Emera Inc – ‘U-1/A’ on 6/30/04

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Pre-Effective Amendment to Application or Declaration   —   Form U-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: U-1/A       Amendment No. 2 to Form U-1 Application               48    150K 

Document Table of Contents

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                                                               File No. 70-10227

 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------
 AMENDMENT NO. 2
TO
FORM U-1
 APPLICATION-DECLARATION
 UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
------------------------------------------------  
      Emera Incorporated                 Bangor Hydro-Electric Company
  P.O. Box 910                           33 State Street
Halifax, Nova Scotia                     Bangor, Maine 04401
Canada                                        
B3J2W5                                        

        Emera US Holdings Inc.          And the direct and indirect subsidiary
          BHE Holdings Inc.             companies of Emera Incorporated listed
 1209 Orange Street                     on Exhibit A hereto.
New Castle, Wilmington, DE 19801                                        

------------------------------------------------
Emera Incorporated

 (Name of top registered holding company parent of
each applicant or declarant)
------------------------------------------------

Richard J. Smith
 Corporate Secretary and General Counsel
Emera Inc.
P.O. Box 910
Halifax, Nova Scotia
Canada
B3J2W5
 -----------------------------------------------
 (Name and address of agent for service)

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 The Commission is requested to send copies of all notices, orders and
communications in connection with this application to:

Markian Melnyk
LeBoeuf, Lamb, Greene & MacRae, L.L.P.  
 1875 Connecticut Avenue
 Washington, D.C. 20009-5728

 ph (202) 986-8000
fax (202) 986-8102

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 TABLE OF CONTENTS

Item 1.     Description Of Proposed Transactions.............................1  
 A. Introduction...........................................................1
 B. Description of the Companies...........................................1
 C. The Proposed Transactions..............................................3
    1.    Summary of Financing Authorization Requested.....................4
    2.    Parameters for Financing Authorization...........................5
    3.    Existing Capital Structure of Emera and BHE......................8
    4.    Description of Proposed Financing Program.......................10
    a.    Emera's External Financing......................................10
    b.    Common Stock....................................................10
    c.    Preferred Stock.................................................12
    d.    Long-Term Debt..................................................13
    e.    Short-Term Debt.................................................14
    f.    Hedges and Interest Rate Risk Management........................15
    g.    Guarantees......................................................17
    h.    Subsidiary Financing............................................18
    i.    Changes in Capital Stock of Wholly-Owned Subsidiaries...........22
    j.    Payment of Dividends Out of Capital or Unearned Surplus.........23
    k.    Financing Entities..............................................24
 D. Intermediate Subsidiaries and Nonutility Reorganizations..............26
 E. Canadian Energy Related Subsidiaries..................................30
 F. EWG and FUCO Investments..............................................31
 G. Reporting.............................................................38

Item 2.     Fees, Commissions And Expenses..................................41  

Item 3.     Applicable Statutory Provisions.................................41  
 A. Applicable Provisions.................................................41
 B. Legal Analysis........................................................41

Item 4.     Regulatory Approvals............................................42  

Item 5.     Procedure.......................................................42  

Item 6.     Exhibits And Financial Statements...............................42  

Item 7.     Information As To Environmental Effects.........................43  

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Item 1.  Description Of Proposed Transactions                                   

A.   Introduction.                                                    

   Emera Incorporated ("Emera"), a registered public utility holding company
under the Public Utility Holding Company Act of 1935 (the "Act") requests       
authorization for the financing program for Emera and its subsidiaries (the     
"Emera Group") for the period beginning with the effective date of an order     
issued pursuant to this filing and continuing through June 30, 2007             
("Authorization Period"). Applicants request that the Commission reserve        
jurisdiction over the transactions requested in this application for the period 
from October 30, 2004 to June 30, 2007 until the record is complete, or as      
further authorized by the Commission.                                           

B.   Description of the Companies                                     

   Emera was formed under the laws of the Province of Nova Scotia, Canada in
1998. Emera became a registered holding company on October 11, 2001, after the  
acquisition of the outstanding common stock of Bangor Hydro-Electric Company    
("BHE"), a Maine electric public utility company. The acquisition of BHE was    
authorized by Commission order dated October 1, 2001, Holding Co. Act Release   
No. 27445 ("Acquisition Order"). In connection with the acquisition, Emera      
organized two companies, Emera US Holdings Inc. ("Emera USH") and BHE Holdings  
Inc. ("BHEH") to hold Emera's interest in BHE. Emera USH is a wholly-owned      
direct subsidiary of Emera and BHEH is a wholly-owned direct subsidiary of Emera
USH. Emera USH and BHEH are registered holding companies under the Act.         

 Emera's common stock is listed and traded on the Toronto Stock Exchange
("TSE"). The securities commissions of each of the provinces of Canada regulate 
securities issuances by Emera and the company also is subject to the rules and  
regulations of the TSE. Emera's public disclosure documents such as annual      
reports and proxy statements are available on SEDAR, an electronic document     
management system like                                                          

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EDGAR, that is administered by the Canadian Securities Administrators, an       
association of the provincial securities commissions.                           

     Emera is the parent of Nova Scotia Power Inc. ("NSPI"), a Canadian electric
utility company that owns and operates a vertically integrated electric utility 
system in Nova Scotia. NSPI, which is classified as a foreign utility company or
"FUCO" under the Act, serves 440,000 customers in Nova Scotia with 2,183 MW of  
generating capacity, approximately 5,200 km of transmission lines, 24,000 km of 
distribution lines, associated substations and other facilities. Emera also owns
several other nonutility subsidiaries that are applicants herein and are        
described in more detail in Exhibit A.                                          

For the twelve months ending December 31, 2003, Emera had revenues of 
approximately CDN $1,231.3 million and income of CDN $129.2 million (US $878.9  
and US $92.2, respectively). As of December 31, 2003, Emera had assets of       
approximately CDN $3,840.9 million (US $2,971.9)./1                             

     BHE is a public utility and holding company exempt under Section 3(a)(1) of
the Act pursuant to the Acquisition Order. BHE provides the transmission and    
distribution system for the delivery of electricity to approximately 123,000    
Maine customers. The Maine Public Utilities Commission ("MPUC") regulates BHE   
with respect to rates, maintenance of accounting records and various other      
service and safety matters. BHE holds a 14.2% equity interest in Maine Electric 
Power Company ("MEPCO"), a Maine utility that owns and operates electric        
transmission facilities from Wiscasset, Maine to the Maine-New Brunswick border.
MEPCO is also owned by the unaffiliated entities, Central Maine Power Company   
(78.3%) and Maine Public Service Company (7.5%). In addition, BHE owns a 50%    
general partnership interest in Chester SVC Partnership ("Chester SVC"), through
BHE's wholly-owned subsidiary Bangor Var Co., Inc. ("Bangor Var"). Chester SVC  
is a single-purpose financing entity formed to                                  

--------------------                                                            
1 For convenience, 2003 revenue and income figures are translated from Canadian 
to US dollars at CDN $1 = US $0.714. Asset figures as of December 31, 2003 are  
translated at CDN $1 = US $0.774.                                               

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own a static var compensator, which is electrical equipment that supports the   
New England Power Pool (NEPOOL)/Hydro Quebec Phase II transmission line. BHE    
also owns several non-utility subsidiary companies, most of which are inactive, 
that are described in more detail in Exhibit A.                                 

For the twelve months ending December 31, 2003, BHE had approximately 
$143.1 million of utility operating revenues and income of $14.4 million. As of 
December 31, 2003, BHE had utility assets of approximately $563.9 million.      

C.   The Proposed Transactions                                        

  Emera, BHE, Emera USH, BHEH and the subsidiaries identified on Exhibit A
(collectively, the "Applicants") request authorization to engage in the         
financing transactions set forth herein during the period from the effective    
date of the order granted pursuant to this Application through the Authorization
Period. The financing authorization granted by the Acquisition Order expires on 
June 30, 2004.                                                                  

     Proceeds from the sale of securities in financing transactions will be used
for general corporate purposes, including financing the capital expenditures and
working capital requirements of the Emera Group, the acquisition, retirement or 
redemption of securities previously issued by Emera Group companies, and for    
authorized investments in companies organized in accordance with Rule 58 under  
the Act, Canadian Energy Related Subsidiaries (defined infra), exempt wholesale 
generators ("EWGs"), foreign utility companies ("FUCOs"), exempt                
telecommunications companies ("ETCs") and for other lawful purposes.            

     Applicants represent that no financing proceeds will be used to acquire the
securities of any company unless such acquisition has been approved by          
Commission order, or it is in accordance with an available exemption under the  
Act or the rules under the Act, including Sections 32, 33 and 34 and Rule 58.   
Financing and guarantees used to fund investments in Rule 58 Subsidiaries will  
be subject to the limitations of that rule.                                     

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  The authorizations sought by this Application should give the Applicants
flexibility to respond quickly and efficiently to their financing needs and to  
changes in market conditions, permitting them to carry on business activities   
designed to provide benefits to their customers and Emera's shareholders.       
Approval of this Application is consistent with the Acquisition Order and       
existing Commission precedent./2                                                

1.   Summary of Financing Authorization Requested           

Applicants seek the following Commission authorization:     

   a.   Emera requests authorization to issue and sell through the
            Authorization Period up to $2 billion of securities at any one
        time outstanding (the "Emera External Limit") and to issue
          guarantees and other forms of credit support in an aggregate
            amount of $500 million at any one time outstanding (the "Emera
Guarantee Limit");/3                              

     b.   Emera requests authority to enter into hedging transactions,
             including anticipatory hedges, with respect to its indebtedness
               to manage and minimize interest rate costs and to lock-in current
interest rates;                                   

          c.   Emera requests authorization to finance certain of its nonutility
 subsidiaries at a mark up to Emera's cost of funds.

   d.   Emera USH and BHEH request authorization to issue and sell
              securities to Emera, to finance one another through the issuance
            and acquisition of securities, and to finance BHE by acquiring
its securities.                                   

e.   Emera requests authorization to change the terms of any
 wholly-owned subsidiary's authorized capital stock;

      f.   Emera's non-utility subsidiaries request authorization to pay
dividends out of capital or unearned surplus;     

--------------------                                                            
2 See e.g., Pepco Holdings Inc., Holding Co. Act Release No. 27557 (July 31,    
2002); E.ON AG, Holding Co. Act Release No. 27539 (June 14, 2002); First Energy 
Corporation, Holding Co. Act Release No. 27459 (Oct. 29 2001); Exelon           
Corporation, Holding Co. Act Release No. 27266 (Nov. 2, 2000); Dominion         
Resources, Inc., Holding Co. Act Release No. 27112 (Dec. 15, 1999); and         
Conectiv, Inc., Holding Co. Act Release No. 26833 (Feb. 26, 1998).              

