<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>ex991.txt
<DESCRIPTION>EXHIBIT A
<TEXT>
                                                               [GRAPHIC OMITTED]

Exhibit A





                                   EMERA INC.

                        Consolidated Financial Statements

                           December 31, 2003 and 2002







                                       1
<PAGE>

                                                               [GRAPHIC OMITTED]


                                MANAGEMENT REPORT

Management's Responsibility for Financial Reporting

The accompanying consolidated financial statements of Emera Inc. and the
information in this annual report are the responsibility of management and have
been approved by the Board of Directors ("Board").

The consolidated financial statements have been prepared by management in
accordance with Canadian generally accepted accounting principles. When
alternative accounting methods exist, management has chosen those it deems most
appropriate in the circumstances. Nova Scotia Power Inc. ("NSPI"), one of Emera
Inc.'s electric utilities and principal subsidiary, is regulated by the Nova
Scotia Utility and Review Board, which also examines and approves NSPI's
accounting policies and practices. Emera Inc.'s other utility, Bangor
Hydro-Electric Company ("Bangor Hydro"), is regulated by the Maine Public
Utilities Commission, which also examines and approves Bangor Hydro's accounting
policies and practices. In preparation of these consolidated financial
statements, estimates are sometimes necessary when transactions affecting the
current accounting period cannot be finalized with certainty until future
periods. Management believes that such estimates, which have been properly
reflected in the accompanying consolidated financial statements, are based on
careful judgements and are within reasonable limits of materiality. Management
has determined such amounts on a reasonable basis in order to ensure that the
consolidated financial statements are presented fairly in all material respects.
Management has prepared the financial information presented elsewhere in the
annual report and has ensured that it is consistent with that in the
consolidated financial statements.

Emera maintains effective systems of internal accounting and administrative
controls, consistent with reasonable cost. Such systems are designed to provide
reasonable assurance that the financial information is relevant, reliable and
accurate and that Emera's assets are appropriately accounted for and adequately
safeguarded.

The Board is responsible for ensuring that management fulfils its
responsibilities for financial reporting and is ultimately responsible for
reviewing and approving the consolidated financial statements. The Board carries
out this responsibility principally through its Audit Committee.

The Audit Committee is appointed by the Board, and its members are directors who
are not officers or employees of Emera Inc. The Committee meets periodically
with management, as well as with the internal auditors and with the external
auditors, to discuss internal controls over the financial reporting process,
auditing matters and financial reporting issues, to satisfy itself that each
party is properly discharging its responsibilities, and to review the annual
report, the consolidated financial statements and the external auditors' report.
The Audit Committee reports its findings to the Board for consideration when
approving the consolidated financial statements for issuance to the
shareholders. The Committee also considers, for review by the Board and approval
by the shareholders, the appointment of the external auditors.

The consolidated financial statements have been audited by Ernst & Young LLP,
the external auditors, in accordance with Canadian generally accepted auditing
standards. Ernst & Young LLP has full and free access to the Audit Committee.

January 28, 2004

"David McD. Mann"                               "Ronald E. Smith, FCA"
President and Chief Executive Officer           Senior Vice-President and
                                                Chief Financial Officer


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                                                               [GRAPHIC OMITTED]

                                AUDITORS' REPORT

To the Shareholders of
Emera Inc.

We have audited the consolidated balance sheets of Emera Inc. as at December 31,
2003 and 2002, and the consolidated statements of earnings, retained earnings
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2003 and 2002
and the results of its operations and its cash flows for the years then ended in
accordance with Canadian generally accepted accounting principles.

Halifax, Canada

January 28, 2004


"Ernst & Young LLP"
Chartered Accountants



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Emera Inc.
Consolidated Statements of Earnings
Year Ended December 31
millions of dollars (except earnings per common share)
                                                             2003           2002
--------------------------------------------------------------------------------
Revenue
     Electric                                            $1,104.1       $1,136.3
     Fuel oil                                                84.5           66.0
     Other                                                   42.7           24.9
--------------------------------------------------------------------------------
                                                          1,231.3        1,227.2
--------------------------------------------------------------------------------
Cost of operations
     Fuel for generation and power purchased                363.3          453.2
     Cost of fuel oil sold                                   71.5           57.3
     Operating, maintenance and general                     269.4          284.2
     Grants in lieu of property taxes                        33.1           22.8
     Provincial capital tax                                   7.8            7.3
     Depreciation                                           127.7          127.8
--------------------------------------------------------------------------------
                                                            872.8          952.6
--------------------------------------------------------------------------------
Earnings from operations                                    358.5          274.6
Equity earnings (note 7)                                      8.6            7.0
Regulatory amortization                                    (18.2)         (23.9)
Allowance for funds used during construction                  5.1            4.9
--------------------------------------------------------------------------------
Earnings before interest and income taxes                   354.0          262.6
Interest       (note 8)                                     133.6          144.0
Amortization of defeasance costs                             16.7           19.4
--------------------------------------------------------------------------------
Earnings before income taxes                                203.7           99.2
Income taxes (note 9)                                        61.3            5.0
--------------------------------------------------------------------------------
Net earnings before non-controlling interest                142.4           94.2
Non-controlling interest (note 9 and 19)                     13.2           10.6
--------------------------------------------------------------------------------
Net earnings applicable to common shares                   $129.2          $83.6
--------------------------------------------------------------------------------
Earnings per common share - basic (note 10)                 $1.20          $0.85
--------------------------------------------------------------------------------
Earnings per common share - diluted (note 10)               $1.16          $0.84
--------------------------------------------------------------------------------

See accompanying notes to the consolidated financial statements

Emera Inc.
Consolidated Statements of Retained Earnings
Year Ended December 31
millions of dollars
                                                             2003           2002
--------------------------------------------------------------------------------
Retained earnings at beginning of year                     $328.9         $330.0
Goodwill impairment (note 3 and 16)                             -          (0.3)
Net earnings applicable to common shares                    129.2           83.6
--------------------------------------------------------------------------------
                                                            458.1          413.3
Dividends                                                    92.8           84.4
--------------------------------------------------------------------------------
Retained earnings at end of year                           $365.3         $328.9
--------------------------------------------------------------------------------


See accompanying notes to the consolidated financial statements


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Emera Inc.
Consolidated Balance Sheets
As at December 31
millions of dollars
                                     Assets
                                                               2003         2002
--------------------------------------------------------------------------------
Current assets
     Cash and cash equivalents                                $16.9        $28.5
     Accounts receivable (note 11)                            182.9        156.3
     Income tax receivable                                      1.4         31.1
     Inventory                                                 89.8        108.7
     Prepaid expenses                                           6.2          7.1
--------------------------------------------------------------------------------
                                                              297.2        331.7
--------------------------------------------------------------------------------
Long-term receivable (note 12)                                 35.0            -
--------------------------------------------------------------------------------
Deferred charges (note 13)                                    528.9        436.2
--------------------------------------------------------------------------------
Future income tax asset (note 9)                               27.2         26.4
--------------------------------------------------------------------------------
Goodwill (note 16)                                            115.1        137.7
--------------------------------------------------------------------------------
Investments (note 7)                                          102.8        112.2
--------------------------------------------------------------------------------
Property, plant & equipment (note 14)                       2,672.8      2,776.4
Construction work in progress                                  61.9         87.3
--------------------------------------------------------------------------------
                                                            2,734.7      2,863.7
--------------------------------------------------------------------------------
                                                           $3,840.9     $3,907.9
--------------------------------------------------------------------------------

                      Liabilities and Shareholders' Equity
Current liabilities
     Current portion of long-term debt (note 17)             $166.3       $203.9
     Short-term debt (note 18)                                129.2        315.3
     Accounts payable and accrued charges                     207.2        175.1
     Dividends payable                                          3.2          3.3
--------------------------------------------------------------------------------
                                                              505.9        697.6
--------------------------------------------------------------------------------
Future income tax liability (note 9)                           87.6         87.2
--------------------------------------------------------------------------------
Deferred credits (note 13)                                     84.5        105.8
--------------------------------------------------------------------------------
Long-term debt (note 17)                                    1,589.5      1,417.8
--------------------------------------------------------------------------------
Non-controlling interest (note 19)                            260.8        267.5
--------------------------------------------------------------------------------
Shareholders' equity
     Common shares (note 20)                                1,008.4      1,000.2
     Foreign exchange translation adjustment (note 22)       (61.1)          2.9
     Retained earnings                                        365.3        328.9
--------------------------------------------------------------------------------
                                                            1,312.6      1,332.0
--------------------------------------------------------------------------------
                                                           $3,840.9     $3,907.9
--------------------------------------------------------------------------------

Commitments (note 24)
Contingencies (note 9)
Guarantees (note 25)

See accompanying notes to the consolidated financial statements

Approved on behalf of the Board of Directors



"Derek Oland", Chairman                        "David McD. Mann", President and
                                               Chief Executive Officer


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Emera Inc.
Consolidated Statements of Cash Flows
Year Ended December 31
millions of dollars

