CENTRAL MAINE POWER
Address:
Edison Drive
Augusta, Maine 04336
U.S.A.
Telephone: (207) 623 3521
Fax: (800) 695-4267
Statistics:
Public Company
Incorporated: 1905
Employees: 2,000
Sales: $855 million (1991)
Stock Exchanges: New York
Company History:
With its origins in the beginning of the electric age, Central Maine Power's history mirrors that of the utility industry. In 1899 the company that became Central Maine Power (CMP) served the modest needs of one village with water-powered electricity. Nearly 100 years later, the firm sends power to some 490,000 customers in an area covering about half the state of Maine, using water, waste, wood, nuclear power, and wind to light homes and streets, and to power factories.
In the late 19th century, nascent electric companies generally consisted of small generators strapped to water wheels at streams and waterfalls. The Oakland Electric Light Company, which was started in 1887, was typical of these early plants, located as it was on Maine's Messalonskee Stream. It provided street lighting for the town of Oakland, Maine, and could generate 22.5 kilowatts.
Walter D. Wyman, a native of Waterville, Maine, was working as a general manager of the small electric company in his hometown in 1893, when he had the opportunity to acquire the Oakland Electric Company, then available for $4,500. He saw great potential in the plant because it was located at the head of the Belgrade Lakes, which provided an enormous water capacity. Wyman and a lawyer friend, Harvey D. Eaton, bought the company as partners in 1899. Eaton became president and Wyman became general manager.
Most electric companies in that era were only allowed to operate in one city. So over the next several years, Wyman and Eaton expanded their company by acquiring small companies in other towns. In 1901 they won a contract to provide electric lighting to Waterville, and formed the Messalonskee Electric Company to provide that service.
In 1902 the Messalonskee Electric Company sought to develop a power station at Fort Halifax to supply electricity for a proposed inter-urban electric railway in eastern Maine. After the firm won the contract, it formed the Fort Halifax Power Company to produce the power. The state of Maine granted Messalonskee a corporate charter, with authorized capital stock of $250,000, in 1905, and the assets of the Oakland Electric Company were sold to Messalonskee. The company's designated territory was the city of Waterville and four neighboring towns. In 1908, when the firm began to furnish electricity to the new railway line, Messalonskee issued $5 million worth of bonds and $2 million of common stock. And in 1909, the tenth year of the firm's existence, Messalonskee provided electricity to 4,550 customers, counting gross earnings of $77,000. During the next year, when the company's name was changed to Central Maine Power, the young utility acquired the Kennebec Light & Heat Company. CMP moved its headquarters from Waterville to the latter company's former home, Augusta, in 1912.
Eaton and Wyman wanted to expand their firm's business. But since the state forbade the transfer of excess utility power across state lines in 1917, CMP was limited to providing service in Maine. Consequently, they focused on building up their business in their home state. In 1911 CMP acquired a half-dozen small electric companies throughout Maine. That year, the firm built its first hydroelectric development in Oakland. And the following year, the company's first steam plant was erected in Farmingdale. CMP quickly expanded into other business areas, opening its first retail electric appliance store in Augusta in 1916. By 1919, CMP was providing electricity to 21,000 customers, and had revenues of $1.4 million.
1919 also saw the startup of the Rice Ripps Hydroelectric Station, an event that heralded a period of great expansion. Over the next several decades, CMP continued to acquire small power companies and build new, innovative plants. In just four years, beginning in 1920, CMP acquired five more companies. And by 1924, when Walter Wyman succeeded Harvey Eaton as president, CMP had acquired 37 discreet companies. Its assets now totaled some $30 million, and the firm could generate some 56,000 kilowatts of power.
To finance further expansion, Walter Wyman turned to outside capital; he began issuing stocks and bonds. Wyman and Eaton gave CMP a huge infusion of funds in 1925 when they convinced a holding company, Middle West Utilities, to purchase CMP's common stock at $140 per share. Middle West made CMP a subsidiary and subsequently transferred control to the New England Public Service Company (Nepsco). By 1931 Wyman had brought in nearly $20 million. With the infusion of new funds, CMP undertook to build a 20,000 kilowatt plant at Gulf Island in 1926. In 1929, on the eve of the Great Depression, the company served some 66,000 customers and had gross revenues of $6.6 million, earning a net income of $399,000.
As it did every other major industry, the Depression hit the power industry. CMP officials took voluntary pay cuts, and, for a while, new construction was kept at a minimum. But CMP soon continued to expand. In 1930, the Wyman station, which was located on the Kennebec River and named after CMP's president, went into operation. That year, to meet the needs of the new Maine Seaboard Paper Company factory, Wyman built a floating power plant in the hull of a defunct cargo steamer. The plant, named the Jacona, was the first floating power plant ever built, and was used as a model for plants later used in World War II. In 1931 CMP built a small substation mounted on an automobile trailer, which was known as the Jacona Jr., for emergency use.