3 The financing limits stated in this application are expressed in U.S.         
dollars.                                                                        

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        g.   Emera and its subsidiaries request authorization to acquire the
           equity securities of one or more special purpose subsidiaries
         ("Financing Subsidiaries") organized solely to facilitate a
             financing transaction and to guarantee the securities issued by
Financing Subsidiaries.                           

         h.   Emera requests that the Commission approve the issuance of up to
              5 million shares of common stock under dividend reinvestment and
              stock-based management incentive and employee benefit plans (the
"Common Stock Plan Limit");                       

        i.   BHE requests authorization to issue and sell up to $100 million
in short-term debt (the "BHE Limit");             

     j.   Emera requests authorization to invest up to $300 million in
         certain energy-related companies that are doing business in
Canada ("Canadian Energy Related Subsidiaries").  

      k.   Emera requests authorization to issue and sell securities and
          guarantees in an aggregate amount of up to $2.0 billion (the
             "EWG-FUCO Investment Limit"), such amount to be included within
         the Emera External Limit and Emera Guarantee Limit proposed
             above, for the purpose of financing the acquisition of EWGs and
FUCOs.                                            

    l.   Emera requests authorization to restructure its non-utility
             interests from time to time, including to establish one or more
             intermediate subsidiaries organized exclusively for the purpose
           of acquiring, financing, and holding the securities of one or
more existing or future non-utility subsidiaries. 

2.   Parameters for Financing Authorization                 

      Applicants propose that the following general terms and conditions
would apply, where appropriate, to the requested financing authorizations       
("Financing Limitations"):/4                                                    

a.   Effective Cost of Money.                               

          The effective cost of money on long-term debt borrowings in accordance
with authorizations granted under the                       

--------------------                                                            
4 The Commission has previously authorized financing transactions subject to    
these same general parameters.  See SCANA Corporation, Holding Co. Act          
Release No. 27649 (Feb. 12, 2003).                                              

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        Application will not exceed the greater of (a) 500 basis points over
     the comparable-term U.S. or Canadian treasury securities or (b) a
         gross spread over U.S. or Canadian treasuries that is consistent with
         similar securities of comparable credit quality and maturities issued
      by other companies. The effective cost of money on short-term debt
   borrowings in accordance with the authorizations granted in the
        Application will not exceed the greater of (a) 500 basis points over
        the comparable-term London Interbank Offered Rate ("LIBOR") or (b) a
         gross spread over LIBOR that is consistent with similar securities of
       comparable credit quality and maturities issued by other companies.
 The dividend rate on any series of preferred stock, preferred
         securities or equity-linked securities will not exceed the greater of
         (a) 500 basis points over the yield to maturity of a U.S. or Canadian
       treasury security having a remaining term equal to the term of that
   series of preferred stock or (b) a rate that is consistent with
         similar securities of comparable credit quality and maturities issued
by other companies./5                                       

b.   Maturity.                                              

         The maturity of long-term debt will be between one and 50 years after
the issuance thereof. Preferred securities and equity-linked
         securities will be redeemed no later than 50 years after the issuance
       thereof, unless converted into common stock. Preferred stock issued
        directly by Emera may be perpetual in duration. Short-term debt will
mature within a year.                                       

c.   Issuance Expenses.                                     

         The underwriting fees, commissions or other similar remuneration paid
         in connection with the non-competitive issue, sale or distribution of
          securities pursuant to this Application will not exceed the greater of
          (i) 5% of the principal or total amount of the securities being issued
    or (ii) issuance expenses that are generally paid at the time of

--------------------                                                            
5 Substantially similar interest rate provisions have been authorized by the    
Commission in Energy East Corporation, et al., Holding Co. Act Release No.      
27643 (January 28, 2003); E.ON AG, Holding Co. Act Release No. 27539 (June      
14, 2002); Ameren Corp. et al., Holding Co. Act Release No. 27655 (February     
27, 2003).                                                                      

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        the pricing for sales of the particular issuance, having the same or
          reasonably similar terms and conditions issued by similar companies of
reasonably comparable credit quality./6                     

d.   Common Equity Ratio.                                   

      Emera will maintain common stock equity/7 as a percentage of total
        capitalization,/8 as shown in its most recent quarterly consolidated
    balance sheet, of at least 30% or above./9 In addition, BHE will
        maintain common stock equity of at least 30% of total capitalization
as shown in its most recent quarterly balance sheet./10     

e.   Investment Grade Ratings.                              

        Applicants further represent that no guarantees or other securities,
other than common stock, may be issued in reliance upon the 
         authorization granted by the Commission pursuant to this Application,
       unless (i) the security to be issued, if rated, is rated investment
       grade; (ii) all outstanding securities of the issuer that are rated
       are rated investment grade; and (iii) all outstanding securities of
         Emera that are rated are rated investment grade. For purposes of this
          provision, a security will be deemed to be rated "investment grade" if
      it is rated investment grade by at least one nationally recognized
      statistical rating organization ("NRSRO"), as that term is used in
  paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the
Securities Exchange Act of 1934, as amended ("1934          

--------------------                                                            
6 See e.g., NiSource, Inc., Holding Co. Act Release No. 27789 (December 30,     
2003); SCANA Corp., Holding Co. Act Release No. 27649 (February 12, 2003).      

7 Common stock equity includes common stock (i.e., amounts received equal to the
par or stated value of the common stock), additional paid in capital, retained  
earnings and minority interests.                                                

8 Applicants would calculate the common stock equity to total capitalization    
ratio as follows: common stock equity (as defined in the immediately preceding  
footnote)/(common stock equity + preferred stock + gross debt). Gross debt is   
the sum of long-term debt, short-term debt and current maturities.              

9 Emera will in any event be authorized to issue common stock (including        
pursuant to stock-based plans maintained for shareholders, employees and        
management) to the extent authorized herein.                                    

10 BHE holds a 14.2% equity interest in MEPCO, which is also owned by the       
unaffiliated entities Central Maine Power Company (78.3%) and Maine Public      
Service Company (7.5%). MEPCO is required to maintain a minimum 30% common      
equity to total capitalization by a Commission order issued to Energy East      
Corp., Holding Co. Act Release No. 27643 (January 28, 2003). As a minority      
shareholder, BHE is not in a position to control the equity level of MEPCO.     

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    Act")./11 Applicants further request that the Commission reserve
          jurisdiction over the issuance of any guarantee or other securities in
         reliance upon the authorization granted by the Commission pursuant to
         this Application at any time that the conditions set forth in clauses
(i) through (iii) above are not satisfied.                  

f.   Authorization Period.                                  

          No security will be issued pursuant to the authorization sought herein
after the last day of the Authorization Period.             

3.   Existing Capital Structure of Emera and BHE            

  The capital structure of Emera and BHE on December 31, 2003, is shown in
the following table:                                                            

-----------------------------------------------------------------------------   
As at December              Emera                        BHE                    
31, 2003                                                                        
-----------------------------------------------------------------------------   
              (US $          % of Total       (US $       % of Total
                millions)      Capitalization   millions)   Capitalization
-----------------------------------------------------------------------------   
Common                 1,062.9          39.0%         192.9        52.8%        
stockholders'                                                                   
equity                                                                          
-----------------------------------------------------------------------------   
Non-controlling          201.8           7.4%            --           --        
interest                                                                        
-----------------------------------------------------------------------------   
Preferred stock             --             --           0.6         0.2%        
-----------------------------------------------------------------------------   
Long-term debt                                                                  
(including                                                                      
current                1,358.6          49.9%         168.0        46.0%        
portion)                                                                        
-----------------------------------------------------------------------------   

--------------------                                                            
11 Investment grade long-term debt is denoted by the Standard & Poor's ratings  
of AAA, AA, A and BBB. The ratings may be modified by a plus (+) or minus (-) to
show relative standing within the rating categories. Moody's ratings of Aaa, Aa,
A and Baa denote investment grade long-term debt. Moody's applies numerical     
clarifiers (1, 2 and 3) to denote relative ranking within a generic rating      
category. Standard & Poor's short-term debt ratings range from A-1 for the      
highest quality obligations to D for the lowest. Categories A-1 to A-3 are      
investment grade. The A-1 rating may also be modified by a plus sign to         
distinguish the strongest credits in that category. Moody's short-term issuer   
ratings are Prime-1, Prime-2 and Prime-3, all of which are investment grade.    
Fitch IBCA's ratings of AAA - BBB are denoted investment grade categories. A    
plus (+) or minus (-) may be appended to a rating to denote relative status     
within major rating categories.                                                 

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-----------------------------------------------------------------------------   
Short-term debt          100.0           3.7%           4.0         1.1%        
-----------------------------------------------------------------------------   
Total                 $2,723.3         100.0%        $365.5       100.0%        
Capitalization                                                                  
-----------------------------------------------------------------------------   

    As of December 31, 2003, Emera had 108.26 million common shares issued and
outstanding. Emera also has a non-controlling minority interest attributable to 
preferred shares that are held in NSPI and BHE. During 2003, BHE redeemed       
substantially of its outstanding preferred shares. Additional information about 
the NSPI and BHE preferred stock is included in note 19 to Emera's financial    
statements, Exhibit FS-2 to this application.                                   

 Emera's long-term debt instruments are issued under trust indentures at
fixed interest rates, and are unsecured, except for a small amount of privately 
placed debt that is secured by a letter of credit. Also included in long-term   
debt are certain bankers acceptances and commercial paper where Emera has the   
intention and the unencumbered ability to refinance the obligations for a period
greater than one year. Emera also has short-term debt outstanding consisting of 
commercial paper, bankers' acceptances and LIBOR loans issued against lines of  
credit.                                                                         

The debt ratings of Emera, BHE and NSPI are set forth below:          

Company/Type of facility                        Moody's    S&P      Fitch       
------------------------                        -------    ---      -----       
Emera/Long Term Corporate                         N/A      BBB+       -         
   Senior Unsecured Debt                Baa2      BBB        -
NSPI/  Long Term Corporate                        N/A      BBB+       -         
   Senior Unsecured Debt                Baa1      BBB+       -
   Commercial Paper                   P-2(Baa)  A-1(low)     -
BHE - not rated                                                                 

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4.   Description of Proposed Financing Program              

a.   Emera's External Financing                   

 Emera proposes to issue equity and debt securities aggregating not more
than the Emera External Limit at any one time outstanding during the            
Authorization Period./12 Such securities could include, but would not           
necessarily be limited to, common stock, preferred stock, options, warrants,    
purchase contracts, units (consisting of one or more purchase contracts,        
warrants, debt securities, shares of preferred stock, shares of common stock or 
any combination of such securities), long- and short-term debt (including       
commercial paper), subordinated debt, bank borrowings, securities with call or  
put options, and securities convertible into any of these securities./13 In     
addition, Emera also seeks authorization to issue shares of common stock or     
options to purchase shares under stock purchase/dividend reinvestment plans and 
stock-based management incentive and employee benefit plans up to the Common    
Stock Plan Limit. Securities issued under the Common Stock Plan Limit would not 
reduce the capacity to issue securities under the Emera External Limit. Emera   
may also issue guarantees and enter into interest rate swaps and hedges as      
described below.                                                                

b.   Common Stock                                 

Emera seeks authorization to issue common stock in an aggregate amount
outstanding not to exceed the Emera External Limit at any time during the       
Authorization Period. Specifically, Emera proposes to issue and sell common     
stock, options, warrants, purchase contracts, units, and other stock purchase   
rights exercisable for common stock. Emera requests authorization, during the   
Authorization Period, to issue and sell from time to time such securities,      
either: (1) through underwritten public offerings, (2) in private               

--------------------                                                            
12 The value of securities issued by Emera under the authority granted in the   
Acquisition Order through the date of the order granting this application would 
not be counted towards the Emera External Limit. To the extent a security issued
under the authorization requested herein is retired during the authorization    
period, an equivalent amount of capacity under the Emera External Limit would be
made available for the issuance of additional securities.                       