                                                            2003          2002
--------------------------------------------------------------------------------
Operating activities
   Cash received from customers                           $1,232.6      $1,197.5
   Cash paid to suppliers and employees                    (667.1)       (749.8)
   Cash paid to non-controlling interest                    (14.2)        (14.5)
--------------------------------------------------------------------------------
Cash provided by operations, before interest and taxes       551.3         433.2
Interest paid                                              (127.9)       (147.4)
Income taxes paid                                           (50.9)        (27.9)
Pre-2003 income tax assessment                             (133.0)             -
--------------------------------------------------------------------------------
Net cash provided by operating activities                    239.5         257.9
--------------------------------------------------------------------------------
Financing activities
   Reduction of short-term debt                            (180.5)       (151.8)
   Proceeds from issue of common shares                        7.3         154.4
   Redemption of preferred shares by subsidiary              (7.2)             -
   Issue of long-term debt                                   368.1         121.2
   Retirements of long-term debt                           (197.6)       (186.5)
   Dividends paid on common shares                          (92.9)        (84.4)
   Long-term financing of asset sale                        (45.0)             -
   Other financing activities                               (22.4)           4.3
--------------------------------------------------------------------------------
Net cash used in financing activities                      (170.2)       (142.8)
--------------------------------------------------------------------------------
Investing activities
   Property, plant and equipment                           (121.2)       (106.8)
   Proceeds on sale of fixed assets                           72.4          26.7
   Investments                                              (27.3)        (25.5)
   Retirement spending                                       (4.8)         (3.1)
   Acquisitions (note 4)                                         -         (0.9)
--------------------------------------------------------------------------------
Net cash used in investing activities                       (80.9)       (109.6)
--------------------------------------------------------------------------------
(Decrease)/increase in cash and cash equivalents            (11.6)           5.5
Cash and cash equivalents, beginning of year                  28.5          23.0
--------------------------------------------------------------------------------
Cash and cash equivalents, end of year                       $16.9         $28.5
--------------------------------------------------------------------------------
Cash and cash equivalents consists of:
Cash                                                         $11.0         $15.2
Short-term investments                                         5.9          13.3
--------------------------------------------------------------------------------
Cash and cash equivalents, end of year                       $16.9         $28.5
--------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements


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Emera Inc.
Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Emera Inc. ("Emera" or the Company), incorporated in the Province of Nova
Scotia, through its principal subsidiaries, Nova Scotia Power Inc. ("NSPI") and
Bangor Hydro-Electric Company ("Bangor Hydro"), is engaged in the production and
sale of electric energy, which is regulated by the Nova Scotia Utility and
Review Board ("UARB") and the Maine Public Utilities Commission ("MPUC"). Emera
follows Canadian generally accepted accounting principles ("GAAP"). NSPI's
accounting policies are subject to examination and approval by the UARB and are
similar to those being used by other companies in the electric utility industry
in Canada. Bangor Hydro's accounting policies are subject to examination and
approval by the MPUC and are similar to those being used by other companies in
the electric utility industry in Maine. The rate-regulated accounting policies
of NSPI and Bangor Hydro may differ from GAAP for non rate-regulated companies.
Where these differences are considered significant, disclosure of the policy has
been made in these notes to the consolidated financial statements.

     a.   Consolidation

          The consolidated financial statements include the accounts of Emera
          Inc. and its subsidiaries. Significant intercompany transactions and
          accounts have been eliminated.

     b.   Measurement Uncertainty

          The preparation of financial statements in accordance with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities at the date of the financial statements and the reported
          amounts of revenues and expenses during the reporting periods. Actual
          results may differ from these estimates.

     c.   Revenue Recognition

          The Company's revenue recognition policy is as follows:
               o   Electric: Revenues are recognized on the accrual basis, which
                   includes an estimate of electricity consumed by customers in
                   the year but billed subsequent to year-end.
               o   Fuel Oil: Revenues are recognized on delivery of product.
               o   Energy Marketing: Derivative financial and commodity
                   instruments that are not entered into for hedging purposes
                   are recognized at fair market value at year-end.
               o   Other: Revenues are recognized on the accrual basis, which
                   includes an estimate for services performed and goods
                   delivered during the year but billed subsequent to year-end.
                   Unearned revenue is recorded as a deferred credit.

     d.   Allowance for Funds Used during Construction

          For the regulated electric business carried on by NSPI and Bangor
          Hydro, the Company provides for the cost of financing construction
          work in progress by including an allowance for funds used during
          construction ("AFUDC") as an addition to the cost of property
          constructed, using a weighted average cost-of-capital. The allowance
          will be charged to operations through depreciation over the service
          life of the related assets and recovered through future revenues.

     e.   Regulatory Amortization


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                                                               [GRAPHIC OMITTED]

          In accordance with the regulations of the UARB, significant assets of
          Nova Scotia Power, which are not currently being used and are not
          expected to provide services to customers in the foreseeable future,
          are amortized over five years. In 2000 the UARB approved NSPI's
          request to amortize the Glace Bay generating station over five years.
          The UARB had allowed Nova Scotia Power flexibility in determining the
          annual amount to be written off in order to support rate stability. On
          July 8, 2003, the UARB approved the Company's request to extend the
          write-off period through 2008, if necessary, with an annual minimum
          amortization of $6.2 million.

          In accordance with rate and accounting orders issued by the MPUC,
          Bangor Hydro has recorded regulatory assets and liabilities on its
          balance sheet. These regulatory assets and liabilities are being
          amortized over varying lives expiring through 2004 to 2018 through
          charges to earnings.

     f.   Property, Plant and Equipment

          Property, plant and equipment are recorded at original cost, net of
          contributions in aid of construction. In accordance with its regulator
          approved accounting policies, when property, plant and equipment of
          NSPI and Bangor Hydro are replaced or retired, the original cost plus
          any removal costs incurred (net of salvage) are charged to accumulated
          depreciation. For the remainder of the Company, when property, plant
          and equipment are replaced or retired, any remaining net book value is
          charged to net earnings.

          Depreciation is determined by the straight-line method, based on the
          estimated remaining service lives of the depreciable assets in each
          category. The estimated average service lives for the major categories
          of plant in service are summarized as follows:

           Functions                          Average Service Life in Years
          -------------------------------------------------------------------
           Generation
               Thermal                                                   43
               Gas turbine                                               36
               Hydroelectric                                             77
               Wind turbine                                              20
           Transmission                                                  47
           Distribution                                                  33
           Offshore                                Unit of production basis
           Other                                                         14
          -------------------------------------------------------------------

          In accordance with the UARB, assets of NSPI, which are not currently
          being used, but will be useful in providing future service to
          customers, are not depreciated. Financing costs associated with assets
          not currently being used are deferred as incurred. Depreciation will
          occur when the asset goes into service. Significant costs in removing
          the asset from service may be deferred and amortized to earnings over
          a five-year period, subject to regulatory approval. Significant costs
          to return the asset to service are added to the capital cost of the
          asset.

     g.   Income Taxes and Investment Tax Credits

          In accordance with ratemaking regulations established by the UARB,
          NSPI uses the taxes-payable method of accounting for income taxes.
          Bangor Hydro uses the future income tax method where allowed for
          ratemaking purposes. Emera's remaining subsidiaries follow the future
          income tax method of accounting for income taxes.

          Investment tax credits arise as a result of incurring qualifying
          scientific research and development expenditures and are recorded in
          the year as a reduction from the related expenditures where there is
          reasonable assurance of collection.

     h.   Employee Future Benefits


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                                                               [GRAPHIC OMITTED]

          Pension costs, and costs associated with non-pension post-retirement
          benefits such as health benefits to retirees and retirement awards,
          are actuarially determined using the projected benefit method prorated
          on services and management's best estimate assumptions. Pension fund
          asset values are calculated using market values at year-end. The
          expected return on pension assets is determined based on
          market-related values. The market-related values are determined in a
          rational and systematic manner so as to recognize asset gains and
          losses over a five-year period. Adjustments arising from plan
          amendments are amortized on a straight-line basis over the expected
          average remaining service period ("ARSP") of active employees. For any
          given year, when NSPI's net actuarial gain (loss), less the actuarial
          gain (loss) not yet included in the market-related value of plan
          assets, exceeds 10% of the greater of the accrued benefit obligation
          and the market-related value of the plan assets, an amount equal to
          the excess divided by the ARSP is amortized. The difference between
          pension expense and pension funding is recorded as a deferred asset or
          credit on the balance sheet. For Bangor Hydro this excess is amortized
          on a straight-line basis over the expected average remaining service
          life of employees, in accordance with ratemaking purposes.

     i.   Stock-Based Compensation

          The Company has two stock-based compensation plans, which are a common
          share option plan for senior management and an employee common share
          purchase plan. The Company accounts for its plans in accordance with
          the fair value based method of accounting for stock-based
          compensation.

     j.   Cash and Cash Equivalents

          Short-term investments, which consists of money market instruments
          with maturities of three months or less at an effective interest rate
          of 2.81% for 2003 (2002 - 2.17%), are considered to be cash
          equivalents and are recorded at cost, which approximates current
          market value.

     k.   Inventory

          Inventories of materials and supplies are valued at the lower of
          average cost and market. Coal and oil inventory is valued at the lower
          of cost, using the first-in, first-out method, and net realizable
          value.

     l.   Debt Financing and Defeasance Costs

          Financing costs pertaining to debt issues are amortized over the life
          of the related debt. The excess of the cost of defeasance investments
          over the face value of the related debt is deferred and amortized over
          the life of the defeased debt.

     m.   Costs to Terminate/Restructure Power Purchase Contracts

          Bangor Hydro has power purchase contracts, which it was required to
          negotiate when oil prices were high, with several independent power
          producers known as small power production facilities. The cost of
          power from these facilities is more than Bangor Hydro would incur from
          other sources if it were not obligated under these contracts. Bangor
          Hydro has been attempting to alleviate the adverse impact of these
          high-cost contracts and in doing so has incurred costs to terminate or
          restructure certain of the contracts. The MPUC has allowed Bangor
          Hydro to defer these costs and recover them in rates. The annual
          amortization expense is approximately $23 million.

     n.   Seabrook Nuclear Project

          Bangor Hydro was a participant in the Seabrook nuclear project in
          Seabrook, New Hampshire. On December 31, 1984, Bangor Hydro had almost
          $87 million invested in Seabrook, but because the uncertainties
          arising out of the Seabrook Project were having an adverse impact on
          Bangor


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                                                               [GRAPHIC OMITTED]

          Hydro's financial condition, an agreement for the sale of Seabrook was
          reached in mid-1985 and was consummated in November 1986. In 1985 the
          MPUC issued an order disallowing recovery of certain Seabrook costs,
          but provided for the recovery through customer rates of 70% of Bangor
          Hydro's year-end 1984 investment in Seabrook Unit 1 over 30 years. The
          annual amortization expense is approximately $3 million.

     o.   Derivative Financial & Commodity Instruments

          The Company uses various derivative financial instruments to hedge its
          exposure to foreign exchange, interest rate, and commodity price
          risks. These instruments are accounted for as hedges of anticipated
          transactions and, accordingly, gains and losses on these instruments
          are included in the measurement of the related hedged risk when
          realized. Gains and losses on instruments used to hedge foreign
          exchange and commodity price risks are recognized as a cost of fuel
          purchases while gains and losses on instruments used to hedge interest
          rate risks are recognized as a part of interest expense.

