Forward-Looking Statements

This filing contains certain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, related to the expected future performance of our plans and objectives, such as forecasts and projections of expected future performance or statements of Management's plans and objectives. These forward-looking statements may be contained in filings with the SEC and in press releases and oral statements. We use words such as "anticipate," "estimate," "predict," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are based on the current expectations, estimates or projections of Management and are not guarantees of future performance. Some or all of these forward-looking statements may not turn out to be what the Company expected. Actual results will differ, and some of the differences may be material.

Factors that could cause actual results to differ materially from our projections include, among other matters, legislation and regulation, construction of new transmission facilities, financing risk for new transmission facilities, risk from joint development agreement, contract risks at MAM USG, attraction and retention of qualified employees, economy of the region and general economic conditions, competitive conditions, holding company structure, interest rate and debt covenant risk, pension plan investments, information technology, environmental risks, aging infrastructure and reliability, weather, vandalism, terrorism and other illegal acts, alternative generation options, and professional liability. Therefore, no assurances can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

Accounting Policies

Critical accounting policies are disclosed in the Company's 2008 Annual Report on Form 10-K.

Results of Operations and Executive Overview

Net Income and Earnings Per Share


                                                Quarters Ended June 30,            Six Months Ended June 30,
(in thousands except per share amounts)         2009               2008             2009               2008
Income (Loss) from Continuing Operations
Regulated Electric Utility                  $       (326 )     $        213     $      1,160       $      2,200
Unregulated Utility Services                         (51 )             (190 )            (64 )              (95 )
Other*                                               (34 )              (79 )           (101 )             (186 )
(Loss) Income from Continuing Operations            (411 )              (56 )            995              1,919
Loss from Discontinued Operations
Unregulated Engineering Services                       -                (12 )              -                (21 )

Net (Loss) Income                           $       (411 )     $        (68 )   $        995       $      1,898

Basic and Diluted (Loss) Income Per Share   $      (0.25 )     $      (0.04 )   $       0.59       $       1.13

Net income above is allocated based upon the segments as presented in Note 3, "Segment Information," of the Consolidated Financial Statements. The results by segment are explained more fully in the following sections.

The consolidated net income of the Company was down $343,000 when compared to the second quarter of 2008 and down $903,000 or 48% for the six months ended June 30, 2009 over the previous year. Following a similar trend as in late 2008 and for the first quarter of 2009, there are two primary reasons for this downturn:

1. Revenues for MPS were down substantially, falling by $444,000 or 5.7% over the same quarter last year. Year to date MPS revenues were off by $1.2 million or 6.6%. While revenues for all customer classes are down year to date, the most significant decrease was from the commercial customer class where the wood and lumber industry continues to struggle within our service territory. Revenue from our large commercial class of customers was down by approximately 34% for the first half of the year or $786,000. Revenues were stable for residential customers, remaining flat year to date. These trends started in the middle of 2008 and Management cannot say for certain if, or when, these trends may reverse.

2. MAM USG, the unregulated contracting subsidiary, had no material projects during the first half of 2009, greatly reducing its revenue. Revenue decreased $1.7 million for the second quarter of 2009 and by $2.8 million for the first half of the year, compared to the first half of 2008 when there were two large projects in process. The resulting impact to net income was to decrease the loss of $190,000 in the second quarter of 2008 to a loss of $51,000 for the second quarter of 2009. However, with MAM USG not providing revenues to cover otherwise fixed costs for the consolidated entity, the overall corporation's net income was adversely affected by approximately $87,000 on a year-to-date basis.

There are certain factors which could help offset these issues:

· We anticipate that some portion of the downturn in MPS revenue will be collected as additional stranded costs during the next stranded cost rate effective period pursuant to a "true-up" mechanism instituted in MPUC Docket 2006-506 under which MPS will recognize previously uncollected revenue for the stranded cost rate component during the year. Management estimates that this revenue adjustment for year-to-date revenue shortfalls will be approximately $500,000. These stranded cost revenue shortfall amounts will be capitalized as a regulatory asset and collected over time from ratepayers.

