates. In February 2002, Stone &Webster filed a claim for approximately $7 million against Maine Yankee in theBankruptcy Court in Delaware for alleged breaches of contract and to subordinateany Maine Yankee's claims. On May 30, 2002, the court concluded extensivehearings and argument by allowing a claim in favor of Maine Yankee under section502 (c) of the Bankruptcy Code, in the estimated amount of $20.8 million againsteach of the three principal bankrupt estates (jointly and severally). TheCourt's ruling also effectively precluded approximately $4 million of Stone& Webster's

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February 2002 claim against Maine Yankee, while offering no opinion orfindings on the remainder, the resolution of which will, if necessary, be thesubject of further motions and proceedings. The actual cash amount to berecovered by Maine Yankee on this allowed claim remains contingent on a numberof factors beyond Maine Yankee's control, including without limitation theextent to which the bankruptcy estates ultimately have assets available to paythe claim, the ultimate disposition of Stone & Webster's February 2002claim, possible reconsideration of the ruling in the future based on actualexpenses of completing the decommissioning, and the effect, if any, of anyappeal of the May 30 decision by the bankruptcy estates. Maine Yankee thereforecannot predict the final outcome of the Bankruptcy Court proceeding.

Federal legislation enacted in 1987 directed the DOE to proceed with thestudies necessary to develop and operate a permanent high-level waste (spentfuel) repository at Yucca Mountain, Nevada. The project has encountered delays,and the DOE has indicated that the permanent disposal site is not expected toopen before 2010, although originally scheduled to open in 1998.

In accordance with the process set forth in the legislation, in February 2002the Secretary of Energy recommended the Yucca Mountain site to the President forthe development of a nuclear waste repository, and the President thenrecommended development of the site to the Congress. As provided in thestatutory procedure, the State of Nevada formally objected to the site in April2002 and in July 2002 the Congress overrode the objection. Construction of therepository requires the approval of the NRC, upon application of the DOE andafter a public adjudicatory hearing as well as second NRC approval aftercompletion of construction to operate the facility. Maine Yankee cannot predictthe timing or results of those proceedings.

In November 1997, the U.S. Court of Appeals for the District of ColumbiaCircuit confirmed the obligation of the DOE under the Nuclear Waste Policy Actof 1982 to take responsibility for spent nuclear fuel from commercial reactorsin January 1998. After an unsuccessful effort by Maine Yankee in the same courtto compel the DOE to take Maine Yankee's spent fuel, in June 1998 Maine Yankeefiled a claim for money damages in the U.S. Court of Federal Claims for thecosts associate with the DOE's default. In November 1998 the Court grantedsummary judgment in favor of Maine Yankee, ruling the DOE had violated itscontractual obligations, but leaving the amount of damages incurred by MaineYankee for later determination by the Court. Since then the parties have beenengaged in extensive discovery and resolution of pre-trial issues in the damagesphase of the proceeding. Maine Yankee is pursuing its claim for determination ofdamages vigorously, but cannot predict the outcome or timing of thedetermination.

At the same time, as an interim measure until the DOE meets its contractualobligation to dispose of Maine Yankee's spent fuel at Yucca Mountain orelsewhere, Maine Yankee constructed an independent spent fuel storageinstallation (ISFSI), utilizing dry-cask storage, on the Plant site and is inthe process of transferring the spent fuel from the spent-fuel pool to theindividual casks and the casks to the ISFSI. Maine Yankee's total cost ofmaintaining the ISFSI will be substantially affected by heightened securitycosts and by the length of time it is required to operate the ISFSI before theDOE honors its contractual obligation to take the fuel from the site. MaineYankee's current decommissioning costs estimate is based on an assumption thatits operation of the ISFSI will end in 2023, but the actual period of operationand cost may vary.

On January 15, 2003, Maine Yankee notified NAC International (NAC), thecontractor responsible for providing for the fabrication of the spent-fuel casksand transferring the fuel to the casks and the casks to the ISFSI, that MaineYankee was terminating its contract with NAC pursuant to the terms of thecontract. NAC had been experiencing financial difficulties and had requestedrelief from the terms of the contract. Maine Yankee believes that NAC had alsofailed to perform its contractual obligations in accordance with the terms ofthe contract and provide adequate assurance of its ability to do so in thefuture. NAC disputed Maine Yankee's basis for terminating the contract andserved Maine Yankee with a demand to arbitrate the dispute and a request fordamages. Maine Yankee, in turn, filed suit in the U.S. District Court for theDistrict of Maine against NAC, its bonding company, and its parent guarantor,wherein Maine Yankee sought, among other things, damages due to NAC's failure toperform. Maine Yankee also entered into contracts with the major subcontractorsand resumed the transfer of fuel to the ISFSI under its own management. In Aprilof 2003 after extensive negotiations, the parties entered into a comprehensivesettlement agreement resolving all the disputed issues and providing for MaineYankee to replace NAC in managing the completion of the fuel-transfer work. Thesettlement included a payment for $10.4 million to Maine Yankee to compensateMaine Yankee for higher costs incurred or to be incurred as a result of NAC'sfailure to perform it's contractual obligations. The payment was not reflectedin Maine Yankee's first quarter 2003 results. Although the NAC disputecontributed to a slowdown in the progress of the fuel

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transfer work in the first quarter of 2003, Maine Yankee believes that thesettlement positions the Company to complete the work without further unduedelay or expense.

On February 28, 2003, the Nuclear Regulatory Commission approved MaineYankee's License Termination Plan. The LTP was approved without any unexpectedconditions.

