Emera Inc – ‘U-1/A’ on 5/25/01

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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       Form U-1/A Application/Declaration Amendment No. 2    94    296K 
 2: EX-99.1     Description of Intermediate Holding Companies          2±     6K 
 3: EX-99.2     Memorandum of Understanding                            7     20K 

U-1/A   —   Form U-1/A Application/Declaration Amendment No. 2
Document Table of Contents

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                                                                File No. 70-9787

 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                          

    Nova Scotia Power Inc.          Bangor Var Co., Inc.
      P.O. Box 910                 33 State Street
    Halifax, Nova Scotia           Bangor, Maine 04401
Canada                          
B3J2W5                          

------------------------------------------------
Not applicable

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

 Richard J. Smith                    Frederick S. Samp
Corporate Secretary and General Counsel     Vice President - Finance & Law    
         Emera Inc.                    Bangor Hydro-Electric Company
P.O. Box 910                            P.O. Box 932
Halifax, Nova Scotia                      33 State Street   
      Canada                           Bangor, Maine 04401
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                                       David P. Falck             
Lynn Robitaille                                      Pillsbury Winthrop LLP     
LeBoeuf, Lamb, Greene & MacRae, L.L.P.               One Battery Park Plaza     
1875 Connecticut Avenue, N.W.                        New York, N.Y. 10004-1490  
Washington, D.C.  20009                                                         

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 TABLE OF CONTENTS

ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.................................1  
 A.    Introduction........................................................1
 B.    Description of the Companies........................................1
        1.      Emera......................................................1
        2.      BHE........................................................7
 C.    The Proposed Transaction...........................................10
 D.    Utility Regulation.................................................11
        1.      Divestiture of Generation Assets..........................12
        2.      Divestiture of Rights to Capacity and Energy..............15
        3.      Standard Offer Service....................................16
        4.      BHE's Ongoing Electric Utility Function...................18
        5.      Intermediate Holding Companies............................19
        6.      Financing the Merger......................................20
        7.      Management and Operations of BHE Following the Merger.....21
 E.    Financing the Emera Registered Holding Company System..............21
        1.      Summary of Authorization Requested........................21
        2.      Parameters for Financing Authorization....................23
        3.      Use of Proceeds...........................................24
        4.      Description of Emera's Existing Capital Structure.........24
        5.      Description of Proposed Financing Program.................26
                a.       Emera's External Financing.......................26
                b.       Common Stock.....................................27
                c.       Preferred Stock..................................29
                d.       Long-Term Debt...................................30
                e.       Short-Term Debt..................................30
                f.       Hedges and Interest Rate Risk Management.........31
                g.       Guarantees.......................................33
                h.       Subsidiary Financing.............................33
     i.       Changes in Capital Stock of Wholly-Owned
                           Subsidiaries...................................36
   j.       Payment of Dividends Out of Capital or
                           Unearned Surplus...............................36
                k.       Financing Entities...............................39
                l.       Tax Allocation Agreement.........................40
m.       Direct Stock Purchase and Dividend 
                   Reinvestment Plan, Incentive Compensation
  Plans and other Employee
                           Benefit Plans..................................41
 F.    Intra-System Service Transactions..................................41
        1.      Emera Services............................................41
 G.    Nonutility Reorganizations.........................................48
 H.    Rule 58-type Subsidiaries..........................................50
 I.    EWG and FUCO Investments...........................................51
 J.    Reporting..........................................................54

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ITEM 2. FEES, COMMISSIONS AND EXPENSES......................................55  

ITEM 3. APPLICABLE STATUTORY PROVISIONS.....................................55  
 A.    Applicable Provisions..............................................55
 B.    Legal Analysis.....................................................56
        1.      Section 10(b)(1)..........................................61
                a.       Interlocking Relationships.......................61
                b.       Concentration of Control.........................62
        2.      Section 10(b)(2)..........................................63
        3.      Section 10(b)(3)..........................................64
        4.      Section 10(c)(1)..........................................65
        5.      Section 10(c)(2)..........................................73
        6.      Section 10(f).............................................75
        7.      Intermediate Holding Companies............................79
        8.      Financing the Emera System................................82

ITEM 4. REGULATORY APPROVALS................................................84  

ITEM 5. PROCEDURE...........................................................85  

ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS...................................85  

ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.............................89  

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This pre-effective Amendment No. 2 replaces and revises the Form U-1  
Application-Declaration in this proceeding, originally filed in File No. 70-9787
on November 6, 2000, in its entirety, except that it does not replace exhibits  
previously filed.                                                               

ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS                                    

A. Introduction.                                                      

   Emera Incorporated ("Emera") is seeking approval under the Public Utility
Holding Company Act of 1935 (the "1935 Act" or "Act") in connection with its    
acquisition of the outstanding common stock of Bangor Hydro-Electric Company    
("BHE") and its public-utility subsidiary companies (the "Merger"). Emera will  
register as a holding company under the Act after completion of the Merger./1   
Consequently, Emera also requests financing, affiliate transaction and other    
authorizations necessary to operate a registered holding company system in      
accordance with the Act.                                                        

B. Description of the Companies                                       

1. Emera                                                              

  Emera is a corporation that was formed under the laws of the Province of
Nova Scotia, Canada in 1998. 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 Emera is also    
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 EDGAR, that is administered by the   