          On occasion, non-hedging derivative financial and commodity
          instruments are entered into and are marked-to-market at each
          reporting date. The net margin recognized is reflected in other
          revenue.

     p.   Goodwill

          Effective January 1, 2002, in accordance with new accounting
          standards, the Company no longer amortizes goodwill. Instead, the
          Company evaluates the carrying value of goodwill for potential
          impairment through an annual review and analysis of fair market value.
          Fair market value is determined by use of net present value financial
          models which incorporate management's assumptions of future
          profitability.

          In accordance with the new standards for goodwill acquired after June
          30, 2001, Emera has not amortized the goodwill acquired on the
          acquisition of Bangor Hydro.

     q.   Long-Term Investments

          The Company accounts for certain investments, over which it maintains
          significant influence but not control, using the equity method,
          whereby the amount of the investment is adjusted annually for the
          company's pro-rata share of the income or loss of investment and
          reduced by the amount of any dividends received.

          Emera accounts for its investments in Maritimes & Northeast Pipeline,
          Maine Yankee Atomic Power Company, Maine Electric Power Company Inc.,
          and Greyhawk Natural Gas Storage using the equity method.

          Long-term investments over which Emera does not have significant
          influence are accounted for on the cost basis.

     r.   Deferred Gain on Asset Sale

          In 1999, Bangor Hydro completed a transaction for the sale of
          substantially all of its electric generating assets and certain
          transmission rights. Bangor Hydro realized a net gain on the sale,
          which was recorded as a deferred credit. As specified in its February
          2000 MPUC rate order, the deferred gain is being utilized over a
          multi-year period to reduce electric rates. The annual amortization
          amounts are recognized in an uneven manner in order to levelize Bangor
          Hydro's revenue requirement and will be complete in February 2004.

     s.   Foreign Currency Translation


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                                                               [GRAPHIC OMITTED]

          Monetary assets and liabilities denominated in foreign currencies are
          converted to Canadian dollars at rates of exchange prevailing at the
          balance sheet date. The resulting differences between the translation
          at the original transaction date and the balance sheet date are
          charged to earnings.

          Assets and liabilities of self-sustaining foreign operations are
          translated using the exchange rates in effect at the balance sheet
          date and the results of operations at the average rates for the
          period. The resulting exchange gains and losses are deferred and
          included in a separate component of shareholders' equity.

     t.   Research and Development Costs

          All research and development costs are expensed in the year incurred
          unless they can be deferred as a part of capital assets.

2. CHANGE IN ACCOUNTING ESTIMATE

        Electric revenues are recognized on the accrual basis, which includes an
        estimate of electricity consumed by customers in the period but billed
        subsequent to the period. During the second quarter, the Company's
        subsidiary, Nova Scotia Power Inc., improved its process for estimating
        unbilled revenue and as a result, decreased its electric revenue by
        approximately $10.0 million. During the third quarter, the Company's
        subsidiary, Bangor Hydro-Electric Company improved its process for
        estimating unbilled revenue and as a result, decreased its electric
        revenue by approximately $3.2 million. The impact on future periods is
        expected to be immaterial.

3.   CHANGE IN ACCOUNTING POLICIES

        In 2002 the Company prospectively adopted the new accounting
        requirements for stock-based compensation. The Company has adopted the
        fair value based method of valuation for determining the amount of
        compensation expense to recognize. As discussed in note 20, the adoption
        of these new accounting requirements resulted in an additional $0.4
        million of compensation expense in 2002.

        In 2002 the Company prospectively adopted the new accounting
        requirements for goodwill and intangibles. Previously, the Company had
        amortized goodwill over 20 years. Under the new recommendations,
        goodwill is no longer amortized but is instead subjected to an annual
        impairment test with any resulting impairment charged to net earnings.
        As part of the new standards, the Company did not amortize goodwill on
        acquisitions completed after June 30, 2001. Accordingly, no goodwill
        acquired on the purchase of Bangor Hydro was amortized. As discussed in
        note 16, the resulting impact of the Company's initial transitional
        impairment test for January 1, 2002 was a charge to retained earnings of
        $0.3 million.

        In 2002 the Company adopted the new provisions for classification of
        short-term debt obligations expected to be refinanced. Under the new
        standard, debt obligations, which are short-term, should be reclassified
        as long-term if the Company has the intention and the unencumbered
        ability to refinance the obligations for a period greater than one year.
        This assessment is performed by taking into account both the actual
        level of short-term debt at the end of the fiscal year and the
        forecasted levels of debt for the period to the end of the next fiscal
        year. The new provisions became effective on January 1, 2002 and have
        been applied prospectively. As a result, as at December 31, 2002, the
        Company reclassified $120 million of debt from short-term to long-term.

        In 2002 NSPI changed its policy regarding employee future benefits to
        use market-related values instead of market values to calculate the
        expected return on its plan assets. The change entails recognizing
        changes in the actual fair value of the plan assets in a rational and
        systematic manner over a five-year period. The change has been applied
        retroactively but with no resulting material adjustments. The impact in
        2002 of changing this policy was to reduce the expense by $5.8 million.


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4.    ACQUISITIONS

    The acquisition described below has been accounted for under the purchase
    method of accounting, and accordingly the results of operations since the
    date of acquisition have been included in the consolidated statement of
    operations.

           2002
           During 2002 Emera Fuels acquired various fuel oil delivery companies
           for cash consideration of $0.9 million. The assets purchased
           consisted of property, plant and equipment ($0.3 million) and
           goodwill ($0.6 million).

5.   SEGMENT INFORMATION

    The Company has two reportable segments: Nova Scotia Power and Bangor Hydro.
    The Company evaluates performance based on contribution to consolidated net
    earnings applicable to common shareholders. The accounting policies of the
    reportable segments are the same as those described in the summary of
    significant accounting policies.

    Reportable segments are determined based on Emera's operating activities.
    NSPI is engaged in the production and sale of electric energy in Nova
    Scotia; and Bangor Hydro is engaged in the transmission and distribution of
    electric energy in central Maine. Other revenue is largely generated from
    fuel oil sales and processing fees earned on the Company's interest in the
    offshore platforms and sub-sea gathering lines of the Sable Offshore Energy
    Project.

<TABLE>
<CAPTION>
                      Nova Scotia Power     Bangor Hydro           Other*              Total
millions of dollars    2003      2002      2003      2002      2003      2002      2003      2002
---------------------------------------------------------------------------------------------------
<S>                   <C>       <C>        <C>       <C>       <C>       <C>     <C>       <C>
Revenues from          $900.2    $865.8    $200.1    $263.9    $131.0     $97.5  $1,231.3  $1,227.2
external customers
Depreciation            101.7     103.9      13.5      16.5      12.5       7.4     127.7     127.8
Cost of operations      598.9     637.9     143.0     194.9     130.9     119.8     872.8     952.6
Net inter-segment
revenues/
(expenses)              100.5       4.2     (1.9)     (1.0)    (98.6)     (3.2)         -         -
Equity earnings             -         -         -         -       8.6       7.0       8.6       7.0
Interest expense        104.3     109.6      14.4      17.8      14.9      16.6     133.6     144.0
Income taxes             57.8      15.7      12.5      10.6     (9.0)    (21.3)      61.3       5.0
Net earnings
applicable to
common
shareholders            112.1      86.1      18.8      18.8     (1.7)    (21.3)     129.2      83.6
Segment assets        2,960.9   2,883.3     608.0     752.3     272.0     272.3   3,840.9   3,907.9
Total investing
activities               96.7     104.6      25.4      15.8    (41.2)    (10.8)      80.9     109.6
Goodwill acquired           -         -         -         -         -       0.6         -       0.6
Goodwill impairment         -         -         -         -         -       0.3         -       0.3
loss
----------------------------------------------------------------------------------------------------
*Other consists of items related to corporate activities and other subsidiaries.
</TABLE>


                                       12
<PAGE>

                                                               [GRAPHIC OMITTED]

6.  EMPLOYEE FUTURE BENEFITS
    millions of dollars

Emera maintains contributory defined-benefit and defined-contribution pension
plans, which cover substantially all of its employees, and plans providing
non-pension benefits for its retirees. The details of these plans are outlined
below:

Nova Scotia Power
<TABLE>
<CAPTION>
                                                    2003                               2002
                                        Defined-benefit   Non-pension     Defined-benefit    Non-pension
                                            pension         benefits       pension plans      benefits
                                             plans           plans                              plans
---------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>                <C>            <C>
Assumptions
Discount rate                                     6.00%         6.00%              6.50%          6.50%
Long-term rate of return on plan                  7.50%             -              7.50%              -
assets
Rate of compensation increase                 3 to 5.5%     3 to 5.5%          3 to 5.5%      3 to 5.5%
Health care trend - urrent                            -        11.00%                  -         10.00%
                  - ultimate                          -         4.00%                  -          4.00%
---------------------------------------------------------------------------------------------------------
Accrued benefit obligations
Balance, January 1                               $549.8         $33.7             $514.4          $35.1
Employer current service cost                       8.6           1.2                7.8            1.3
Employee contributions                              4.7             -                4.9              -
Interest cost                                      35.2           2.2               34.0            2.4
Past service amendments                             6.1             -                  -              -
Actuarial loss (gain)                              48.3         (4.5)               21.5          (3.7)
Benefits paid                                    (28.7)         (1.4)             (32.8)          (1.4)
---------------------------------------------------------------------------------------------------------
Balance, December 31                             $624.0         $31.2             $549.8          $33.7
---------------------------------------------------------------------------------------------------------
Fair value of plan assets
Balance, January 1                               $406.8             -             $459.0              -
Employee contributions                              4.7             -                4.9              -
Employer contributions                             20.6          $1.4                8.9           $1.4
Actual investment income                           67.9             -             (33.2)              -
Benefits paid                                    (28.7)         (1.4)             (32.8)          (1.4)
---------------------------------------------------------------------------------------------------------
Balance, December 31                             $471.3             -             $406.8              -
---------------------------------------------------------------------------------------------------------
Plan deficit                                   ($152.7)       ($31.2)           ($143.0)        ($33.7)
Unamortized past service costs                      7.0             -                1.2              -
Unamortized actuarial losses                      196.8         (4.1)              181.1            0.4
Unamortized transitional obligation                 0.2          20.1                0.2           22.4
---------------------------------------------------------------------------------------------------------
Accrued benefit asset (liability)                 $51.3       ($15.2)              $39.5        ($10.9)
---------------------------------------------------------------------------------------------------------
Expense
Current service costs                              $8.6          $1.2               $7.8           $1.3
Interest on accrued benefits                       35.2           2.2               34.0            2.4
Less: expected return on plan assets             (37.8)             -             (36.4)              -
Amortization of actuarial losses                    2.5             -                0.5            0.1
Amortization of transitional                          -           2.3                  -            2.2
liability
Amortization of past service costs                  0.3             -                0.1              -
---------------------------------------------------------------------------------------------------------
Total Expense                                      $8.8          $5.7               $6.0           $6.0
---------------------------------------------------------------------------------------------------------

Defined-contribution plan
Employer expense                                   $0.7             -               $0.6              -
---------------------------------------------------------------------------------------------------------
</TABLE>

The expected return on plan assets is determined based on the market-related
value of plan assets of $506.2 million at January 1, 2003 (January 1, 2002 -
$495.5 million), adjusted for interest on certain cash flows during the year.


                                       13
<PAGE>

                                                               [GRAPHIC OMITTED]

<TABLE>
<CAPTION>
Bangor Hydro                                        2003                              2002
                                        Defined-benefit  Non-pension     Defined-benefit     Non-pension
                                           pension         benefits          pension           benefits
                                            plans           plans             plans             plans
---------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>                   <C>           <C>
Assumptions
Discount rate                                  6.25%         6.25%                 6.75%         6.75%
Long-term rate of return on plan               8.00%         5.00%                 8.00%         5.00%
assets
Rate of compensation increase                  4.00%         4.00%                 4.00%         4.00%
Health care trend - current                        -         9.00%                     -         9.00%
                  - ultimate                       -         5.00%                     -         5.00%
---------------------------------------------------------------------------------------------------------
Accrued benefit obligations
Balance, January 1                             $95.9         $50.4                 $85.0         $43.8
Employer current service cost                    1.5           1.0                   1.4           0.9
Interest cost                                    5.6           2.7                   6.2           3.2
Actuarial loss (gain)                           14.2         (4.8)                   3.6           2.4
Benefits paid                                  (5.4)         (2.5)                 (5.3)         (1.6)
Amendments                                         -             -                   3.2             -
Special termination charge                         -             -                   2.5           2.1
Foreign currency translation adjustment       (18.6)         (8.9)                 (0.7)         (0.4)
---------------------------------------------------------------------------------------------------------
Balance December 31                            $93.2         $37.9                 $95.9         $50.4
---------------------------------------------------------------------------------------------------------
Fair value of plan assets
Balance, January 1                             $54.4          $1.5                 $66.0          $1.6
Employer contributions                           2.9           2.4                   0.2           1.4
Retiree medical contributions                      -           0.1                     -           0.1
Actual investment income                        10.4             -                 (5.8)             -
Benefits paid                                  (5.4)         (2.5)                 (5.3)         (1.6)
Foreign currency translation adjustment       (10.5)         (0.3)                 (0.7)             -
---------------------------------------------------------------------------------------------------------
Balance December 31                            $51.8          $1.2                 $54.4          $1.5
---------------------------------------------------------------------------------------------------------
Plan deficit                                 ($41.4)       ($36.7)               ($41.5)       ($48.9)
Unamortized past service costs                   3.8             -                   6.0             -
Unamortized actuarial losses                    28.8           7.0                  26.1          15.1
Unamortized transitional obligation                -           5.8                     -           7.9
Unamortized special termination charge           1.8           1.5                   2.4           2.0
---------------------------------------------------------------------------------------------------------
Accrued benefit liability                     ($7.0)       ($22.4)                ($7.0)       ($23.9)
---------------------------------------------------------------------------------------------------------
Expense
Employer current service costs                  $1.5          $1.0                  $1.4          $0.9
Interest on accrued benefits                     5.6           2.7                   6.2           3.2
Less: expected return on plan assets           (5.1)             -                 (6.2)             -
Amortization of actuarial losses                 0.8           0.8                   0.7             -
Amortization of transitional                       -           0.7                     -           0.8
liability (asset)
Amortization of past service costs               1.2             -                   0.3           1.0
Amortization of special termination charge       0.2           0.2                   0.2           0.1
---------------------------------------------------------------------------------------------------------
                                                $4.2          $5.4                  $2.6          $6.0
---------------------------------------------------------------------------------------------------------

Defined-contribution plan
Employer expense                                $0.3             -                  $0.4             -
---------------------------------------------------------------------------------------------------------
</TABLE>

The expected return on plan assets is determined based on the market-related
value of plan assets of $74.7 million at January 1, 2003 (January 1, 2002 -
$80.9 million), adjusted for interest on certain cash flows during the year.


                                       14
<PAGE>

                                                               [GRAPHIC OMITTED]

7.   INVESTMENTS AND EQUITY EARNINGS

Investments are comprised of the following:

<TABLE>
<CAPTION>
millions of dollars                               2003                           2002
                                        Carrying        Equity        Carrying        Equity
                                          value        earnings         value        earnings
----------------------------------------------------------------------------------------------
Equity accounted investments
<S>                                        <C>             <C>          <C>              <C>
Maritimes & Northeast Pipeline              $91.4          $9.6          $94.7           $9.1
Maine Yankee Atomic Power Company             4.0             -            6.4              -
Maine Electric Power Company Inc.             1.3             -            1.6              -
Greyhawk Natural Gas Storage                  1.8         (1.0)            2.5          (2.1)
Intragas Energy                               1.9             -            1.9              -
----------------------------------------------------------------------------------------------
Total equity investments                    100.4           8.6          107.1            7.0
Long-term portfolio investments               2.4             -            5.1              -
----------------------------------------------------------------------------------------------
                                           $102.8          $8.6         $112.2           $7.0
----------------------------------------------------------------------------------------------
</TABLE>

8.  INTEREST

Interest expense consists of the following:

millions of dollars                                         2003           2002
--------------------------------------------------------------------------------
Interest on long-term debt                                $115.9         $118.4
Interest on short-term debt                                 21.9           26.9
Amortization of debt financing                               1.5            1.4
Foreign exchange (gains) losses                            (3.2)            0.7
--------------------------------------------------------------------------------
                                                           136.1          147.4
Less:
   Defeasance earnings and other interest income           (2.5)          (3.4)
--------------------------------------------------------------------------------
                                                          $133.6         $144.0
--------------------------------------------------------------------------------

9.  INCOME TAXES

The income tax provision differs from that computed using the statutory rates
for the following reasons:

<TABLE>
<CAPTION>
millions of dollars                                            2003                    2002
----------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>        <C>       <C>
Earnings before taxes                                    $203.7                     $99.2
----------------------------------------------------------------------------------------------------
Income taxes, at statutory rates                           81.7         40.1%        41.8     42.1%
Unrecorded future income taxes on regulated earnings     (18.4)         (9.0)      (37.9)    (38.2)
Equity earnings not subject to tax                        (3.5)         (1.7)       (3.9)     (3.9)
Manufacturing & Processing profits credit                 (2.4)         (1.2)           -         -
Large Corporations Tax                                      5.6           2.7         6.3       6.3
Other                                                     (1.7)         (0.8)       (1.3)     (1.3)
----------------------------------------------------------------------------------------------------
                                                           61.3         30.1%         5.0      5.0%
                                                                    ---------              ---------
Income taxes - current                                     66.6                      23.3
----------------------------------------------------------------------------------------------------
Income taxes - future                                    ($5.3)                   ($18.3)
----------------------------------------------------------------------------------------------------
</TABLE>