In accordance with a plan approved by the Securities and Exchange Commission,Maine Yankee has started the redemption of its Common Stock periodically through2008.
**Maine Yankee**
**Board      Meeting******
Total Shares      
**Redeemed**
MPS      
**Shares**
Amounts      
**Received**
Date      
**Received**
September 27, 200175,2003,760$ 499,484October 4, 2001June 27, 200222,6001,130150,110July 11, 2002September 26, 200233,9001,695225,166October 4, 2002December 18, 200233,8001,690224,502January 9, 2003165,5008,275$1,099,262
7. STOCK COMPENSATION PLAN 

Upon approval by the Company's shareholders in June of 2002, the Companyadopted the 2002 Stock Option Plan (the Plan). The Plan provides designatedemployees of the Company and its Subsidiaries with stock ownership opportunitiesand additional incentives to contribute to the success of the Company, and toattract, reward and retain employees of outstanding ability. The Plan isadministered by the members of the Performance and Compensation Committee of theBoard, who are not employees of the Company or any Subsidiaries. The Company maygrant options to its employees for up to 150,000 shares of common stock,provided that the maximum aggregate number of shares which may be issued underthe plan pursuant to incentive stock options shall be 120,000 shares. Theexercise price for shares to be issued under any incentive stock option shallnot be less than one hundred percent (100%) of the fair market value of suchshares on the date the option is granted. An option's maximum term is 10 yearsand a three-year vesting schedule is followed.

The Company accounts for the fair value of its grants under the plan inaccordance with the expense provisions of Statement of Financial AccountingStandards (SFAS) No. 123, Accounting for Stock-Based Compensation. The effect ofthe grants on compensation expense for the quarter ended March 31, 2003 wasimmaterial. 

The fair value of each option grant is estimated on the date of grant usingthe Black-Scholes option-pricing model with the following weighted-averageassumptions used for grants: dividend yield of 4.9 percent; expected volatilityof 20 percent, risk-free interest rate of 3.33%; and expected lives of 7 years.

A summary of the status of the Company's stock option plan as of March 31,2003, and changes during the quarter then ended is presented below: 
OptionsShares (000) Exercise Price Outstanding at January 1, 20035,250$30.45Granted--Exercised--Forfeited-- Outstanding at March 31, 20035,250$30.45Options exercisable at March 31, 2003 0Weighted-average fair value of options granted during the quarter$3.67
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The following table summarizes information about fixed stock optionsoutstanding at March 31, 2003: 
Options OutstandingOptions ExercisableRange of Exercise PricesNumber Outstanding at 03/31/03Weighted-Average Remaining Contractual    LifeWeighted-Average Exercise PriceNumber Exercisable at 03/31/03Weighted-Average Exercise Price$30.455,2509.2 years30.45--
8. NEW ACCOUNTING PRONOUNCEMENTS

In June of 2001, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards No. 143, "Accounting for AssetRetirement Obligations." This Statement addresses financial accounting andreporting for obligations associated with the retirement of tangible long-livedassets and associated asset retirement costs. This Statement was effective forthe Company beginning January 1, 2003. The Company currently records an assetretirement obligation related to the decommissioning of Maine Yankee in itsfinancial statements. The adoption of this statement did not have a materialimpact on the Company's financial position or results of operations. 

On January 17, 2003, the Financial Accounting Standards Board issued FASBInterpretation No. 46, (FIN 46), "Consolidation of Variable Interest Entities."The provisions have far-reaching effects and will be the guidance thatdetermines (1) whether consolidation is required under the "controllingfinancial interest" model of Accounting Research Bulletin No. 51 (ARB 51),"Consolidated Financial Statements" (or other existing authoritative guidance)or, alternatively, (2) whether the variable interest model under FIN 46 shouldbe used to account for existing and new entities. The transitional disclosuresare required for financial statements issued after February 1, 2003. FIN 46 iseffective and required to be applied to pre-existing entities as of thebeginning of the first interim period beginning after June 15, 2003. The Companydoes not expect the adoption of this statement will have a material impact onthe Company based on its current structure.

In November 2002, the FASB issued FIN No. 45, (FIN 45) "Guarantor'sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others an interpretation of FASB Statements No. 5,57, and 107 and rescission of FASB Interpretation No. 34." FIN 45 requires thata guarantor recognize, at the inception of a guarantee, a liability for the fairvalue of the obligation undertaken by issuing the guarantee. The Interpretationalso requires additional disclosures to be made by a guarantor in its interimand annual financial statements about its obligations under certain guaranteesit has issued. The accounting requirements for the initial recognition ofguarantees are applicable on a prospective basis for guarantees issued ormodified after December 31, 2002. The disclosure requirements are effective forall guarantees outstanding, regardless of when they were issued or modified, forfinancial statements for interim or annual periods ending after December 15,2002. The adoption of the recognition provisions of FIN 45 did not have anyimpact on the Company's financial condition or results of operations on theCompany's consolidated financial statements. The following is a summary of ouragreements that management has determined are within the scope of FIN 45. 

As permitted under Maine law, the Company has agreements that indemnify theCompany's officers and directors for certain events or occurrences while theofficer or director serves in such a capacity. The term of the indemnificationperiod is for the officer's or director's lifetime. The maximum potential amountof future payments we could be required to make under these indemnificationagreements not limited under the terms of the agreements; however, we have adirector and officer insurance policy that limits the Company's exposure andenables the Company to recover a portion of any future amounts paid. As a resultof this insurance policy coverage, the Company believes the estimated fair valueof these indemnification agreements is minimal. All of these indemnificationagreements were grandfathered under the provisions of FIN 45 as they were ineffect prior to December 31, 2002. Accordingly, the Company has no liabilitiesrecorded for these agreements as of March 31, 2003.