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1/ In connection with the Merger, Emera intends to organize two companies,      
tentatively named US Holdco and Acquisition Co. No. 1 ("Acq. Co. 1") to hold    
Emera's interest in BHE. US Holdco would be a wholly-owned direct subsidiary of 
Emera and Acq. Co. 1 would be a wholly-owned direct subsidiary of US Holdco. US 
Holdco and Acq. Co. 1 will register under the Act upon consummation of the      
Merger and will join this Application as applicants when they are formed. A     
subsidiary of Acq. Co. 1, Acquisition Co. No. 2 ("Acq. Co. 2"), will be formed  
to merge with and into BHE. Acq. Co. 2 is not an applicant because it does not  
survive the Merger.                                                             

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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 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. NSPI has 
no retail gas distribution facilities.                                          

  NSPI's electric generation, transmission and distribution facilities are
located exclusively within Nova Scotia. The transmission assets are used        
primarily to transmit power within Nova Scotia and, on a limited basis, to      
transmit power for sale to customers in New Brunswick and beyond./2             

     In 2000, NSPI generated 11,432 GWh of electricity and sold 10,656 GWh./3 Of
the amount sold, 10,475 GWh was consumed in the province of Nova Scotia and 181 
GWh was exported using the international lines of New Brunswick Power           
Corporation ("NB Power")./4 NB Power's principal interconnection with the U.S.  
is with the transmission facilities of Maine Electric Power Company, Inc.       
("MEPCO"), in which BHE has a minority interest. At present, NSPI is not        
authorized to transmit power and energy within the U.S., and accordingly, all   
purchasers of energy from NSPI purchase the energy within Canada or for export  
by the purchaser across the international border for transmission via ISO-New   
England facilities. In connection with the proposed Merger, Emera has undertaken

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2/ Under permits issued by Canada's National Energy Board ("NEB"), NSPI may     
export energy over any international power line originating in New Brunswick or 
Quebec. NSPI's permits expire on July 9, 2008. The permits authorize a total of 
1200 GWh of energy export in any 12 month period.                               

3/ The difference between the amount generated and sold is accounted for        
principally by internal consumption and line losses.                            

4/ NB Power, a Crown Corporation of the Province of New Brunswick established in
1920 with a legislated mandate to serve the electricity needs of the Province of
New Brunswick, is Atlantic Canada's largest electric utility. NB Power is not   
affiliated with Emera.                                                          

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that NSPI will qualify for exemption as a foreign utility company or "FUCO"     
within the meaning of Section 33 of the Act./5 NSPI's compliance with the       
standards of Section 33 of the Act is discussed infra at Item 3.B.              

For the twelve months ending December 31, 2000, Emera had revenues of 
approximately $604.4 million and NSPI had operating revenues of approximately   
$548.2 million./6 As of December 31, 2000, Emera and NSPI had assets of         
approximately $1,989.0 million and $1,913.3 million, respectively.              

    Emera owns directly or indirectly a number of nonutility subsidiaries that
are described below. The Emera subsidiaries, including subsequently acquired    
subsidiaries, but excluding NSPI, are referred to as the "Subsidiaries" in this 
application. Emera, the Subsidiaries and NSPI are referred to as the "Emera     
System." Emera and the Subsidiaries, excluding BHE, MEPCO, Chester SVC          
Partnership and Bangor Var Co., Inc., are referred to as the "Nonutility        
Subsidiaries."                                                                  

   1. NS Power Services Ltd., a wholly owned subsidiary of Emera, was in the
business of providing energy services primarily in Atlantic Canada, including   
the design, development, installation and investment in cost-effective energy   
projects for industrial, commercial, and institutional customers to assist in   
reducing overall energy consumption. NS Power Services Ltd. is currently        
inactive.                                                                       

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5/ Under the Privatization Act 1992, the assets of Nova Scotia Power Corp., a   
Crown Corporation of the Province of Nova Scotia, were transferred to NSPI to   
facilitate the initial public offering of NSPI's common shares. In 1999, NSPI   
entered into an agreement with Emera, then named NS Power Holdings Inc., to     
implement an arrangement under the Companies Act (Nova Scotia) whereby Emera    
acquired all the issued and outstanding common shares of NSPI in exchange for an
equal number of Emera common shares (the "Arrangement"). The Reorganization Act 
provided statutory authority for the Arrangement and provided that no person    
other than Emera could hold 15% or more of the common stock of NSPI.            
Consequently, without further legislation, Emera cannot adopt a corporate       
structure that places an intermediate FUCO holding company over NSPI and Emera's
Canadian nonutility subsidiaries.                                               

6/ Unless otherwise noted, all amounts presented in the Application are stated  
in U.S. dollars. An exchange rate of $1 CDN to $0.674 USD is assumed.           

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1.1. NSP Trigen Inc., is 50% owned by NS Power Services Ltd., and the 
remainder is owned by a nonaffiliate. NSP Trigen Inc. was formed to develop     
district energy and cogeneration in Nova Scotia, New Brunswick, Prince Edward   
Island, and Newfoundland. NSP Trigen Inc. is currently inactive.                

   2. Enercom Inc., a wholly owned subsidiary of Emera, is a holding company
for Emera's diversified activities within the energy industry.                  