· MAM USG has several outstanding bids on projects with developer time horizons within the next one to three years. MAM USG is also pursuing other commercial and industrial projects, as well as looking at additional products and services it may be able to provide.

· We continue to analyze and pursue components of the MPC project as an additional transmission investment which would support the development of renewable generation within our service territory as well as provide additional capacity, stabilization, and security for existing customers. As part of this effort, we are continuing discussions with our partner, Central Maine Power, as well as generation developers, state and federal regulators, and state and federal political representatives. The Company's recent efforts have been focused on a 25-mile phase between the Houlton vicinity and the existing 345 KV MEPCO line.

Regulated Operations

Regulated operations include MPS and Me&NB, the Company's regulated subsidiary
and its inactive unregulated Canadian subsidiary:


                                                Quarters Ended              Six Months Ended
                                                   June 30,                     June 30,
                                              2009          2008           2009          2008
Net (Loss) Income - Regulated Electric
Utility (In thousands)                     $     (326 )   $     213     $    1,160     $   2,200
(Loss) Earnings Per Share from Regulated
Electric Utilities                         $    (0.19 )   $    0.13     $     0.69     $    1.31

Regulated Operating Revenues

Consolidated revenues (in thousands of dollars) and Megawatt Hours ("MWH") for
the quarters and six months ended June 30, 2009, and 2008, are as follows:


                                  Quarters Ended June 30,                               Six Months Ended June 30,
                             2009                        2008                        2009                       2008
                     Dollars         MWH         Dollars         MWH        Dollars         MWH        Dollars         MWH
Residential         $   3,424        40,317     $   3,561        41,212     $  7,898        94,172     $  7,906        92,634
Large Commercial          694        31,979           949        37,399        1,510        62,159        2,296        75,403
Medium Commercial         963        23,088         1,061        24,346        2,706        48,169        2,916        50,691
Small Commercial        1,315        20,107         1,394        21,409        3,807        46,466        3,882        47,338
Other Retail              229           854           231           848          455         1,706          463         1,699

Total Regulated
Retail                  6,625       116,345         7,196       125,214       16,376       252,672       17,463       267,765

Other Regulated
Operating Revenue         736                         609                      1,104                      1,243

Total Regulated
Revenue             $   7,361                   $   7,805                   $ 17,480                   $ 18,706

MPS residential customer revenue volume decreased 895 MWH or 2.2% from the second quarter of 2008 to the second quarter of 2009. This volume decrease resulted in $77,000 less revenue, while a decrease in average rates also reduced residential revenue approximately $60,000, for a total decrease of $137,000.

In the second quarter of 2009, large commercial customer volume is down 5,420 MWH or 14.5% compared to the same period of 2008. This volume decrease caused a $138,000 decrease in revenue, while a decrease in average rates also decreased revenue by $117,000. The lower usage is due to various companies in our service territory, primarily in wood- and lumber-related industries, scaling back operations or closing. We continue our efforts with Aroostook Partnership for Progress and Leaders Encouraging Aroostook Development, two of northern Maine's economic development organizations, to encourage growth in our service territory. As well, under its stranded cost filing in MPUC Docket No. 2006-506, MPS reconciles actual sales volume to expected sales volume to ensure we do not over- or under-earn on stranded cost rate base due to fluctuations in volume. This annual adjustment, recorded in December, will partly mitigate the large commercial customer revenue shortfall.

Medium and small commercial customers also reduced their volume in the second quarter of 2009 compared to the same period of 2008. The 1,258 MWH or 5.2% decrease in medium commercial usage is attributable to a combination of fewer customers and lower use by the remaining customers, and resulted in $98,000 less revenue year-over-year. The 1,302 MWH or 6.1% decrease in small commercial usage resulted in a $79,000 decrease in this revenue class year-over-year. These decreases in sales volume have continued from the first quarter, and are due primarily to customers ceasing or cutting back operations, or implementing conservation efforts.

Other retail revenue was essentially flat, at $229,000 in second quarter of 2009, compared to $231,000 for the second quarter of 2008.