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9. COMMITMENTS AND CONTINGENCIES

The Company does not have any variable interest entities as defined by FIN 46above. Except for operating leases accounted for in accordance with FASB 13 foroffice and field equipment, vehicles, and computer hardware and software, theCompany has no other form of off balance sheet arrangements. The followingsummarizes payments for leases for a period in excess of 1 year for the threemonths ended March 31, 2003 and 2002:
(Dollars in Thousands)Three Months EndedMarch 31,20032002Office Equipment$2$2Vehicles11Computer Hardware and Software2925Rights of Way2928Field Equipment2010Total$81$66
-16-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Forward-Looking Statements

The discussion below may contain "forward-looking statements", as defined inthe Private Securities Litigation Reform Act of 1995, related to expected futureperformance or our plans and objectives, such as expected future revenues fromEnergy Atlantic. There can be no assurance that actual results will notmaterially differ from expectations. Factors that could cause actual results todiffer materially from our projections include, among other matters, electricutility restructuring; future economic conditions; changes in tax rates,interest rates or rates of inflation; developments in our legislative,regulatory, and competitive environment; and the decommissioning cost of MaineYankee.

Results of Operations
The Company earns revenue from its own transmission and distribution(T&D) operations as well as the activities of its wholly-owned unregulatedmarketing subsidiary, Energy Atlantic, LLC (EA). The Company's wholly-ownedunregulated Canadian subsidiary, Maine and New Brunswick Electrical PowerCompany, Limited (ME&NB) is inactive at this time. For purposes of thediscussion below, ME&NB results, if any, are included under the heading of"Core T&D" below.

Net income and earnings per share for the three months ended March 31, 2003along with the corresponding information for the previous year are asfollows:
20032002Net IncomeCore T&D$1,938$1,940EA2165Total Company$1,940$2,105Earnings Per ShareTotal Company$1.23$1.34
Net income from Core T&D was $1,940,000 in the first quarter of 2002compared to $1,938,000 in the first quarter of 2003. EA's net income declinedfrom $165,000 in the first quarter of 2002 to $2,000 in the first quarter of2003. The reduction in EA net income was largely attributable to the expirationof EA's sales of standard offer service to customers in CMP's service territoryas described previously in Note 2 to the Consolidated Financial Statements.

Earnings per share for the first quarter ended March 31, 2003 declined $0.11per share from the first quarter of 2002. Earnings from the Company'sunregulated supply subsidiary, Energy Atlantic LLC (EA), declined $0.10 pershare due to the fact that effective March 1, 2002, EA ceased providing standardoffer service (SOS) within Central Maine Power's service area.

-17-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Results of Operations (Continued)

In the first quarter of 2003, expenses associated with seeking variousregulatory approvals and incremental organization costs associated with theformation of the new holding company, Maine & Maritimes Corporation, reducedearnings by $0.09 per share. The Company feels the migration to a holdingcompany structure will help facilitate the Company's growth strategy.Stockholders of Maine Public Service Company will be voting on the Company'sreorganization at the annual meeting of stockholders to be held on May 30,2003

In the first quarter of 2002, pursuant to a stranded cost order from theMaine Public Utilities Commission, a portion of a refund for nuclear liabilityinsurance for Maine Yankee was recognized in earnings. This one time eventresulted in a reduction in first quarter 2003 earnings of $0.06 per sharecompared to the same period of last year.

Offsetting the above decreases in earnings were increases in earnings in thefirst quarter of 2003 totaling $0.14 per share compared to the first quarter of2002. A reduction in interest expense and an increase in stranded cost carryingcharges resulted in an increase in first quarter 2003 earnings of $0.05 pershare. Operating expense reductions for the core transmission and distributionutility were attributable to an increase in earnings of $0.09 per share,reflecting ongoing efforts to control costs.

Consolidated operating revenues for the quarters ended March 31, 2003 and2002, are as follows:
20032002(Dollars in Thousands)$MWH$MWHMaine Public Service (MPS)- Retail 9,399144,7018,938138,564- Other Revenues181661Total Regulated9,580144,7019,599138,564Energy Atlantic, LLC (EA)- Competitive Energy Supply1,78832,8301,40046,322- Standard Offer Margin00407627,503Total Unregulated1,78832,8301,807673,825Totals11,368177,53111,406812,389
MPS retail sales increased by 4.4% (6,137 MWH), reflecting increases in salesto residential customers of 7.2% (3,400 MWH) and to medium and small commercialcustomers of 6.1% (2,991 MWH) offset by a reduction to large commercialcustomers of 0.6% (261 MWH). The $480,000 decrease in Other Revenues is dueprimarily to a decrease in flexible pricing revenue according to the regulatorystipulation in Docket 2001-240 regarding the recovery of stranded costs, asdiscussed below in Part II, Item 1(a.), Legal Proceedings, as well as reducedwheeling revenues associated with the temporary closure of the Boralex Ashlandgenerating plant.

Competitive Energy Supply ("CES") revenues of the Company's wholly-ownedenergy marketing subsidiary, Energy Atlantic, LLC (EA) increased by $388,000, or28%, due to an increase in residential sales in northern Maine. Included in the2002 CES energy sales were 22,105 MWH sales brokered to Bangor Hydro Electric(BHE) where EA assumed only the cost to deliver the energy to BHE's customer anda small portion of the energy supplied, in addition to an administrative chargefor brokering the transactions. Excluding those sales, CES sales would have been24, 217 MWH in the first quarter of 2002. 