13 Any convertible or equity-linked securities would be convertible into or     
linked only to securities that Emera is otherwise authorized to issue directly  
or indirectly through a financing entity on behalf of Emera.                    

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placements, (3) under its dividend reinvestment, stock-based management         
incentive and employee benefit plans and such other plans as may hereafter be   
adopted, (4) in exchange for securities or assets being acquired from other     
companies, and (5) in connection with redemptions of certain series of NSPI     
preferred stock.                                                                

Emera may perform common stock financings pursuant to underwriting    
agreements of a type generally standard in the industry. Public distributions   
may be made by private negotiation with underwriters, dealers or agents as      
discussed below or through competitive bidding among underwriters. In addition, 
sales may be made through private placements or other non-public offerings to   
one or more persons. All such common stock sales will be at rates or prices and 
under conditions negotiated or based upon, or otherwise determined by,          
competitive capital markets. Underwriters may resell common stock from time to  
time in one or more transactions, including negotiated transactions, at a fixed 
public offering price or at varying prices determined at the time of sale. Emera
also may grant underwriters a "green shoe" option permitting common stock to be 
offered solely for the purpose of covering over-allotments.                     

Emera issues and sells common stock pursuant to its Common Shareholder
Dividend Reinvestment Plan and its Employee Common Share Purchase Plan, which   
provide an opportunity for shareholders and company employees to reinvest       
dividends and make cash contributions for the purpose of purchasing common      
shares. Emera also has a stock option plan that grants options to the senior    
management of Emera and its subsidiary companies for a maximum term of 10 years.
The option price for these shares is the market price of the shares on the day  
prior to the option grant. Emera proposes to issue shares pursuant to these     
plans and such other plans as may hereafter be adopted during the Authorization 
Period subject to the Common Stock Plan Limit./14                               

--------------------                                                            
14 Emera proposes, from time to time during the Authorization Period to issue   
and/or acquire its common stock in open market transactions or by another method
that complies with applicable law and Commission interpretations then in effect 
in an amount up to the Common Stock Plan Limit to fund Emera's dividend         
reinvestment plan, certain incentive compensation plans and certain other       
employee benefit plans currently existing or that may be adopted in the future. 
For example, Emera currently maintains the following stock-based benefit plans  
for employees: 1) Emera Senior Management Stock Option Plan, which currently has
1.3 million treasury shares reserved; 2) Emera Common Share Purchase Plan, which
currently has 1.5 million treasury shares reserved; and 3) Emera Dividend       
Reinvestment Plan.                                                              

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     Emera may seek to acquire securities of companies engaged in energy-related
businesses as described in Rule 58, Canadian Energy Related Subsidiaries, or    
other businesses authorized by the Act, the rules thereunder or by Commission   
order. These acquisitions may involve the exchange of Emera stock for securities
of the company being acquired in order to provide the seller with certain tax   
advantages. These transactions would be individually negotiated. The Emera      
common stock to be exchanged may be purchased on the open market, or may be     
original issue. Original issue stock may be registered or qualified under       
applicable securities laws or unregistered and subject to resale restrictions.  
Emera does not intend to engage in any transaction where original issue stock is
not registered or qualified while a public offering is being made, other than a 
public offering pursuant to a compensation, dividend or stock purchase plan, or 
a public offering of debt. Subject to the foregoing, Emera accordingly seeks    
authorization to issue common stock or options, warrants or other stock purchase
rights exercisable for common stock in public or privately negotiated           
transactions as consideration for the equity securities or assets of other      
companies, provided that the acquisition of any equity securities or assets has 
been authorized by the Commission or is exempt under the Act or rules under the 
Act.                                                                            

 The ability to offer stock as consideration may make a transaction more
economical for Emera as well as for the seller of the business. For purposes of 
calculating compliance with the Emera External Limit, Emera's common stock would
be valued at market value based upon the negotiated agreement between the buyer 
and the seller.                                                                 

c.   Preferred Stock                              

    Emera may issue preferred stock from time to time during the Authorization
Period in accordance with the Financing Limitations and the Emera External      
Limit.                                                                          

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Preferred stock or other types of preferred or equity-linked securities may be  
issued in one or more series with such rights, preferences, and priorities as   
may be designated in the instrument creating each such series, as determined by 
Emera's board of directors./15 Dividends or distributions on preferred stock or 
other preferred securities will be made periodically and to the extent funds are
legally available for such purpose, but may be made subject to terms that allow 
the issuer to defer dividend payments for specified periods. Preferred stock or 
other preferred securities may be convertible or exchangeable into shares of    
Emera common stock or unsecured indebtedness.                                   

d.   Long-Term Debt                               

 Emera proposes to issue long-term debt in accordance with the Financing
Limitations and the Emera External Limit. Long-term debt would be unsecured and 
have the maturity, interest rate(s) or methods of determining the same, terms of
payment of interest, redemption provisions, sinking fund terms and other terms  
and conditions as Emera may determine at the time of issuance. Any long-term    
debt: (i) may be convertible into any other authorized securities of Emera;/16  
(ii) will have maturities ranging from one to 50 years; (iii) may be subject to 
optional and/or mandatory redemption, in whole or in part, at par or at various 
premiums above the principal amount; (iv) may be entitled to mandatory or       
optional sinking-fund provisions; (v) may provide for reset of the coupon       
pursuant to a remarketing arrangement; (vi) may be subject to tender or the     
obligation of the issuer to repurchase at the election of the holder or upon the
occurrence of a specified event; or (vii) may be called from existing investors 
by a third party. The request for authorization for Emera to issue long-term    
debt                                                                            

--------------------                                                            
15 Any convertible or equity-linked securities would be convertible into or     
linked to securities that Emera is otherwise authorized to issue directly or    
indirectly through a financing entity on behalf of Emera.                       

16 See note 15, above.                                                          

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securities is consistent with authorization that the Commission has granted to  
other registered holding companies and the Acquisition Order./17                

e.   Short-Term Debt                              

Emera requests authorization to issue directly, or indirectly through 
Financing Subsidiaries existing or to be formed under the authorization         
requested herein, short-term debt including, but not limited to, institutional  
borrowings, commercial paper and bid notes. The issuance of short-term debt will
be in accordance with the Financing Limitations and the Emera External Limit.   
Proceeds of any short-term debt issuance may be used to refund Emera's          
outstanding debt securities and to provide financing for general corporate      
purposes, working capital requirements and the capital expenditures of the Emera
Group until long-term financing can be obtained. Short-term debt issued by Emera
will be unsecured.                                                              

     Emera may sell commercial paper, from time to time, in established domestic
Canadian, U.S. or European commercial paper markets. Such commercial paper would
be sold to dealers at the discount rate or the coupon rate per annum prevailing 
at the date of issuance for commercial paper of comparable quality and          
maturities sold to commercial paper dealers generally. It is expected that the  
dealers acquiring commercial paper from Emera will reoffer such paper at a      
discount to corporate, institutional and, with respect to European commercial   
paper, individual investors. Institutional investors are expected to include    
commercial banks, insurance companies, pension funds, investment trusts,        
foundations, colleges and universities and finance companies.                   

--------------------                                                            
17 See Southern Co., Holding Co. Act Release No. 27134 (February 9, 2000);      
Columbia Energy Group, Holding Co. Act Release No. 27035 (June 8, 1999).  A     
restriction against parent-level debt would be a unreasonable financial         
burden that is not necessary or appropriate in the public interest or for the   
protection of investors or consumers because it may interfere with Emera's      
ability to implement an optimal capital structure for its business.  Prior to   
issuing debt, preferred securities or equity, Emera will evaluate the           
relevant financial implications of the issuance, including without limit, the   
cost of capital, and select the security that provides the most efficient       
capital structure consistent with sound financial practices and the capital     
markets.                                                                        

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Emera also proposes to establish bank lines of credit, directly or    
indirectly through one or more financing subsidiaries. Loans under these lines  
will have maturities of less than one year from the date of each borrowing.     
Alternatively, if the notional maturity of short-term debt is greater than 364  
days, the debt security will include put options at appropriate points in time  
to cause the security to be accounted for as a current liability under US       
generally accepted accounting principles./18 Emera may engage in other types of 
short-term financing generally available to borrowers with comparable credit    
ratings as it may deem appropriate in light of its needs and market conditions  
at the time of issuance. All short-term debt issued by Emera during the         
Authorization Period would be included within Emera's External Limit and would  
be subject to the Financing Limitations. Unused borrowing capacity under a      
credit facility would not count towards Emera's External Limit.                 

f.   Hedges and Interest Rate Risk Management     

Emera requests authorization to enter into, perform, purchase and sell
financial instruments intended to manage the volatility of interest rates,      
including but not limited to interest rate swaps, caps, floors, collars and     
forward agreements or any other similar agreements. Hedges may also include the 
issuance of structured notes (i.e., a debt instrument in which the principal    
and/or interest payments are indirectly linked to the value of an underlying    
asset or index), or transactions involving the purchase or sale, including short
sales, of U.S. Treasury or agency (e.g., Federal National Mortgage Association) 
obligations or LIBOR based swap instruments (collectively, "Hedge Instruments").
Emera would employ Hedge Instruments as a means of prudently managing the risk  
associated with any of its outstanding debt by, in effect, synthetically (i)    
converting variable rate debt to fixed rate debt, (ii) converting fixed rate    
debt to variable rate debt, (iii) limiting the impact of changes in interest    
rates resulting from variable rate debt and (iv) providing an option to enter   
into interest rate swap transactions                                            

--------------------                                                            
18  See Enron Corp., Holding Co. Act Release No. 27809 (March 9, 2004)          
(authorizing similar treatment for debt with a notional maturity greater than   
364 days for Portland General Electric Company).                                

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in future periods for planned issuances of debt securities. In no case will the 
notional principal amount of any Hedge Instrument exceed that of the underlying 
debt instrument and related interest rate exposure. Thus, Emera will not engage 
in "leveraged" or "speculative" transactions. The underlying interest rate      
indices of such Hedge Instrument will closely correspond to the underlying      
interest rate indices of Emera's debt to which such Hedge Instrument relates.   
Off-exchange Hedge Instruments would be entered into only with counterparties   
whose senior debt ratings are investment grade/19 ("Approved Counterparties").  