Other regulated operating revenue is up $127,000 in the second quarter of 2009 compared to the same period of 2008, mainly due to increases in transmission wheeling revenue and unbilled revenue of $35,000 and $95,000, respectively. The remaining $3,000 decrease is due to other smaller changes in other operating revenues.

Consistent with the first quarter, residential customer revenue volume has increased for the year to date by 1,538 MWH or 1.7% from the first half of last year. The lower average residential customer rates this year reduced revenue by $139,000. However, with the volume increase contributing $131,000 more revenue than last year, overall residential revenue is down only $8,000 year to date.
Medium and small commercial customer sales decreased $285,000 from the first half of 2008 to the first half of 2009, with volume down 3,394 MWH or 3.5%.

Large commercial customers have contributed $786,000 less revenue in the first half of 2009 than in the first half of 2008, on 13,244 or 17.6% fewer MWH. The reduced sales volume to the customers identified in the quarterly explanation above was also the largest impact year-to-date.

Other retail revenue is down for the year to date, approximately $8,000 and 7 MWH. Other regulated operating revenue is also down $139,000 year-over-year. Wheeling revenue was down significantly compared to the same period of 2008 due to lower transmission rates, contributing $121,000 less revenue in the first six months. Miscellaneous service revenue was also lower by $40,000 from 2008. These decreases were partly offset by the increase in unbilled revenue of approximately $53,000, and other smaller differences.

For more information on the status of the most recent rate filings, see Part II, Item 1, "Legal Proceedings."

Regulated Utility Expenses

For the quarters and six months ended June 30, 2009, and 2008, regulated
operation and maintenance expenses are as follows:


                                                Quarters Ended June 30,            Six Months Ended June 30,
(In thousands of dollars)                       2009               2008             2009               2008
Regulated Operation and Maintenance
Labor                                       $      1,317       $      1,093     $      2,524       $      2,253
Benefits                                             446                203              844                597
Outside Services                                     392                246              694                507
Holding Company Management Costs                     392                696              688                971
Insurance                                            146                127              273                258
Regulatory Expenses                                  274                303              585                613
Transportation                                       187                209              376                450
Maintenance                                          165                160              309                309
Rent                                                  60                 28              489                 40
Other                                                387                240              772                644
Total Regulated Operation and Maintenance   $      3,766       $      3,305     $      7,554       $      6,642

Regulated operation and maintenance expense increased approximately $461,000 or 14% from the second quarter of 2008 to the second quarter of 2009. The $467,000 increase in labor and benefits expenses represented the majority of the increase. The increase in labor and benefits is due to several factors: normal pay increases, an increase in the number of employees from 138 at December 31, 2008 to 140 at June 30, 2009, a $108,000 increase in contingent health insurance expense, and a $150,000 decrease in capitalized labor and benefits. Employees in several departments spent more time on capital, deferred and billable work in 2008 than in 2009.

Outside services are up approximately $146,000, primarily due to an expansion of MPS's tree trimming program in response to a vegetation management study performed in 2008. Also, bad debt expense (classified within "Other" above) was up $52,000 year-over-year. These increases were partly offset by a $304,000 decrease in holding company management costs, partly due to a decrease in the value of deferred directors' compensation and to a smaller pool of other common costs to be allocated to the utility. The remainder of the increase in expense is due to other smaller changes in various expense categories.

Year-to-date, regulatory operation and maintenance expenses are up $912,000 or 13.7%. The increases include:

? Labor and benefits expenses are up $518,000 year-over-year for the same reasons mentioned above.

? Rent expense increased $449,000 due to the reclassification of depreciation and amortization of leased assets, described more fully in Note 9.

? Outside services have increased $187,000, from $507,000 for the first six months of 2008 to $694,000 for the first six months of 2009. As noted in the first quarter, the vegetation management program has been expanded.

A decrease in holding company management costs for the first two quarters of 2009 partly offsets these increases. Holding company management costs have decreased $283,000 year-to-date, due, in part, to the smaller cost pool to be allocated to the regulated utility, and to the decrease in the value of deferred directors' compensation.

