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      March 31, 1999           Commission File No.    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
          Subsidiaries Condensed Consolidated Financial Statements,
          including a statement of consolidated operations for the
          quarter ended March 31, 1999, and for the corresponding period
          of the preceding year; a consolidated balance sheet as of
          March 31, 1999, and as of December 31, 1998, 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 March 31, 1999, 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 March 31, 1999 and
          December 31, 1998, and the results of their operations for the
          three months ended March 31, 1999 and their cash flows for the
          three months ended March 31, 1999, and for the corresponding
          period of the preceding year.
          





























                                    -2-
           MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES
               STATEMENTS OF CONSOLIDATED OPERATIONS
                         (Unaudited)
          (Dollars in Thousands Except Per Share Amounts)
      
                                                    Three Months Ended
                                                          March 31,
                                                    1999        1998
 
 
Operating Revenues                                 $17,469    $15,597
Operating Expenses
   Purchased Power                                   9,098      7,725
   Other Operation and Maintenance                   3,305      3,785
   Depreciation                                        601        659
   Amortization                                        385        402
   Taxes Other Than Income                             447        435
   Provision for Income Taxes                        1,144        733
        Total Operating Expenses                    14,980     13,739
Operating Income                                     2,489      1,858
Other Income (Deductions)
   Equity in Income of Associated Companies            277        126
   Allowance for Equity Funds Used During
      Construction                                      10          7
   Provision for Income Taxes                          (34)       (16)
   MY Replacement Power Carrying Charges                69         56
   Other - Net                                         (80)        16
Total                                                  242        189
Income Before Interest Charges                       2,731      2,047
Interest Charges
   Long-Term Debt and Notes Payable                    979        945
   Less Allowance for Borrowed Funds
      Used During Construction                          (7)        (4)
Total                                                  972        941
Net Income Available for Common Stock               $1,759     $1,106
 
Average Shares Outstanding (000's)                   1,617      1,617
Basic Earnings Per Share of Common Stock             $1.09      $0.68
Dividends Declared per Common Share                  $0.25      $0.25
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 
 
 
  
                                   -3-
               MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                              (Unaudited)
                            (Dollars in Thousands)
                                                       March 31,   December 31,
                       ASSETS                             1999           1998
Utility Plant
   Electric Plant in Service                            $101,002       $101,211
   Less Accumulated Depreciation                          51,999         51,585
      Net Electric Plant in Service                       49,003         49,626
   Construction Work-in-Progress                           1,589          1,014
        Total                                             50,592         50,640
Investment in Associated Companies
   Maine Yankee Atomic Power Company                       3,933          3,979
   Maine Electric Power Company, Inc.                        453            241
        Total                                              4,386          4,220
        Net Utility Plant and Investments                 54,978         54,860
Current Assets
   Cash and Cash Equivalents                               1,314          1,454
   Deposits for Interest and Dividends                       477            477
   Accounts Receivable - Net                               7,137          5,856
   Unbilled Base Revenue                                   1,510          1,892
   Deferred Fuel and Purchased Energy                        687            687
   Current Deferred Income Taxes                               0             31
   Inventory                                               1,232          1,037
   Prepayments                                               437            521
      Total                                               12,794         11,955
Other Assets
   Restricted Investment                                   2,820          2,817
   Uncollected Maine Yankee Decommissioning Costs         35,185         36,037
   Recoverable Seabrook Costs                             24,519         24,875
   Regulatory Asset - SFAS 109 & 106                      11,872         11,886
   Deferred Fuel and Purchased Energy                     10,264          9,618
   Regulatory Asset - Power Purchase Agmt Restructuring    8,706          8,706
   Other                                                   3,089          3,541
      Total                                               96,455         97,480
Total Assets                                            $164,227       $164,295
           CAPITALIZATION AND LIABILITIES
Capitalization
   Common Shareholders' Equity
      Common Stock                                       $13,071        $13,071
      Paid-in Capital                                         38             38
      Retained Earnings                                   28,893         27,539
      Treasury Stock, at cost                             (5,714)        (5,714)
         Total                                            36,288         34,934
      Long-Term Debt (less current maturities)            45,890         45,915
Current Liabilities
   Long-Term Debt Due Within One Year                      1,275          1,275
   Notes Payable                                           6,800          8,100
   Accounts Payable                                        4,149          4,671
   Current Deferred Income Taxes                              45             0
   Dividends Declared                                        404            404
   Customer Deposits                                          22             24
   Interest and Taxes Accrued                              1,368          1,029
      Total                                               14,063         15,503
Deferred Credits
  Uncollected Maine Yankee Decommissioning Costs          35,185         36,037
  Deferred Income Tax                                     26,353         25,812
  Investment Tax Credits                                     562            578
  Deferred Revenues                                        1,206          1,170
  Miscellaneous                                            4,680          4,346
    Total                                                 67,986         67,943
Total Capitalization and Liabilities                     164,227        164,295
The accompanying notes are an integral part of these financial statements.











































                                   -4-
               MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARIES
                    Statements of Consolidated Cash Flows
                              (Unaudited)
                         (Dollars in Thousands)
                                                            Three Months Ended
                                                                 March 31,
                                                             1999          1998
Cash Flow From Operating Activities
   Net Income                                                $1,759     $1,106
 
Adjustments to Reconcile Net Income to Net Cash
   Provided by Operations
   Depreciation                                                 601        659
   Amortization                                                 394        412
   Income on Tax Exempt Bonds-Restricted Funds                   (4)       (27)
   Deferred Income Taxes - Net                                  585        456
   AFUDC                                                        (17)       (11)
   Change in Deferred Fuel & Purchased Energy                  (647)    (1,327)
   Change in Deferred Regulatory and Debt Issuance Costs        235        235
   Change in Deferred Revenues                                   36         65
   Change in Benefit Obligation                                 168        206
   Change in Current Assets and Liabilities                  (1,194)      (929)
   Other                                                        311        (28)
Net Cash Flow Provided By Operating Activities                2,227        817
 
Cash Flow From Financing Activities
   Dividend Payments                                           (404)      (809)
   FAME Financing Costs                                          (6)         0
   Retirements on Long-Term Debt                                (25)       (25)
   Short-Term Borrowings (Repayments), Net                   (1,300)       500
Net Cash Flow Used In Financing Activities                   (1,735)      (334)
 
Cash Flow From Investing Activities
   Investment in Electric Plant                                (632)      (482)
   Net Cash Used For Investment Activities                     (632)      (482)
 
Increase in Cash and Cash Equivalents                          (140)         1
Cash and Cash Equivalents at Beginning of Year                1,454      2,071
Cash and Cash Equivalents at End of Period                   $1,314     $2,072
 
Change in Current Assets and Liabilities Providing (Utilizing)
   Cash From Operating Activities
      Accounts Receivable                                   ($1,280)      $270
      Unbilled Revenue                                          382        218
      Deferred Maine Yankee Replacement Power Costs               0          7
      Inventory                                                (195)       (44)
      Prepayments                                                84        128
      Accounts Payable & Accrued Expenses                      (183)    (1,504)
      Other Current Liabilities                                  (2)        (4)
   Total Change                                             ($1,194)     ($929)
 
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period For:
   Interest                                                  $1,366     $1,347
   Income Taxes                                                 $40        $33
 
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, its wholly-owned Canadian subsidiary, Maine and  
    New Brunswick Electrical Power Company, Limited and its unregulated       
    marketing subsidiary, Energy Atlantic, LLC (EA).

    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 1998 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 1998 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 with a maturity, when purchased, 
    of three months or less to be cash equivalents.

    Certain reclassification have been made to the 1998 financial          
    statement amounts in order to conform to the 1999 presentation. 

2.  ENERGY ATLANTIC

    In January, 1999, Energy Atlantic, the Company's wholly-owned          
    unregulated marketing subsidiary, formally began operations.  This     
    marketing segment is currently involved in wholesale energy transactions 
    and intends to enter the retail market in March 1, 2000, the           
    commencement of retail competition in the State of Maine.