   In addition, Emera requests authorization to enter into Hedge Instruments
with respect to anticipated debt offerings ("Anticipatory Hedges"), subject to  
certain limitations and restrictions. Anticipatory Hedges would only be entered 
into with Approved Counterparties, and would be used to fix and/or limit the    
interest rate risk associated with any new issuance through (i) a forward sale  
of exchange-traded Hedge Instruments ("Forward Sale"), (ii) the purchase of put 
options on Hedge Instruments ("Put Options Purchase"), (iii) a Put Options      
Purchase in combination with the sale of call options on Hedge Instruments (    
"Zero Cost Collar"), (iv) transactions involving the purchase or sale, including
short sales, of Hedge Instruments, or (v) some combination of a Forward Sale,   
Put Options Purchase, Zero Cost Collar and/or other derivative or cash          
transactions, including, but not limited to structured notes, caps and collars, 
appropriate for the Anticipatory Hedges.                                        

     Hedging Instruments may be executed on-exchange ("On-Exchange Trades") with
brokers through the opening of futures and/or options positions traded on the   
Chicago Board of Trade, the opening of over-the-counter positions with one or   
more counterparties ("Off-Exchange Trades"), or a combination of On-Exchange    
Trades and Off-Exchange Trades. Emera will determine the optimal structure of   
each Hedging Instrument transaction at the time of execution.                   

--------------------                                                            
19 See note 11 supra.                                                           

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Emera will comply with applicable standards relating to accounting for
derivative transactions as are adopted and implemented by the Financial         
Accounting Standards Board ("FASB") or Canadian GAAP. In addition, Emera will   
endeavor to qualify these financial instruments for hedge accounting treatment  
under FASB rules. In the event transactions in financial instruments or products
are qualified for hedge accounting treatment under Canadian GAAP, but not under 
US GAAP, Emera's financial statements filed with the Commission will contain a  
reconciliation of the difference between the two methods of accounting          
treatment. No gain or loss on a hedging transaction entered into by Emera or its
subsidiaries (except BHE and its subsidiaries) will be allocated to BHE or its  
subsidiaries, regardless of the accounting treatment accorded to the            
transaction.                                                                    

   BHE requests authorization to enter into the transactions described above
on the same terms applicable to Emera, except that BHE would comply with        
applicable FASB standards and US GAAP.                                          

g.   Guarantees                                   

Emera and BHE request authorization to enter into guarantees, obtain  
letters of credit, enter into expense agreements or otherwise provide credit    
support ("Guarantees") with respect to the obligations of their respective      
subsidiaries as may be appropriate or necessary to enable such subsidiaries to  
carry on in the ordinary course of their respective businesses in an aggregate  
principal amount not to exceed the Emera Guarantee Limit outstanding at any one 
time (not taking into account obligations exempt under Rule 45) with respect to 
guarantees issued by Emera and $55 million with respect to guarantees issued by 
BHE. All debt guaranteed will comply with the Financing Limitations. Included in
this amount are Guarantees entered into by Emera that were previously issued in 
favor of its subsidiaries to the extent that they remain outstanding during the 

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Authorization Period./20 The limit on Guarantees is separate from the Emera     
External Limit. As of December 31, 2003, Emera had outstanding Guarantees on    
behalf of subsidiaries in an aggregate amount of approximately $242.0 million   
and BHE had outstanding Guarantees in the amount of $27.3 million.              

Guarantees may take the form of, among others, direct guarantees,     
reimbursement undertakings under letters of credit, "keep well" undertakings,   
agreements to indemnify, expense reimbursement agreements, and credit support   
with respect to the obligations of the subsidiary companies as may be           
appropriate to enable such system companies to carry on their respective        
authorized or permitted businesses. Emera may, for example, provide credit      
support to Emera Energy Inc. or Emera Energy Services Inc. in connection with   
energy trading, transportation and physical commodity contracts. BHE may need   
guarantee authorization to provide credit support for a subsidiary engaged in   
utility construction activity. Any guarantee that is outstanding at the end of  
the Authorization Period shall remain in force until it expires or terminates in
accordance with its terms.                                                      

     Certain Guarantees may be in support of obligations that are not capable of
exact quantification. In these cases, Emera and BHE will determine the exposure 
under a Guarantee for purposes of measuring compliance with their respective    
guarantee limit by appropriate means, including estimation of exposure based on 
loss experience or potential payment amounts. Each subsidiary may be charged a  
fee for any Guarantee provided on its behalf that is not greater than the cost, 
if any, of obtaining the liquidity necessary to perform the Guarantee for the   
period of time the Guarantee remains outstanding.                               

h.   Subsidiary Financing                         

Emera seeks authorization to finance the capital requirements of its  
subsidiaries and to fund their authorized or permitted businesses through the   
acquisition of the                                                              

--------------------                                                            
20 A guarantee of the securities issued by a financing subsidiary would not     
count against the issuer's guarantee limit but the amount of the guarantee would
count against the guarantor's external financing limit.                         

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securities of subsidiaries issued under the Act, the Commission's rules,        
regulations or orders, and within any limits applicable to investments in EWGs, 
FUCOs, Rule 58 subsidiaries and Canadian Energy Related Subsidiaries.           

Market Rate Subsidiaries                                                        

   Under the Acquisition Order Emera was granted authorization to lend funds
to certain of its nonutility subsidiaries at a mark up to Emera's cost of funds.
Emera requests that this authorization be continued for the Authorization       
Period. The authorization requested would apply to borrowings by all            
subsidiaries except (i) BHE, (ii) any of BHE's direct or indirect subsidiaries, 
(iii) Emera's U.S. nonutility subsidiaries, and (iv) NSPI, (the "Market Rate    
Subsidiaries"). The authorization requested would apply to loans from Emera or  
NSPI to Market Rate Subsidiaries and to loans between such companies. Emera     
requests such authority principally to allow it to operate its businesses       
efficiently under Canadian tax regulations.                                     

As explained in Emera's application in SEC File No. 70-9787, which was
granted by the Acquisition Order, the Income Tax Act (Canada) and the           
Regulations promulgated thereunder (collectively the "ITA") requires borrowed   
funds to be used for the purpose of earning income before it allows a taxpayer a
deduction in calculating taxable income, for the interest expense associated    
with a borrowing. This restriction flows from the fundamental principle in the  
ITA that each taxable company is a separate and distinct entity for tax         
purposes. Consequently, Emera must earn income from lending its external        
borrowings to its subsidiaries or Emera will not be permitted a deduction of the
related interest expense in calculating its taxable income under the ITA. Each  
company must independently demonstrate a business purpose for incurring debt. If
Emera would be required to lend funds to its Market Rate Subsidiaries at cost,  
Emera would not be eligible, under the rules for computation of taxable income  
in the ITA and the rules of administrative practice adopted by Canada's Customs 
and Revenue Agency                                                              

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("Revenue Canada"), (the administrative body responsible for the administration 
of the ITA) for an interest expense deduction on such borrowed funds.           

   Because the ITA treats each company as a separate and distinct entity for
Canadian income tax purposes, an associated group of Canadian companies also    
cannot file a consolidated tax return. Therefore, unlike U.S. corporate groups, 
Canadian groups cannot use losses from affiliated companies to offset income    
from other companies in the same corporate group. Intercompany loans at market  
rates may be used where appropriate to adjust taxable income among the group    
members. The proposed market rate loan authority, therefore, would allow Emera  
to implement the most economically efficient financial structure given its tax  
constraints.                                                                    

   Emera would determine the appropriate market rate for loans from Emera or
NSPI to each Market Rate Subsidiary, or between Market Rate Subsidiaries, in    
much the same manner practiced by an independent bank. Emera would review the   
nature of each subsidiary's business, evaluate its capital structure, the       
particular risks to which it is subject, and generally prevailing market        
conditions. Emera would also evaluate and take into account information from    
third parties such as banks that would indicate the prevailing market rates for 
similar businesses. In particular, Emera will obtain information on the range of
rates used by one or more banks for loans to similar businesses. Such           
independent third-party information would serve as an index against which an    
appropriate market rate could be determined. Emera would provide its analysis   
supporting its market-based rate determination to the Commission upon           
request./21                                                                     

Financing BHE                                                                   

    Emera intends to finance BHE's capital needs at the lowest practical cost.
BHE will either finance its capital needs through short, medium and long-term   
borrowings from nonassociated entities or through borrowings from Emera         
directly, or indirectly                                                         

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through Emera USH and BHEH./22 BHE also proposes to borrow funds from NSPI if   
NSPI has surplus funds and the interest rate on the loan would result in a lower
cost of borrowing for BHE. All borrowings by BHE from an associate company would
be at the lower of Emera's effective cost of capital, NSPI's effective cost of  
capital (if NSPI is the lender) or BHE's effective cost of capital incurred in a
direct borrowing at that time from nonassociates for a comparable term loan./23 
In addition, borrowings by BHE from an associate company would be unsecured,    
i.e., not backed by the pledge of specific BHE assets as collateral.            

      The MPUC exercises jurisdiction over the securities issued by BHE with
maturities of one year or longer. BHE requests Commission authorization to issue
and sell securities with maturities of less than one year. Such short-term debt 
issued and outstanding at any time during the Authorization Period will not     
exceed the BHE Limit.                                                           

Financing Emera USH and BHEH                                                    

    Emera USH requests authorization to issue and sell securities to Emera and
NSPI and to acquire securities from BHEH and BHE. BHEH requests authorization to
issue and sell securities to Emera, NSPI and Emera USH and to acquire securities
from BHE. Each of Emera USH and BHEH also seeks authority to issue guarantees   
and other forms of credit support for the benefit of their direct and indirect  
subsidiaries. Emera USH and BHEH would not borrow, or receive any extension of  
credit or indemnity from any of their respective direct or indirect subsidiary  
companies.                                                                      

   Each of Emera USH and BHEH is intended to function as a financial conduit
to facilitate Emera's U.S. investments. As authorized by the Acquisition Order, 
for reasons of economic efficiency, the terms and conditions of any securities  
issued by Emera USH                                                             

--------------------                                                            
21 Similar market rate financing authorization was granted in E.ON AG, Holding  
Co. Act Release No. 27539 (June 14, 2002).                                      

22 BHE's nonutility subsidiaries will                                           
finance their capital needs through the issuance of securities under Rule 52(b).

23 Emera will report to the Commission in its Rule 24 certificates filed        
hereunder the lender, principal amount, term and interest rate applicable to any
loans between an associate company and BHE. The report will also explain how the
interest rate was determined, including whether benchmarking or other methods   
were used to establish the interest rate charged to BHE in connection with the  
loan.                                                                           

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and BHEH to an associate company will be on an arm's length basis. The financing
proposed herein would be used to fund the capital requirements of BHE and its   
subsidiaries and any exempt or subsequently authorized activity that is         
hereafter acquired. Such financing would not be used by Emera USH or BHEH to    
carry on business or investment activities, other than as described herein.     

        i.   Changes in Capital Stock of Wholly-Owned Subsidiaries

Applicants request authority to change the terms of any wholly-owned  
subsidiary's authorized capital stock capitalization by an amount deemed        
appropriate by Emera or other intermediate parent company. The portion of an    
individual subsidiary's aggregate financing to be effected through the sale of  
stock to Emera or other immediate parent company during the Authorization Period
pursuant to Rule 52 and/or an order issued in this file is unknown at this time.
The proposed sale of capital securities (i.e., common stock or preferred stock) 
may in some cases exceed the then authorized capital stock of such subsidiary.  
In addition, the subsidiary may choose to use capital stock with no par value.  
The relief requested herein would provide necessary financing flexibility.      