   2.1 Emera Fuels Inc. is a wholly owned subsidiary of Enercom Inc. that is
engaged in the supply of furnace and fuel oil, lubricants, diesel and gasoline  
products.                                                                       

 3. Stellarton Basin Coal Gas Inc. is a wholly owned subsidiary of Emera
that was formed to participate in a joint venture to explore and develop methane
gas reserves in Nova Scotia.                                                    

4. Strait Energy Inc. is a wholly owned subsidiary of Emera that sells
steam energy to one large industrial customer located in Nova Scotia.           

  5. 510845 N.B. Inc. is a wholly owned subsidiary of Emera engaged in the
provision of utility services, in particular, the supply and maintenance of     
electric transformers.                                                          

5.1 Cablecom Ltd., is a wholly owned subsidiary of 510845 N.B. Inc.   
Cablecom Ltd. is engaged in the design and engineering, project management,     
construction, structured cabling, maintenance and installation of fiber optic   
and wireless communications applications.                                       

5.1.1 Fibretek Inc., is a wholly owned subsidiary of Cablecom Ltd that
engages in the same activities as its parent.                                   

    6. NSP Pipeline Management Ltd. is a wholly owned subsidiary of Emera that
owns a 12.5% interest in Maritimes and Northeast Pipeline Management Ltd.       

    6.1 Maritimes and Northeast Pipeline Management Ltd. is 12.5% owned by NSP
Pipeline Management Ltd. and the remainder is owned by nonaffiliates. Maritimes 
and Northeast Pipeline Management Ltd. is the general partner of, and owns a    
0.125% interest in, Maritimes and Northeast Pipeline Limited Partnership.       
Maritimes and Northeast Pipeline Management Ltd. operates and manages the       

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Canadian portion of the Maritimes and Northeast Pipeline, a natural gas pipeline
with its origin in Nova Scotia and its terminus near Boston.                    

7. NSP Pipeline Inc. is a wholly owned subsidiary of Emera that owns a
12.375% interest in the Maritimes and Northeast Pipeline Limited Partnership.   

   7.1 Maritimes and Northeast Pipeline Limited Partnership is 12.375% owned
by NSP Pipeline Inc. and 0.125% owned by Maritimes and Northeast Pipeline       
Management Ltd. The remainder is owned by nonaffiliates. Maritimes and Northeast
Pipeline Limited Partnership owns the Canadian portion of the Maritimes and     
Northeast Pipeline.                                                             

8. NSP US Holdings Inc. is a wholly owned subsidiary of Emera that    
indirectly owns a 12.5% interest in Maritimes and Northeast Pipeline L.L.C.     
through the holding companies identified below.                                 

     8.1 NSP Investments Inc., a wholly owned subsidiary of NSP US Holdings Inc.
was established to facilitate the financing of the acquisition of Emera's       
interest in Maritimes and Northeast Pipeline, L.L.C.                            

  8.2 Scotia Holdings Inc. is a wholly owned holding company subsidiary of
NSP US Holdings Inc.                                                            

     8.2.1 Nova Power Holdings Inc. is a wholly owned holding company subsidiary
of Scotia Holdings Inc.                                                         

     8.2.1.1 Scotia Power U.S. Ltd. is a wholly owned holding company subsidiary
of Nova Power Holdings Inc.                                                     

     8.2.1.1.1 Maritimes and Northeast Pipeline, L.L.C. is 12.5% owned by Scotia
Power U.S. Ltd. and the remainder is owned by nonaffiliates. Maritimes and      
Northeast Pipeline L.L.C. owns the U.S. portion of the Maritimes and Northeast  
Pipeline.                                                                       

9. 1447585 Ontario Ltd. is a wholly owned subsidiary of Emera that was
incorporated in the event it was needed in connection with the acquisition of   
BHE. 1447585 Ontario Ltd. is inactive and will not be used to effect the Merger.

     10. 3054167 Nova Scotia Ltd. is a wholly owned subsidiary of Emera that was
incorporated to acquire an interest in the Sable Offshore Energy Project        
discussed below.                                                                

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     Applicants request that the Commission permit Emera to retain its direct or
indirect interests in the Subsidiaries under Sections 9(a)(1), 10 and 11 of the 
Act. Applicants note that under Rule 16: 1) Maritimes and Northeast Pipeline    
Management Ltd.; 2) Maritimes and Northeast Pipeline Limited Partnership, and;  
3) Maritimes and Northeast Pipeline, L.L.C. (collectively, the "Maritimes       
Entities") would be exempt from all obligations, duties or liabilities imposed  
upon them by the Act as a subsidiary or as an affiliate of a registered holding 
company thereof, as such terms are respectively defined in Sections 2(a)(8)(A)  
and 2(a)(11) of the Act.                                                        

As required by Rule 16: a) none of the Maritimes Entities is a public 
utility company as defined in Section 2(a)(5) of the Act; (b) each of the       
Maritimes Entities is or has been organized to engage primarily in the          
exploration, development, production, manufacture, storage, transportation or   
supply of natural or synthetic gas; (c) no more than 50% of the voting          
securities or other voting interests of each of the Maritimes Entities would be 
owned, directly or indirectly, by one or more registered holding companies;/7   
and (d) the acquisition by the registered holding company or subsidiary thereof 
of the interests in the Maritimes Entities "has been approved by the Commission 
pursuant to Sections 9(a)(1) and 10 of the Act and applicable rules thereunder  
upon a timely application to the Commission." The requirement in item (d) above 
would be satisfied by the Commission's determination in this Application to     
permit Emera to retain its interests in the Maritimes Entities under Section    
11(b)(1) of the Act. See AGL Resources, Inc., Holding Co. Act Release No. 27243 
(October 5, 2000) (finding the operations of a 25%-owned propane joint venture  
to be exempt under Rule 16).                                                    

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7/ In addition to Emera, the owners of the Maritimes Entities are M&N Management
Co., a wholly-owned subsidiary of Duke Energy Corp., Westcoast Energy (U.S.)    
Inc., a wholly owned subsidiary of Westcoast Energy, Inc. and Mobil Midstream   
Natural Gas Investments Inc., a wholly-owned subsidiary of Mobil Oil Canada     
Properties, none of which is associated with a registered holding company.      