    During the quarter ended March 31, 1999, the Company adopted Statement of 
    Financial Accounting Standards (FAS) No. 131, "Disclosure about Segments of 
    an Enterprise and Related Information", which became applicable as a result 
    of the start-up of Energy Atlantic.  Segment reporting has been presented 
    below for the current period only since historically there had not been   
    separate reportable segments.  The accounting policies of the segments are 
    the same as those described in Note 1, "SUMMARY OF SIGNIFICANT ACCOUNTING 
    POLICIES".  The Company provides certain administrative support services to 
    Energy Atlantic, which are billed to that entity at cost based on a       
    combination of direct charges and allocations.  The Company is organized on 
    the basis of products and services.  The Company's reportable segments    
    include the electric utility portion of the business, consisting of Maine 
    Public Service Company and Maine and New Brunswick Electrical Power 
    Company, Limited, and the energy marketing portion of the business,       
    consisting of Energy Atlantic.           -6-

                            First Quarter of 1999 (Dollars in Thousands)
                                 Energy      Maine Public      Total
                                 Atlantic    Service Co.      Company    

    Operating Revenues           $ 1,461        $ 16,008       $ 17,469
    Operations & Maintenance
      Expense                      1,547          12,289         13,836
    Taxes                            (34)          1,178          1,144
    Total Operating Expenses       1,513          13,467         14,980
    Operating Income (Loss)          (52)          2,541          2,489
    Other Income & Deductions         -              242            242
    Income (Loss) Before
     Interest Charges                (52)          2,783          2,731
    Interest Charges                   2             970            972
    Net Income (Loss)            $   (54)       $  1,813       $  1,759
    Total Assets as of
      March 31, 1999             $ 1,158        $163,069       $164,227

3.  IMPLEMENTATION OF MULTI-YEAR RATE PLAN

    A four-year rate plan, approved by the MPUC on November 13, 1995,      
    provided retail rate increases of 4.4% on January 1, 1996, 2.9% on     
    February  1, 1997, and 3.9% on February 1, 1998.  On April 6, 1999,    
    the MPUC approved a Stipulation between the Office of the Public       
    Advocate (OPA) and the Company.  Under this stipulation and with       
    the April 5, 1999 MPUC approval of the sale of the Company's generating 
    assets, customer rates did not increase on April 1, 1999.  

    Principal provisions of the Stipulation are as follows:
    a)  The Company is entitled to a 3.66% specified rate increase as      
        of April 1, 1999.  Rather than increasing customer rates, the      
        Company will recognize the revenues related to this rate increase, 
        and recognize a corresponding deferred asset.  The parties to the  
        Stipulation agreed to recommend that available value from the asset 
        sale be used in an amount corresponding to the specified rate      
        increase which will be addressed by the MPUC's determination of    
        allowed stranded cost recovery.
    b)  The Company agreed to begin amortizing on April 1, 1999, an additional
        $150,000 per month of Maine Yankee replacement power costs or a total
        of $1,650,000 for the remaining eleven months of the rate plan.

    With higher winter rates for our commercial and industrial customers   
    and the elimination of the fuel clause, revenues will be higher        
    during the winter months than during the summer months when rates      
    charged to those customers are approximately 25% lower.

4. INCOME TAXES                                                     
   
   A summary of Federal and State income taxes charged 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)".
                                    -7-

                                              (Dollars In Thousands)
                                              Three Months Ended 
                                                      March 31,     
                                                  1999          1998    
   Current income taxes                       $    593       $   293   
   Deferred income taxes                           601           474
   Investment credits                              (16)          (18)  
      Total income taxes                      $  1,178       $   749 

   Allocated to:
   Operating Income                           $  1,144       $   733   
   Other income                                     34            16  
      Total                                   $  1,178       $   749 
  
   For the three months ended March 31, 1999 and 1998, the effective income tax 
   rates were 40.1% and 40.4%, respectively.  The principal reason for the    
   effective tax rates differing from the US federal income tax rate are the  
   contribution to net income of the Company's Canadian subsidiary, flow 
   through items required by regulation and state income taxes.           
   
   The following summarizes accumulated deferred income taxes established on  
   temporary differences under SFAS 109 as of March 31, 1999 and December 31, 
   1998.
                                              (Dollars in Thousands)
                                              March 31,   December 31,
                                                 1999          1998       
      Seabrook                                 $13,646       $13,706
      Property                                   8,578         8,532
      Regulatory expenses                        2,101         2,002       
      Deferred fuel                              2,150         2,056
      Pension and postretirement benefits         (877)         (952)
      Other                                        755           468 
      Net accumulated deferred income taxes    $26,353       $25,812 

5. MAINE YANKEE 
    
   The Company owns 5% of the Common Stock of Maine Yankee, which operated an 
   860 MW nuclear power plant (the "Plant") in Wiscasset, Maine.  On August 6, 
   1997, the Board of Directors of Maine Yankee voted to permanently cease 
   power operations and to begin decommissioning the Plant.  The Plant        
   experienced a number of operational and regulatory problems and did not    
   operate after December 6, 1996. The decision to close the Plant permanently 
   was based on an economic analysis of the costs, risks and uncertainties    
   associated with operating the Plant compared to those associated with 
   closing and decommissioning it. The Plant's operating license from the     
   Nuclear Regulatory Commission (NRC) was due to expire on October 21, 2008.
                                     
   The Maine Public Utilities Commission (MPUC) stayed an investigation of the 
   prudency of the shutdown decision and the operation of Maine Yankee prior to 
   the shutdown decision, pending the outcome of Maine Yankee's rate case 
   before the Federal Energy Regulatory Commission (FERC).  The MPUC and the  
   Maine Office of the Public Advocate (OPA) are actively participating in the 
   FERC proceeding, as well as 28 municipal and cooperative utilities in New  
   England who received               -8- 

   approximately 6.2% of the output from Maine Yankee (the "Secondary      
   Purchasers").

   In support of its request for an increase in decommissioning            
   collections, Maine Yankee submitted with its initial FERC rate case     
   filing a 1997 decommissioning cost study performed by TLG Services,     
   Inc. ("TLG").  During 1998, Maine Yankee engaged in an extensive        
   competitive bid process to engage a Decommissioning Operations          
   Contractor ("DOC") to perform certain major decontamination and         
   dismantlement activities at the Plant on a fixed-price, turnkey         
   basis.  As a result of that process, a consortium headed by Stone &     
   Webster Engineering Corporation ("Stone & Webster") was selected to     
   perform such activities under a fixed-price contract.  The contract     
   provides for, among other undertakings, construction of an              
   independent spent fuel storage installation ("ISFSI") and               
   completion of major decommissioning activities and site restoration     
   by the end of 2004.  The DOC process resulted in fixing certain         
   costs that had been estimated in the earlier decommissioning cost       
   estimate performed by TLG.

   Since the filing of the FERC rate request, Maine Yankee and the         
   active intervenors, including among others the MPUC Staff, the OPA,     
   the Company and other owners, the Secondary Purchasers, and a Maine     
   environmental group (the "Settling Parties"), engaged in extensive      
   discovery and negotiations.  Those parties participated in              
   settlement discussions that resulted in an Offer of Settlement filed    
   by those parties with the FERC on January 19, 1999.  On February 8,     
   1999, the FERC Trial Staff recommended that the presiding judge         
   certify the settlement to the FERC and that the FERC approve it.        
   Upon approval by the FERC, the settlement would constitute a full       
   settlement of all issues raised in the consolidated FERC proceeding,    
   including decommissioning-cost issues and issues pertaining to the      
   prudence of the management, operation, and decision to permanently      
   cease operation of the Plant.  A separately negotiated settlement       
   filed with the FERC on February 5, 1999 would resolve the issues        
   raised by the Secondary Purchasers by limiting the amounts they will    
   pay for decommissioning the Plant and by settling other points of       
   contention affecting individual Secondary Purchasers. On February 24,   
   1999, the FERC Trial Staff recommended certification and approval of the 
   settlement with the Secondary Purchasers.  On March 10,1999, the        
   presiding judge certified to the FERC that both Offers of Settlement were 
   uncontested and joined in the Trial Staff's comments that both were     
   "fair, reasonable and in the public interest".