     The requested authorization is limited to Emera's wholly-owned subsidiaries
and will not affect the aggregate limits or other conditions contained herein. A
subsidiary would be able to change the par value, or change between par value   
and no-par stock, without additional Commission approval. Any such action by BHE
or any other public utility company would be subject to and would only be taken 
upon the receipt of any necessary approvals by the MPUC or other public utility 
commission with jurisdiction over the transaction. As noted previously, BHE will
maintain, during the Authorization Period, a common equity capitalization of at 
least 30%./24                                                                   

--------------------                                                            
24 See New Century Energies, Inc., Holding Co. Act Release No. 26750 (Aug. 1,   
1997); Conectiv, Inc., Holding Co. Act Release No. 26833 (Feb. 26, 1998);       
Dominion Resources, Inc., Holding Co. Act Release No. 27112 (Dec. 15, 1999).    

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          j.   Payment of Dividends Out of Capital or Unearned Surplus

 Upon the acquisition of BHE by Emera, the retained earnings of BHE were
eliminated. The goodwill resulting from the transaction was pushed down to BHE  
and reflected as additional paid-in-capital in its financial statements. The    
effect of these accounting adjustments was to leave BHE without retained        
earnings, the traditional source of dividend payment, but, nevertheless, a      
strong balance sheet showing a significant equity level. Accordingly, the       
Acquisition Order permitted BHE to pay dividends and or to repurchase or redeem 
its common stock held by its associate company parent after the acquisition out 
of its additional paid-in-capital up to the amount of BHE's pre-acquisition     
retained earnings plus any amortization or write-down of goodwill charged       
against post-acquisition earnings. The Acquisition Order provided, however, that
in no event would dividends paid or share repurchases and redemptions cause     
BHE's common equity capitalization to fall below 30% of total capitalization.   
BHE will continue to rely on the Acquisition Order for the dividend             
authorization summarized above.                                                 

  Applicants now request authorization for the nonutility companies in the
Emera Group, excluding NSPI, to pay dividends with respect to the securities of 
such companies, from time to time through the Authorization Period, out of      
capital and unearned surplus to the extent permitted under applicable corporate 
law and state or national law applicable in the jurisdiction where each company 
is organized, and any applicable financing covenants./25 In addition, each of   
such nonutility companies will not declare or pay any dividend out of capital or
unearned surplus unless it: (i) has received excess cash as a result of the sale
of some or all of its assets; (ii) has engaged in a restructuring or            
reorganization; and/or (iii) is returning capital to an associate company.      

Emera anticipates that there will be situations in which a nonutility 
subsidiary will have unrestricted cash available for distribution in excess of  
such company's current                                                          

--------------------                                                            
25 See FirstEnergy Corp., Holding Co. Act Release No. 35-27459 (Oct. 29,        
2001).                                                                          

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and retained earnings. In such situations, the declaration and payment of a     
dividend would have to be charged, in whole or in part, to capital or unearned  
surplus. The sale of an asset, for example, may provide cash in excess of the   
selling company's retained earnings. In addition, distributions out of capital  
may be necessary in connection with winding down a subsidiary. Further, there   
may be periods during which unrestricted cash available for distribution by a   
nonutility subsidiary exceeds current and retained earnings due to the          
difference between accelerated depreciation allowed for tax purposes, which may 
generate significant amounts of distributable cash, and depreciation methods    
required to be used in determining book income. Finally, even under             
circumstances in which a nonutility subsidiary has sufficient earnings, and     
therefore may declare and pay a dividend to its immediate parent, such immediate
parent may have negative retained earnings, even after receipt of the dividend, 
due to losses from other operations. In this instance, cash would be trapped at 
a subsidiary level where there is no current need for it./26 In all these       
circumstances the payment of dividends out of capital or unearned surplus is    
appropriate.                                                                    

k.   Financing Subsidiaries                       

    The Emera Group companies (except NSPI) seek authorization to organize new
corporations, trusts, partnerships or other entities that will facilitate       
financings by issuing short-term debt, long-term debt, income preferred         
securities, equity securities or other securities to third parties and          
transferring the proceeds of these financings to Emera or                       

--------------------                                                            
26 The Commission has previously approved the payment of dividends out of       
capital or unearned surplus by registered holding companies when the payment    
would not impair the subsidiary's ability to meet its obligations and the       
subsidiary's assets would be sufficient to meet any anticipated expenses or     
liabilities.  See Entergy Corp., Holding Co. Act Release No. 26534 (June 18,    
1996); Northeast Utilities, Holding Co. Act Release No. 27529 (May 16, 2002);   
Excel Energy, Holding Co. Act Release No. 27597 (November 7, 2002).  Because    
the purpose of Rule 46 is to protect utility operating companies, and not       
diversified non-utility enterprises, the Commission has extended blanket        
authority for non-utility energy companies to pay dividends from unearned       
surplus.  Energy East Corp., Holding Co. Act Release No. 27228 (September 12,   
2001); Exelon Corp., Holding Co. Act Release No. 27266 (November 2, 2000);      
The Southern Co., Holding Co. Act Release No. 26543 (July 17, 1996).  See       
also Eastern Utilities Associates, Holding Co. Act Release No. 25330 (July      
13, 1991) (finding that the legislative history of Section 12 demonstrates      
that it was intended to protect utility operating companies); S. Rep. No.       
621, 74th Cong., 1st Sess. 3434 (1935) and Summary Report of the FTC to the     
U.S. Senate Pursuant to S.R. No. 83, 70th Cong., 1st Sess. Doc. 92, Vol.        
73-A, pp. 61-62.)                                                               

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such entity's respective parent company./27 To the extent not exempt under Rule 
52, the Financing Subsidiaries also request authorization to issue such         
securities to third parties. In connection with this method of financing, Emera 
and the subsidiaries may: (i) issue debentures or other evidences of unsecured  
indebtedness to a Financing Subsidiary in return for the proceeds of the        
financing; (ii) acquire voting interests or equity securities issued by the     
Financing Subsidiary to establish ownership of the Financing Subsidiary (the    
equity portion of the entity generally being created through a capital          
contribution or the purchase of equity securities, ranging from one to three    
percent of the capitalization of the Financing Subsidiary), and; (iii) guarantee
a Financing Subsidiary's obligations in connection with a financing transaction.
Any amounts issued by a Financing Subsidiary to a third party under this        
authorization will be included in the overall external financing limitation     
authorized herein for the immediate parent of such Financing Subsidiary.        
However, the underlying intra-system mirror debt and parent guarantee shall not 
be so included.                                                                 

Applicants also request authorization to enter into support or expense
agreements ("Expense Agreement") with Financing Subsidiaries to provide services
to and pay the expenses of any such entity. In cases where it is necessary or   
desirable to ensure legal separation for purposes of isolating a Financing      
Subsidiary from its parent or another subsidiary for bankruptcy purposes, the   
ratings agencies require that any Expense Agreement whereby the parent or       
subsidiary provides services related to the financing to the Financing          
Subsidiary be at a price, not to exceed a market price, consistent with similar 
services for parties with comparable credit quality and terms entered into by   
other companies so that a successor service provider could assume the duties of 
the parent or subsidiary in the event of the bankruptcy of the parent or        
subsidiary without interruption or an increase of fees. Therefore Applicants    
seek approval under Section 13(b) of the Act                                    

--------------------                                                            
27 Financing Entities would not issue securities that would be convertible into 
equity securities of a utility subsidiary.                                      

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and rules 87 and 90 to provide the services described in this paragraph at a    
charge not to exceed a market price but only for so long as such Expense        
Agreement established by the Financing Subsidiary is in place. The authorization
sought herein with respect to Financing Subsidiaries is substantially the same  
as that granted in New Century Energies, Inc., Holding Co. Act Release No. 26750
(Aug. 1, 1997); Conectiv, Holding Co. Act Release No. 26833 (Feb. 26, 1998) and 
Dominion Resources, Inc., Holding Co. Act Release No. 27112 (Dec. 15, 1999).    

D.   Intermediate Subsidiaries and Nonutility Reorganizations         

The Acquisition Order authorized the applicants to restructure Emera's
nonutility holdings from time to time as may be necessary or appropriate to     
further the Emera Group's authorized nonutility activities. Applicants request  
the continuation of such authorization. In particular, Emera requests           
authorization to acquire, directly or indirectly, the equity securities of one  
or more entities ("Intermediate Subsidiaries") which would be organized         
exclusively for the purpose of acquiring, holding and/or financing the          
securities of one or more existing or future EWGs, FUCOs, Rule 58 Subsidiaries, 
ETCs, Canadian Energy Related Subsidiaries or other non-exempt nonutility       
subsidiaries (as authorized in this proceeding or in a separate proceeding),    
provided that Intermediate Subsidiaries may also engage in administrative       
activities ("Administrative Activities") and development activities             
("Development Activities"), as such terms are defined below, relating to such   
subsidiaries.                                                                   

Administrative Activities include ongoing personnel, accounting,      
engineering, legal, financial, and other support activities necessary to manage 
Emera's investments in nonutility subsidiaries. Development Activities will be  
limited to due diligence and design review; market studies; preliminary         
engineering; site inspection; preparation of bid proposals, including, in       
connection therewith, posting of bid bonds; application for required permits    
and/or regulatory approvals; acquisition of site options and options on other   
necessary rights; negotiation and execution of contractual commitments with     
owners of existing facilities, equipment vendors, construction firms, power     
purchasers,                                                                     

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fuel suppliers and other project contractors; negotiation of financing          
commitments with lenders and other third-party investors; and such other        
preliminary activities as may be required in connection with the purchase,      
acquisition, financing or construction of facilities or the acquisition of      
securities of or interests in new businesses. Intermediate Subsidiaries also may
provide management, administrative, project development, and operating services 
to such entities.                                                               

 An Intermediate Subsidiary may be organized, among other things, (1) to
facilitate the making of bids or proposals to develop or acquire an interest in 
any EWG, FUCO, Rule 58 Subsidiary, ETC, Canadian Energy Related Subsidiary or   
other authorized nonutility business; (2) after the award of such a bid         
proposal, to facilitate closing on the purchase or financing of such acquired   
company; (3) at any time subsequent to the consummation of an acquisition of an 
interest in any such company to, among other things, effect an adjustment in the
respective ownership interests in such business held by Emera and non-affiliated
investors; (4) to facilitate the sale of ownership interests in one or more     
acquired nonutility companies; (5) to comply with applicable laws of foreign    
jurisdictions limiting or otherwise relating to the ownership of domestic       
companies by foreign nationals; (6) as a part of tax planning to limit Emera's  
exposure to Canadian, U.S. and foreign taxes; (7) to further insulate Emera and 
its utility subsidiaries from operational or other business risks that may be   
associated with investments in non-utility companies; or (8) for other lawful   
business purposes.                                                              

