« Back

Fuel Costs Reduce Emera 2005 Earnings – February 20, 2006

HALIFAX, Nova Scotia, February 20, 2006, (EMA-TSX): Emera Inc.’s consolidated net earnings were $121.2 million for the year ended December 31, 2005, down from $129.8 million in 2004.

The decrease in annual earnings reflects lower earnings at Emera’s largest subsidiary, Nova Scotia Power Inc. (NSPI), which earned $91.2 million in 2005, compared to $107.3 million in 2004. NSPI’s fuel costs were approximately $71 million, or 23% higher year over year, due to higher coal and oil prices. The related earnings impact was only partially offset by an approximately 5% electricity rate increase implemented in the spring of 2005, and the deferral of first quarter corporate taxes in advance of that rate increase.

Emera’s consolidated net earnings for the fourth quarter of 2005 were $37.7 million, compared to $31.4 million for the fourth quarter of 2004. Again, higher coal and oil prices increased fuel expense in NSPI by approximately $16 million. This was offset by a revised agreement on natural gas supply pricing, reached in November, which was more favourable than had been estimated. It resulted in a $24 million adjustment to fuel expense for 2005, all of which was recorded in Q4.

Earnings per share were $1.11 for the year ended December 31, 2005, compared to $1.20 in the prior year; and $0.34 for the fourth quarter of 2005, compared to $0.30 in Q4, 2004.
“Rising fuel costs continue to have a major effect on the company,” said Chris Huskilson, President and Chief Executive Officer of Emera Inc. “The issue of fuel costs was central to Nova Scotia Power’s 2006 rate application. A decision from the regulator is expected soon.”

Bangor Hydro Electric (BHE), Emera’s electricity transmission and distribution utility in Maine, contributed $4.0 million to consolidated net earnings in Q4, 2005, compared to $4.4 million in Q4, 2004; and $14.9 million for the year ended December 31, 2005, compared to $18.5 million for 2004. The lower earnings primarily reflect increases in depreciation rates, higher NEPOOL transmission expenses, and the effect of a stronger Canadian dollar.

Emera's Other operations contributed $15.1 million to consolidated net earnings for the year ended December 31, 2005, compared to $4.0 million in 2004. The addition of the Bear Swamp hydro-electric facility, foreign exchange gains, and the capitalization of business development expenses related to the Bear Swamp acquisition contributed to the earnings increase.

Consolidated cash used in operating activities was $36.3 million in Q4, 2005, compared to cash provided by operating activities of $62.9 million in Q4, 2004, primarily due to changes in working capital.

About Emera Inc.
Emera Inc. (EMA-TSX) is an energy and services company with $4.0 billion in assets. Electricity is Emera’s core business. The company has two wholly-owned regulated electric utility subsidiaries, Nova Scotia Power Inc. and Bangor Hydro-Electric Company, which together serve 580,000 customers. 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. Emera’s other investments include a 12.9% interest in the Maritimes & Northeast Pipeline and Emera Energy Services which manages energy assets on behalf of third parties and provides related services. Visit Emera on the web at www.emera.com

Teleconference Call
Emera is holding a teleconference today at 11:30 AM Atlantic (10:30 AM Eastern, 7:30 AM Pacific) to discuss the Q4, 2005 financial results. Analysts and other interested parties wanting to participate in the call should dial 1-866-898-9626 (in Toronto 416-340-2216) 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 (in Toronto 416-695-5800), access code 3174566# (available until midnight, Monday, February 27, 2006). The teleconference will also be web cast 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).