   The Offer of Settlement provides for Maine Yankee to collect $33.6      
   million in the aggregate annually, effective January 15, 1998           
   consisting of: (1) $26.8 million for estimated decommissioning          
   costs, and (2) $6.8 million for ISFSI-related costs.  The original      
   filing with FERC on November 6, 1997, called for an aggregate           
   annual collection rate of $36.4 million for decommissioning and the     
   ISFSI, based on the TLG estimate.  Under the settlement the amount      
   collected annually could be reduced to approximately $26 million if     
   Maine Yankee is able to (1) use for construction the ISFSI funds        
                                    -9-

   held in trust under Maine law for spent-fuel disposal, and (2)          
   access approximately $6.8 million held by the State of Maine for        
   eventual payment to the State of Texas pursuant to a compact for        
   low-level nuclear waste disposal, the future of which is now in         
   question after rejection of the selected disposal site in west          
   Texas by a Texas regulatory agency. Both would require                  
   authorizing legislation in Maine, which Maine Yankee is committed       
   to use its best efforts to obtain.

   The Offer of Settlement also provides for recovery of all               
   unamortized investment (including fuel) in the Plant, together with     
   a return on equity of 6.50 percent, effective January 15, 1998, on      
   equity balances up to certain maximum allowed equity amounts.  The      
   Settling Parties also agreed in the proposed settlement not to          
   contest the effectiveness of the Amendatory Agreements submitted to     
   FERC as part of the original filing, subject to certain limitations     
   including the right to challenge any accelerated recovery of            
   unamortized investment under the terms of the Amendatory Agreements     
   after a required informational filing with the FERC by Maine            
   Yankee.  In addition, the settlement contains incentives
   for Maine Yankee to achieve further savings in its decommissioning      
   and ISFI-related costs and resolves issues concerning restoration       
   and future use of the Plant site and environmental matters of           
   concern to certain of the intervenors in the proceeding.
   
   As a separate part of the Offer of Settlement, the Company, Central     
   Maine Power Company, and Bangor Hydro-Electric Company (the other       
   two Maine owners of Maine Yankee), the MPUC Staff, and the OPA          
   entered into a further agreement resolving retail rate issues and       
   other issues specific to the Maine parties, including those that had    
   been raised concerning the prudence of the operation and shutdown of    
   the Plant (the "Maine Agreement").  Under the Maine Agreement, the      
   Company would continue to recover its Maine Yankee costs in             
   accordance with its most recent Rate Stabilization Plan ("RSP")     
   order from the MPUC without any adjustment reflecting the outcome of   
   the FERC proceeding.  To the extent that the Company has collected     
   from its retail customers a return on equity in excess of the 6.50     
   percent contemplated by the Offer of Settlement, no refunds would be   
   required, but such excess amounts would be credited to the customers   
   to the extent required by the RSP.

   The final major provision of the Maine Agreement requires the Maine    
   owners, for the period from March 1, 2000 through December 1, 2004,    
   to hold their Maine retail ratepayers harmless from the amounts by     
   which the replacement power costs for Maine Yankee exceed the          
   replacement power costs assumed in the report to the Maine Yankee      
   Board of Directors that served as a basis for the Plant shutdown       
   decision, up to a maximum cumulative amount of $41 million.  The       
   Company's share of that maximum amount would be $4.1 million for the   
   period.  The Maine Agreement, which was approved by the MPUC on        
   December 22, 1998, also sets forth the methodology for calculating     
   such replacement power costs.

                                 -10-

     The Company believes the Offer of Settlement, including the Maine      
     Agreement, reasonably resolves the issues presented by the parties     
     in the Maine Yankee FERC proceeding.  If the Offer of Settlement is    
     approved by the FERC, several significant uncertainties regarding      
     the recovery of Maine Yankee-related costs are eliminated.  Although   
     all of the active parties to the proceeding, including the FERC      
     Trial Staff, support or, with respect to certain individual            
     provisions, do not oppose, the Offer of Settlement, the Company        
     cannot predict with certainty whether or in what form the Offer of     
     Settlement will be approved by the FERC.

     With the closing of Maine Yankee, a provision of the Company's rate    
     plan allowing the deferral of 50% of the Maine Yankee replacement      
     power costs went into effect on June 6, 1997.  Beginning in May,       
     1998, Maine Yankee replacement power costs have been offset by net     
     savings from the restructured Purchase Power Agreement with            
     Wheelabrator-Sherman, in accordance with the rate plan stipulation,    
     resulting in a deferral of $303,000 during the first quarter of        
     1999.  As of March 31, 1999, the Company has a deferred Maine Yankee   
     replacement power cost balance of approximately $3.8 million,          
     subject to recovery in accordance with the rate plan.

     On September 1, 1997, Maine Yankee estimated the sum of the future     
     payments for the closing, decommissioning and recovery of the          
     remaining investment in Maine Yankee to be approximately $930          
     million, of which the Company's 5% share would be approximately     
     $46.5 million.  In December, 1998, Maine Yankee updated its estimate   
     of decommissioning costs based on the Settlement, as discussed         
     above.  Legislation enacted in Maine in 1997 calls for restructuring   
     the electric utility industry and provides for recovery of             
     decommissioning costs, to the extent allowed by federal regulation,    
     through the rates charged by the transmission and distribution         
     companies.  Based on the Maine legislation and regulatory precedent    
     established by the FERC in its opinion relating to the                
     decommissioning of the Yankee Atomic nuclear plant, the Company        
     believes that it is entitled to recover substantially all of its       
     share of such costs from its customers and, as of March 31, 1999, is   
     carrying on its consolidated balance sheet a regulatory asset and a    
     corresponding liability in the amount of $35.2 million, which is the   
     September, 1997 cost estimate of $46.5 million discussed above         
     reduced by the Company's post-September 1, 1997 cost-of-service        
     payments to Maine Yankee and reflects the cost adjustments agreed to   
     in the Settlement.

6.  RESTRUCTURING OF MAINE'S ELECTRIC UTILITY INDUSTRY

     On May 29, 1997, legislation titled "An Act to Restructure the     
     State's Electric Industry" was signed into law by the Governor of  
     Maine.  The principal provisions with accounting impact on the     
     Company are as follows:



                                 -11-

        1)  Beginning on March 1, 2000, all consumers of electricity   
            have the right to purchase generation services directly from 
            competitive electricity suppliers who will not be subject to 
            rate regulation.

        2)  By March 1, 2000, the Company, Central Maine Power Company 
            (CMP) and Bangor Hydro-Electric Company (BHE) must divest of 
            all generation related assets and business functions except 
            for:
                  a)    contracts with qualifying facilities, such as
                        the Company's power contract with Wheelabrator-
                        Sherman (W-S) and conservation providers;

                  b)    nuclear assets, namely, the Company's
                        investment in the Maine Yankee Atomic Power
                        Company;

                  c)    facilities located outside the United States,
                        i.e., the Company's hydro facility in New
                        Brunswick, Canada; and
                  d)    assets that the MPUC determines necessary for
                        the operation of the transmission and          
                        distribution services.  

               The MPUC can grant an extension of the divestiture      
               deadline if the extension will improve the selling      
               price.  For assets not divested, the utilities are      
               required to sell the rights to the energy and capacity  
               from these assets.  The Company shall submit to the MPUC 
               its divestiture plan no later than January 1, 1999.