Investments in Intermediate Subsidiaries may take the form of any     
combination of the following: (1) purchases of capital shares, partnership      
interests, member interests in limited liability companies, trust certificates  
or other forms of equity interests; (2) capital contributions; (3) open account 
advances with or without interest; (4) loans; and (5) guarantees issued,        
provided or arranged in respect of the securities or other obligations of any   
Intermediate Subsidiaries. Funds for any direct or indirect investment in any   
Intermediate Subsidiary will be derived from: (1) financings authorized in this 
proceeding; (2) any appropriate future debt or equity securities issuance       
authorization                                                                   

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obtained by Emera from the Commission; and (3) other available cash resources,  
including proceeds of securities sales by nonutility subsidiaries pursuant to   
Rule 52.                                                                        

    Emera requests authorization to consolidate or otherwise reorganize all or
any part of its direct and indirect ownership interests in nonutility           
subsidiaries, and the activities and functions related to such investments. To  
effect any such consolidation or other reorganization, Emera may wish to merge  
or contribute the equity securities of one nonutility subsidiary to another     
nonutility subsidiary (including a newly formed Intermediate Subsidiary) or sell
(or cause a nonutility subsidiary to sell) the equity securities or all or part 
of the assets of one nonutility subsidiary to another one. To the extent that   
these transactions are not otherwise exempt under the Act or rules thereunder,  
Emera hereby requests authorization under the Act to consolidate or otherwise   
reorganize under one or more direct or indirect Intermediate Subsidiaries       
Emera's ownership interests in existing and future nonutility subsidiaries./28  
Such transactions may take the form of a nonutility subsidiary selling,         
contributing or transferring the equity securities of a subsidiary or all or    
part of such subsidiary's assets as a dividend to an Intermediate Subsidiary or 
to another nonutility subsidiary, and the acquisition, directly or indirectly,  
of the equity securities or assets of such subsidiary, either by purchase or by 
receipt of a dividend. The purchasing nonutility subsidiary in any transaction  
structured as an intrasystem sale of equity securities or assets may execute and
deliver its promissory note evidencing all or a portion of the consideration    
given. Each transaction would be carried out in compliance with all applicable  
laws and accounting requirements./29                                            

 The requested authorization would enable the Emera Group to consolidate
similar businesses and to participate effectively in authorized nonutility      
activities,                                                                     

--------------------                                                            
28 Applicants will seek such authorization under Section 12(e) of the Act and   
the rules thereunder as may be required in connection with the solicitation of  
any proxy, power of attorney, consent, or authorization regarding any security  
of a subsidiary which terms may be changed under the authorization granted      
according to this provision.                                                    

29 Applicants would seek authorization under the Act for the sale or transfer of
a nonutility subsidiary held by a FUCO to another company in the Emera Group,   
unless the associate company's acquisition of the nonutility subsidiary being   
sold or transferred by the FUCO would otherwise be exempt under the Act, under  
rule 58, or under an applicable prior Commission order.                         

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without the need to apply for or receive additional Commission approval. Such   
restructurings would be undertaken in order to eliminate corporate complexities,
to combine related business segments for staffing and management purposes, to   
eliminate administrative costs, to achieve tax savings, or for other ordinary   
and necessary business purposes. Any new entity formed under the authority      
requested herein may be a corporation, partnership, limited liability company or
other entity in which Emera, directly or indirectly, might have a 100% interest,
a majority equity or debt position, or a minority debt or equity position. These
entities would engage only in businesses to the extent the Emera Group is       
authorized, whether by statute, rule, regulation or order, to engage in those   
businesses. Emera does not seek authorization to acquire an interest in any     
nonassociate company as part of the authority requested in this application and 
states that the reorganization will not result in the entry by the Emera Group  
into a new, unauthorized line of business./30                                   

Emera requests authorization to make expenditures on Development and  
Administrative Activities, as defined above, in an aggregate amount of up to    
$150 million. Emera proposes a "revolving fund" concept for permitted           
expenditures on such activities. Thus, to the extent a nonutility subsidiary in 
respect of which expenditures for Development or Administrative Activities were 
made subsequently becomes an EWG, FUCO or qualifies as an "energy-related       
company" under Rule 58, the amount so expended will cease to be considered an   
expenditure for Development and                                                 

--------------------                                                            
30 The Commission has authorized other registered holding companies to carry    
out future reorganizations of their non-utility businesses without further      
approval.  See Columbia Energy Group, Inc., Holding Co. Act Release No. 27099   
(Nov. 5, 1999); Exelon Corporation, Holding Co. Act Release No. 27545 (June     
27, 2002); Energy East, Inc., Holding Co. Act Release No. 27228 (Dec. 12,       
2000); PowerGen, plc, Holding Co. Act Release No. 27291 (Dec. 6, 2000);         
NiSource, Inc., Holding Co. Act Release No. 27265 (Nov. 1, 2000); Entergy       
Corp., Holding Co. Act Release No. 27039 (June 22, 1999).                       

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Administrative Activities, but will instead be considered as part of the        
"aggregate investment" in such entity pursuant to Rule 53 or 58, as             
applicable./31                                                                  

E.   Canadian Energy Related Subsidiaries                             

The Acquisition Order authorized Emera to invest in various businesses
located in Canada that are energy related and retainable nonutility businesses  
under Section 11 of the Act. In particular, the Acquisition Order authorized    
Emera to invest up to $300 million to organize or acquire companies engaged in  
the nonutility businesses in which Emera was then engaged and in certain other  
nonutility energy related businesses specifically described below without       
obtaining additional Commission authorization under the Act for each individual 
acquisition. Such businesses would derive substantially all their revenues from 
Canada or the U.S., or derive revenues from both countries./32 Emera requests a 
continuation of this authorization.                                             

The specific nonutility businesses in which Emera proposes to invest  
include, in addition to its current nonutility businesses:                      

o    energy management services and other energy conservation related 
businesses,                                                 

o    the maintenance and monitoring of utility equipment,             

 o    the provision of utility related or derived software and services,

o    engineering, consulting and technical services, operations and   
maintenance services,                                       

   o    brokering and marketing electricity and other energy commodities and
        providing services such as fuel management, storage and procurement,

--------------------                                                            
31 A revolving fund of permitted expenditures on Development Activities has     
been authorized by the Commission in prior cases.  See e.g., Exelon Corp.,      
Holding Co. Act Release No. 27545 (June 27, 2002).                              

32 Emera's investments prior to its registration under the Act in such          
nonutility subsidiaries would be excluded from the investment limit.            

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o    oil and gas exploration, development, production, gathering,     
     transportation, storage, processing and marketing activities, and
related or incidental activities./33                        

F.   EWG and FUCO Investments                                         

   Emera seeks authorization to issue and sell securities for the purpose of
funding investments in EWGs and FUCOs in an aggregate amount not to exceed the  
EWG-FUCO Investment Limit. Under Rule 53, in determining whether to approve the 
issue or sale of a security by Emera to finance an EWG or FUCO investment, the  
Commission must consider the circumstances surrounding the proposed issuance. In
particular, in connection with the financing of the acquisition of an EWG, or   
the guarantee of a security of an EWG by Emera, the Commission may not find that
the securities issuance is not reasonably adapted to the earning power of Emera 
or to the security structure of Emera or companies in the Emera Group, or that  
the circumstances are such that a guarantee by Emera of the security of an EWG  
would create an improper risk for Emera, if the conditions of Rule 53(a) are met
and none of the provisions of Rule 53(b) are applicable.                        

Emera does not satisfy the conditions of Rule 53(a) because its FUCO  
investment exceeds 50% of its consolidated retained earnings. As of December 31,
2003, Emera had consolidated retained earnings of $235.5 million and an         
investment of $642.7 million in NSPI. Consequently, the additional authorization
requested and Emera's current investment in EWGs and FUCOs could result in an   
aggregate investment of approximately $2.64 billion. Because the conditions of  
Rule 53(a) are not satisfied,                                                   

--------------------                                                            
33 To keep the Commission informed about Emera's investments in such companies, 
the Acquisition Order required Emera to provide to the Commission quarterly, in 
a certificate under Rule 24, the information required by Form U-9C-3 with regard
to companies acquired under this authorization. Emera commits that it will not  
attempt to seek higher rates for customers of BHE or its utility subsidiaries to
compensate for any possible losses or inadequate returns from the activities of 
its Canadian nonutility subsidiaries.                                           

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Emera must demonstrate that the proposed issuance of securities is consistent   
with the standards of Rule 53(c)./34                                            

  The proposed issuance and sale of securities meets the standards of Rule
53(c) and should be authorized. The securities issuance will not have a         
substantial adverse impact upon the financial integrity of the registered       
holding company system and it will not have an adverse impact on any utility    
subsidiary of Emera or on the ability of the MPUC to protect the customers of   
such subsidiaries. The general financing commitments proposed in this           
Application assure that Emera will remain financially sound, in particular the  
30% minimum capitalization standard and the investment grade debt rating        
standard assure that any securities issued for purposes of financing an EWG or  
FUCO investment would be consistent with an appropriate capital structure. In   
addition, BHE has also committed to maintain a minimum 30% equity capitalization
ratio. Further, the MPUC has full authority to monitor BHE and its relationship 
with Emera and to take corrective action should it find that the affiliation has
an adverse impact on BHE or its customers.                                      

     To demonstrate that the proposed EWG-FUCO Investment Limit will not have an
adverse impact on the financial integrity of the Emera registered holding       
company system and its utility subsidiaries, Emera describes below its          
investment review process and discusses various financial indicators that       
demonstrate Emera's financial strength.                                         

The Investment Review Process                                                   

   Emera practices a disciplined investment review process to assure that it
identifies and minimizes or appropriately mitigates the risks associated with   
EWG and                                                                         

--------------------                                                            
34 Emera also does not meet the GAAP books and records requirement in Rule 53(a)
but, as discussed infra, it will comply with the other provisions of Rule 53(a),
in particular, the reporting requirements, and the limitation on the use of     
public utility subsidiary employees in the provision of services to EWGs and    
FUCOs. In accordance with Rule 53(a)(4), Emera will provide a copy of this      
Application to the MPUC.                                                        

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FUCO activities./35 Before any project investment would be made, the project    
would be analyzed in detail, including potential exposure to: (1) operational   
risks,/36 (2) construction risks,/37 (3) commercial risks,/38 (4) financial     
risks,/39 (5) foreign currency exchange risks,/40 (6) legal and regulatory      
risks/41 and (7) country and political risks./42 The review process would be    
conducted both at the subsidiary level where the project would be developed and 
at the Emera level. All projects must be consistent with Emera's broader        
strategic goals and consistent with Emera's skills and expertise. Individual    
project plans would be created to evaluate the project "fit" and the potential  
hurdles or obstacles to success as well as the opportunities presented. All     
projects must be justified on business, technical and economic grounds. In      
addition, projects under development are subject to budget review to monitor the
expenditure of development funds./43                                            

  Once past the initial review stages the project will be subject to
additional review by senior Emera management. If the project passes this review,
briefing materials                                                              

--------------------                                                            
35 Because many projects will also be debt financed, in some cases on a         
non-recourse basis, lenders that provide project finance also play a role in    
critically appraising the financial soundness of a project and its risk profile.