-18-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Results of Operations (Continued)

The Standard Offer Service (SOS) margin decreased $407,000, due to theexpiration of EA's sales contract for SOS service in CMP's service territorythat began March 1, 2000 and ended February 28, 2002.

For the quarters ended March 31, 2003 and 2002, total operating expenses were$9,167,000 and $9,272,000, respectively. Energy supply expenses for EA were asfollows: 
20032002(Dollars in Thousands)$MWH$MWHEnergy Supply - UnregulatedEA Competitive Energy Supply1,45832,8301,20146,322EA Standard Offer Service-0-627,503EA Wholesale36578--Total1,49433,4081,201673,825
With the start of retail competition on March 1, 2000, EA began selling toretail customers, and MPS itself now provides transmission and distribution(T&D or delivery) services only, no longer purchasing or generating energysupply for its customers. Compared to the first quarter of 2002, CES purchasesby EA in the first quarter of 2003 decreased by 13,492 MWH. However, CES energysupply expenses increased by $257,000 or 21.4%. Included in the 2002 CES energysupply expenses were 22,105 MWH sales brokered to Bangor Hydro Electric (BHE)where EA assumed only the cost to deliver the energy to BHE's customer inaddition to a small portion of the cost of the energy supplied. Excluding thosesales, their CES energy supply MWH would have been 24, 217 MWH in 2002. SOSpurchases by EA decreased by 627,503 MWH due to the expired contracts, asdiscussed above. Only the gross margin of SOS activity is recorded, therefore noenergy supply expenses are recognized. In the first quarter of 2003, EApurchased 578 MWH of wholesale energy valued at $36,000 that was subsequentlysold to ISO New England.

T&D operation and maintenance expenses, as well as stranded costs, are asfollows:
20032002Increase (Decrease)Operation and Maintenance - RegulatedTransmission and Distribution636775(139)Customer Accounting and General Administrative2,1291,989140Regulated O & M2,7652,7641Operation and Maintenance - Unregulated289325(36)Total Operation and Maintenance3,0543,089(35)Stranded CostsWheelabrator-Sherman2,3922,37814Maine Yankee727768(41)Seabrook278278-Deferred Fuel and Special Discounts(506)82(588)Amortization of Gain from Asset Sale(443)(1,045)602Total Stranded Costs2,4482,461(13)
-19-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Results of Operations (Continued)

Regulated customer accounting and general administrative expenses increasedby $140,000, reflecting increases

in employee benefits, principally retiree medical and pension, regulatory andlegal expenses. These increases 

were offset by a decrease of $139,000 in transmission and distributionexpenses, reflecting ongoing cost 

containment efforts. EA's operating expenses decreased by $36,000 reflectinga reduction in personnel.

The Company recognized $2,448,000 of stranded costs in the first quarter of2003, compared to $2,461,000 in the first quarter of 2002. MPS continues topurchase power from Wheelabrator-Sherman (W-S) under an agreement that expiresin 2006, at prices above current market conditions. Beginning on March 1, 2000,in accordance with the MPUC's treatment of W-S as stranded costs as a result ofcompetitive bidding, the output from W-S is sold to the successful bidder, andthe above-market amount is included in stranded cost amortization rather thanenergy supply. The decrease in amortization of stranded costs of $13,000reflects an increase in net W-S costs of $14,000, a $41,000 decrease in MaineYankee decommissioning expenses, a $635,000 decrease in deferred fuelrecognition and a $588,000 decrease in deferred fuel and special discounts.

Energy Atlantic Operations

EA's net income for the first quarter of 2003 was $2,343 compared to a netincome of $164,581 for the first quarter of last year. The reduction in netincome reflects the expiration of EA's sales of standard offer service tocustomers in CMP's service territory on February 28, 2002 as describedbelow.

Energy Atlantic's sales have been classified into two general categories:Standard Offer Service (SOS) sales in CMP's service territory which expiredFebruary 28, 2002, and Competitive Energy Supply (CES) sales to individualretail customers within the State of Maine. Except as stated below, theelectricity for those sales within ISO New England was provided entirely under aWholesale Power Sales Agreement (the "Agreement") with Engage Energy America,LLC (Engage), which also expired February 28, 2002. Under this Agreement, allrevenues from both SOS and CES sales were paid directly to an Escrow Agent thatdisbursed funds in accordance with instructions from Engage. For SOS sales, EAreceived reimbursement for certain expenses and a portion of the net profit thatwas reported as SOS margin. EA is currently in the process of negotiating newwholesale power agreements in connection with future retail sales it may make incentral and southern Maine.

EA has a contract for 40% of the output of the Wheelabrator-Sherman (W-S)energy facility for the two years beginning March 1, 2002. The output from thistake-or-pay contract amounts to approximately 55,000 MWH annually and will beused to provide electricity for CES sales in MPS's service territory. Thiscontract is a take-or-pay contract, which carries more counterparty risk thanothers entered into by EA. To mitigate this risk, EA has entered into a contractwith NB Power, whereby NB Power will buy W-S output in excess of loadrequirements in the Company's service territory at a rate indexed to the priceof 3% Sulphur Max No. 6 residential oil into New York Harbor, which is intendedto reflect NB Power's avoided cost, subject to a floor and ceiling. Currently,all output has been sold to CES customers, therefore limiting the risk thatenergy will be sold to NB Power. In addition, NB Power will sell electricity toEA when load exceeds W-S output at a fixed on and off-peak rate. 