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   On February 6, 2001, Emera offered to purchase 8.4% of the Sable Offshore
Energy Project ("SOEP") infrastructure assets for approximately $60.6 million.  
The offer is subject to certain rights of first refusal, and other approvals.   
The SOEP infrastructure assets comprise a gas processing plant at Goldboro, Nova
Scotia; a natural gas liquids fractionation plant at Point Tupper, Nova Scotia; 
a natural gas liquids line connecting the Goldboro and Point Tupper operations; 
and offshore production platforms and sub-sea gathering pipelines. Applicants   
request Commission authorization to acquire the SOEP assets, if they have not   
been acquired prior to Emera's registration under the Act, and to retain the    
SOEP assets if they have already been acquired when Emera registers. See        
American Electric Power Company, Inc., Holding Co. Act Release No. 26933        
(November 2, 1998) (authorizing AEP to acquire energy assets to include, without
limitation, natural gas production, gathering, processing, storage and          
transportation facilities and equipment, liquid oil reserves and storage        
facilities, and associated facilities).                                         

2. BHE                                                                

     BHE is a public utility and holding company currently exempt by order under
Section 3(a)(1) of the 1935 Act./8 BHE holds a 14.2% equity interest in MEPCO, a
Maine utility that owns and operates electric transmission facilities from      
Wiscasset, Maine to the Maine-New Brunswick border. MEPCO is owned jointly by   
Central Maine Power Company ("CMP") (78.3%), BHE (14.2%) 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 

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8/ Bangor Hydro-Electric Company, Holding Co. Act Release No. 27094 (Oct. 25,   
1999). BHE obtained that order in connection with its acquisition of a 50%      
interest in Bangor Gas Company LLC ("Bangor Gas"), a start up natural gas system
in the Bangor area that the company was developing with Sempra Energy           
("Sempra"). BHE has since sold its interest in Bangor Gas to Sempra. Prior to   
the issuance of the 1999 order, BHE was exempt under Rule 2.                    

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financing entity formed to own a static var compensator, which is electrical    
equipment that supports the New England Power Pool (NEPOOL)/Hydro Quebec Phase  
II transmission line.                                                           

By order dated July 12, 1990, the Maine Public Utilities Commission   
("MPUC") authorized the creation of Chester SVC and the formation of Bangor Var 
as a subsidiary of BHE for the single purpose of owning the Chester SVC         
partnership interest. Bangor Var has no assets other than its Chester SVC       
interest./9                                                                     

   BHE provides the transmission and distribution system for the delivery of
electricity to approximately 123,000 Maine customers. For the twelve months     
ending December 31, 2000, BHE had approximately $212 million of utility         
operating revenues.10 As of December 31, 2000 BHE had approximately $532 million
in utility assets.                                                              

  BHE owns directly or indirectly a number of Nonutility Subsidiaries that
are described below.                                                            

     1. Bangor Energy Resale, Inc., a wholly owned subsidiary of BHE permits BHE
to use a power sales agreement as collateral for a bank loan.                   

2. CareTaker, Inc., a wholly owned subsidiary of BHE provides security
alarm services.                                                                 

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9/ Application of Central Maine Power Co., et al, Maine Public Utilities        
Commission Docket No. 90-100, Stipulation (July 12, 1990).                      

10/ As explained infra, under Maine's electric restructuring law, BHE exited the
power supply aspect of its traditional utility function as of March 1, 2000.    
Nonetheless, BHE's revenues for the twelve months ending December 31, 2000      
continue to include revenue associated with power supply because (1) BHE had    
responsibility for power supply until March 1, 2000, so until then BHE's        
revenues were derived in part from regulated rates that included the costs      
associated with power supply, and (2) since March 1, 2000, under the direction  
of the Maine Public Utilities Commission, BHE has been acquiring the power      
supply to fulfill the MPUC's obligation to provide for "standard offer service",
for which the MPUC sets the rate charged to customers. Revenues in 2000         
associated with providing the power supply for the standard offer service were  
approximately $66 million.                                                      

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     3. East Branch Improvement Company ("EBIC") formerly provided water storage
services for hydroelectric facilities. Its dams have been sold and EBIC is now  
inactive. BHE owns 60% of the common stock of EBIC.                             

     3.1 Godfrey's Falls Dam Company ("Godfrey's Falls") holds rights that would
permit future water storage development in the basin of the East Branch of the  
Penobscot River. Godfrey's Falls is wholly owned by EBIC and is also inactive.  

3.2 The Sawtelle Brook Dam & Improvement Company ("Sawtelle") controls
certain water rights in the basin of the East Branch of the Penobscot River.    
Sawtelle is wholly owned by EBIC and is also inactive.                          

