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Nova Scotia Power Successful in First Stage of Federal Tax Case

HALIFAX, Nova Scotia, January 30, 2002: Nova Scotia Power Inc. (NSPI) announced today that the Tax Court of Canada has ruled in its favor 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. Nova Scotia Power is a wholly owned subsidiary of Emera Inc. (TSE:EMA)

The case arose when NSPI claimed deductions related to the capitalization of interest on assets constructed by its predecessor, Nova Scotia Power Corporation (NSPC), a provincial crown corporation. The assets were purchased by NSPI in the course of privatizing NSPC in 1992. 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 Canada Customs and Revenue Agency disallowed the deductions claimed, and NSPI pursued the issue through to the Tax Court.

The decision is subject to appeal and, ultimately, there is also likely to be debate around the amount of deductions claimed. Therefore, the company expects it will be some time before a final decision is rendered.

The tax loss carryforwards claimed will be fully utilized by 2002 and, as a result, the company expects to begin to pay income taxes in 2003.

About Emera Inc

Emera Inc. is a diversified energy and services company, with 550,000 customers and $4.1 billion in assets. The company has two wholly-owned operating subsidiaries, Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Nova Scotia Power, a regulated utility, supplies over 95% of the electric generation, transmission and distribution in Nova Scotia. Bangor Hydro, also regulated, 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. Emera also delivers bunker oil, diesel fuel and light fuel oil through its unregulated subsidiaries; has 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.