In addition, EA has a power supply relationship with Duke Energy Trading andMarketing ("DETM") for electricity in CMP's service area. In connection withthis relationship, and certain transactions between EA and DETM, MPS provides acontractual guarantee on behalf of EA in an aggregate amount of one milliondollars ($1,000,000). This guarantee was related specifically to the deliveryand/or receipt of electric power between EA and DETM. This guarantee was renewedin September of 2002 for an additional year. Effective March 21, 2003, DETM hasagreed to waive this credit requirement in lieu of EA's commitment to maintain a$1 million ($1,000,000) minimum bank account balance.

-20-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Results of Operations (Continued)

The following illustrates each type of EA's risk exposure related to thesecontracts for supply and sales:

- Counterparty risk includes the possibility of the other parties failure tofulfill their contractual obligations to EA such as:

a) Deliverability risk, referring to EA not being able to serve contractedload due to the supplier's failure to provide energy.

b) Transmission risk, indicating EA's reliance on the utilities, such as theCompany, Central Maine Power and Bangor Hydro-Electric, to physically transportenergy to EA's customers.

c) Credit risk exposure, depending on EA's customers ability to pay, whichmay deteriorate during a general economic downturn or when a commercial customerexperiences financial difficulty.

- Market liquidity risk encompasses the risk of being forced to buy or sellenergy on the open market. This would occur if: (1) energy is not available fromW-S, NB Power or other energy supply arrangements, while the contracted customerload must still be satisfied or (2) the existing customer load deteriorated andNB Power could not buy the excess power from WS, as contracted.

- Forecasting risk exposure includes possible inaccuracy in the estimation ofenergy supply requirements. One of EA's suppliers requires a 24-month forecastof load for each commitment to a 1 MW block of energy. Although there is nopenalty for not using all of the energy, EA is assessed a penalty for using morethan the amount contracted.

- Market-based cost risk is exposure to transactions tied to market indexes,such as the arrangement to sell excess W-S power to NB Power at a currentmarket-indexed rate.

With the expiration of the EA's sales of SOS in CMP's service territory, EA'srevenues and net income will be adversely impacted by the decrease in revenuesand correspondingly, earnings. In 2002, EA realized SOS margin in CMP's serviceterritory of approximately $5.8 million. The Company continues to review EA'scurrent and future business model, which may include a possible exit from theCES market in part or in whole, a refinement of its market area, and/orexpansion into other product and service lines. On February 24, 2003, EAannounced its intent to withdraw from retail electricity markets in northernMaine due to concerns over the overall liquidity of the wholesale power market,as well as other factors discussed above in Item 2, "Energy Atlantic." EA willcontinue to serve its existing customer contracts in northern Maine until theyexpire by their terms on February 28, 2004. EA believes that, in addition tominimizing its risk profile, this action will substantially relieve anyunderlying regulatory concerns that may exist or arise in connection with theissue of employee sharing and energy marketing activities conducted by EA withinthe Company's service territory. In connection with MPS's proposedreorganization (discussed above in Item 4, "Regulatory Matters") the Companyfiled with the MPUC on February 21, 2003, an "Application for Exemption ofChapter 304" to exempt the Company and EA from certain management restrictionsthat have arisen due to this aspect of the corporate relationship and expects aruling on the application during calendar year 2003. (See Item 1 "LegalProceedings," paragraph (a) below).

Liquidity

Net cash flows from operating activities were $3,491,000 for the first threemonths of 2003. For the period, the Company paid $582,000 in dividends and drewdown $436,000 of proceeds from the tax-exempt revenue bonds, based on qualifyingproperty additions. The Company also paid scheduled sinking fund payments of$1,800,000 on long-term debt 

-21-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 2. Management's Analysis of Quarterly Income Statements

Results of Operations (Continued)

and decreased short-term borrowings by $2,700,000. On February 25, 2003, theMPUC granted approval for the Company to participate in a $4.0 millionintercompany revolving credit agreement with Energy Atlantic. As of March 31,2003, the Company had a balance of $2.5 million under this intercompanyagreement. For the period, the Company invested $1,782,000 in electricplant.

Net cash flows from operating activities were $3,657,000 for the first threemonths of 2002. For the period, the Company paid $551,000 in dividends and drewdown $620,000 from the trustee of the tax-exempt revenue bond proceeds based onqualifying property. The Company also paid scheduled sinking fund payments of$25,000 on long-term debt and decreased short-term borrowings by $2,600,000. Forthe period, the Company invested $1,166,000 in electric plant.

Revolving Credit Agreement and Letters of CreditExtensions

On May 23, 2002, the Company's $6 million revolving credit agreement with twoparticipating banks was extended until June 8, 2004. The agreement containscertain restrictive covenants including interest coverage tests anddebt-to-equity ratios. As of March 31, 2003, the Company was in compliance withthese covenants.

The Maine Public Utility Financing Bank (MPUFB) has issued its tax-exemptbonds on behalf of the Company for the construction of qualifying distributionproperty. Originally issued for $15 million and reduced with generating assetsale proceeds, the 1996 Refunding Series has $13.6 million outstanding at March31, 2003 and is due in 2021. On October 19, 2000, the 2000 Series of bonds wereissued in the amount of $9 million with these bonds due in 2025. The proceeds ofthe 2000 Series were placed in trust to be drawn down for the reimbursement ofissuance costs and for the construction of qualifying distribution property and,as of March 31, 2003, approximately $1.6 million is available. For bothtax-exempt bond series, a long-term note was issued under a loan agreementbetween the Company and the MPUFB with the Company agreeing to make payments tothe MPUFB for the principal and interest on the bonds. Concurrently, pursuant toa letter of credit and reimbursement agreement, the Bank of New York hasseparately issued its direct pay letters of credit (LC's) for the benefit of theholders of each series of bonds. Both LC's were due to expire in June 2002, andwere extended to June 8, 2004. In addition, the Company issued $14.4 million inSecond Mortgage Bonds due 2021 to secure its obligations under the letter ofcredit and reimbursement agreement for the 1996 Refunding Series, replacing$15.875 million of second mortgage bonds issued in 1996 that were due in June2002.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

(a) The Company has interest rate risk with three variable rate debt issuesof the regulated business as of March 31, 2003 for purposes other than trading.These issues are discussed in detail in the Company's 2002 Annual Report, whichincludes the Company's 2002 Form 10-K. The discussion occurs in Note 11, "SFASNo. 133", of the Notes to Consolidated Financial Statements. 

