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Emera Reports Q2 Earnings of $29.8 Million

HALIFAX, Nova Scotia, July 28, 2004, (TSX:EMA): Emera Inc.'s Q2, 2004 consolidated net earnings were $29.8 million, or 27 cents per share, compared to $15.5 million, or 14 cents per share for the same period in 2003. The increase primarily reflects a $14.9 million after-tax increase in electric margin, resulting from higher electric revenues and lower fuel costs in Nova Scotia Power ("NSPI"), the company's largest subsidiary. Much of the electric revenue increase arises from a charge against revenues taken in Q2, 2003 as a result of an adjustment to the company's unbilled revenue accrual.

Year to date, Emera's net earnings are $6.1 million higher, at $76.3 million, or 70 cents per share, compared to $70.2 million, or 65 cents per share for the first half of 2003. The increase reflects the adjustment to 2003 revenue referred to above.

"Our Q2 results are on track, and we continue to exercise disciplined cost control," said David Mann, President and Chief Executive Officer. "In NSPI, lower fuel costs are helping us cover our higher tax bill for this year, but the fuel price picture is changing for 2005. So our rate application was needed to deal with these higher taxes once the fuel savings are no longer available to offset them."

NSPI's contribution to consolidated earnings was $25.0 million in Q2, 2004, compared to $12.9 million in Q2, 2003. As noted above, electric revenues were higher primarily because the 2003 comparative amount was reduced by an adjustment to unbilled revenue. An increase in the amount of residential sales in the sales mix also contributed to higher revenues. Quarter over quarter sales volume was modestly higher. The net proceeds from NSPI's natural gas sales were $5.7 million lower year over year, but this was offset by lower coal and petroleum coke prices, such that fuel costs overall were reduced. Operating, maintenance and general expenses were $1.1 million lower, despite a $1.9 million increase in pension costs compared to Q2, 2003. These positive impacts were somewhat offset by increased depreciation and amortization costs, and provincial grants in lieu of taxes.

"We expect NSPI will earn within its allowed range in 2004," said Mr. Mann.

Bangor Hydro, Emera's electricity transmission and distribution utility in Maine, contributed $3.5 million to earnings in Q2, 2004, compared to $4.3 million in 2003. The decrease is primarily due to the write off of previously deferred costs that were disallowed from rates in recent proceedings. Emera's other operations contributed $1.3 million to consolidated net earnings in Q2, 2004, a $3.0 million increase over 2003. An increase in energy marketing margin and decreased business development expenditures offset the loss of offshore gas infrastructure revenue.
Consolidated net cash provided by operating activities was $92.2 million in Q2, 2004, compared to $27.3 million in Q2, 2003. A $49.3 million deposit to the Canada Revenue Agency, made in the second quarter of 2003 in connection with NSPI's pre-2003 income tax case reduced cash flow in that period.

Corporate Developments

On June 11, 2004, the Supreme Court of Canada dismissed NSPI's appeal to allow income tax deductions the company had claimed between 1998 and 2002. The deductions represented approximately $129 million in income tax otherwise payable ($150 million including interest).

NSPI had previously filed income tax returns claiming the deductions, which the Canada Revenue Agency ("CRA") disallowed. NSPI successfully pursued the issue through the Tax Court of Canada. The Federal Court overturned the Tax Court decision, and NSPI had appealed that decision to the Supreme Court.

NSPI deposited the amount owing with CRA in 2002 and 2003 in order to avoid incurring non-deductible interest charges in the event the Supreme Court appeal was unsuccessful. The company's regulator, the Utility and Review Board, provided an accounting order allowing NSPI to defer the amount while the matter was before the Supreme Court. Now that a final decision has been rendered, NSPI has amended its 2005 rate application to provide for amortization of the tax deposit over a seven-year period.

On May 28, 2004 NSPI filed a rate application to incorporate substantially higher corporate taxes into its rate structure. The company applied for an overall increase in rates of 8.6%, based on a rate of return of 10.2% calculated on an equity level of 37.5%. The application was subsequently amended to incorporate amortization over seven years of the $150 million income tax deposit referred to above. This added an additional 3.8% to the initial rate request, bringing the total to 12.4%.

On July 26, 2004, Randy Henderson, CA joined Emera as Senior Vice-President and Chief Financial Officer, replacing Ron Smith who is retiring.

About Emera Inc.

Emera Inc. (EMA-TSX) is an energy and services company with 570,000 customers and $4.0 billion in assets. The core business of Emera is electricity and 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 owns a 12.9% interest in the Maritimes & Northeast Pipeline, which delivers Sable natural gas to markets in Maritime Canada and the northeastern United States; Emera Energy Services which manages energy assets on behalf of third parties and provides related services; and Emera Fuels, which distributes home heating oil and related products to customers in the Maritime provinces.

Teleconference Call

Emera is holding a teleconference today at 2:00 pm Atlantic (1:00 pm Toronto/Montreal/New York; 12:00 pm Winnipeg; 10:00 am Vancouver) to discuss the Q2 2004 financial results. Analysts and other interested parties wanting to participate in the call should dial 1-800-387-6216 (in Toronto 416-405-9328) at least 10 minutes prior to the start of the call. No pass code is required. The teleconference will be recorded. If you are unable to join the teleconference live, you can dial for playback toll-free at 1-800-408-3053 access code 3075518 (available until midnight Wednesday, August 4, 2004). The teleconference will also be webcast live at www.emera.com and available for playback for one year.

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).