36 Emera focuses on projects where it is familiar with the technological and    
operational issues that may arise. Emera uses its engineers and outside         
technical consultants when necessary to evaluate the equipment and the          
performance thereof involved in a project.                                      

37 Contracts to build facilities may contain fixed-price terms, performance     
milestones, and guarantees backed by liquidated damages provisions to assure    
timely and proper construction.                                                 

38 The credit quality of partners, suppliers, purchasers and other parties may  
be evaluated to assure that they perform under project-related agreements. The  
markets in the relevant region are studied to confirm the ability of the project
to perform profitably in that market.                                           

39 Non-recourse financing and appropriate debt levels are selected to match the 
project capital structure to the project characteristics. For example, a        
merchant generating plant with a long-term off-take contract may have a debt    
capitalization in the 70-80% range while a regulated utility acquisition may    
have less debt as a proportion of total capitalization. Interest rate           
variability may be addressed through long-term borrowings or interest rate      
hedges.                                                                         

40 Borrowings may be made in the same currency as the project revenues to match 
the debt service obligation with the income stream. Revenues could also be      
indexed to a hard currency to minimize currency risks.                          

41 Regulatory, permitting, environmental, contracting and other risks are       
identified by counsel with appropriate expertise in the relevant project and    
jurisdiction.                                                                   

42 Political risks may be addressed through insurance obtained from the Overseas
Private Investment Corporation, the Multilateral Investment Guaranty Agency or  
in the commercial insurance market. The participation of local partners in a    
project can also help to mitigate political risks.                              

43 See e.g., American Electric Power Co., Holding Co. Act Release No. 26864     
(April 27, 1998) (discussing a similar project review procedure for EWG and     
FUCO investments).                                                              

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for the Emera board of directors will be prepared outlining the key risks and   
opportunities, as well as the strategic rationale for the proposed investment.  
The board's review serves as an additional check on the internal evaluation     
process.                                                                        

Once a project is selected for investment, management sets clear      
performance expectations to assure that expenditures for development produce    
acceptable results. Measures to mitigate risks to which the project may be      
subject are further evaluated and implemented. The risk mitigation exercise     
would also include structuring any project financing so that it does not        
adversely impact the customers of any public utility companies owned by Emera,  
including BHE.                                                                  

Indicators of Emera's Financial Strength                                        

In accordance with Rule 53(c) under the Act, to obtain Commission     
authorization for EWG and FUCO investments that exceed 50% of the registered    
holding company's consolidated retained earnings or otherwise fail to qualify   
for safe harbor treatment under Rule 53(a) the registered holding company must  
demonstrate that the proposed investments:                                      

(i) Will not have a substantial adverse impact upon the financial   
integrity of the registered holding company system; and             

 (ii) Will not have an adverse impact on any utility subsidiary of the
    registered holding company, or its customers, or on the ability of State
commissions to protect the subsidiary or its customers.             

     The Commission has found compliance with Rule 53(c) in several ways. In The
National Grid Group plc/44 the Commission focused on several indicators of the  
overall financial health of the National Grid system and a relied on a          
demonstration of the financial soundness of National Grid's principal FUCO      
asset. The Commission's analysis in National Grid focused on National Grid's    
credit rating, the contribution of the FUCO's operations to National Grid's     
overall earnings and the fact that none of the                                  

--------------------                                                            
44 The National Grid Group plc, Holding Co. Act Release No. 27154 (March 15,    
2000).                                                                          

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conditions in Rule 53(b) existed. In addition, the Commission noted the reduced 
risk of the foreign investment to U.S. ratepayers as demonstrated by commitments
by the registered holding company to satisfy the various conditions in its      
financing application./45 In particular, those conditions were:                 

       a.   That the U.S. utility subsidiaries would be insulated from the
            direct effects of EWG and FUCO investments because none of the
               utility subsidiaries would extend its credit or pledge its assets
            to any EWG or FUCO in which National Grid held an interest. In
              addition, National Grid committed not to seek recovery in retail
             rates for any failed investment in, or inadequate returns from,
an EWG or FUCO investment;                        

     b.   The credit ratings of National Grid's principal U.S. utility
subsidiaries were rated investment grade;         

        c.   The utility subsidiaries had in place financing facilities that
adequately supported their operations;            

         d.   That National Grid has complied with and will continue to comply
       with Rules 53(a)(3) (regarding the use of utility company
          employees to provide services to EWGs or FUCOs) and 53(a)(4)
             (regarding the submission of certain forms and reports to State
commissions); and                                 

          e.   That National Grid would provide the information required by Form
             20-F to permit the Commission to monitor the effect of National
             Grid's FUCO investments on National Grid's financial condition.

Emera's long-term debt is rated investment grade, BBB+, by Standard & 
Poor's. Emera's capital structure as of December 31, 2003 also included 39.0%   
equity, 7.4% non-controlling interest and 53.6% debt. NSPI has contributed      
significantly to Emera's overall earnings. The table below compares the net     
income of Emera and NSPI over the last 3 years.                                 

--------------------                                                            
45 Id. at 62-64.                                                                

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   Emera               NSPI         NSPI as % of Emera
($CDN mm)           ($CDN mm)                       

As of    2003   2002   2001   2003  2002   2001   2003    2002  2001            
Dec. 31                                                                         
Net      129.2  83.6  114.2  112.1  86.1   105.1  86.8%  103.0% 92.0%           
Income                                                                          

     The table illustrates NSPI's history of stable earnings and its substantial
role in the financial performance of the Emera Group. Further, none of the      
conditions in Rule 53(b) exist. Neither Emera nor any of its subsidiaries with  
assets having a book value exceeding an amount equal to 10% or more of Emera's  
consolidated retained earnings, has been the subject of a bankruptcy or similar 
proceeding. The average consolidated retained earnings for the four most recent 
quarterly periods has not decreased by 10% from the average for the previous    
four quarterly periods. And lastly, in the previous fiscal year, Emera has not  
reported operating losses, exceeding 5% of Emera's consolidated retained        
earnings, attributable to its direct or indirect investments in EWGs and FUCOs. 

Furthermore, Emera will abide by certain commitments regarding the    
maintenance of financial soundness that would restrict the issuance of          
securities for the purpose of financing EWG or FUCO investments in the event    
that Emera's financial condition begins to deteriorate. In particular, as       
discussed in Item 1.C.2.e above, Emera commits that all rated debt issued by    
Emera to unaffiliated parties under the authority requested in this Application 
will, when issued, be rated investment grade by at least one nationally         
recognized statistical rating organization. Emera also commits that it, on a    
consolidated basis, and BHE, individually, will maintain common stock equity as 
a percentage of total capitalization of at least 30%. Emera further commits not 
to seek recovery in retail rates for any failed investment in, or inadequate    
returns from, an EWG or FUCO investment. In addition, neither BHE nor its       
subsidiaries will extend their credit or pledge assets to any EWG or FUCO in    
which Emera owns an interest.                                                   

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    Notably, BHE has adequate financial facilities in place and cash resources
available to support its operations. BHE will accrue substantial amounts of cash
in excess of its financing needs for the next several years. MPUC has also      
certified that it has adequate authority to protect BHE's ratepayers from any   
adverse effects that may be associated with Emera's ownership of BHE.           

   With regard to compliance with Rules 53(a)(3) and 53(a)(4), Emera commits
to abide by those provisions. Emera will restrict the number of BHE employees   
that it uses in connection with its EWG and FUCO activities. Emera also will    
provide a copy of the Form U-1 Application in this matter to the MPUC.          

  Lastly, the Commission will be able to monitor the effect of Emera's EWG
and FUCO investments on its overall financial condition through the             
comprehensive financial reporting provided to the Commission. Emera will provide
NSPI's financial statements and those of any subsequently acquired EWG or FUCO  
to the Commission semiannually.                                                 

    The above facts demonstrate that NSPI is a source of financial strength to
the Emera Group and testify to the Emera management's capable guidance of NSPI  
over the years. Any future acquired EWG or FUCO would be operated with similar  
regard for prudent financial practices.                                         

 The market data provided below demonstrates that the securities markets
share the view that Emera is financially sound.                                 

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---------------------------------------------------------------------           
          Emera's Market to Book Value
---------------------------------------------------------------------           
At:                     December 31,   December 31,    December 31,             
           2003           2002            2001
---------------------------------------------------------------------           
           $CDN mm        $CDN mm        $CDN mm
---------------------------------------------------------------------           
Market value of equity        1,932.4         1,730.2        1,629.7            
---------------------------------------------------------------------           
Book value of equity          1,312.6         1,332.0        1,181.4            
---------------------------------------------------------------------           
Ratio of market to               1.47            1.30           1.38            
book value (times)                                                              
---------------------------------------------------------------------           

---------------------------------------------------------------------           
          Emera's Price/Earnings Ratio
---------------------------------------------------------------------           
At:                     December 31,   December 31,    December 31,             
           2003           2002            2001
---------------------------------------------------------------------           
           $CDN           $CDN            $CDN
---------------------------------------------------------------------           
Basic earnings per               1.20            0.85           1.20            
share                                                                           
---------------------------------------------------------------------           
Ratio of price to               14.88           18.88          13.86            
earnings                                                                        
---------------------------------------------------------------------           

Based on all these factors, the Commission should conclude that the   
standards of Rule 53(c) are satisfied and should, accordingly, grant the        
requested EWG/FUCO investment authorization.                                    

G.   Reporting                                                        

  The Acquisition Order granted applicants an exemption from Rule 26(a)(1)
under the Act, regarding the maintenance of financial statements in conformance 
with Regulation S-X. The exemption applied only to Emera and its subsidiaries   
that are organized outside the U.S. Any exempted company would maintain its     
financial statements in accordance with Canadian GAAP and reconcile such        
statements to U.S. GAAP in the same manner as required by Form 20-F when such   
statements are provided to the Commission in Emera's filings on Form U5S and in 
the Rule 24 certificates proposed below. Emera's Annual Report on Form U5S would
include consolidating financial statements as required by Item 10 of the form.  
Applicants request a continued exemption from Rule 26(a)(1).                    