(b) The Company's unregulated energy marketing subsidiary, Energy Atlantic,LLC (EA) is engaged in retail and wholesale energy transactions for purposesother than trading. This activity exposes EA to a number of risks such ascounterparty, market liquidity, forecasting, deliverability, transmission,volumetric, market-based cost and credit risk as noted above. EA seeks to assurethat risks are identified, evaluated and actively managed.

-22-

Form 10-Q

PART 1. FINANCIAL INFORMATION
Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures 

The Company's President and Chief Executive Officer and Vice President,Treasurer and Chief Financial Officer have implemented new disclosure controlsand procedures. Based on their reviews of these disclosure controls and theprocedures, conducted within 90 days of this filing, as evidenced by thecertifications appearing at the end of this Form 10-Q, the afore-mentionedofficers have concluded that the controls are working effectively.

(b) Changes in Internal Controls 

There have not been any significant changes in the Company's internalcontrols or in other factors that could significantly offset these controlssubsequent to the date of their evaluation; there were also no correctiveactions with regard to significant deficiencies and material weaknesses.

-23-
Form 10-Q

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

(a) Maine Public Utilities Commission, Request for Approval of Reorganizationof the Company Into a 

Holding Company Structure, Docket No. 02-676

On October 31, 2002, the Company filed a request for Commission approval ofthe formation of a Maine-based holding company structure. Under this structure,the Company, EA, ME&NB, as well as other affiliates which might be createdat a later date, will become subsidiaries of a holding company (HoldCo). In itsapplication, the Company stated that the corporate restructuring will beaccomplished through a "reverse triangular merger," similar to the one employedin Central Maine Power Company Application for Approval of Reorganization, ofTransactions with Affiliated Interests, and Transfer of Assets, Docket No.97-930.

The proposed restructuring constitutes a reorganization requiring Commissionapproval pursuant to the provisions of 35-A M.R.S.A.  708. In addition to theproposed reorganization, the Company also requested the approval of certainstock issuances and affiliated interest transactions. 

Specifically, the Company requested Commission approval of the followingtransactions and arrangements:

1. the creation of a corporation (HoldCo) that will become the parent companyof MPS through its 

ownership of all outstanding company stock of MPS;

2. the creation of a corporation (MergeCo) whose only purpose will be tofacilitate the corporate 

reorganization and which, when organized, will be a wholly-owned subsidiaryof HoldCo and 

which will cease to exist once it has served its purpose;

3. the conversion and exchange of all the outstanding shares of the Company'scommon stock into an equal number of shares of HoldCo's common stock (to thedegree that the conversion and exchange of MPS stock to be effected in thattransaction is deemed to constitute an issuance of utility stock within themeaning of 35-A M.R.S.A.  901 and 902);

4. the merger of MergeCo into the Company, with the Company as the survivingcorporation, and the resulting conversion of the outstanding shares of MergeCocommon stock into a number of shares of the common stock of the Company equal tothe number of shares of the Company's common stock outstanding immediately priorto the share conversion described in item 3 above, which will be deemed issuedby the Company for this purpose;

5. the dividend by Maine Public Service of its limited liability companyinterests in Energy Atlantic to HoldCo pursuant to 35-A M.R.S.A.  708, 901 and902;

6. the execution and delivery of the Managerial and Support ServicesAgreement and approval of the 

cost manual submitted in conjunction therewith pursuant to 35-A M.R.S.A.707;

7. the winding up and dissolving of Me&NB at such future time as MPSmight deem appropriate 

pursuant to 35-A M.R.S.A.  708; and,

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Form 10-Q

PART II. OTHER INFORMATION

Item 1. Legal Proceedings (Continued)

8. the transfer, after the merger date, (i) of assets that are not "necessaryor useful" within the 

meaning of Section 1101 of title 35-A, from MPS to any MPS affiliate, and(ii) the transfer of all 

other assets from MPS to HoldCo or any non-MPS HoldCo subsidiary in the totalamount of up to 

$1,000,000 over the three-year period beginning upon the merger date.

The Company also requested that the Commission authorize the creation ofHoldCo and MergeCo within thirty days of the date of its filing. This "interimapproval" would be for the limited purpose of making necessary filings with theSecurities and Exchange Commission under the Public Utility Holding Company Actand for executing a registration statement under federal securities law. As partof this request for interim approval, the Company also represented that shouldthe Commission deny its petition for reorganization, or if for any other reasontheir organization does not occur, it will dissolve both HoldCo and MergeCo.