    4. The Sebois Dam Company improved the navigation of certain of the Sebois
waters entering the Piscataquis River. The Sebois Dam Company is wholly owned by
BHE and is also inactive.                                                       

5. The Pleasant River Gulf Improvement Company was engaged in water   
improvement. It is wholly owned by BHE and is inactive.                         

  6. Bangor Fiber Company, Inc. owns and leases fiber optic communications
cable. It is wholly owned by BHE.                                               

7. Bangor Line Company constructs and maintains transmission and      
distribution lines and provides engineering services. It is wholly owned by BHE.

  BHE also holds 7% of the outstanding common stock of Maine Yankee Atomic
Power Company ("Maine Yankee"), a company that owns and, prior to its permanent 
closure in 1997, operated an 880 MW nuclear generating plant in Wiscasset,      
Maine. Maine Yankee is being decommissioned. Applicants request authorization to
retain BHE's interests in the nonutility businesses described above             

    BHE is obligated to negotiate in good faith to acquire a 50% interest in a
joint venture to develop a second 345 kv transmission line to New Brunswick,    
Canada, pursuant to a Memorandum of Understanding with Penobscot Hydro, LLC,    
dated January 5, 1999. See, Exhibit O-1 hereto. The transmission line would     
connect with BHE's existing transmission facilities. BHE's investment in the    
joint venture has not been determined at this time but could be approximately   

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$25 million. Applicants request that the Commission reserve jurisdiction over   
the acquisition of an interest in the joint venture until the record is complete
with respect to this matter.                                                    

C. The Proposed Transaction                                           

    Pursuant to an Agreement and Plan of Merger entered into on June 29, 2000,
between Emera and BHE ("Merger Agreement"),/11 Emera will acquire all of BHE's  
common shares for $26.50 per share in cash. The total value of consideration    
that BHE shareholders will receive in the Merger, based on the number of shares 
of BHE common stock outstanding on September 15, 2000 (7,363,424), is           
approximately $195 million. BHE will retain its name and continue to serve its  
customers pursuant to the terms of its existing contracts and state and federal 
requirements. Neither BHE nor Emera will modify or terminate any existing       
customer contracts as a result of this transaction.                             

  The Merger offers substantial benefits to both parties' shareholders and
customers. The Merger will allow BHE to become part of a larger organization    
with greater resources, yet retain its name and identity, continue its historic 
record of community involvement and support, and continue to promote economic   
development in the regions it serves. The price to be paid by Emera for each    
share of BHE's common stock represents a substantial premium above the value of 
the stock at the time the Merger was announced./12 Thus, the proposed           
transaction will benefit BHE's shareholders, customers, and employees, as well  
as the communities in which they work and live.                                 

With respect to Emera, this transaction will allow it to continue its 
strategy of expanding its operations beyond its Nova Scotia base while          
capitalizing on its experience and expertise in operating electric utility      
companies.                                                                      

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11/ The Merger Agreement is incorporated by reference as Exhibit B-1 to this    
application. In this agreement, Emera is identified by its old name, NS Power   
Holdings Incorporated.                                                          

12/ The closing price of BHE's common stock on June 29, 2000, the day prior to  
the Merger announcement, was $15.13 per share.                                  

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Pursuant to the terms of the Merger Agreement, a to-be-formed Emera   
subsidiary incorporated in the U.S. ("Merger Sub"), will merge with and into    
BHE, with BHE surviving (the "Surviving Corporation"). The Merger has been      
approved by BHE's shareholders and Board of Directors, by the MPUC and by the   
Federal Energy Regulatory Commission ("FERC"). The Merger is expected to occur  
as soon as all of the remaining conditions to the consummation of the Merger    
(principally the authorization sought herein) are met or waived. The Merger     
Parties plan to consummate the Merger in the spring of 2001.                    

Under the terms of the Merger Agreement, (i) each outstanding share of
common stock of Merger Sub will be converted into one share of common stock of  
the Surviving Corporation, (ii) each outstanding share of preferred stock of BHE
(the "BHE Preferred Stock") will remain outstanding as one share of preferred   
stock of the Surviving Corporation, and (iii) each outstanding share of common  
stock of BHE (the "BHE Common Stock") other than Dissenting Shares (as defined  
in the Merger Agreement) or shares owned by BHE as treasury shares, or by Emera,
if any, will be converted into the right to receive $26.50 in cash (the "Per    
Share Amount"), as such amount may be adjusted in accordance with the Merger    
Agreement (the "Merger Consideration"). Holders of BHE's warrants outstanding at
the effective time of the Merger will thereafter be entitled to receive, upon   
exercise of each warrant, the Merger Consideration less the exercise price. If  
the closing of the Merger does not occur on or prior to June 29, 2001, and all  
conditions to closing have been satisfied or are capable of being satisfied     
except for the receipt by Emera of (A) the necessary authorizations from the    
Commission under the 1935 Act, or (B) any other necessary governmental approvals
to be obtained by Emera, then the Per Share Amount shall be increased by an     
amount equal to $0.003 for each day after such date up to and including the day 
which is one day prior to the closing of the Merger.                            