The future income tax asset and liability comprise the following:

millions of dollars                                    2003       2002
------------------------------------------------------------------------
Future income tax asset:
Tax loss carry forwards                               $28.1      $28.7
Property, plant and equipment                         (0.4)      (4.9)
Deferred charges                                      (0.1)        2.2
Other                                                 (0.4)        0.4
------------------------------------------------------------------------
                                                      $27.2      $26.4
------------------------------------------------------------------------
------------------------------------------------------------------------
Future income tax liability:
Property, plant and equipment                         $74.4      $69.7
Deferred charges                                       14.7        9.1
Regulatory assets                                       5.2       11.4


                                       15
<PAGE>

                                                               [GRAPHIC OMITTED]

Tax loss carry forwards                               (2.0)      (1.8)
Financing                                             (1.7)      (3.8)
Investments                                               -        2.6
Other                                                 (3.0)          -
----------------------------------------------------------------------
                                                      $87.6      $87.2
----------------------------------------------------------------------

NSPI filed income tax returns for previous years that increased the tax
depreciation (capital cost allowance) available to be deducted against NSPI's
future taxable income. Those returns were reassessed by the Canada Customs and
Revenue Agency (CCRA), which disallowed the deductions claimed. A notice of
objection was filed with respect to the reassessments, and the issue was
litigated. In January 2002 NSPI received a favourable decision from the Tax
Court of Canada with respect to CCRA's reassessment of its corporate income tax
returns. CCRA appealed the decision to the Federal Court of Appeal which, in
January 2003, overturned the Tax Court ruling. In November 2003, NSPI was
granted leave to appeal the Federal Court decision to the Supreme Court of
Canada. It is expected that the Appeal will be heard by the Supreme Court in
2004.

As a result of the Federal Court's decision, NSPI is now recognizing a provision
for income taxes. Without the benefit of this additional deduction, it is
estimated that the Company's tax liability at December 31, 2002 would have been
approximately $118 million ($149 million including interest). The Company has
reduced its previous estimate of $157 million including interest as a result of
reductions in previous years' taxable income as a result of CCRA reassessments.
In February 2003 the UARB provided an accounting order providing for deferral of
any pre-2003 income tax liability together with any related interest until the
matter is resolved.

At December 31, 2003, assuming that NSPI`s Appeal is successful, NSPI's
unrecorded future income tax asset is approximately $237 million (2002 - $283
million), a decrease of approximately $46 million (2002 - $37 million) from the
previous year. The asset consists of deductible temporary differences of $619
million (2002 - $715 million deductible temporary differences and $30 million of
unused non-capital tax losses).

If NSPI's Appeal is unsuccessful, the unrecorded future income tax asset of NSPI
would be approximately $47 million (2002 - $65 million), consisting of
deductible temporary differences of $121 million (2002 - $171 million).

NON-CONTROLLING INTEREST

Non-controlling interest consists of NSPI and Bangor Hydro preferred share
dividends less a net recovery of income tax expense of $1.0 million (2002 - $3.9
million). The income tax recovery of $6.6 million in 2003 (2002 - $9.5 million)
is reflected as a reduction of preferred share dividends with an offsetting
increase in income tax expense.

<TABLE>
<CAPTION>
millions of dollars                                                               2003           2002
------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>
Preferred share dividend                                                         $14.2          $14.5
Part VI.1 tax on preferred share dividends                                         5.6            5.6
Part I tax recovery related to the Part VI.1 tax deduction - current year        (6.6)          (5.2)
Part I tax recovery related to the Part VI.1 tax deduction - prior years             -          (4.3)
------------------------------------------------------------------------------------------------------
                                                                                 $13.2          $10.6
------------------------------------------------------------------------------------------------------
</TABLE>

10.   EARNINGS PER SHARE

    Earnings per share for 2003 are as follows:

<TABLE>
<CAPTION>
                                                                                          2003
                            ------------------------------------------------------------------
                               Net earnings ($ millions)   Weighted average common     EPS ($)
                                                           shares (millions)
----------------------------------------------------------------------------------------------
<S>                                    <C>                      <C>                    <C>
Basic EPS                              $129.2                   108.0                  $1.20
Employee share plans                        -                     0.2                  (0.01)
Series C preferred shares of              6.5                     7.5                  (0.02)
NSPI
Series D preferred shares of              8.4                     8.1                  (0.01)


                                       16
<PAGE>

                                                               [GRAPHIC OMITTED]

NSPI
----------------------------------------------------------------------------------------------
Diluted EPS                            $144.1                   123.8                  $1.16
----------------------------------------------------------------------------------------------
</TABLE>

    Earnings per share for 2002 are as follows:

<TABLE>
<CAPTION>
                                                                                         2002
                            ------------------------------------------------------------------
                               Net earnings ($ millions)   Weighted average common    EPS ($)
                                                           shares (millions)
----------------------------------------------------------------------------------------------
<S>                                       <C>                  <C>                    <C>
Basic EPS                                 $83.6                98.9                   $0.85
Employee share plans                          -                 0.1                   (0.01)
----------------------------------------------------------------------------------------------
Diluted EPS                               $83.6                99.0                   $0.84
----------------------------------------------------------------------------------------------
</TABLE>

Senior management stock options, whose exercise price exceeded the average
market price for the period, were excluded from the above calculations because
they were anti-dilutive. Preferred shares in NSPI were excluded from the above
calculations for 2002 because they were anti-dilutive.

11.   ACCOUNTS RECEIVABLE SECURITIZATION

In February 2002, NSPI renewed an agreement with a third party to sell up to $88
million of high quality accounts receivables on a revolving basis. As part of
the agreement, NSPI continues to service all accounts receivables and retains an
interest in 10% of the accounts receivables sold, which has been recorded as a
deferred charge. This retained interest is measured at its carrying value, which
is substantially equal to its fair value. At December 31, 2003, net trade
receivables sold amounted to $50 million (2002 - $75 million). The agreement is
in place until February 2004 with the intention that it be renewed at that time.

12.     LONG-TERM RECEIVABLE

    The current portion of the long-term receivable, which arose from Emera's
    sale of its 8.4% interest in the offshore platforms and sub-sea field
    gathering lines of the Sable Offshore Energy Project to Pengrowth
    Corporation, is $10.0 million and has been classified in accounts receivable
    on the balance sheet. The remaining balance is due as follows:

                             millions of dollars
                             2005                        $15.0
                             2006                         20.0
                                                     ----------
                                                         $35.0
                                                     ----------

    Late payments bear interest at prime plus 500 basis points. The receivable
    is secured.

13.  DEFERRED CHARGES AND CREDITS

Deferred charges and credits comprise the following:

millions of dollars                                             2003        2002
--------------------------------------------------------------------------------
Deferred charges:
Unamortized debt financing and defeasance costs               $204.0      $215.6
Pre-2003 income tax liability and related interest             148.7           -
Costs to terminate/restructure purchased power contracts        72.2       114.7
Seabrook nuclear project                                        26.1        34.5
Accrued pension and non-pension benefit asset (note 6)          36.1        28.6
Retained interest in accounts receivable securitized             5.0         7.5
Other                                                           36.8        35.3
--------------------------------------------------------------------------------
                                                              $528.9      $436.2
--------------------------------------------------------------------------------

Deferred credits:
Future site restoration liability                              $22.9       $26.9
Accrued pension and post-retirement benefit costs (note 6)      29.4        30.9
Deferred gain on asset sale                                      1.0        15.6


                                       17
<PAGE>

                                                               [GRAPHIC OMITTED]

Unearned revenue                                                14.2        11.3
Other                                                           17.0        21.1
--------------------------------------------------------------------------------
                                                               $84.5      $105.8
--------------------------------------------------------------------------------

14.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:

                                                           2003
                                ------------------------------------------------
 millions of dollars                     Cost       Accumulated              Net
                                                   Depreciation       Book Value
--------------------------------------------------------------------------------
 Generation
     Thermal                         $1,601.8            $609.8           $992.0
     Gas Turbine                         77.5              28.3             49.2
     Hydroelectric                      357.5             118.9            238.6
     Wind Turbine                         2.9               0.1              2.8
 Transmission                           665.1             273.9            391.2
 Distribution                         1,230.1             508.7            721.4
 Other                                  377.6             100.0            277.6
--------------------------------------------------------------------------------
                                     $4,312.5          $1,639.7         $2,672.8
--------------------------------------------------------------------------------

                                                           2002
                                ------------------------------------------------
 millions of dollars                     Cost       Accumulated              Net
                                                   Depreciation       Book Value
--------------------------------------------------------------------------------
 Generation
     Thermal                         $1,587.2            $581.8         $1,005.4
     Gas Turbine                         35.0              28.1              6.9
     Hydroelectric                      354.9             114.9            240.0
    Wind Turbine                          3.2                 -              3.2
 Transmission                           661.5             261.1            400.4
 Distribution                         1,246.9             487.7            759.2
 Offshore                                67.8               7.8             60.0
 Other                                  389.9              88.6            301.3
--------------------------------------------------------------------------------
                                     $4,346.4          $1,570.0         $2,776.4
--------------------------------------------------------------------------------

At December 31, 2003, the Glace Bay generating station had a net book value of
$22.5 million (2002 - $27.0 million). During the year NSPI amortized $6.2
million (2002 - $1.0 million) related to the plant, and capitalized $1.7 million
in AFUDC (2002 - $1.8 million) to the plant value.

During 2002 the Company recognized impairment of $6.4 million on assets included
in construction work in progress, a reflection of management's best estimate of
projected future cash flows on these assets.