          3)   The Company, through a regulated affiliate, will continue
               to provide transmission and distribution services which
               will be subject to continued rate regulation by the MPUC.
                                   
          4)   Maine electric utilities will be permitted a reasonable
               opportunity to recover legitimate, verifiable and
               unmitigable costs that are otherwise unrecoverable as a
               result of retail competition in the electric utility
               industry (so-called "Stranded Costs").

               The MPUC shall determine these stranded costs by        
               considering:

                  a)    the utility's regulatory assets related to
                        generation, i.e., the Company's unrecovered
                        Seabrook investment;

                  b)    the difference between net plant investment in
                        generation assets compared to the market value
                        for those assets; and


                                 -12-

                  c)    the difference between future contract payments
                        and the market value of the purchased power
                        contracts, i.e., the W-S contract.
                                   
               By the end of 1999, the MPUC will have estimated the    
               stranded costs for the Company and the manner for the   
               collection of these costs by the transmission and       
               distribution company.  Customers reducing or eliminating 
               their consumption of electricity by switching to self-  
               generation, conversion to alternative fuels or utilizing 
               demand-side management measures cannot be assessed exit 
               or entry fees.   

          5)   The MPUC shall include in the rates charged by the      
               transmission and distribution utility decommissioning   
               expenses for Maine Yankee.  In 2003 and every three years 
               thereafter until the stranded costs are recovered, the  
               MPUC shall review and adjust the stranded cost recovery 
               amounts and related transition charges. However, the MPUC 
               may adjust the amounts at any point in time that they   
               deem appropriate.  Since the legislation provides for our 
               recovery of stranded costs by the transmission and      
               distribution company, the Company will continue to      
               recognize existing regulatory assets and plant costs as 
               provided by Emerging Issues Task Force 97-4.
 
          6)   Employees, other than officers, displaced as a result of
               retail competition will be entitled to certain severance
               benefits and retraining programs.  These costs will be
               recovered through charges collected by the regulated
               transmission and  distribution company.

    The MPUC will conduct several rulemaking proceedings associated with 
    the new restructuring law.  The Company is presently reviewing its 
    business operations and the opportunities that the new restructuring 
    law presents.  

    In accordance with EITF 97-4 "Deregulation of the Pricing of       
    Electricity", when the details of the restructuring plan are       
    determined by the MPUC rulemaking, the Company will discontinue    
    application of the Statement of Financial Accounting Standards No. 
    71 (SFAS 71), "Accounting for the Effects of Certain Types of      
    Regulations", for the retail generation segment of its business.   
    As a result, the Company continues to defer certain costs as       
    regulatory assets in instances where recovery through future       
    regulatory cash flows is anticipated.  

    In a February 9, 1999 filing with the MPUC, the Company amended its 
    October 14, 1998 determination of stranded costs, transmission and 
    distribution costs and rate design with the MPUC.  The Company's   
    testimony supports its $99.3 million estimate of stranded costs when 
    deregulation occurs on March 1, 2000.  The major components include 

                                 -13- 

    the remaining investment in Seabrook, the above market costs of the 
    amended power purchase agreement and recovery of fuel expense      
    deferrals related to Wheelabrator-Sherman, the obligation for      
    remaining operating expenses and recovery of the Company's remaining 
    investment in Maine Yankee, and the recovery of several other      
    regulatory assets, but does not include any benefits from the      
    Company's sale of generating assets.  These stranded costs         
    revenue requirements will be reduced by an estimated $19.9 million 
    upon the sale of the Company's generating assets, as discussed     
    further in Note 7, "GENERATING ASSET DIVESTITURE", below.       

7.  GENERATING ASSET DIVESTITURE

    On July 7, 1998, the Company and WPS Power Development, Inc. (WPS- 
    PDI) signed a purchase and sale agreement for the Company's electric 
    generating assets.  WPS-PDI agreed to purchase 91.8 megawatts of   
    generating capacity for $37.4 million, which is 3.2 times higher   
    than the net book value of the assets.  This sale of assets is     
    required by the State's electric industry restructuring law and    
    requires the approvals of the MPUC and the FERC. The gain from the 
    asset sale would reduce stranded costs revenue requirements by $19.9 
    million.   

    On August 7, 1998, the Company filed with the MPUC for approval of 
    this sale.  The proceeding was given the Docket No. 98-584.  The   
    Public Advocate and the Houlton Water Company (HWC) have intervened 
    in this proceeding.  As reported in the Company's Form 10-Q for the 
    quarter ended September 30, 1998, the MPUC, in its order approving 
    the Company's divestiture plan in MPUC Docket No. 97-670, noted a  
    number of concerns that it would address in Docket No. 98-584.     
    Principal among these concerns is whether the Company's lack of any 
    connection to New England electrical markets, except through the   
    Province of New Brunswick, Canada (NB) and the transmission system 
    owned by the Maine Electric Power Company (the MEPCO line) presented 
    unique issues concerning development of an adequate competitive    
    retail market for electricity in northern Maine and directed the   
    Company to address these concerns when it filed for approval in    
    Docket No. 98-584.

    On January 29, 1999, the Company filed a Partial Stipulation in this 
    Docket.  Under the terms of this Stipulation, the parties agreed   
    that access to northern Maine's electrical markets exclusively     
    through the transmission of the New Brunswick Power Corporation (NB 
    Power) and the MEPCO line "is no longer a substantial barrier to the 
    development of an adequate retail market for electricity in northern 
    Maine" and that any market power issues in northern Maine should not 
    prevent the MPUC from approving the sale of the Company's generation 
    assets to WPS-PDI.

    The basis for this Stipulation is a Products and Service Agreement 
    reached in principal between NB Power, on the one hand, and the    
    Company, HWC, Eastern Maine Electric Cooperative, Inc. and the Van 
    Buren Light and Power District (collectively, "the northern Maine  
                                 -14- 

    utilities"), on the other (the "P&SA").  Under this Agreement, NB  
    Power agrees to supply: (i) tie-line interruption service, on a firm 
    or non-firm basis, to any northern Maine utility requiring it; (ii) 
    ancillary services to any northern Maine utility; (iii) transmission 
    services through NB to any northern Maine utility at a fixed rate  
    that can be increased only by authorization of the proper NB       
    regulatory authority; and (iv) bona fide offers of energy and      
    capacity and other electric products and service to any customer of 
    any northern Maine utility.  It is understood that northern Maine  
    utilities will transfer these services at cost to competitive      
    electricity providers. On April 27,1999, the P&SA was executed by  
    all of the parties.

    In its April 5, 1999 Order, the MPUC approved the Company's sale of 
    its generation assets to WPS-PDI.  The MPUC noted that the P&SA    
    "mitigates market power to a significant extent and, as a result, it 
    is reasonable to allow the sale of MPS assets."    

    In an April 14, 1999 Order, the Federal Energy Regulatory Commission 
    (FERC) authorized the sale of the Company's generating assets      
    concluding that "the proposed transaction is consistent with the   
    public interest." The Company has therefore received all of the    
    major regulatory approvals necessary to permit the transfer of its 
    generating assets to WPS-PDI. 
                                   
 8. OPEN ACCESS TRANSMISSION TARIFF

    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.  On May 
    31, 1996, the FERC issued Order 888, a final rule on open          
    transmission access and stranded cost recovery.  As a result the   
    Company has refiled its tariff to comply with the Order.  

    On December 22, 1998, the FERC issued its order in this proceeding. 
    Although many of the major issues were not decided in the Company's 
    favor, the Company does not expect the order to have any adverse   
    impact on the Company's financial condition.  Based on the FERC    
    order, the Company expects to refund approximately $1.2 million to 
    the customers and has reflected these refunds as liabilities.