D. Utility Regulation                                                 

     The State of Maine has been a leader in electric industry restructuring. As
described below, restructuring has required BHE to exit the former utility      
function of the provision of power supply for retail consumption. The           
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generation and power supply assets. Thus, under retail choice, which was        
implemented on March 1, 2000, BHE has largely exited the power supply           
business./13                                                                    

1. Divestiture of Generation Assets                                   

In 1997, legislation was enacted to restructure Maine's electric      
industry./14 The Maine Restructuring Act states that "[b]eginning on March 1,   
2000, all consumers of electricity have the right to purchase generation        
services directly from competitive electric providers."/15 The Maine            
Restructuring Act required each investor-owned electric utility in Maine to     
divest all generation assets and generation-related businesses activities on or 
before March 1, 2000, other than any:                                           

    A.   Contract with a qualifying facility, contract with a party other than
        a qualifying facility or affiliated interest entered into solely for
         the purpose of restructuring a contract with a qualifying facility or
    contract with a demand-side management or conservation provider,
broker or host;/16                                          

B.   Ownership interest in a nuclear power plant;/17                  

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13/ As a transitional measure, however, pursuant to MPUC orders, BHE has        
provided standard offer supply service since March 1, 2000, and will continue to
do so at least until February 28, 2002.                                         

14/ "An Act to Restructure the State's Electric Industry," Pub. Law, ch. 316,   
35-A M.R.S.A.ss.ss. 3201, et seq. (May 29, 1997) ("Maine Restructuring Act").   

15/ 35-A M.R.S.A.ss. 3202(1).                                                   

16/ The "qualifying facility" exemption recognizes that Maine's utilities have  
ongoing contracts with nonutility generators entered into under the requirements
of the Public Utility Regulatory Policies Act of 1978 and Maine's Small Power   
Production Act, 35-A M.R.S.A. ss. 3301 et seq. (1999) (repealed effective March 
1, 2000), which are not intended to be affected by the Maine Restructuring Act. 
The utilities are instead required to periodically auction the power supply     
entitlement under the contracts.                                                

17/ This exemption recognizes the difficulties associated with divesting nuclear
power plant interests. BHE's only interest in a nuclear power plant is its 7%   
ownership interest in Maine Yankee Atomic Power Company's nuclear plant in      
Wiscasset, Maine, which has permanently ceased operations and is being          
decommissioned.                                                                 

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     C.   Ownership interest in a facility located outside the United States;/18
or                                                          

D.   Ownership interest in a generation asset that the commission     
         determines is necessary for the utility to perform its obligations as
      a transmission and distribution utility in an efficient manner./19

    The MPUC required each investor-owned electric utility to submit a plan to
accomplish the required divestiture, which the MPUC reviewed for consistency    
with the Maine Restructuring Act and issued an order approving or modifying the 
plan./20 Each investor-owned electric utility was then required to divest its   
generation assets in accordance with the MPUC's order and was prohibited from   
owning or having a financial interest in or otherwise controlling generation or 
generation-related assets, except as otherwise permitted by the Maine           
Restructuring Act, on or after March 1, 2000./21                                

  Consistent with this requirement, BHE submitted a plan for divesting its
generation assets to the MPUC on February 9, 1998. On June 17, 1998, the MPUC   
approved the plan./22 Following its approved divestiture plan, BHE engaged in an
open bidding process to select a purchaser of its generation assets. BHE        
selected PP&L Global, Inc. ("PP&L Global"), which purchased the majority of     
BHE's generating assets. Specifically, BHE sold to PP&L Global: (1) BHE's       
wholly-owned hydro units/23 and the expansion rights to those assets; (2) BHE's 

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18/ BHE has no facilities located outside the U.S.                              

19/ As discussed infra, BHE has retained ownership of certain diesel-fired      
generators under this exception. 35-A M.R.S.A ss. 3204(1).                      

20/ Id.                                                                         

21/ Id.; 35-A M.R.S.A.ss. 3204(5).                                              

22/ Re Bangor Hydro-Elec. Co., No. 98-114 (Me. P.U.C. June 17, 1998).           

23/ Ellsworth Hydro Project, Howland Hydro Project, Medway Hydro Project.,      
Milford Hydro Project, Orono Hydro Project, Stillwater Hydro Project, and Veazie
Hydro Project.                                                                  

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subsidiary's (Penobscot Hydro Company, Inc.'s ("PHC")) ownership interest in the
partnership known as Bangor-Pacific Hydro Associates, which owns the West       
Enfield Project; (3) BHE's ownership interest in Wyman Unit No. 4 (8.33% or 51.7
MW); (4) BHE's right, title and interest, subject to a memorandum of            
understanding, in the work in progress relating to the potential development of 
a new 345-kV tie-line to New Brunswick; (5) BHE's rights in the Hydro-Quebec    
Agreements and Transmission Support Agreements; and (6) BHE's Basin Mills       
development rights. As part of the sale, BHE also reassigned its 100 MW firm    
transmission reservation over MEPCO to PP&L Global./24 By August 27, 1999, the  
various asset sales to PP&L Global were complete.                               

After the asset sale, BHE retained 21 MW of diesel-fired internal     
combustion units. These facilities consist of 11 units located at BHE's Bar     
Harbor, Eastport, and Medway plants. BHE was not required to divest its         
ownership in its units at Bar Harbor and Eastport pursuant to 35-A M.R.S.A. ss. 
3204(1) of the Maine Restructuring Act. The MPUC found that "BHE's ownership of 
its diesel-fired generating units in Bar Harbor and Eastport are necessary for  
BHE to perform its obligations as a transmission and distribution utility in an 
efficient manner." The Bar Harbor and Eastport units involve 12 MW in total./25 
The MPUC extended the deadline for divestiture of BHE's diesel-fired generating 
units in Medway until March 1, 2003. The MPUC found that "extending the         
divestiture deadline for those units for three years is likely to improve their 
sale value."/26                                                                 

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24/ On March 15, 1999, the Federal Energy Regulatory Commission ("FERC")        
approved the transfer to PP&L Global of FERC jurisdictional facilities. Bangor  
Hydro Elec. Co., 86 FERCP. 61,281, clarified, 87 FERCP. 61,057 (1999).          