15.  DISPOSAL OF LONG-LIVED ASSETS

On December 31, 2003 Emera sold its 8.4% interest in the offshore platforms and
sub-sea field gathering lines of the Sable Offshore Energy Project (SOEP) to
Pengrowth Corporation for total proceeds of $73.6 million consisting of cash
proceeds of $28.6 million and a receivable of $45.0 million. The $73.6 million
consists of property, plant and equipment of $70.7 million and working capital
of $2.9M. The sale price of $65.0 million as of July 1, 2003, the effective date
of the transaction, was increased to $70.7 million for capital transactions from
the effective date of the transaction to the closing date. A loss of $1.2
million ($0.6 million after-tax) has been recognized in OM&G expense. The loss
on sale offsets profits earned from July 1, 2003, the effective date of the
transaction, to the signing date of October 31, 2003.

16.  GOODWILL

The change in goodwill is due to the following:

millions of dollars                                     2003                2002
--------------------------------------------------------------------------------
Balance, beginning of year                             $137.7             $138.4
Acquired during the year                                    -                0.6
Impairment loss recognized                                  -              (0.3)
Change in foreign exchange rate                        (22.6)              (1.0)
--------------------------------------------------------------------------------


                                       18
<PAGE>

                                                               [GRAPHIC OMITTED]

Balance, end of year                                   $115.1             $137.7
--------------------------------------------------------------------------------

During the first quarter of 2002, the Company adopted the new accounting
recommendations for goodwill. Previously, the Company amortized goodwill over 20
years. Under the new recommendations, goodwill is no longer amortized but is
instead subjected to an annual impairment test with any resulting impairment
charged to earnings. The Company was also required to perform an initial
impairment test as of January 1, 2002, and to charge any impairment to opening
retained earnings.

As a result of its initial goodwill impairment tests, the Company determined
that goodwill impairment existed in one of its subsidiaries. The cause of the
impairment was lower estimates of future profitability and resulted in a charge
to retained earnings of $0.3 million.

17.  LONG-TERM DEBT

Long-term debt includes the issues detailed below. All long-term debt
instruments are issued under trust indentures at fixed interest rates, and are
unsecured unless noted below. Also included are certain bankers acceptances and
commercial paper where the Company has the intention and the unencumbered
ability to refinance the obligations for a period greater than one year.

<TABLE>
<CAPTION>
                                    Effective Average
                                     Interest Rate %
millions of dollars                  2003       2002     Years of Maturity       2003      2002
-------------------------------------------------------------------------------------------------
Emera
<S>                                  <C>        <C>             <C>            <C>       <C>
Medium Term Notes                    6.000      6.000           2006           $100.0    $100.0
Private Placement - secured by       6.297      6.297           2006             10.0      10.0
letter of credit
Bankers Acceptances                  3.344      2.980    One year renewable      40.0       9.0

NSPI
Medium Term Notes                    7.135      7.321       2002 - 2097       1,240.0     940.0
Debentures                           9.750      8.490       2003 - 2019          95.0     245.0
Commercial paper                     2.765      2.730    One year renewable      81.0     111.0


Bangor Hydro (issued and
payable in US$)
First Mortgage Bonds                 9.740      9.177       2020 - 2022          64.6     102.6
Financing Authority of Maine         7.030      7.030           2005             49.4      87.4
Municipal Review Committee           5.000      5.000           2008             12.7      18.5
Senior unsecured note                6.091      6.090           2012             25.9      31.6
Senior unsecured notes               5.310        -             2018             64.6         -
Less: Sinking Funds                                                            (27.4)    (33.4)
-------------------------------------------------------------------------------------------------
                                                                              1,755.8   1,621.7
Less: Amount due within one year                                                166.3     203.9
-------------------------------------------------------------------------------------------------
                                                                             $1,589.5  $1,417.8
-------------------------------------------------------------------------------------------------
</TABLE>

Repayments of long-term debt are due as follows:

millions of dollars
--------------------------------------------------------------------------------
Year of Maturity                                            2003         2002
--------------------------------------------------------------------------------
One year renewable                                        $121.0       $120.0
2003                                                           -        203.9
2004                                                       166.3        172.0
2005 - net of sinking funds                                100.8        103.2
2006                                                       153.0        153.6
2007                                                         3.4          4.1
2008                                                       122.1            -
Greater than 5 years                                     1,089.2        864.9
--------------------------------------------------------------------------------
                                                        $1,755.8     $1,621.7
--------------------------------------------------------------------------------


                                       19
<PAGE>

                                                               [GRAPHIC OMITTED]

18.  SHORT-TERM DEBT

Short-term debt consists of commercial paper of nil (2002 - $115.6 million),
bankers' acceptances of $81.7 million (2002 - $128.0 million), and LIBOR loans
of $28.8 million (2002 - $27.1 million) issued against lines of credit.
Commercial paper, bankers' acceptances and LIBOR loans bear interest at
prevailing market rates, which on December 31, 2003, averaged 2.77%, 3.35% and
1.74% respectively (2002 - 2.88%, 3.36% and 2.02%). The operating line of credit
consists of advances of $13.5 million (2002 - $19.4 million), which when drawn
upon, bears interest at the prime rate, which on December 31, 2003, was 4.5%
(2002 - 4.5%). The short-term debt in NSPI and Emera is unsecured. Also, Bangor
Hydro has a revolving credit loan agreement of $5.2 million (2002 - $25.2
million) that bears interest of 1.9% (2002 - 2.4%). This revolving credit loan
is secured by a First Mortgage Bond.


19.  NON-CONTROLLING INTEREST

The non-controlling interest represents preferred shares that are held in Nova
Scotia Power Inc. and Bangor Hydro-Electric Company.

AUTHORIZED:

Nova Scotia Power

Unlimited number of First Preferred Shares, issuable in series.

Unlimited number of Second Preferred Shares, issuable in series.

Bangor Hydro

600,000 non-participating, cumulative preferred shares, par value US$100 per
share, redeemable at the option of the issuer.



ISSUED AND OUTSTANDING:
                                                                      Preferred
                                                       Millions of        Share
millions of dollars                                         Shares      Capital
--------------------------------------------------------------------------------
January 1, 2002                                              10.45       $267.5
--------------------------------------------------------------------------------
December 31, 2002                                            10.45       $267.5
Bangor Hydro preferred share redemption                     (0.04)        (6.7)
--------------------------------------------------------------------------------
December 31, 2003                                            10.41       $260.8
--------------------------------------------------------------------------------

Nova Scotia Power

Series B First Preferred Shares and Series C Purchase Warrants

On March 8, 1999, NSPI issued 5,000,000 First Preferred Share Units at a price
of $6.25 per Unit. Each unit consisted of one non-detachable cumulative,
redeemable First Preferred Share, Series B and a Warrant to purchase one
cumulative, redeemable First Preferred Share, Series C for cash consideration of
$18.75. On October 1, 2000, unit holders exercised 4,417,116 Series C purchase
warrants and Series B First Preferred Shares, and converted them to Series C
First Preferred Shares. Virtually all of the remaining Series C purchase
warrants and Series B First Preferred Shares were exercised on either January 1
or April 1, 2001 with a cash payment of $18.75. The remaining 1,305 Series B
First Preferred Shares, which had not been converted to Series C, were cancelled
in the second quarter of 2002 and each shareholder received their original
investment.


                                       20
<PAGE>

                                                               [GRAPHIC OMITTED]

Series C First Preferred Shares

Each Series C First Preferred Share is entitled to a $1.225 per share per annum
fixed cumulative preferential dividend, as and when declared by the Board of
Directors, accruing from the date of issue and payable quarterly on the first
day of January, April, July and September of each year. On or after April 1,
2009, NSPI may redeem for cash the Series C First Preferred Shares, in whole at
any time or in part from time to time at $25.00 per share plus accrued and
unpaid dividends. The Series C First Preferred Shares will be exchangeable into
Emera Inc. common shares on April 1, 2009.

Series D First Preferred Shares

On October 31, 2000, NSPI issued 5,400,000 First Preferred Shares for a price of
$25 per share. Each share is entitled to a fixed cumulative cash dividend of
$1.475 per share per annum, as and when declared by the Board of Directors.
These dividends will accrue from the date of issue and will be payable quarterly
on the fifteenth day of January, April, July, and October of each year. On or
after October 15, 2015, NSPI may redeem for cash the Series D First Preferred
Shares, in whole at any time, at $25 per share plus accrued and unpaid
dividends. The Series D First Preferred Shares will be exchangeable into Emera
Inc. common shares on October 15, 2015.

Bangor Hydro

The preferred shares issued by Bangor Hydro consist of three separate issues:

   o  2003 - 6,277 (2002 - 25,000) non-callable 7% preferred shares
   o  2003 - 0 (2002 - 4,840) callable 4.25% preferred shares
   o  2003 - 0 (2002 - 17,500) Series A callable 4% preferred shares

During 2003, Bangor Hydro redeemed substantially all of its outstanding
preferred shares.

20.  COMMON SHARES

AUTHORIZED:

Unlimited number of non-par value Common Shares.

ISSUED AND OUTSTANDING:
<TABLE>
<CAPTION>
millions of dollars                                                          Millions     Common Share
                                                                                   of          Capital
                                                                               Shares
-------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>
January 1, 2002                                                                 98.00           $845.4
New common share issue                                                           9.50            149.5
Issued for cash under purchase plans                                             0.28              4.6
Options exercised under senior management stock option plan                      0.02              0.3
Stock-based compensation                                                            -              0.4
-------------------------------------------------------------------------------------------------------
December 31, 2002                                                              107.80          1,000.2
Issued for cash under purchase plans                                             0.36              5.7
Options exercised under senior management stock option plan                      0.10              1.6
Stock-based compensation                                                            -              0.9
-------------------------------------------------------------------------------------------------------
December 31, 2003                                                              108.26         $1,008.4
-------------------------------------------------------------------------------------------------------
</TABLE>

As at December 31, 2003, there were 1.3 million (2002 - 1.4) common shares
reserved for issuance under the senior management common share option plan, and
1.5 million (2002 - 1.6) common shares reserved for issuance under the employee
common share purchase plan.