 9.  ACCOUNTING PRONOUNCEMENTS
    
     In 1998, the FASB issued SFAS No. 133, "Accounting for Derivative 
     Instruments and Hedging Activities". Based on current business    
     activities, the Company does not expect this pronouncement to have 
     a material impact to the Company's financial reporting. 
                                 -15-

                                                            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 in the Private Securities
                  Litigation Reform Act of 1995, related to expected
                  future performance or our plans and objectives. 
                  Actual results could potentially differ  materially
                  from these statements.  Therefore, there can be no
                  assurance that actual results will not materially
                  differ from expectations.

                  Factors that could cause actual results to differ
                  materially from our projections include, among other
                  matters, electric utility 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 Maine Yankee.

                         Results of Operations

                  Earnings per share and the net income available for
                  common stock for the three months ended March 31, 1999
                  along with the corresponding information for the
                  previous year are as follows:
                                          

                                                Three Months Ended
                                                     March 31,    
                                                      
                                                  1999       1998 
                  Earnings per share            $ 1.09    $   .68 

                  Net income in thousands       $1,759    $ 1,106 

                  For the first quarter of 1999 compared to the same
                  quarter last year, the increase in consolidated
                  earnings per share (EPS) of $.41 is attributable to
                  the following:








                                 -16-

                                                            Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

Item 2.        Management's Analysis of Quarterly Income Statements
                  Results of Operations (Continued)               
                                                                       
                       Change in EPS - First Quarter of 1999  
                         Compared to First Quarter of 1998      
                                                               EPS
                                                             Increase
                                                            (Decrease)
               Decrease in operating expenses resulting
                 from the closure of Maine Yankee and
                 changes in net replacement power costs:
                  Capacity Expenses                             $ .35 
                  Replacement Power Costs                        (.03)
                                                                  .32

               Increase in retail rates of 3.9% effective
                    2/1/98 and a 2.7% sales increase              .25

               Decreased wheeling expenses due to termination
                   of contract with NB Power                      .26

               Other fuel expense - increased W-S production
                   and increased prices                          (.40)

               Change in other operation & maintenance expenses  (.06)
                  
               Other                                              .04 
                  Total                                        $  .41 
               
               The reduction of Maine Yankee capacity expenses increased 
               earnings by $.35 per share.  During the first quarter of 
               1998, Maine Yankee expenses reflected termination       
               benefits to displaced employees and other curtailment   
               costs prior to the beginning of decommissioning.  Maine 
               Yankee expenses for the first quarter of 1999 were      
               significantly less than the first quarter of 1998,      
               reflecting decommissioning activities and an insurance  
               refund due to the curtailment of operations. The net    
               increase in Maine Yankee replacement power costs        
               decreased earnings by $.03 per share and reflects the   
               treatment of their expense under the Company's rate plan. 
               The rate plan is discussed in detail in item 3(f) of the 
               Legal Proceedings section. The 3.9% rate increase under 
               the Company's rate plan effective February 1, 1998, and 
               a 2.7% increase in retail sales, resulted in a $.25     
               increase in earnings per share. A decrease in wheeling  
               expenses due to the termination of the transmission     
               agreement with NB Power for Maine Yankee and Wyman      
               wheeling increased earnings by $.26 per share. 

                                 -17-

                                                             Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

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

               An increase in other fuel expenses due to price increases
               and an increase in purchases from the independent power 
               producer, Wheelabrator-Sherman (W/S), reduced earnings by 
               $.40 per share. Under contract, the Company's purchases 
               from W/S are limited to a specific amount over a twelve- 
               month period.  Once this limit is obtained, the Company 
               does not purchase any additional output from the        
               facility.  Therefore, timing of W/S production can effect 
               earnings comparisons from quarter to quarter.  Increases 
               in other operation and maintenance expenses resulted in 
               a net decrease in earnings of $.06 per share. 

               Consolidated operating revenues for the quarters ended  
               March 31, 1999 and 1998, are as follows:

                                         1999              1998
(Dollars in Thousands)                $       MWH        $        MWH

Retail                            15,141   134,155    14,472   130,634 
Sales for Resale                     558    18,008       540    17,334
Total Primary Sales               15,699   152,163    15,012   147,968
Secondary Sales                    1,875    66,265       457     9,600
Other Revenues/Rev. Adjust.         (105)     -          128      -   
Total Operating Revenues          17,469   218,428    15,597   157,568


               Primary sales in the first quarter of 1999 were 152,163 
               MWH, an increase of 4,195 MWH (2.8%) from sales in the  
               first quarter of 1998.  Secondary sales increased by    
               56,665 MWH, reflecting the return of Houlton Water      
               Company in February, 1999 as a customer to be served by 
               the Company's wholly-owned unregulated marketing        
               subsidiary, Energy Atlantic (EA).

               Retail revenues for the first quarter of 1999 were      
               $15,141,000 compared to $14,472,000 for the same period 
               of 1998, reflecting  the 3.9% increase in retail rates  
               effective February 1, 1998 allowed under the Company's  
               rate plan and the 2.7% increase in retail sales noted   
               above.  The $1,418,000 increase in secondary sales to   
               $1,875,000 for the first quarter of 1999 is a result of 
               the increase in sales noted above.                  





                                 -18-

                                                             Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

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

               For the quarters ended March 31, 1999 and 1998,         
               total operating expenses were $14,980,000 and           
               $13,739,000, respectively.  The changes in operating    
               expenses and energy sources are as follows:

                                                                  
                                                Increase/(Decrease)
                  (Dollars in Thousands)            $         MWH
                  Purchased Power Expenses      
                  Maine Yankee                    (1,019)        -    
                  Wheelabrator-Sherman              (118)     3,759  
                  NB Power                           172    (16,596)
                  Northeast Empire                 1,031     30,551 
                  Other Purchases                    620     32,882 
                  Deferred Fuel - MY Replacement     687        -    
                                                   1,373     50,596 
                  Generating Expenses                126     12,069  
                  Other Operation & Maint. Expenses (606)
                  Depreciation                       (58)
                  Amortization                       (17)
                  Income Taxes                       411
                  Taxes Other than Income             12            
                              Total                1,241     62,665 
                  
                  Purchases from Northeast Empire increased by 30,551
                  MWH, while other purchases increased by 32,882 MWH.
                  Since February, 1998 and continuing until March 1,
                  2000, Northeast Empire has provided Maine Yankee
                  replacement power.  The total increase of 62,665 MWH
                  reflect the additional retail and secondary sales. The
                  Company's share of Maine Yankee capacity expenses
                  decreased by $1,019,000 as previously discussed. 
                  Wheelabrator-Sherman purchased power expenses
                  decreased by $118,000, due to the reduced price under
                  the amended Power Purchase Agreement (PPA), partially
                  offset by the 3,759 MWH increase in production. 
                  Deferred fuel expense increased $687,000 as a result
                  of the application of the Wheelabrator-Sherman savings
                  in the first quarter of 1999, as mentioned above, in
                  accordance with the January, 1998 rate stipulation
                  discussed further in Note 5 of the Notes to
                  Consolidated Financial Statements, "Maine Yankee".  
                        




                                 -19-

                                                             Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

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

               Hydro production was 200.9% and 182.4% of normal in the 
               first quarters of 1999 and 1998, respectively,          
               reflecting an increase of 3,445 MWH.  Generating        
               expenses increased by $126,000 because of increased     
               operation at Wyman No. 4. Other operation and maintenance 
               expenses decreased by $606,000 because of the termination 
               of a wheeling contract with NB Power. 

                              Financial Condition

               Net cash flows from operating activities were $2,227,000
               for the first quarter of 1999.  For the period, the
               Company invested $632,000 in electric plant, paid
               $404,000 in dividends and used $25,000 to reduce long-
               term debt. Final financing costs of $6,000 were paid
               related to the issuance of Fame's $11,540,000 Taxable
               Electric Rate Stabilization Revenue Notes on behalf of
               the Company in 1998.  Short-term borrowings decreased by
               $1,300,000 because of the cash flows from operations.  