25/ Re Bangor Hydro-Elec. Co., No. 98-820 (Me. P.U.C. Feb. 3, 1999).            

26/ Id.                                                                         

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2. Divestiture of Rights to Capacity and Energy                       

  The Maine Restructuring Act directed the MPUC to develop rules requiring
each investor-owned electric utility after February 28, 2000 to sell rights to  
capacity and energy from all generation assets and generation-related           
businesses, including purchased power contracts that are not divested pursuant  
to the general divestiture requirement./27 An investor-owned electric utility   
may keep those rights to capacity and energy that the MPUC determines are       
necessary for the efficient performance of utility transmission and distribution
obligations./28 The MPUC established rules requiring the sale of remaining      
capacity and energy from generation assets and generation-related business./29  

 On July 16, 1999, the MPUC approved BHE's proposal to sell 38 MW of its
entitlements to generating capacity and associated energy, under existing power 
purchase contracts between BHE and six individual qualifying facilities./30 The 
six contracts reflect all of BHE's rights to capacity and energy remaining at   
the commencement of retail choice, except for: (1) the output of BHE's 12 MW of 
diesel-fired units./31 and (2) 6 MW of capacity and associated energy from PERC 

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27/ 35-A M.R.S.A.ss. 3204(4).                                                   

28/ Id.                                                                         

29/ Code Me. R. 65-407, Chapter 307.                                            

30/ Re Bangor Hydro-Elec. Co., No. 99-284 (Me. P.U.C. July 16, 1999). The       
entitlements sold include 16 MW from BHE's contract with Penobscot Energy       
Recovery Company ("PERC"), the entire output of the 19.1 MW entitlement in the  
West Enfield hydro-electric facility, and BHE's entitlement to the output of    
four small, less than 1 MW hydro-electric projects (Green Lake Hydro, Sebec     
Hydro, Milo Hydro, and Pumpkin Hill Hydro).                                     

31/ The MPUC's finding that the Bar Harbor and Eastport diesels were necessary  
for transmission and distribution efficiency exempts the output from these units
from the Chapter 307 bid process. Re Bangor Hydro-Elec. Co., No. 99-602 (Me.    
P.U.C. Dec. 1, 1999). The MPUC authorized BHE to exclude the output of the      
Medway diesels from the Chapter 307 bid process. Id.                            

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that is committed to be sold under a pre-existing agreement to UNITIL Power     
Corporation ("UNITIL")./32                                                      

  After evaluating the bids received, BHE selected, and the MPUC approved,
Morgan Stanley Capital Group, Inc. ("Morgan Stanley") as the winning bidder. On 
December 3, 1999, the MPUC approved BHE's selection of Morgan Stanley./33       
Pursuant to the contract approved by the MPUC, Morgan Stanley has purchased the 
38 MW of entitlements from BHE for a two-year period starting March 1, 2000.    
Subsequent auctions will take place to establish purchasers after this initial  
period.                                                                         

3. Standard Offer Service                                             

  Under the Maine Restructuring Act, all consumers of electricity acquired
the ability to purchase generation services directly from competitive           
electricity providers beginning March 1, 2000./34 Because not all consumers     
would want or be able to obtain generation services from the competitive market,
the Maine Restructuring Act required that "when retail access begins, the       
Commission shall ensure that standard-offer service is available to all         
consumers of electricity."/35 Accordingly, the MPUC has established the terms   
and conditions for standard offer service as well as the bid process used by the
MPUC to select standard offer service providers./36                             

In the event that the MPUC determines that the bids it receives for   
standard offer service are inadequate or unacceptable, it may require a         
transmission and distribution utility to provide standard offer service. In     
doing so, the MPUC must, with full reconciliation, ensure recovery by the       
utility of all costs of providing standard offer service, including the costs of

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32/ The MPUC authorized BHE to retain the UNITIL contract concluding that       
allowing BHE to retain the contract to continue to meet its contractual         
obligation and to receive the associated revenues will likely provide a greater 
stranded cost reduction than if BHE divested the contract.                      

33/ Re Bangor Hydro-Elec. Co., No. 99-284 (Me. P.U.C. Dec. 3, 1999).            

34/ 35-A.M.R.S.A.ss.3202(1).                                                    

35/ 35-A.M.R.S.A.ss.3212.                                                       

36/ 35-A.M.R.S.A.ss.3212(2). Code Me. R. 65-407, Chapter 301.                   