The remainder of the increase in expense is due to other smaller changes in various expense categories.

Stranded cost expenses of the regulated utility are as follows:

                                               Quarters Ended June 30,            Six Months Ended June 30,
(In thousands of dollars)                      2009               2008             2009               2008
Stranded Costs
Maine Yankee                               $         70       $        588     $        139       $      1,176
Seabrook                                            385                384              769                768
Deferred Fuel                                     2,115              1,559            4,230              3,119
Cost Incentive Refund                                63                 63              125                125
Cancelled Transmission Plant                          -                 64                -                128
Special Discounts                                    68                 70              138                140
Total Stranded Costs                       $      2,701       $      2,728     $      5,401       $      5,456

The stranded cost expenses presented above for both 2009 and 2008 reflect the impact of MPS's most recent stranded cost rate case, MPUC Docket No. 2006-506. The amortization amounts for the remainder of 2009 are expected to remain consistent with the first and second quarters. The changes from prior year are a result of the timing of the stranded cost recovery under the Docket, primarily related to Maine Yankee and deferred fuel. The recovery of Maine Yankee in the Docket correlates to Maine Yankee's cost budget, which is decreasing over time, while the recovery of deferred fuel is the levelizing mechanism.

Unregulated Utility Services

Unregulated Utility Services are comprised of the operations of MAM USG.


                                               Quarters Ended June 30,            Six Months Ended June 30,
                                               2009               2008             2009               2008
Revenue                                    $        354       $      2,078     $        548       $      3,374
Direct Expenses                                     220              2,092              354              3,210
Gross Profit (Loss)                                 134                (14 )            194                164
Other Expenses                                     (179 )             (114 )           (237 )             (111 )
Common Corporate Costs and Facilities
Charges                                             (41 )             (187 )            (64 )             (209 )
Income Tax Benefit                                   35                125               43                 61
Net Loss - Unregulated Utility Services    $        (51 )     $       (190 )   $        (64 )     $        (95 )

Loss Per Share from Unregulated Utility
Services                                   $      (0.03 )     $      (0.11 )   $      (0.04 )     $      (0.06 )

MAM USG incurred a loss of $51,000 for the second quarter of 2009, compared to a loss of $190,000 for the second quarter of 2008. In 2008, MAM USG was performing work on two significant wind farm projects outside of MPS's service territory, as well as other smaller projects. In 2009, such development activity has slowed. As noted in MAM's 2008 Form 10-K, MAM USG has hired a new General Manager, and continues to seek opportunities to provide its electrical contracting, engineering, planning, procurement and project management services to developers, generators and others in both the private and public sectors.

Other Continuing Operations


                                               Quarters Ended              Six Months Ended
                                                  June 30,                     June 30,
                                             2009          2008           2009          2008
Net Loss - Other Continuing Operations
(in thousands)                             $     (34 )   $     (79 )   $     (101 )   $    (186 )
Loss Per Share from Other Continuing

Other continuing operations are the common costs of MAM that cannot be allocated to MPS or MAM USG, the corporate costs of MAM directly associated with the former unregulated businesses, and intercompany eliminations. The net loss from this segment is $45,000 lower in the second quarter of 2009 than the second quarter of 2008, and $85,000 less for 2009 than 2008 year-to-date. The improvement is due to a reduction in operation and maintenance expenses of $61,000 for the quarter and $73,000 for the year-to-date and a reduction in interest expense of $20,000 for the quarter and $63,000 for the year-to-date. This reduction is a combination of the repayment of debt during 2008 and into 2009, and lower interest rates on MAM's variable rate debt.

Interest Expense

Interest charges decreased by $6,000 from the second quarter of 2008 to the second quarter of 2009, and by $139,000 for 2009 year-to-date, compared to the same period in 2008. The decrease is primarily due to lower debt balances, with $4.0 million of short- and long-term debt and capital lease obligations repaid in the first half of 2009, in addition to the $6.9 million repaid during 2008. Also, interest rates have decreased on MAM and MPS's variable rate debt.