               For the first quarter of 1998, net cash flows from
               operating activities were $817,000.  For the period, the
               Company invested $482,000 in electric plant, paid
               $809,000 in dividends and used $25,000 to reduce long-
               term debt.  Short-term borrowings were increased by
               $500,000 for working capital and construction
               requirements.

                  
               

















                                 -20-

                                                             Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

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

               Year 2000 Issues

               The Year 2000 issue is the result of computer programs  
               being written using two digits rather than four to      
               define the applicable year.  Computer programs that     
               have date-sensitive software using two digits would     
               recognize a date using "00" as the year 1900 rather     
               than the year 2000, resulting in system failure or      
               miscalculations.  The Company conducted an assessment of 
               its computer systems, including embedded chip technology, 
               to determine the potential technical and economic impact 
               which the Year 2000 issues might have on the Company, its 
               systems and its business operations.  The Company is    
               currently rewriting the computer application systems    
               responsible for billing to meet the electric industry   
               restructuring requirements and is incorporating changes 
               that achieve Year 2000 compliance.  If these new systems 
               are not functional by December 31, 1999, the current    
               systems will continue to be used with a minor alteration 
               to achieve Year 2000 compliance. The Company also       
               reviewed its other mission critical systems in order    
               to identify Year 2000 remediation or renovation
               measures needed for those systems and intends to        
               complete necessary modifications, renovations and       
               testing of these mission critical systems by July 1,    
               1999.  The compliance plans and implementation and      
               testing milestones are based on the Company's best      
               estimates, which were derived from numerous            
               assumptions of future events, including the continued
               availability of certain resources, third party          
               modification plans and other known factors.  In         
               addition to the review of internal systems, the         
               Company is requesting assurances of Year 2000           
               compliance from third parties upon whom the Company
               relies. The responses are being reviewed and       
               concerns of noncompliance are being addressed.  The     
               Company is attempting to obtain responses and prepare   
               contingency plans, where necessary, no later than July  
               1, 1999.








                                 -21-
                                                            Form 10-Q
                    PART 1.  FINANCIAL INFORMATION

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

               As of March 31, 1999, the Company has incurred          
               approximately $24,000 of internal labor for review and  
               testing which has not revealed material system          
               modifications necessary to obtain Year 2000 compliance  
               for mission critical systems, other than the changes    
               necessary for electric industry restructuring discussed 
               above.  However, $50,000 has been budgeted in 1999 for  
               external expenditures for unforeseen modifications
               to achieve Year 2000 compliance for mission critical
               technology.

               The assessment phase of the Year 2000 compliance        
               project is essentially complete and the Company is 
               identifying risks and most reasonable likely worse
               case scenarios specific to the Year 2000 non-
               compliance by the Company and third-party sources.
               For example, for every day of a Company-wide shutdown,
               the Company would lose approximately $187,000 in 
               revenues.  The Company will develop approximate plans
               or these risks no later than July 1, 1999, as           
               mentioned above.  Although all reasonable and           
               available efforts will be made, the Company cannot
               predict the ultimate achievement of Year 2000
               compliance due to its reliance on systems and third-
               parties outside the Company's control.






















                                 -22-

                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings

    (a)   Restructuring of Maine's Electric Utility Industry.

          In the Company's Form 10-K's for December 31, 1996, 1997 and 
          1998 the Company described electric utility restructuring    
          efforts in Maine, including the Maine Public Utilities       
          Commission's (MPUC) recommendation to the legislature.  After 
          months of hearings and deliberations, the Maine legislature  
          passed L.D. 1804, "An Act to Restructure the State's Electric 
          Industry", which the Governor signed into law on May 29, 1997.

          The principal provisions of the new law are as follows:

          1)   Beginning on March 1, 2000, all consumers of electricity 
          have the right to purchase generation services directly from 
          competitive electricity suppliers who will not be subject to 
          rate regulation.

          2)   By March 1, 2000, the Company, Central Maine Power      
          Company (CMP) and Bangor Hydro-Electric Company (BHE) must   
          divest of all generation related assets and business functions 
          except for:

               (a)   contracts with qualifying facilities, such as the
               Company's power contract with Wheelabrator-Sherman (W-S),
               and conservation providers;

               (b)   nuclear assets, namely, the Company's investment in 
               the Maine Yankee Atomic Power Company, however, the MPUC 
               may require divestiture on or after January 1, 2009;

               (c)   facilities located outside the United States, i.e., 
               the Company's hydro facility in New Brunswick, Canada;  
               and

               (d)   assets that the MPUC determines necessary for the
               operation of the transmission and distribution services.

          The MPUC can grant an extension of the divestiture deadline if 
          the extension will improve the selling price.  For assets not 
          divested, the utilities are required to sell the rights to the 
          energy and capacity from these assets.  See item (b) below   
          regarding the divestiture of the Company's generating assets.

          3)   Billing and metering services will be subject to        
          competition beginning March 1, 2002, but permits the MPUC to 
          establish an earlier date, no sooner than March 1, 2000.


                                 -23-

                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings - continued

          4)   The Company, through an unregulated affiliate, may market 
          and sell electricity both within and outside its current     
          service territory, without limitation.  Both CMP and BHE are 
          limited to 33% of the load within their respective service   
          territories, but may sell an unlimited amount outside their  
          service territories.  Consumer-owned utilities are allowed to 
          market and sell within their service territories, but the MPUC 
          can limit or prohibit competition in their service territory, 
          if the tax-exempt status of the consumer-owned utility is    
          threatened.

          5)   The Company will continue to provide transmission and   
          distribution services which will be subject to continued     
          regulation by the MPUC.

          6)   Maine electric utilities will be permitted a reasonable 
          opportunity to recover legitimate, verifiable and unmitigable 
          costs that are otherwise unrecoverable as a result of retail 
          competition in the electric utility industry.  The MPUC shall 
          determine these stranded costs by considering:

               a) the utility's regulatory assets related to generation, 
               i.e., the Company's unrecovered Seabrook investment;

               b) the difference between net plant investment in       
               generation assets compared to the market value for those 
               assets; and

               c) the difference between future contract payments and  
               the market value of the purchased power contracts, i.e., 
               the W-S contract.

          By the end of 1999, the MPUC will have estimated the stranded 
          costs for the Company and the manner for the collection of   
          these costs by the transmission and distribution company.    
          Customers reducing or eliminating their consumption of       
          electricity by switching to self-generation, conversion to   
          alternative fuels or utilizing demand-side management measures 
          cannot be assessed exit or entry fees.  In a February, 1999  
          MPUC filing, the Company estimated its stranded costs to be  
          approximately $99.3 million, based on market power estimates 
          beyond 2000 and regulatory treatment of






                                 -24-


                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings - continued

          the Company's remaining Seabrook investment, but does not    
          include any benefits from the Company's sale of generating   
          assets. The MPUC shall include in the rates to be charged by 
          the transmission and distribution utility decommissioning    
          expenses for Maine Yankee.  In 2003 and every three years    
          thereafter until the stranded costs are recovered, the MPUC  
          shall review and revaluate the stranded cost recovery.

          7)   All competitive providers of retail electricity must be 
          licensed and registered with the MPUC and meet certain       
          financial standards, comply with customer notification       
          requirements, adhere to customer solicitation requirements and 
          are subject to unfair trade practice laws.  Competitive      
          electricity providers must have at least 30% renewable       
          resources in their energy portfolios, including hydro-electric 
          generation.

          8)   A standard-offer service will be available, ensuring    
          access for all customers to reasonably priced electric power. 
          Unregulated affiliates of CMP and BHE providing retail       
          electric power are prohibited from providing more than 20% of 
          the load within their respective service territories under the 
          standard offer service, while any unregulated affiliate of the 
          Company does not have a similar restriction.