Subsequent to its filing, the Company received and responded to severalrequests for information from the MPUC and Office of Public Advocate, anintervenor in the proceeding, and met on several occasions with interestedparties. The parties settled all issues in the proceeding, and entered a signedStipulation formally approved by the MPUC on March 26, 2003. The Company hasalso filed, on March 11, 2003, a Form S-4 Registration Statement with theSecurities and Exchange Commission for "Maine & Maritimes Corporation" theentity designated as "HoldCo" in this disclosure. The filing is reviewable onthe SEC's website at "http://www.sec.gov/edgar" or on the MPS Investor Relationspage at "http://www.mainepublicservice.com."

(b) Maine Public Utilities Commission, Request for Approval of AlternativeRate Plan

On March 6, 2003, following a series of informal meetings with the Office ofPublic Advocate and the MPUC, the Company submitted its formal "Request forApproval of Alternate Rate Plan" (MPUC Docket 2003-85). The proposal (ARP) is aseven-year rate plan for its distribution delivery services with a targetimplementation date on or before July 1, 2003. The ARP is an alternative form ofregulating MPS's distribution assets, similar to the performance rate plans theMPUC has adopted for Central Maine Power Company and Bangor Hydro-ElectricCompany. The ARP has numerous components, all of which have been designed to fittogether as an integrated whole that will allow the Company to continue to meetthe unique needs of its Northern Maine customers. Its key components include: aninflation index and productivity offset; an adjustment for the treatment ofextraordinary costs the Company may incur; an interest expense adjustment; aneconomic conditions adjustment; a shareholder earnings sharing mechanism;pricing flexibility; reliability safety and service quality indices; and asharing mechanism for non-core revenues. The Company believes that the ARP willbenefit customers by: (1) ensuring that customer's electric service does notsuffer under the plan through the use of the above-described mechanisms; (2)providing predictable and stable rates; (3) providing an acceptable risk sharingenvironment; and (4) encouraging the Company to minimize its costs whereverpossible. At this time the Company cannot predict the nature or the outcome ofany decision or ruling by the MPUC in this proceeding. 

(c) Maine Public Utilities Commission Notice of Inquiry

On February 11, 2003, the MPUC initiated a formal Notice of Inquiry (NOI)into the status of the competitive market for electricity supply in northernMaine (MPUC Docket No. 2003-82). The NOI is not directed at the Company or anyspecific party or entity but is a general inquiry designed to gather informationabout the

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Form 10-Q

PART II. OTHER INFORMATION

Item 1. Legal Proceedings (Continued)

adequacy of existing market structures, rules and laws in light of thelimited number of supplier/generator participants in the region. The MPUC'sinquiry is for the purpose of identifying potential concerns related to northernMaine's supply and market situation, and to explore possible solutions. Incontrast to the rest of Maine, which is part of the Independent System Operator- New England (ISO-NE) region, northern Maine is electrically interconnected tothe Canadian Maritimes region, which also includes the electric loads andgeneration of New Brunswick, as well as Nova Scotia and Prince Edward Island.Load and generation in northern Maine, which comprises the Company's serviceterritory, are interconnected to the rest of Maine and New England only bytransmission through New Brunswick. The Northern Maine Independent SystemAdministrator (NMISA) operates the bulk power and transmission systems for theregion. The divestiture of generation assets in connection with the MaineElectric Industry Restructuring Act eliminated rate regulation for theproduction and sale of electricity supply as of March 1, 2000. During thesubsequent period of time, the retail and wholesale markets have experienced alimited number of participants. In furtherance of the MPUC's inquiry, itrequested comments on a number of issues related to these unique marketconditions. The Company has provided comments for the MPUC's consideration andresponded to additional requests for information from the MPUC. At this time theCompany cannot predict the nature or the outcome of any finding, decision orruling by the MPUC in this proceeding.

(d) Federal Energy Regulatory Commission (FERC) Open Access TransmissionTariff (OATT) Filing

Pursuant to Section 2.5 of the Settlement Agreement filed on June 30, 2000,in Docket No. ER00-1053-000, and accepted by the Federal Energy RegulatoryCommission (FERC) on September 15, 2000, MPS provided parties and FERC staffproposed changes to its Open Access Transmission Tariff (OATT) Formula Rateduring March 2003. In general, the Company is seeking a slight modification toits rate formula under its transmission tariff. The Company has conferred withthe parties and FERC staff to informally resolve outstanding issues in thefiling with the objective of reaching agreement on the OATT "Formula Rate" priorto May 30, 2003. If MPS, the parties and FERC staff are unable to reachagreement, the Company shall submit by May 30, 2003, under section 205 of theFederal Power Act, 16 U.S.C.  824d, a unilateral filing with the FERC restatingor revising the Formula Rate. The probability of success of this collaborativeeffort is unknown at this time.

Item 2. Changes in Securities

None

Item 3. Defaults upon Senior Securities

None

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

None

Item 5. Other Information

Board of Directors Authorizes Reorganization of Company into HoldingCompany

On October 4, 2002, the Company's Board of Directors authorized the Companyto reorganize into a holding company structure.  The intended result wouldbe that Maine Public Service Company (the "Company") would become a wholly-ownedsubsidiary of a new holding company. Maine and New Brunswick Electrical PowerCompany, Ltd., will remain a subsidiary of the Company until all obligationshave terminated, at which time it is

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Form 10-Q

PART II. OTHER INFORMATION

Item 5. Other Information (continued)

proposed the subsidiary may be dissolved. The ownership of Energy Atlantic,LLC, now a subsidiary of the Company, would be transferred to the holdingcompany.  To achieve this corporate structure, stock in the Company will beexchanged for stock in the new holding company through a "reverse triangularmerger."  The reorganization will not go forward without an opinion ofcounsel that the transaction does not cause federal income tax liability to theCompany's shareholders, whose stock is exchanged in the reorganization. The Company will be undertaking the reorganization in order to maintain itsfocus on its core regulated business, while at the same time positioning theCompany for more diversified growth.