DIVIDEND REINVESTMENT AND EMPLOYEE COMMON SHARE PURCHASE PLANS

The Company has a Common Shareholder Dividend Reinvestment Plan and an Employee
Common Share Purchase Plan, which provide an opportunity for shareholders and
Company employees to reinvest dividends and employees to make cash contributions
for the purpose of purchasing common shares.


                                       21
<PAGE>

                                                               [GRAPHIC OMITTED]

STOCK-BASED COMPENSATION PLAN

The Company has a common share option plan that grants options to senior
management of the Company for a maximum term of ten years. The option price for
these shares is the closing market price of the shares on the day before the
option is granted.

All options granted to date are exercisable on a graduated basis with up to 25
percent of options exercisable on the first anniversary date and in further 25
percent increments on each of the second, third and fourth anniversaries of the
grant. If an option is not exercised within ten years, it expires and the
optionee loses all rights thereunder. The holder of the option has no rights as
a shareholder until the option is exercised and shares have been issued. The
maximum number of such shares optioned to anyone cannot exceed one percent of
the issued and outstanding common shares on the date the option is granted.

If, before the expiry of an option in accordance with its terms, the optionee
ceases to be an eligible person due to retirement or a change of responsibility
at the Company's request, such option may, subject to the terms thereof and any
other terms of the plan, be exercised at anytime within the 24 months following
the date the optionee retires, but in any case prior to the expiry of the option
in accordance with its terms.

If, before the expiry of an option in accordance with its terms, the optionee
ceases to be an eligible person due to employment termination for just cause,
resignation or death, such option may, subject to the terms thereof and any
other terms of the plan, be exercised at anytime within the six months following
the date the optionee is terminated, resigns, or dies, as applicable, but in any
case prior to the expiry of the option in accordance with its terms.

                                          2003                    2002
                                ------------------------------------------------
                                               Weighted                 Weighted
                                                average  Shares under    average
                                 Shares under  exercise        option   exercise
                                       option     price                    price
--------------------------------------------------------------------------------
Outstanding, beginning of year      1,287,750    $16.07       770,150    $15.61
Granted                               543,200    $15.73       550,100    $16.65
Exercised                           (103,950)    $14.72      (22,500)    $13.00
Expired                             (246,400)    $16.40      (10,000)    $19.30
--------------------------------------------------------------------------------
Outstanding, end of year            1,480,600    $15.98     1,287,750    $16.07
Exercisable, end of year              531,825    $15.81       497,825    $15.52
--------------------------------------------------------------------------------

The weighted average contractual life of options outstanding at December 31,
2003 is 7.5 years (2002 - 7.0 years). The range of exercise prices for the
options outstanding at December 31, 2003 is $11.25 to $19.30 (2002 - $11.25 to
$19.30).

The Company is using the fair value based method to measure the compensation
expense related to this plan, as well as its employee common share purchase
plan, and has recorded $0.9 million (2002 - $0.4 million) of compensation
expense related to new awards granted and shares purchased since the inception
of the new stock-based compensation recommendations on January 1, 2002.

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for the grants:


                                            2003               2002
            Dividend yield                 5.31%              5.31%
            Expected volatility            15.0%              15.8%
            Risk-free interest rate        4.84%              5.03%
            Expected life                 7 years            7 years


                                       22
<PAGE>

                                                               [GRAPHIC OMITTED]

21.  FINANCIAL INSTRUMENTS

Financial instruments include the following:

<TABLE>
<CAPTION>
                                                        2003                                  2002
                                              Carrying         Fair Value         Carrying         Fair value
                                               Amount       Liability (Asset)      Amount        Liability (Asset)
millions of dollars                       Liability (Asset)                    Liability (Asset)
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>              <C>              <C>
Long-term debt                                $1,755.8           $1,947.8         $1,621.7         $1,796.9
Short-term debt                                  129.2              129.4            315.3            316.8
Derivative financial instruments (hedges)
     Interest rate swaps                           1.5                8.0              0.9              9.0
     Interest rate caps and collars                  -                0.3                -              0.8
     Natural gas swaps                               -              (0.3)                -            (1.7)
     Natural gas caps and collars                (3.6)                0.4            (2.1)            (1.5)
     Oil swaps                                       -             (13.1)                -            (8.6)
     Foreign exchange contracts                    0.5               11.5                -            (1.7)

Derivative financial instruments                 (0.8)              (0.8)                -                -
(non-hedges)
--------------------------------------------------------------------------------------------------------------
</TABLE>

LONG-TERM DEBT AND SHORT-TERM DEBT

The fair value of Emera's long-term and short-term debt is estimated based on
the quoted market prices for the same or similar issues, or on the current rates
offered to Emera, for debt of the same remaining maturities.

DERIVATIVE FINANCIAL INSTRUMENTS

The fair value of derivative financial instruments is estimated by obtaining
prevailing market rates from investment dealers.

Interest Rates

The Company enters into interest rate hedging contracts that convert the
interest characteristics of outstanding short-term debt from a floating to a
fixed rate basis. Interest rate swap contracts converting floating interest on
$135 million over 2004 to 2005 (2002 - $320 million over 2003 to 2005) to a
weighted average fixed interest rate of 6.24% (2002 - 5.68%) were outstanding at
December 31, 2003.

Interest rate collars are used to insure against extreme movements in interest
rates on maturing debt. Interest rate collar contracts covering $50 million
(2002 - $20 million) at average fixed interest rates in a range from 4.81% to
5.23% (2002 - 5.35% to 5.75%) were outstanding at December 31, 2003.

Commodity Prices

The Company purchased natural gas option contracts and entered into natural gas
swap contracts in 2003 to limit exposure to fluctuations in natural gas prices.
As at December 31, 2003, the Company had hedged approximately 80% of all natural
gas purchases and sales for 2004.

The Company enters into oil swap and option contracts to limit exposure to
fluctuations in world prices of heavy fuel oil. As at December 31, 2003, the
Company had entered into oil swap contracts that fix the price of approximately
55% of 2004 requirements along with a portion of 2005 requirements.

The Company also entered into option contracts for the physical delivery of
natural gas and coal.

On occasion the Company purchases non-hedging derivative financial instruments
whose value is marked-to-market at each reporting date. On December 31, 2003 the
Company held natural gas and oil futures which were marked-to-market.

Foreign Exchange


                                       23
<PAGE>

                                                               [GRAPHIC OMITTED]

Emera enters into foreign exchange forward, option, and swap contracts to limit
exposure to currency rate fluctuations. Currency forwards are used to fix the
Canadian dollar cost to acquire U.S. dollars, reducing exposure to currency rate
fluctuations. Forward contracts to buy U.S. $89.5 million over 2004 and 2005
(2002 - U.S. $79 million over 2003 and 2004) at a weighted average rate of CAD
$1.4167 (2002 - CAD $1.5516) were outstanding at December 31, 2003. There were
also option contracts to buy U.S. $52.6 million in 2004 (2002 - U.S. $110
million over 2003 to 2007) at rates in a range from CAD $1.3180 to $1.5600 in
2004 (2002 - range of CAD $1.5600 in 2003 to $1.6703 in 2007) outstanding at
December 31, 2003.

Risk Management

Interest rate risk
The Company makes use of various financial instruments to hedge against interest
rate risk, as discussed above. Additionally, the Company uses diversification as
a strategy. It maintains a portfolio of debt instruments which includes
short-term instruments and long-term instruments with staggered maturities. The
Company also deals with several counterparties so as to mitigate interest rate
concentration risk.

Credit risk
The Company is exposed to credit risk with respect to amounts receivable from
customers. Credit assessments are conducted with respect to, and deposits are
requested from, many new customers. The Company also maintains provisions for
potential credit losses, which are assessed on a regular basis. With respect to
customers outside of the sphere of electric customers, counterparty
creditworthiness is assessed through reports of credit rating agencies or other
available financial information.

22.  FOREIGN EXCHANGE TRANSLATION ADJUSTMENT

millions of dollars                                             2003        2002
--------------------------------------------------------------------------------
Balance, beginning of year                                      $2.9        $6.0
Effect of exchange rate changes                               (64.0)       (3.1)
--------------------------------------------------------------------------------
Balance, end of year                                         ($61.1)        $2.9
--------------------------------------------------------------------------------

23. RELATED PARTY TRANSACTIONS

    During the year, in the ordinary course of business, the Company purchased
    transportation capacity totaling $21.7 million (2002 - $18.8 million) from
    the Maritimes and Northeast Pipeline, an investment under significant
    influence of the Company. The amount is recognized in fuel for generation or
    netted against energy marketing margin in other revenue, and is measured at
    the exchange amount. At December 31, 2003 the amount payable to the related
    party is $2.3 million (2002 - $2.1 million).

24. COMMITMENTS

Emera had the following significant commitments at December 31, 2003:

    o  NSPI has an annual requirement to purchase approximately 190 GWh of
       electricity from independent power producers for each of the next twenty
       years.
    o  NSPI is required to purchase approximately 61.6 million cubic feet of
       natural gas per day for the next eight years, and an additional 4 million
       cubic feet per day, at the option of the supplier, for five years.
    o  NSPI has commitments to purchase approximately 65,000 mmbtu per day of
       transportation capacity on the Maritimes and Northeast Pipeline for
       periods ranging from nine to nineteen years at an approximate cost of $16
       million per year.
    o  NSPI is responsible for managing a portfolio of approximately $1.1
       billion of defeasance securities held in trust. The defeasance securities
       must provide the principal and interest streams of the related defeased
       debt. Approximately 69%, or $750 million, of the defeasance portfolio
       consists of investments in the related debt, eliminating all risk
       associated with this portion of the portfolio.
    o  NSPI has a commitment to a third party for the transportation of its coal
       at its Lingan and Point Aconi generation station for ten years beginning
       in late 2002 at an approximate cost of $15 million per year.