During the Depression CMP also continued to acquire new companies. In 1935 it bought the properties of Androscoggin Electric, which in turn owned several smaller companies. That year CMP also bought the Dennistown Power Company and the Central Securities Corporation. By 1938 CMP had acquired nearly 60 small companies, its plants had a combined capacity of 125,000 kilowatts, and the utility pumped out 537 million kilowatt hours. Also during this time, the firm's output of electricity increased slowly but steadily every year. In 1932 the firm served 82,170 customers; by 1937 the number grew to 89,000. And while CMP remained in the black, its profits fell. Income stood at $1.669 million in 1932, but dropped by about one third in the following three years. By 1937 the firm had recovered somewhat and reported net income of $1.7 million. Two years later, in the firm's fortieth year of business, CMP earned $2 million on revenues of $7.4 million.
In the late 1930s Wyman foresaw that the seemingly inevitable war in Europe would bring greater economic activity to the United States, so he arranged for a new 20,000-kilowatt steam plant to be built on tidewater. The result was the Mason Station, which came on-line just three weeks after the Japanese attack on Pearl Harbor in 1941. The following year Wyman died; William Skelton, who had been director and president of Nepsco, succeeded him. Skelton remained as president for five years, after which William F. Wyman, son of the company founder, became CMP's president.
In 1942 CMP acquired Cumberland County Power & Light, and began to operate motor bus service in the Portland area. With this merger, CMP added 61,000 customers in 36 cities, nearly doubling its total. CMP emerged from the years of World War II on sound economic footing, poised for the challenges of the Atomic Age. In 1946 Congress enacted the Atomic Energy Act, which aimed to promote the development of nuclear energy, a trend that would transform the nature of CMP's business. That year CMP stock was publicly traded and held for the first time. In 1950 CMP installed a gas turbine--one of the first to be used in the United States--in its Farmingdale plant. It was also the first year that CMP charted an output of one billion kilowatt hours.
CMP grew steadily in the postwar years: the number of customers served increased from 165,000 in 1945 to 212,000 in 1951; revenues rose from $15 million in 1945 to $23 million in 1951; and the company's income rose from $3.1 million to $4.4 million in the same period. By 1951 the firm employed 1,677 people, and owned 34 hydroelectric, six steam, and four internal combustion electricity plants, with the hydro plants accounting for 68 percent of the output.
As the 1950s progressed, CMP grew more independent and branched out into new areas. In 1953, Nepsco and Northern New England Company liquidated, leaving CMP as an independent entity. The following year, the Indian Pond Plant--CMP's newest and largest hydro-generating station--went on-line. In 1954 CMP joined 11 other New England utilities in organizing the Yankee Atomic Electric Company for the purposes of building a nuclear power plant at Rowe, Massachusetts, and in 1955 the Maine legislature repealed the law that had prohibited the transmission of hydroelectric power beyond state borders, an important measure that enabled CMP to work with other utilities in developing new projects. By 1958 CMP owned 9.5 percent of the Yankee project and had committed $1.2 million to the venture. Construction on the plant was completed two years later. The plant became operational in 1961, with a capacity of 185,000 kilowatts.
CMP's business continued to boom. By 1957 CMP served some 230,000 customers in 276 locales, and the annual output had climbed to two billion kilowatt hours. The next year CMP reported operating revenues of $38.6 million and earned profits of $6.5 million. In 1958 CMP completed the first stage of its newest plant, the William F. Wyman Station in Yarmouth--then the biggest generator in Maine. As part of the modernization process, older gas plants were retired as larger, more modern plants came into operation.
In 1962 William F. Wyman died; his replacement was William Dunham, former executive vice-president. That year CMP and several other New England utilities voted to build a second atomic plant, the Connecticut Yankee nuclear power plant at Haddam Neck, Connecticut, which would have a 500,000- kilowatt capacity. Dunham sat at the company's helm until 1971, presiding over great changes in the meantime. In 1963, CMP founded its Area Development Department, which was established to promote expansion of industry, agriculture, natural resource development, and recreation in Maine.
CMP continued to add smaller companies to its empire. In 1964, for example, it acquired Casco Bay Light & Power. And in 1966 it joined with 10 other utilities to form the Maine Yankee Atomic Power Company, which would eventually build a large atomic plant in Maine. As nuclear and other plants came on-line, hydroelectric plants accounted for an increasingly smaller percentage of the output. In the mid-1960s, hydro accounted for only 44 percent.