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  Emera proposes to file certificates under Rule 24 on a semi-annual basis
within 60 days of the end of Emera's fiscal year and fiscal second quarter. In  
addition, annually upon issuance, Emera will provide the Commission staff with a
copy of its annual report to shareholders and the annual audited consolidated   
financial statements of BHE in U.S. GAAP with notes. The Rule 24 certificates   
will contain the following information:                                         

     a.   If sales of common stock by Emera are reported, the purchase price per
        share and the market price per share at the date of the agreement of
    sale, and the aggregate amount of common stock issued during the
Authorization Period;                                       

  b.   The total number of shares of Emera common stock issued or issuable
          pursuant to options granted during the reporting period under employee
        benefit plans and dividend reinvestment plans including any employee
       benefit plans or dividend reinvestment plans hereafter adopted, and
       the total number of shares of Emera common stock issued or issuable
    pursuant to options outstanding during the Authorization Period;

   c.   If Emera common stock has been transferred to a seller of securities
          of a company being acquired, the number of shares so issued, the value
       per share and whether the shares are restricted in the hands of the
acquirer;                                                   

    d.   If a guarantee is issued during the reporting period, the name of the
        guarantor, the name of the beneficiary of the guarantee, the amount,
          terms and purpose of the guarantee, and the total amount of guarantees
issued and outstanding during the Authorization Period;     

   e.   The amount and terms of any financings consummated by any subsidiary
    utility company that are not exempt under Rule 52, and the total
    amount of short-term financings issued and currently outstanding
          during the Authorization Period. In addition, Emera will report to the
   Commission the lender, principal amount, term and interest rate
     applicable to any loans between an associate company and BHE. The
  report will also explain how the interest rate was determined,
         including the benchmarking method used to establish the interest rate
charged to BHE in connection with the loan;                 

  f.   If any subsidiaries are Variable Interest Entities ("VIEs") as that
      term is used in FASB Interpretation 46R, Consolidation of Variable
   Interest Entities, Applicants will provide a description of any
          financing transactions conducted during the reporting period that were
used to fund such VIEs;                                     

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g.   If any financing proceeds are used for VIEs, a description of the
  accounting for such transaction under FASB Interpretation 46R;

     h.   A list of Form U-6B-2 filings with the Commission during the reporting
   period, including the name of the filing entity and the date of
filing;                                                     

     i.   A table showing, as of the end of the reporting period, the dollar and
percentage components of the capital structure of Emera on a
consolidated basis, and each public utility subsidiary;     

    j.   A retained earnings analysis of Emera on a consolidated basis and for
     each public utility subsidiary detailing gross earnings, goodwill
          amortization, dividends paid out of capital surplus, and the resulting
capital account balances at the end of the reporting period;

k.   A list of securities issued by the Intermediate Holding Companies
         during the reporting period, including the principal amount, interest
       rate, term, number of shares and aggregate proceeds, as applicable,
with the acquiring company identified;                      

  l.   Emera's aggregate investment, as defined under Rule 53, in EWGs and
   FUCOs as of the end of the reporting period in dollars and as a
percentage of Emera's consolidated retained earnings, and a 
     description of EWG and FUCO investments made during the reporting
period;                                                     

     m.   The information required by Form U-9C-3 with regard to Canadian Energy
   Related Subsidiaries acquired under the authorization requested
herein;                                                     

 n.   For any of BHE's borrowings from NSPI, a listing of at least three
         other sources of funds and their rates and terms; in addition, a cost
          benefit rationale as to why NSPI's funds were a better source of funds
than other sources.                                         

Emera will also provide the following supplemental information in its 
annual Form U5S filing:                                                         

a.   The amount of any income tax credit and/or income tax liability  
         incurred during the previous fiscal year by Emera USH (a) as a result
        of any debt incurred to finance the BHE acquisition ("Merger Debt");
and (b) as a result of any other income source or expense;  

     b.   A description of how the income tax credit and/or income tax liability
 was calculated and allocated to all companies included in the
consolidated tax                                            

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         return, showing all of Emera USH's interest costs and any assumptions
used in the calculations;                                   

  c.   A description of how any Merger Debt flows through all Intermediate
Holding Companies (i.e., Emera USH and BHEH);               

     d.   A description of the amount and character of any payments made by each
         Intermediate Holding Company to any other Emera system company during
the reporting period; and                                   

 e.   A statement that the allocation of tax credits and liabilities was
       conducted in accordance with the Tax Allocation Agreement in effect
and filed as an exhibit to the Form U5S.                    

Item 2.  Fees, Commissions And Expenses.                                        

     The fees, commissions and expenses to be paid or incurred by Emera directly
or indirectly in connection with the preparation of this application are        
estimated to be approximately $25,000. Fees, commissions and expenses paid in   
connection with the transactions for which authorization is requested herein    
will be consistent with the terms set forth in the Financing Limitations.       

Item 3.  Applicable Statutory Provisions.                                       

A.   Applicable Provisions                                            

  The proposed financing transactions are subject to Sections 6, 7, 9, 10,
12(b), 12(c), 13(b), 32 and 33 of the Act and Rules 43, 45, 46, 53, 54, 87 and  
90 thereunder are considered applicable to the proposed transactions.           

B.   Legal Analysis                                                   

     The financing authorizations requested in the Application are substantially
similar to financing authorizations granted to other registered holding company 
systems. See National Grid Group plc, Holding Co. Act Release No. 27154 (March  
15, 2000); NiSource, Inc., Holding Co. Act Release No. 27265 (November 1, 2000);
Exelon Corp., Holding Co. Act Release No. 27266 (November 2, 2000). Emera       
proposes to abide by the same basic parameters applied to the financing         
authorizations previously authorized                                            

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by the Commission, in particular, the minimum 30% common equity standard and the
investment grade credit standard. For these reasons, the Commission should find 
the proposed financing transactions to be in accordance with the Act and        
generally in the interest of investors, consumers and the public interest.      

Item 4.  Regulatory Approvals.                                                  

   No state commission and no federal commission, other than the Commission,
has jurisdiction over the proposed transactions.                                

Item 5.  Procedure.                                                             

 The Commission is respectfully requested to issue and publish not later
than May 21, 2004 the requisite notice under Rule 23 with respect to the filing 
of this Application, such notice to specify a date not later than June 14, 2004 
by which comments may be entered. The Commission is requested to issue its order
granting and permitting this Application to become effective not later than June
18, 2004.                                                                       

 A recommended decision by a hearing or other responsible officer of the
Commission is not needed for approval of the proposed financing transactions.   
The Division of Investment Management may assist in the preparation of the      
Commission's decision. There should be no waiting period between the issuance of
the Commission's order and the date on which it is to become effective.         

Item 6.  Exhibits And Financial Statements.                                     

Exhibits                                                                        

A    Applicant subsidiary companies of Emera and BHE (previously filed).        

F    Opinion of counsel of Emera (previously filed).                            

G    Past tense opinion of counsel (to be filed by amendment).                  

H    Proposed form of notice (previously filed).                                

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Financial Statements                                                            
--------------------                                                            

FS-1  Financial projections for Emera and BHE for the Authorization Period      
(confidential treatment requested).                                 

FS-2  Balance sheet and income statement of Emera consolidated for the year     
      ended December 31, 2003 (incorporated by reference to Exhibit A of Emera's
  certificate under Rule 24, filed on Form 35-Cert, SEC File No. 70-9787
(Feb. 27, 2004)).                                                   

FS-3  Balance sheet and income statement of BHE consolidated for the year ended 
December 31, 2003 (incorporated by reference to Exhibit B of Emera's
  certificate under Rule 24, filed on Form 35-Cert, SEC File No. 70-9787
(Feb. 27, 2004)).                                                   

Item 7.  Information As To Environmental Effects.                               

The proposed transactions neither involve a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are 
used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C.   
Sec. 4321 et seq. No federal agency is preparing an environmental impact        
statement with respect to this matter.                                          

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SIGNATURES

   Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Application to be signed on  
its behalf by the undersigned thereunto duly authorized. The signature of the   
applicants, through the undersigned, is restricted to the information contained 
in this Application which is pertinent to the instant Application.              

---------------------------------------------------------------------------     
Date:  June 29, 2004                  Emera Incorporated                        

                    By: /s/ Richard J. Smith
                        --------------------
                   Name:  Richard J. Smith
                           Title:  Corporate Secretary and
           General Counsel
---------------------------------------------------------------------------     
Date:  June 29, 2004                  Emera US Holdings Inc.                    
             BHE Holdings Inc.
                   By: /s/ Michael Burnell
                       -------------------
                     Name:  A. Michael Burnell
                            Title:   Director, President and
     Secretary
---------------------------------------------------------------------------     
Date:  June 29, 2004                  Bangor Hydro-Electric Company             
               Bangor Var Co. Inc.
                     Bangor Energy Resale Inc.
           CareTaker, Inc.
                 Bangor Fiber Co. Inc.
           Bangor Line Co.
                               The Pleasant River Gulf Improvement
Co. 
              The Sebois Dam Co.
                       East Branch Improvement Co.
                   Godfrey's Falls Dam Co.
                    The Sawtelle Brook & Dam
           Improvement Co.

                    By: /s/ Richard J. Smith
                        --------------------
                   Name:  Richard J. Smith
                       Title:  Corporate Secretary
---------------------------------------------------------------------------     

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---------------------------------------------------------------------------     
Date:  June 29, 2004                  NS Power Services Ltd.                    
           NSP Trigen Inc.
            Emera Fuels Inc.
              Strait Energy Inc.
                       Emera Utility Services Inc.
         Cablecom Ltd.
         Fibretek Inc.
            Utilismart Corp.
                        NSP Pipeline Management Ltd.
             NSP Pipeline Inc.
                NSP US Holdings Inc.
                NSP Investments Inc.
                Scotia Holdings Inc.
                    Nova Power Holdings Inc.
                  Scotia Power U.S. Ltd.
                1447585 Ontario Ltd.
                         Ontario 8 Group Financing LLC
             Emera Energy Inc.
                                    Emera Energy U.S. Subsidiary No. 1, Inc.
                                    Emera Energy U.S. Subsidiary No. 2, Inc.
                      Emera Energy Services Inc.
                       3065381 Nova Scotia Company
                       3065383 Nova Scotia Company
                       3065384 Nova Scotia Company
                       3065385 Nova Scotia Company
                 Emera Investments LLC

                    By: /s/ Richard J. Smith
                        --------------------
                   Name:  Richard J. Smith
                           Title:  Corporate Secretary and
           General Counsel
---------------------------------------------------------------------------     

45

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘U-1/A’ Filing		Date		First		Last			Other Filings
		6/30/07		4
		10/30/04		4
Filed on:		6/30/04		6
		6/29/04		47		48
		6/18/04		45
		6/14/04		45
		5/21/04		45
		3/9/04		18
		2/27/04		46					35-CERT
		12/31/03		5		46			U5S,  U5S/A
		12/30/03		10
		2/27/03		9
		2/12/03		8		10
		1/28/03		9		10
		11/7/02		27
		7/31/02		7
		6/27/02		32		33
		6/14/02		7		24
		5/16/02		27
		10/29/01		26
		10/11/01		4					U5A
		10/1/01		4
		9/12/01		27
		12/12/00		32
		12/6/00		32
		11/2/00		7		44
		11/1/00		32		44
		3/15/00		37		44
		2/9/00		17
		12/15/99		7		29
		11/5/99		32
		6/22/99		32
		6/8/99		17
		4/27/98		36
		2/26/98		7		29
		8/1/97		25		29
		7/17/96		27
		6/18/96		27
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