                                       24
<PAGE>

                                                               [GRAPHIC OMITTED]

    o  Bangor Hydro has various contracts committing it to purchase annually
       approximately $18 million to $25 million of electricity for the period
       from 2004 to 2017 from independent power producers. These commitments are
       reduced to approximately $1.9 million from 2018 to 2023.
    o  Emera Energy must reserve and make available 56 MWh of energy per hour
       calculated at the Nova Scotia border for certain customers for a sales
       price of approximately $40 million, based on a cost plus formula, until
       the fourth quarter, 2004 unless terminated at the option of the
       customers.

25. GUARANTEES

Emera had the following guarantees at December 31, 2003:

    o  Nova Scotia Power has guaranteed a tenant's obligation to its project
       sponsor to a maximum amount of $0.5 million for a term of 12 years
       beginning in 1997. The carrying amount of the guarantee is nil.

26.  COMPARATIVE INFORMATION

Certain of the comparative figures have been reclassified to conform to the
financial statement presentation adopted for 2003.


                                       25
<PAGE>

                                                               [GRAPHIC OMITTED]

   OPERATING STATISTICS

<TABLE>
<CAPTION>
   FIVE-YEAR SUMMARY
   Year Ended December 31                      2003        2002       2001      2000        1999
----------------------------------------------------------------------------------------------------
   Electric energy sales (GWh)
<S>                                           <C>         <C>       <C>        <C>         <C>
      Residential                              4,391.1     4,401.6   3,901.7    3,632.1     3,494.6
      Commercial                               3,586.1     3,401.8   2,862.3    2,661.9     2,582.8
      Industrial                               4,449.8     4,225.9   3,952.5    3,917.2     3,834.8
      Other                                    1,375.4     1,641.8     654.1      445.0       453.2
----------------------------------------------------------------------------------------------------
   Total electric energy sales                13,802.4    13,671.1  11,370.6   10,656.2    10,365.4
----------------------------------------------------------------------------------------------------
   Sources of energy (GWh)
   Thermal - coal                              9,218.7     8,861.6   8,854.8    8,863.7     7,816.0
           - oil                               1,537.2       289.2     690.8    1,347.8     1,870.9
           - natural gas                         119.5     1,578.7   1,129.1       43.8           -
   Hydro                                       1,176.8     1,108.7     692.2      881.2       980.7
   Wind                                            2.6         0.3         -          -           -
   Purchases                                   2,724.5     2,765.9     776.6      295.2       411.3
----------------------------------------------------------------------------------------------------
   Total generation and purchases             14,779.3    14,604.4  12,143.5   11,431.7    11,078.9
   Losses and internal use                       976.9       933.3     772.9      775.5       713.5
----------------------------------------------------------------------------------------------------
   Total electric energy sold                 13,802.4    13,671.1  11,370.6   10,656.2    10,365.4
----------------------------------------------------------------------------------------------------
   Electric customers
      Residential                              509,824     501,233   492,256    400,653     397,406
      Commercial                                48,846      47,914    46,974     32,186      31,753
      Industrial                                 2,393       2,325     2,292      2,194       2,118
      Other                                      8,341      11,663    10,932      7,073       6,760
----------------------------------------------------------------------------------------------------
   Total electric customers                    569,404     563,135   552,454    442,016     438,037
----------------------------------------------------------------------------------------------------
   Capacity
   Generating nameplate capacity (MW)
      Coal Fired                                 1,243       1,243     1,243      1,243       1,243
      Dual Fired                                   350         350       350        250           -
      Heavy Fuel Oil-Fired                           -           -         -        100         350
      Gas Turbine                                  274         225       225        204         204
      Hydroelectric                                395         395       395        395         395
      Wind Turbine                                   1           1         -          -           -
   Independent power producers                      67          66        66         25          25
----------------------------------------------------------------------------------------------------
                                                 2,330       2,280     2,279      2,217       2,217
----------------------------------------------------------------------------------------------------
   Total number of employees                     2,359       2,476     2,666      2,134       1,912
----------------------------------------------------------------------------------------------------
   km of transmission lines                      6,064       6,138     6,134      5,250       5,250
----------------------------------------------------------------------------------------------------
   km of distribution lines                     31,640      31,344    31,968     24,000      24,000
----------------------------------------------------------------------------------------------------
</TABLE>


                                       26
<PAGE>

                                                               [GRAPHIC OMITTED]

<TABLE>
<CAPTION>
   FIVE YEAR SUMMARY
   Years Ended December 31 (millions of dollars)      2003       2002     2001      2000     1999
----------------------------------------------------------------------------------------------------
   Statement of Earnings Information
<S>                                                  <C>       <C>       <C>        <C>      <C>
   Revenue                                           $1,231.3  $1,227.2  $1,003.9   $896.5   $816.6
   Cost of operations
      Fuel for generation and power purchased           363.3     453.2    341.6     273.9    267.5
      Cost of fuel oil sold                              71.5      57.3     60.5      67.7     15.3
      Operating, maintenance and general                269.4     284.2    194.7     168.0    155.5
      Grants in lieu of property taxes                   33.1      22.8     13.2      11.0      8.9
      Provincial capital tax                              7.8       7.3      7.6       7.2      7.1
      Depreciation                                      127.7     127.8    108.4      98.3     94.8
----------------------------------------------------------------------------------------------------
                                                        872.8     952.6    726.0     626.1    549.1
----------------------------------------------------------------------------------------------------
   Earnings from operations                             358.5     274.6    277.9     270.4    267.5
   Regulatory amortization                             (18.2)    (23.9)    (9.3)    (19.0)   (23.1)
   Allowance for funds used during construction           5.1       4.9      5.5       4.8      4.8
   Equity earnings                                        8.6       7.0      9.6       6.0      5.3
----------------------------------------------------------------------------------------------------
   Earnings before interest and income taxes            354.0     262.6    283.7     262.2    254.5
   Interest                                             133.6     144.0    122.7     115.6    116.5
   Amortization of defeasance costs                      16.7      19.4     19.8      19.8     20.0
----------------------------------------------------------------------------------------------------
   Earnings before income taxes                         203.7      99.2    141.2     126.8    118.0
   Income tax                                            61.3       5.0     14.8      12.5      6.3
----------------------------------------------------------------------------------------------------
   Net earnings before non-controlling interest         142.4      94.2    126.4     114.3    111.7
   Non-controlling interest                              13.2      10.6     12.2       9.9     11.3
----------------------------------------------------------------------------------------------------
   Net earnings applicable to common shares             129.2      83.6    114.2     104.4    100.4
   Common dividends                                      92.8      84.4     81.0      73.2     72.2
----------------------------------------------------------------------------------------------------
   Earnings retained for use in Company                 $36.4    ($0.8)    $33.2     $31.2    $28.2
----------------------------------------------------------------------------------------------------
   Cost of fuel for generation - coal                  $211.9    $229.6   $202.9    $186.3   $184.3
                               - oil                     90.4      20.6     40.3      60.5     58.2
                               - natural gas           (58.4)      62.5     35.4       5.9        -
   Power purchased                                      119.4     140.5     63.0      21.2     25.0
----------------------------------------------------------------------------------------------------
   Total cost of fuel for generation and power         $363.3    $453.2   $341.6    $273.9   $267.5
   purchased
----------------------------------------------------------------------------------------------------
   Balance Sheet Information
   Current asset                                       $297.2    $331.7   $334.4    $196.6   $149.2
   Other assets                                         706.2     600.3    635.1     313.2    335.2
   Investments                                          102.8     112.2     98.6      67.0     54.7
   Property, plant and equipment                      2,734.7   2,863.7  2,891.3   2,374.2  2,362.8
----------------------------------------------------------------------------------------------------
   Total assets                                      $3,840.9  $3,907.9  $3,959.4 $2,951.0  $2,901.9
----------------------------------------------------------------------------------------------------
   Current liabilities                                 $505.9    $697.6   $938.9    $541.3   $448.5
   Other liabilities                                    172.1     193.0    190.2      28.0     19.3
   Long-term debt                                     1,589.5   1,417.8  1,381.4   1,155.0  1,260.5
   Non-controlling interest                             260.8     267.5    267.5     249.1    231.3
   Common shares                                      1,008.4   1,000.2    845.4     680.8    676.5
   Foreign currency translation adjustment             (61.1)       2.9      6.0         -        -
   Retained earnings                                    365.3     328.9    330.0     296.8    265.8
----------------------------------------------------------------------------------------------------
   Total equity and liabilities                      $3,840.9  $3,907.9  $3,959.4 $2,951.0  $2,901.9
----------------------------------------------------------------------------------------------------
   Statement of Cash flow information
   Cash provided by operating activities               $239.5    $257.9   $145.1    $208.1   $206.2
   Cash used in investing activities                    $80.9    $109.6   $566.2    $126.1   $144.0
----------------------------------------------------------------------------------------------------
   Financial ratios ($ per share)
   Earnings per share                                   $1.20     $0.85    $1.20     $1.20    $1.16
----------------------------------------------------------------------------------------------------
</TABLE>

                                       27

</TEXT>
</DOCUMENT>