          9)   Unregulated affiliates of CMP and BHE marketing and     
          selling retail electric power must adhere to specific codes of 
          conduct, including, among others:

               a) employees of the unregulated affiliate providing     
               retail electric power must be physically separated from 
               the regulated distribution affiliate and cannot be      
               shared;

               b) the regulated distribution affiliate must provide    
               equal access to customer information;

               c) the regulated distribution company cannot participate 
               in joint advertising or marketing programs with the     
               unregulated affiliate providing retail electric power;







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

Item 3.   Legal Proceedings - continued

               d)  the distribution company and its unregulated        
               affiliated provider of retail electric power must keep  
               separate books of accounts and records; and

               e)  the distribution company cannot condition or tie the 
               provision of any regulated service to the provision of  
               any service provided by the unregulated affiliated      
               provider of electricity.

               The MPUC shall determine the extent of separation       
               required in the case of the Company to avoid cross-     
               subsidization and shall consider all similar relevant   
               issues as well as the Company's small size.

          10)  Employees, other than officers, displaced as a result of 
          retail competition will be entitled to certain severance     
          benefits and retraining programs.  These costs will be       
          recovered through charges collected by the regulated         
          distribution company.

          11)  Other provisions of the new law include provisions for:

               a) consumer education;
               b) continuation of low-income programs and demand side
                  management activities;
               c) consumer protection provisions;
               d) new enforcement authority for the MPUC to protect
                  consumers.

(b)       Maine Public Service Company, Request for Approval of Sale of 
          Generating Assets, Docket No. 98-584


          Reference is made to the Company's Form 8-K for July 7, 1998 
          and Form 10-Q for the quarter ended June 30, 1998, in which  
          the Company reported that it had agreed to sell all of its   
          generating assets to WPS Power Development, Inc. (WPS-PDI) for 
          $37.4 million.

          On August 7, 1998, the Company filed with the MPUC for       
          approval of this sale.  The proceeding was given the Docket  
          No. 98-584.  The Public Advocate and the Houlton Water Company 
          (HWC) have intervened in this proceeding.  As reported in the 





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

Item 3.   Legal Proceedings - continued

          Company's Form 10-Q for the quarter ended September 30, 1998, 
          the MPUC, in its order approving the Company's divestiture   
          plan in MPUC Docket No. 97-670, noted a number of concerns   
          that it would address in Docket No. 98-584.  Principal among 
          these concerns is whether the Company's lack of any connection 
          to New England electrical markets, except through the Province 
          of New Brunswick, Canada (NB) and the transmission system    
          owned by the Maine Electric Power Company (the MEPCO line)   
          presented unique issues concerning development of an adequate 
          competitive retail market for electricity in northern Maine  
          and directed the Company to address these concerns when it   
          filed for approval in Docket No. 98-584.

          On December 10, 1998, the MPUC issued a bench analysis concerning
          certain aspects of the manner in which the Company structured the
          proposed sale with WPS-PDI.  Principal among these concerns were
          whether the Company should withdraw from the proposed sale its
          interest in Wyman Unit No. 4 and attempt to sell this asset
          independently in the New England markets and whether the Company
          should retain title to approximately 12 MW of diesel capacity.  The
          Company addressed these concerns in rebuttal testimony filed on
          January 19, 1999 and at a hearing on February 2, 1999.  

          On January 29, 1999, the Company filed a Partial Stipulation in this
          Docket.  Under the terms of this Stipulation, the parties agreed that
          access to northern Maine's electrical markets exclusively through the
          transmission of the New Brunswick Power Corporation (NB Power) and the
          MEPCO line "is no longer a substantial barrier to the development of
          an adequate retail market for electricity in northern Maine" and that
          any market power issues in northern Maine should not prevent the MPUC
          from approving the sale of the Company's generation assets to WPS-PDI.

          The basis for this Stipulation is a Products and Service     
          Agreement reached in principal between NB Power, on the one  
          hand, and the Company, HWC, Eastern Maine Electric           
          Cooperative, Inc. and the Van Buren Light and Power District 
          (collectively, "the northern Maine utilities"), on the other 
          (the "P&SA").  Under this Agreement, NB Power agrees to      
          supply: (i) tie-line interruption service, on a firm or non- 
          firm basis, to any northern Maine utility requiring it; (ii) 
          ancillary services to any northern Maine utility; (iii)      
          transmission services through NB to any northern Maine utility 
          at a fixed rate that can be increased only by authorization of 
          the proper NB regulatory authority; and (iv) bona fide offers 
          of energy and capacity and other electric products and service 
          to any customer of any northern Maine utility.  It is        
          understood that northern Maine utilities will transfer these 
          services at cost to competitive electricity providers.
                                 -27-

                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings - continued


          On April 27, 1999, the P&SA was executed by all of the       
          parties.

          On April 5, 1999, the MPUC approved the Company's sale of its 
          generation assets to WPS-PDI.  The MPUC based its approval on 
          a Products and Service Agreement (P&SA) reached in principal
          between NB Power and the Company, Houlton Water Company,     
          Eastern Maine Electric Cooperative, Inc. and the Van Buren   
          Light and Power District.  The MPUC noted that the P&SA      
          "mitigates market power to a significant extent and, as a    
          result, it is reasonable to allow the sale of MPS assets."   
          
          In the Company's April 9, 1999 Form 8-K announcing the MPUC's 
          approval, a misunderstanding was reported on some terms of the 
          P&SA. That misunderstanding has now been resolved and all of 
          the parties have executed to P&SA.  

          In an April 14, 1999 Order, the Federal Energy Regulatory    
          Commission (FERC) authorized the sale of the Company's       
          generating assets concluding that "the proposed transaction is 
          consistent with the public's interest."  The Company has     
          therefore received all of the major regulatory approvals     
          necessary to permit the transfer of its generating assets to 
          WPS-PDI.
          
  (c)     Final Report by the Department of the Maine Attorney General 
          and the MPUC Regarding Market Power Issues Raised by the     
          Prospect of Retail Competition in Maine's Electric Industry, 
          Docket No. 97-877.

          The Legislation described in item (a) above requires the Maine 
          Department of the Attorney General and the MPUC to jointly   
          conduct a study of the various market power issues presented 
          by the introduction of retail competition into Maine's       
          electric industry.  This Report was issued on December 1,    
          1998.
         










                                 -28-
                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings - continued
 
          With respect to market power in northern Maine, the Report   
          noted the potential for an unacceptably high level of market 
          power in northern Maine, arising from circumstances it       
          described as follows:

          (i)  "The northern Maine wholesale market is highly
               concentrated, and subject to a corresponding degree of
               market power.  The market is dominated by NB Power, which
               controls transmission access to northern Maine.  NB Power
               transmission is unsupervised by any regulatory authority,
               and NB Power has set discriminatory rates, with the
               result that it has preferential access to the market. 
               This transmission regime effectively excludes Hydro-
               Quebec from the market as well as participants from New
               England and Nova Scotia."

          (ii) "In addition, there exists a transmission constraint
               [over the MEPCO line] which prevents firm power from
               flowing to northern Maine from New England.  Moreover,
               the problem of market power is probably aggravated by the
               lack of access to a well-designed spot market."

          Faced with these conclusions, the Report opined that "[t]he  
          question of whether retail choice in northern Maine should be 
          postponed must be confronted."  The Report concluded, however, 
          that postponement should be a last resort and that other "less 
          drastic remedies" should be attempted first.  The Report     
          specified certain of these remedies:

          (i)  regarding NB Power's dominance of the northern Maine
               market, the Report proposed that NB Power contract with
               northern Maine T&D companies to provide transmission
               service at a fixed, non-discriminatory rate;

          (ii) regarding the lack of firm energy over the MEPCO line,
               the Report proposed that NB Power should contract with
               the northern Maine utilities to provide ancillary and so-
               called tie-line interruption service, which would
               effectively remove the south-to-north constraint on the
               MEPCO line; and








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

Item 3.   Legal Proceedings - continued

          (iii)   finally, the Report concluded that if NB Power is
                  obligated to provide tie-line interruption service,
                  ancillary services and reasonably-priced transmission
                  to the northern Maine utilities, "the beneficial
                  influence of New England spot market pricing will be
                  felt in northern Maine."