Income Tax Expense / Benefit

The regulated provision for income taxes decreased $421,000 from the second quarter of 2008 to the second quarter of 2009, and $812,000 from the first half of 2008 to the first half of 2009, due to the decrease in net income at MPS. The decreases in revenue of $459,000 and $1.2 million for the quarter and year-to-date resulted in $184,000 and $499,000 reductions in income tax expense, respectively, with the remainder of the reduction due to higher expenses.

The benefit of income taxes for unregulated continuing operations decreased from $175,000 in the second quarter of 2008 to $55,000 in the second quarter of 2009. This income tax benefit also decreased from $177,000 in the first half of 2008 to $107,000 in the first half of 2009. The decreases are due to reductions in the losses of MAM and MAM USG.

Taxes Other Than Income

Taxes other than income are primarily payroll and property taxes. These taxes increased $20,000 from the second quarter of 2008 to the second quarter of 2009, and $17,000 for the year to date from 2008 to 2009.

Off-Balance Sheet Arrangements and Financial Information System Hosting Agreement

Please refer to Note 8 of the financial statements.

Liquidity and Capital Resources

MAM has continued the trend of improving its liquidity position as we did in the first quarter of 2009. In the six months ended June 30, 2009, we have reduced our consolidated short-term debt by $3.2 million, and long-term debt by $700,000. MAM has reduced its outstanding short-term debt by $2.8 million compared with June 30, 2008.

The Company's cash and cash equivalents as of June 30, 2009, were $1.3 million, down $515,000 from December 31, 2008. The "Statements of Consolidated Cash Flows" of the Company's Consolidated Financial Statements, as presented in Part I, Item 1 of this Form 10-Q, reflect the Company's sources and uses of capital.

Cash flow provided by operating activities for the first six months of 2009 amounted to $8.1 million, compared to $8.4 million in the first six months of 2008. While net income was down by $903,000, the increase in collection of stranded cost cash flows from our customers for the first two quarters of 2009, compared to the first two quarters of 2008, of $1.2 million and the decrease in accounts receivable of $3.0 million as a result of fewer MAM USG projects at June 30, 2008, were the most significant positive factors making up for the net income shortfall. These positive cash flow factors were offset by decreases in accounts payable and in deferred taxes.

Cash flow used for financing included the repayment of short- and long-term debt totaling $3.9 million in the first six months of 2009, as well as $97,000 payment of capital lease obligations. Cash flow used for financing activities for the first six months of 2008 totaled $6.5 million from reductions in debt and an additional $92,000 reduction for payment of capital leases.

Cash flow used for investing activities for the first half of 2009 was $4.6 million consisting of $3.5 million for investments in fixed assets, $168,000 for payments of dividends, and $915,000, which was transferred to our first mortgage bond trustee and recorded as restricted cash on our balance sheet. This restricted cash is for a partial liquidation of our inactive subsidiary, Me & NB, as we look to employ our capital in our continuing businesses. We will receive this restricted cash back from our trustee as soon as we apply subsequent property additions, which are expected during the third quarter. For the first six months of 2008, cash flow used for investing activity totaled $1.2 million. The $4.1 million investment in fixed assets was offset by $2.4 million of incoming cash from the transfer of restricted cash from our FAME note trustees set aside for repayment of debt which was retired in 2008. An additional offset in 2008 was $573,000 proceeds from the sale of some discontinued real-estate assets.

On July 7, 2009, MAM and MAM USG reached terms on an amendment to MAM USG's debt agreement with Bank of America, which expired on June 30, 2009. This amendment is disclosed in our financial statements under Note 12. MAM and MAM USG jointly entered into the $4.0 million two-year credit facility with Bank of America to replace the previous $500,000 line. The facility is structured to allow MAM and/or MAM USG to use the credit capacity as either a line of credit or letters of credit. MAM USG may use the letter of credit option as a way to secure performance bonding required for some projects. Interest on the line of credit or any letters of credit that are drawn on is at LIBOR plus 2.25%. There is also a 0.375% commitment fee on the unused balance. This credit facility has certain covenants, including maintaining a MAM consolidated interest coverage ratio of . . .