Emera reports dip in profits, but says it won't apply for N.S. rate hike

HALIFAX - July 30, 2003 - Nova Scotia's major power utility reported a slight dip in profits Wednesday, but says its prospects are so strong it won't need to apply for a rate hike in the province next year.

Emera Inc., owner of Nova Scotia Power Inc., released results showing it earned $15.5 million or 14 cents a share for the three months ended June 30. That's down from $15.7 million or 16 cents a share for the same 2002 period.

But president and CEO David Mann said he's backing away from earlier statements that he'll be going to the provincial regulator to seek price hikes from customers in 2004.

"Nova Scotia Power doesn't expect to file a rate application this year," he said during a Wednesday conference call. "It's a change from what was previously indicated."

The change in plans is due to improved fuel costs, as well as revenues from natural gas sales.

Mann told analysts the Emera subsidiary is confident its fuel costs will be "favourable" next year because of long-term contracts signed to buy coal and other heavy fuels.

The company is also going to continue selling the natural gas it receives from the Sable Offshore Energy Project, rather than burning it at the Tufts Cove generating station.

The company's ability to sell natural gas when prices are high, rather than using it to generate electricity, has added $30 million to the company's revenues so far this year.

Emera's drop in second-quarter earnings was due to a $3.3-million fall in second quarter profits at Nova Scotia Power.

This was mainly because of a one-time $6.5-million adjustment on the utility's books for unbilled revenues.

The decrease was partly offset by lower interest expenses and a $1.6-million increase in profits at Emera's Bangor Hydro unit in Maine.

For the first six months of the year, Emera profits rose 42 per cent to $70.2 million, from $49.3 million in 2002. Revenues rose to $640 million from $632.8 million.

Mann said 2003 will be a strong year financially for the diversified company, which sells electricity and has growing investments in Atlantic Canada's growing natural gas business.

The company's ownership of Bangor Hydro has also continued to produce consistent returns, the CEO said.

"Bangor Hydro is delivering solid performance, and we're keeping tight control on other expenses."

Emera (TSX:EMA) has 550,000 customers, $4 billion in assets and operates through two wholly owned regulated electric utilities - Nova Scotia Power Inc. and Bangor Hydro-Electric Co.

Nova Scotia Power supplies more than 95 per cent of the electric generation, transmission and distribution in Nova Scotia, while Bangor Hydro provides electricity transmission and distribution service to 107,000 customers in eastern Maine.

In addition, Emera has a growing gas infrastructure investment portfolio, including its 12.5 per cent stake in the Maritimes & Northeast Pipeline, which delivers Sable natural gas to markets in the Maritimes and the northeastern United States. Emera also owns an 8.4-per-cent interest in the Sable Offshore Energy Project offshore platforms and sub-sea field gathering lines.