          As reported in item (b) above, the Products and Service      
          Agreement between NB Power and the northern Maine utilities  
          incorporates all of these proposals.

          In a related matter, and again as required by the Legislature 
          described in item (a), the MPUC, on January 26, 1998, opened 
          an investigation into the feasibility of a direct physical   
          interconnection between the Company's service territory and  
          the New England power grid (Docket No. 97-586).  On November 
          24, 1998, the Commission issued its final report, which was  
          prepared by an independent consultant.  Like the Attorney    
          General's Report described above, this Study concluded that, 
          without changes such as those suggested in the Report, the   
          northern Maine market for electricity is likely to be subject 
          to market power problems.

          (d)  Maine Public Utilities Commission, Inquiry Into Bulk
               Power System Administration and Settlement System in
               Northern Maine, MPUC Docket No. 98-929.

               On December 1, 1998, the MPUC issued its Notice of
               Inquiry into the structure and operation of a bulk power
               system administrator and retail settlement system for
               northern Maine.  This Inquiry was assigned MPUC Docket
               No. 98-529.  The MPUC based the need for this proceeding
               on the fact that northern Maine is not electrically
               connected to the New England grid and therefore systems
               in place in the rest of New England that are necessary to
               support a marketable competitive environment do not yet
               exist in northern Maine.

               The MPUC Notice acknowledges that the four northern Maine
               utilities - the Company, the Houlton Water Company, the
               Eastern Maine Electric Cooperative, Inc. and the Van
               Buren Light and Power District - have formed a working
               group for the express purpose of developing these 





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

Item 3.   Legal Proceedings - continued

               systems.  The northern Maine utilities are to develop and 
               file a proposal for these systems by April 30, 1999.  The 
               proposal will be developed with the participation of    
               various market participants, including marketers,       
               generators, customers and NB Power.  The Company is     
               satisfied with the working groups' progress to date, but 
               cannot predict the success of any final outcome.

          (e)  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.  On May 31, 1996, the FERC 
               issued Order 888, a final rule on open transmission     
               access and stranded cost recovery.  As a result the     
               Company has refiled its tariff to comply with the Order. 

               On December 22, 1998, the FERC issued its order in this 
               proceeding.  Although many of the major issues were not 
               decided in the Company's favor, the Company does not    
               expect the order to have any adverse impact on the      
               Company's financial condition.  Based on the FERC order, 
               the Company expects to refund $1.2 million to the       
               customers and has reflected these refunds as liabilities.

                  
          (f)  Maine Public Service Company Investigation of Stranded  
               Costs, Transmission and Distribution Utility Revenue    
               Requirements and Rate Design, Docket No. 98-577

               On October 14, 1998, and subsequently amended on February 
               9, 1999, the Company filed its determination of stranded 
               costs, transmission and distribution costs and rate     






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

Item 3.   Legal Proceedings - continued

               design with the MPUC.  The Company's testimony supports 
               its $99.3 million estimate of stranded costs when       
               deregulation occurs on March 1, 2000.  The major        
               components include the remaining investment in Seabrook, 
               the above market costs of the amended power purchase    
               agreement and recovery of fuel expense deferrals related 
               to Wheelabrator-Sherman, the obligation for remaining   
               operating expenses and recovery of the Company's        
               remaining investment in Maine Yankee, and the recovery of 
               several other regulatory assets.  These stranded costs  
               revenue requirements will be reduced by an estimated    
               $19.9 million should the sale of the Company's generating 
               assets be approved by the MPUC, discussed further in item 
               (b) above.  The Company's proposed annual revenue       
               requirements supported in the filings would be          
               approximately $32.2 million:  $19.8 million for         
               transmission and distribution and $12.4 million for     
               stranded investment.  

               Reference is made to the Company's Form 10-K for December 
               31,  1996 where the Company's rate stabilization plan   
               approved by the Maine Public Utilities Commission (MPUC) 
               (Docket No. 95-052) in November, 1995 is described.  In 
               addition, the Company's Form 10-K for December 31, 1998, 
               describes a January, 1998 Stipulation approved by the   
               MPUC in Docket No.97-830, which established the rate    
               increase beginning February 1, 1998 and the minimum rate 
               increase effective February 1, 1999.  The Stipulation   
               also prescribes that the savings from the restructured  
               Wheelabrator-Sherman (W-S) Power Contract would offset  
               Maine Yankee replacement power costs.  For the final year 
               of the rate plan beginning February 1, 1999, the Company 
               filed on November 13, 1998, with the MPUC for a 6.4%    
               increase.  The Company also stated that it would forego 
               part or all of this 1999 increase if the sale of its    
               generating assets was allowed to go forward.  On December 
               15, 1998, the MPUC granted the Company's request to defer 
               the increase to April 1, 1999, as well as extend the rate 
               plan by one month to February 29, 2000, to coincide with 
               the start of retail competition in Maine.








                                 -32-
                                                            Form 10-Q
                    PART II.  OTHER INFORMATION

Item 3.   Legal Proceedings - continued

               In its April 6, 1999 Order, the MPUC approved a March 25, 
               1999 Stipulation between the Office of the Public       
               Advocate (OPA) and the Company.  Under this Stipulation, 
               customer rates will not increase on April 1, 1999, if the 
               MPUC approved the sale of the Company's generation assets 
               as described in Item 5(c) above.  The approval of the   
               Stipulation also resolved certain issues associated with 
               the treatment of capacity cost savings from the closure 
               of Maine Yankee under the Company's rate stabilization  
               plan.

               The principal provisions are as follows:

               1)  The Company is entitled to a 3.66% specified rate   
               increase as of April 1, 1999.  Rather than increase     
               customer rates, the Company will recognize the revenues 
               that this increase would have generated and,            
               correspondingly, record a deferred asset on the Company's 
               books of account.  The parties to the Stipulation also  
               agreed to recommend the use in rates of available value 
               from the asset sale corresponding with the specified rate 
               increase once the MPUC determines the Company's allowed 
               stranded cost recovery in Docket No. 98-577, Public     
               Utilities Commission, Investigation of Stranded Costs,
               Transmission and Distribution Utility, Revenue          
               Requirements and Rate Design of Maine Public Service    
               Company.

               2)   The Stipulation also resolves a dispute over the
               determination of Maine Yankee replacement power costs.  
               The Stipulation allows the Company to continue to       
               recognize and defer Maine Yankee replacement power costs 
               on an energy-only basis, offset by Wheelabrator-Sherman 
               contract restructuring savings, through the end of the  
               rate plan.  The Company agreed to begin amortizing on   
               April 1, 1999, Maine Yankee replacement power costs in  
               the amount of $150,000 per month or a total of $1,650,000 
               for the remaining eleven months of the rate plan.

               3)   With the Commission's approval of the generation   
               asset sale, the parties agreed that the Company would not 
               increase retail rates on April 1, 1999, to reflect any  
               increase under the Maine Yankee replacement power       
               provisions of the rate plan.  Any Maine Yankee deferred
               replacement costs will be deferred, and, beginning on   
               March 1, 2000, will be offset by a corresponding amount 
               of available value as allowed in Docket No. 98-577.
          
                                 -33-

                                                             Form 10-Q
                      PART II.  OTHER INFORMATION

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)  A Form 8-K was filed on:  January 27, 1999, under item 5,
               Other Events; April 9, 1999, under item 5, Other Events 
               and April 28, 1999, under item 5, Other Events.


                               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:  May 12, 1999                 By: /s/  Larry E. LaPlante         
                                       Larry E. LaPlante
                                       Vice President Finance,
                                       Administration and Treasurer



















                                 -34-

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