« Back

Acquisitions Boost Emera 2001 Earnings
Bangor Hydro Adds $5.4 Million in Fourth Quarter

HALIFAX, Nova Scotia, February 15, 2002, (TSE:EMA): Emera Inc.'s consolidated earnings increased to $114.2 million for the year ended December 31, 2001, up from $104.4 million in 2000. The company's newest subsidiary, Bangor Hydro-Electric, contributed $5.4 million to the increase since its acquisition on October 10, 2001. In addition, equity earnings from the Maritimes & Northeast Pipeline increased $4.0 million year over year, partially as a result of a one-time write-off taken in 2000. Earnings from the company's largest subsidiary, Nova Scotia Power Inc. (NSPI), increased modestly, by $1.4 million, or just over 1%.

Earnings per share were unchanged year over year, at $1.20, reflecting the $0.07 dilutive effect of the common equity issue in the first quarter of 2001.

Consolidated earnings for the three months ended December 31, 2001 were $37.7 million, or $0.39 per share compared to $29.6 million, or $0.34 per share for the three months ended December 31, 2000. The inclusion of Bangor Hydro's results was the primary reason for the fourth quarter earnings increase.

"2001 was a challenging year, but I believe our focused strategy is bringing results," said David Mann, President and Chief Executive Officer of Emera Inc. " We're managing our electric utility businesses efficiently and effectively, and growing earnings through our portfolio of complementary energy businesses that capitalize on the developing northeast energy market."

Electric revenues increased to $916.2 million in 2001, from $813.3 million in 2000. The Bangor Hydro acquisition added $82.0 million. The balance of the increase was realized in Nova Scotia Power, primarily resulting from a return to colder temperatures in the early part of the year after several warm winters; and increased export sales.

Fuel for generation and power purchased increased to $341.6 million in 2001, from $273.9 million in 2000. $40.6 million of the increase relates to Bangor Hydro. Nova Scotia Power's fuel costs rose $26.3 million, due mainly to substantially higher coal prices. The company mitigated these higher costs with the proceeds on sales of natural gas, primarily in the first quarter of 2001 when prices were high. NSPI also increased its gas-fired generation as prices fell later in the year, realizing gains on related gas sales hedges that were no longer required.

"We're proud that Nova Scotia Power was able to absorb such significant fuel cost increases without raising prices in 2001," said Mr. Mann. "But there are challenges going forward which have forced us to take rate action. Continued high coal prices, coupled with a weak Canadian dollar, will add another $54 million to NSPI's fuel costs in 2002." On December 18, 2001, Nova Scotia Power filed an application with its regulator, requesting an average 8.9% increase in electricity rates.

Operating, maintenance and general expenditures were $194.7 million for 2001, compared to $168.0 million in the prior year. Once again, the acquisition of Bangor Hydro was a significant factor in the increase, contributing $17.7 million. Growth in Emera's gas infrastructure investment portfolio and higher business development expenditures are also reflected in the 2001 OM&G amounts. Nova Scotia Power's OM&G costs were stable year over year, at $156.8 million, compared to $156.7 million in 2000. The company increased maintenance expenditures to ensure reliability, and implemented various marketing and sales initiatives. Offsetting these increased expenditures was a $10.6 million decrease in employee future benefits expense year over year as a result of actuarial adjustments, much of which was recorded in the fourth quarter.

NSPI's regulator has granted it flexibility with respect to the amount of annual write-off for its Glace Bay generating station, which is permanently shut down. Lower amortization in 2001 enabled NSPI to maintain rate stability and earnings despite significantly higher fuel costs. $3.0 million was written off in the year, compared to $10.0 million in 2000. In addition, in 2000, the company expensed $9.0 million representing the full accrual of estimated site restoration costs for the Glace Bay facility.

Corporate Developments

On October 10, 2001, Emera completed its acquisition of all of the outstanding common shares of Bangor Hydro Electric Company for cash proceeds of $316.6 million.

On December 18, 2001, Nova Scotia Power filed an application with its regulator wherein the company requested an average increase in electricity prices of 8.9%; an increase in its allowed common equity component from 35% to between 40% and 45%; and an allowed return on common equity of between 11% and 12%. Hearings are scheduled to begin in late April.

On January 29, 2002, the Tax Court of Canada ruled in favour of Nova Scotia Power on the issue of whether the company is allowed income tax deductions related to the capitalization of interest on assets constructed by its predecessor company. The deductions created substantial tax depreciation and tax loss carryforwards, that were used to reduce income taxes payable by approximately $110 million through 2001. The decision is subject to appeal.

About Emera Inc.

Emera Inc. (EMA-TSE) is a diversified energy and services company, with 550,000 customers and $4.0 billion in assets. The company has two wholly-owned regulated electric utility subsidiaries, Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Nova Scotia Power supplies over 95% of the electric generation, transmission and distribution in Nova Scotia. Bangor Hydro provides electricity transmission and distribution service to 110,000 customers in eastern Maine. It is a member of the New England Power Pool, and is interconnected with the other New England utilities to the south and with New Brunswick Power to the north. In addition, Emera Energy incorporates Emera's business development activities, and manages its growing gas infrastructure investment portfolio, including Emera Fuels, which delivers bunker oil, diesel fuel and light fuel oil throughout the Maritimes; a 12.5% interest in the Maritimes & Northeast Pipeline, which delivers Sable natural gas to markets in Maritime Canada and the northeastern United States; and an 8.4% interest in the Sable Offshore Energy Project offshore platforms and sub-sea field gathering lines.

Conference Call:

Emera is holding a teleconference today at 2:00 pm Atlantic (1:00 pm Eastern, 10 am Pacific) to discuss the 2001 financial results. Analysts and other interested parties wanting to participate in the call should dial 1-888-882-0141 at least 10 minutes prior to the start of the call. No pass code is required. A replay of the teleconference will be available one hour after the call ends, until midnight on Monday, February 18, 2002 by dialing 1-800-558-5253 Reservation #20241830 . The teleconference will also be Webcast live on the internet at www.Q1234.com, and archived and available for replay on that site.

Forward Looking Information:

This news release contains forward looking information. Actual future results may differ materially. Additional financial and operational information is filed electronically with various securities commissions in Canada through the System for Electronic Document Analysis and Retrieval (SEDAR).