In 1965 CMP's common stock was first listed on the New York Stock Exchange under the symbol CTP. That year the firm counted 266,000 customers, had revenues of $57 million, and a net income of $10 million. Three years later construction began on the largest industrial project in the history of Maine, the Maine Yankee Atomic Plant in Wicasset, of which CMP owned 38 percent. Despite some concern on the part of Maine residents about possible accidents and negative environmental impact, the plant was completed and went on-line in 1972.
The decade of William Dunham's leadership was one of huge growth. In 1969, the seventieth year of its enterprise, the firm served 293,000 customers, had revenues of $70.7 million, and a net income of $11.1 million. Also that year, CMP established a Department of Environmental Studies and Control. Investment in corporate projects rose from $277.5 million in 1963 to $440.4 million in 1973. In these years, the workforce rose less significantly, from 1,743 to 1,920, and the amount of energy produced more than doubled from 2.38 billion to 5.26 billion kilowatts in 1973. Rate increases were rare in these years. When CMP filed for a rate increase in 1971, it was its first in 13 years.
In 1971 Dunham became chairman and chief executive officer, and Elwin Thurlow, who had joined the firm as a meter reader 30 years earlier, was named president. The next year saw CMP with 23 hydroelectric, 3 steam, and 5 internal combustion plants. The company served 317,000 customers, tallied revenues of $95.3 million, and reaped a net income of $12 million. At the time, hydro power accounted for only 29 percent of the firm's output.
Like the 1960s, the 1970s would also prove a period of great growth. In 1974 CMP announced it expected to spend $280 million on construction through 1978. But the growth was not as great as CMP would have liked. In 1975--the same year Thurlow was named to the additional post of CEO--the utility was forced to indefinitely postpone its plans to build a new nuclear plant at Sears Island. Researchers found evidence of a fault in the rock on which the plant would be built. In 1977 CMP decided to scrap its plans for the $1 billion plant entirely, filing instead for permission to build a large coal-fired generating plant at the same location. But in 1979 the Maine Public Utilities Commission rejected the petition because CMP had failed to demonstrate the need for such a large capacity.
In 1979, with the firm serving some 375,000 customers in a large area of southern and central Maine, CMP reaped profits of $29.6 million on revenues of $271 million. Both totals were more than double those from 1974. The company now owned 23 hydroelectric, 2 steam, and 5 internal combustion plants, and held parts of four nuclear generating companies: a 9.5 percent interest in Yankee Atomic, a 6 percent interest in Connecticut Yankee, a 4 percent interest in Vermont Yankee, and a 38 percent interest in Maine Yankee.
Nuclear energy continued to be both blessing and curse to CMP. By 1979 nuclear accounted for 33 percent of the firm's output. Twenty percent came from hydro and 47 percent came from fossil production and purchase. But in March of 1979, the Nuclear Regulatory Commission shut down Maine Yankee Atomic Power for 10 days, charging that faulty design 'left vital cooling systems vulnerable to possible earthquake damage.' Shortly after, CMP confirmed that a tiny amount of radiation leaked from the plant in March.
Coming as it did on the heels of the disastrous Three Mile Island nuclear leak, the accident heightened opposition to nuclear power in Maine. Activists managed to place on the 1980 ballot a referendum on whether to keep the Maine Yankee plant in operation. But in the first public vote on nuclear energy since the Three Mile Island accident, and after CMP spent a good deal of money on a public relations campaign, the electorate voted to keep the plant. At the time the plant produced about a third of the electricity consumed in Maine, and half its production was sold in neighboring Massachusetts, New Hampshire, and Vermont.
Opponents of nuclear power in Maine did not give up, however. In 1982 there was another referendum on Maine Yankee--again defeated by the voters. Finally, Maine citizens would reject in 1987 yet a third referendum to close Maine Yankee. Although plans for CMP nuclear projects in Massachusetts were abandoned in 1980, other plants were built. From 1979 to 1982, for instance, CMP was busy constructing the Brunswick-Topsham hydroelectric project.
Revenues grew steadily in the 1980s, from $600 million in 1984 to $704 million in 1989, and net income grew to $48 million in 1989. By that year, CMP was serving 475,000 customers in Maine. In the earlier part of the decade, however, CMP experienced some bad luck. With per-share earnings at the lowest level since 1974, Elwin Thurlow initiated a new austerity program, cut $34 million from the utility's 1981 budget, and restricted hiring. Then in 1982 Robert Scott, a CMP director, pleaded guilty to lying under oath to state utility regulators. He resigned his position, and was suspended from the company. Scott had said under oath that a telephone poll on a proposed energy conservation loan program had been destroyed when actually he still had a copy in his possession. It wasn't clear why the utility didn't want to disclose all the results of its poll, but later that year, the firm paid a $20,000 contempt fine. In the wake of the Scott fiasco, Maine's attorney general investigated Thurlow's part in the wrongdoing, prompting Thurlow to request the board to move up his retirement date. In 1984 senior vice-president Charles E. Monty took over as interim president and was quickly replaced by John Rowe, a former senior vice-president of Consolidated Rail Corporation.