 

The reorganization will require the approval of the Maine Public UtilitiesCommission, and review and filings with the U.S. Securities and ExchangeCommission under the Public Utilities Holding Company Act, and the FederalEnergy Regulatory Commission under the Federal Power Act.  Among the firststeps authorized by the Board was the filing of a petition for MPUC approval onOctober 31, 2002 and the preparation and filing of documents necessary for otherState and federal regulatory approvals.  Certain other regulatory andnon-regulatory consents must also be obtained, and will be sought, in connectionwith the Company's outstanding indebtedness.

 

After regulatory approvals have been obtained, the Company will requestshareholder approval for the reorganization.  Prior to the Company's AnnualShareholder Meeting on May 30, 2003, specific details concerning the holdingcompany will be provided to shareholders.  Investor tours and a web-castwill be held prior to the 2003 Annual Shareholders Meeting to detail plans andanswer specific shareholder questions.  Management's goal is to have thenecessary regulatory approvals in place prior to the date of our annual meeting.Subsequent to its filing, the Company received and responded to several requestsfor information from the MPUC and Office of Public Advocate, an intervenor inthe proceeding, and met on several occasions with these and other interestedparties. The parties settled all issues in the proceeding and entered a signedStipulation to that effect that was formally approved by the MPUC on March 26,2003. The MPUC Order in Docket No. 2002-676, authorizing the Company to form aholding company structure is included on Pages O-1 to O-21 of the Company's Form10-K. The Company filed, on March 11, 2003, a Form S-4 Registration Statementwith the Securities and Exchange Commission for the "Maine & MaritimesCorporation," the entity designated as "HoldCo" in this disclosure. The filing,which was made effective by the SEC on April 18, 2003, is reviewable on theSEC's website at http://www.sec.gov/edgar or on the MPS Investor Relations pageat http://www.mainepublicservice.com For additional information on the strategicvision for the Maine & Maritimes Corporation, please refer to the Form S-4mentioned above and Exhibit 99(ao) of the Company's Form 10-K for December 31,2002, Letter to Shareholders and Q&A with the President from the 2002 MainePublic Service Company Annual Report.

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Form 10-Q

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Form 8-Ks were filed on January 23, 2003 naming David N. Felch to the Boardof Directors; on February 14, 2003 releasing financial results for the fourthquarter and calendar year 2002; and on February 28, 2003 announcing thealternative rate plan and EA ceasing marketing in Northern Maine.

Exhibit 99.1 Certification of Financial Reports dated May 15, 2003 for theForm 10-Q for the quarter ended March 31, 2003.

SIGNATURE

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

MAINE PUBLIC SERVICE COMPANY

(Registrant)

Date: May 15, 2003 By: /s/ Michael A. Thibodeau

Michael A. Thibodeau

Vice President, Controller and Chief Risk Officer

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Form 10-Q

CERTIFICATIONS
I, J. Nicholas Bayne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Maine Public ServiceCompany (the registrant);

2. Based on my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this quarterlyreport;

3. Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to us by others within those entities, particularly during theperiod in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls andprocedures as of a date within 90 days prior to the filing date of thisquarterly report (the "Evaluation Date"); and

c) presented in this quarterly report conclusions about the effectiveness ofthe disclosure controls and procedures based on our evaluation as of theEvaluation Date;

5. The registrant's other certifying officers and I have disclosed, based onour most recent evaluation, to the registrant's auditors and the audit committeeof the registrant's board of directors:

a) all significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability to record,process, summarize and report financial data and have identified for theregistrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or otheremployees who have significant role in the registrant's internal controls;and

6. The registrant's other certifying officers and I have indicated in thisquarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

Dated: May 15, 2003 

/s/ J. Nicholas Bayne

J. Nicholas Bayne

Chief Executive Officer

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Form 10-Q

CERTIFICATIONS
I, Larry E. LaPlante, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Maine Public ServiceCompany (the registrant);

2. Based on my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this quarterlyreport;

3. Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to us by others within those entities, particularly during theperiod in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls andprocedures as of a date within 90 days prior to the filing date of thisquarterly report (the "Evaluation Date"); and

c) presented in this quarterly report conclusions about the effectiveness ofthe disclosure controls and procedures based on our evaluation as of theEvaluation Date;

5. The registrant's other certifying officers and I have disclosed, based onour most recent evaluation, to the registrant's auditors and the audit committeeof the registrant's board of directors:

a) all significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability to record,process, summarize and report financial data and have identified for theregistrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or otheremployees who have significant role in the registrant's internal controls;and

6. The registrant's other certifying officers and I have indicated in thisquarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

Dated: May 15, 2003 

/s/ Larry E. LaPlante

Larry E. LaPlante

Vice President, Treasurer, and Chief Financial Officer

-30-
Exhibit 99.1

Certification of Financial Reports Pursuant to 18USC Section 1350

The undersigned hereby certify that the quarterly report on Form 10-Q for thequarter ended March 31, 2003 fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)and that information contained in that Form 10-Q fairly presents, in allmaterial respects, the financial condition and results of operations of theCompany.

By: /s/ J. Nicholas Bayne 

J. Nicholas Bayne

Chief Executive Officer

/s/ Larry E. LaPlante 

Larry E. LaPlante

Vice President, Treasurer and Chief Financial Officer

Dated: May 15, 2003 

This certification is made solely for purposes of 18 USC Section 1350,subject to the knowledge standard contained therein, and not for any otherpurpose. 

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