The 1980s held additional woes for CMP. In 1984 the company canceled its Sears Island coal project, and the construction of the Seabrook 1 plant, of which CMP owned 6 percent, was suspended. Seabrook 1 was running way over its $5 billion cost. In 1985, Eastern Utilities Associates agreed in principle to buy the stake in the Seabrook plant from CMP for 14 cents on the dollar; the Seabrook 2 nuclear project in Seabrook, New Hampshire, was canceled; and CMP reached an agreement with the state regulatory commission that allowed the utility to take a $44.9 million after-tax write-off on its investments in the projects. That year, CMP served 437,000 customers, and owned 28 hydroelectric generating stations, two oil-fired steam electric generating stations, and three internal combustion generating facilities. Total revenues rose consistently in the early and mid-1980s, from $335 million in 1980 to $508 million in 1986. But earnings followed a different path. In 1980 they stood at $26 million, doubling to $51 million by 1983. The firm managed to bring in only $12 million in profits in 1985, and $45 million in 1986.
The following year brought more bad tidings for CMP. In April of 1987, CMP wrote off $85 million spent on canceled nuclear plants, and convinced the state to let it charge consumers for $191 million of the remaining cost. Also in 1987, CMP reached an agreement with Hydro-Quebec to build a $250 million transmission line to import Canadian hydroelectric power. But opponents--among them, the coal industry and property owners whose land would be affected by the new electric lines--vigorously fought the new pact. In 1989 the Maine Public Utilities Commission voted to deny CMP's proposal to purchase the power from Hydro-Quebec, and the contract was nullified.
In the late 1980s, CMP embarked upon a number of conservation programs to boost public relations. For example, it donated high-efficiency light bulbs to charities, who sold them as fundraisers. CMP also sponsored a program in which high-efficiency bulbs were made available for sale in several supermarket chains. Problems with nuclear power continued to plague the firm in the early 1990s, however. In 1991 the Maine Yankee nuclear power plant was closed after a fire which caused extensive damage and was confined to non-nuclear areas of the plant. In addition, the Yankee Rowe plant was set to be dismantled at a cost of $247 million. CMP nevertheless continued to expand, and in 1990, on the eve of the recession, a new unit, the Charles E. Monty Hydro Station, was dedicated at Lewiston falls.
Despite the recession, fire, and demise of Yankee Rowe, 1991 was CMP's best year ever. Operating revenues rose from $780 million in 1990 to $866 million, and net income rose from $48.8 million in 1990 to $59.1 million. The firm, which was worth just $4,500 nearly a century before, now had assets of $1.574 billion, and served 490,000 customers. CMP continued to thrive by reducing its workforce by more than 200, or about 9 percent, in 1991. It also managed costs carefully, deactivating the oil-fired Mason Station in Wicasset, and reducing capital investments in 1991 by more than $30 million. Construction outlays fell from $120 million in 1989 to about $75 million in 1991.
CMP, therefore, emerged from the 1980s as a different company: leaner, less bent on expansion, and relying less on oil and hydroelectric plants. In 1991, oil accounted for only about 12 percent of the energy generated, a huge reduction from the 57 percent level of 1970. In that year nuclear plants still accounted for 30 percent of the power generated, while hydroelectric produced 17 percent. The biggest growth was in local non-utility sources, which accounted for 37 percent of the output. And although the company had no new generating facilities under construction at the start of the 1990s, CMP has predicted modest growth for the remaining years of the 20th century.
Principal Subsidiaries: Cumberland Securities Corporation, Union Water-Power Company, Central Securities Corporation, Maine Electric Power Company (78.1%).
Further Reading:
Skelton, William B., Walter S. Wyman One of Maine's Great Pioneers, The Newcomen Society in North America, 1949.
History of CMP, Augusta, Maine, Central Maine Power, 1974.
'Still in the Woods,' Forbes, April 20, 1987.
'Why Americans Consume More Energy to Produce Less,' New York Times, March 12, 1989.
'Central Maine Power Company,' Moody's Manual of Investments, 1990.
Source: International Directory of Company Histories, Vol. 6. St. James Press, 1992.