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the supply arrangements, any incremental administrative costs of procuring and  
managing the purchases and all applicable carrying costs./37                    

On August 2, 1999, the MPUC commenced the bidding for the provision of
standard offer service and received proposals in response to its Request for    
Bids ("RFB"). However, the MPUC rejected the bids received for BHE's service    
territory because they were not in conformance with the MPUC's rules for        
standard offer service and the RFB or they were unreasonably high./38           

  The MPUC initiated a second round of bids for standard offer service for
BHE's service territory and again rejected all bids submitted in response to the
solicitation./39 The MPUC then directed BHE to provide standard offer service   
"through wholesale arrangements with suppliers or from the spot market until the
Commission acts in the future to designate standard offer providers./40         

   The MPUC set the standard offer service price and required BHE to procure
wholesale power to provide standard offer service until March 1, 2001./41 On    
February 29, 2000, the MPUC authorized BHE to enter into a one-year wholesale   
power supply contract with a supplier BHE chose through an offer of             
solicitation./42 This contract with NB Power provided approximately 60 percent  
of BHE's standard offer load requirements. The remainder was obtained through   
short-term purchases from the NEPOOL market.                                    

    On October 2, 2000, the MPUC issued a Request for Bids to provide standard
offer service in BHE's service territory commencing March 1, 2001. Once again,  
the MPUC rejected all the bids received and terminated the bid process./43 While

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37/ 35-A.M.R.S.A.ss.3212(2). Code Me. R. 65-407, Chapter 301,ss.8(D)(3).        

38/ Re Bangor Hydro-Elec. Co., NO. 99-111 (Me. P.U.C. Oct. 25, 1999).           

39/ Re Bangor Hydro-Elec. Co., No. 99-111 (Me. P.U.C. Dec. 3, 1999).            

40/ Id.                                                                         

41/ Id.                                                                         

42/ Re Bangor Hydro-Elec. Co., No. 99-111 (Me. P.U.C. Feb. 29, 2000).           

43/ Re Public Utils. Comm., No. 2000-808 (Me. P.U.C. Oct. 2, 2000).             

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continuing to entertain price proposals from qualified bidders, the MPUC        
directed BHE to explore wholesale power supply arrangements as sources for      
providing standard offer service beginning March 1, 2001.                       

   By Orders of February 2/44, 15/45, 20/46, 27/47 and March 1, 2001,/48 the
MPUC designated BHE as the standard offer service provider in its service       
territory beginning March 1, 2001 and directed BHE to enter into three wholesale
power supply contracts in order to serve a portion of that load. To the extent  
that wholesale contract amounts vary from the amount needed to serve the actual 
standard offer load, differences are expected to be traded in the NEPOOL spot   
market. The MPUC also established standard offer prices for the year beginning  
March 1, 2001.                                                                  

    The MPUC requires BHE, as the standard service provider, to submit monthly
reports of its standard offer costs and collections. Throughout the year, the   
MPUC reviews BHE's purchases for standard offer service and, where appropriate, 
it increases or decreases the standard offer service prices for customers in    
BHE's service territory to cover projected shortfalls or eliminate surpluses./49

4. BHE's Ongoing Electric Utility Function                            

    Following the divestiture activities described above, BHE now continues in
its historic function of the provision of all of the attributes of electric     
utility service other than power supply as a regulated monopoly in the area it  
serves. Its rates are regulated by the FERC and the MPUC. BHE may be required by

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44/ Id. (Me. P.U.C. Feb. 2, 2001).                                              

45/ Id. (Me. P.U.C. Feb. 15, 2001).                                             

46/ Id. (Me. P.U.C. Feb. 20, 2001).                                             

47/ Id. (Me. P.U.C. Feb. 27, 2001).                                             

48/ Id. (Me. P.U.C. Mar. 1, 2001).                                              

49/ Re Bangor Hydro-Elec. Co., No. 99-111 (Me. P.U.C. Feb 29, 2000); Re Bangor  
Hydro-Elec. Co., No. 99-111 (Me. P.U.C. June 15, 2000); Re Bangor Hydro-Elec.   
Co., No. 99-111 (Me. P.U.C. June 23, 2000); Re Bangor Hydro-Elec. Co., No.      
99-111 (Me P.U.C. July 20, 2000); Re Bangor Hydro-Elec. Co., No. 99-111 (Me.    
P.U.C. Aug. 17, 2000); Re Bangor Hydro-Elec. Co., No. 99-111 (Me. P.U.C. Sept.  
21, 2000).                                                                      

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the MPUC from time to time to acquire power to fulfill the MPUC's obligation to 
provide standard offer power supply service. When it does so, the MPUC sets the 
price for standard offer service at a level sufficient to cover the cost of such
power supply, and provides for a reconciliation after the fact for under or over
recoveries.                                                                     

5. Intermediate Holding Companies                                     

     To effect the Merger, Emera will hold its ownership interest in BHE through
one or more intermediate holding companies ("Intermediate Holding Companies").  
The Intermediate Holding Companies allow Emera to structure its BHE ownership   
interest efficiently from a tax perspective and will not be used to make Emera's
capital structure more complex. The Intermediate Holding Companies will be      
wholly-owned, directly, or indirectly, by Emera and will have no public or      
private institutional equity or debt holders. The Intermediate Holding Companies
will be capitalized with equity and/or debt, all of which will be held directly 
or indirectly either by Emera or an Intermediate Holding Company. The only      
utility holdings of the Intermediate Holding Companies will be direct or        
indirect interests in BHE and its utility subsidiaries.                         

In particular, at the time of the Merger, Emera intends to hold its   
interest in BHE through two to-be-formed Intermediate Holding Companies. US     
Holdco would be a wholly-owned direct subsidiary of Emera and Acquisition Co.   
No. 1 ("Acq. Co. 1"), would be a wholly-owned direct subsidiary of US Holdco./50
Acq. Co. 1 would own all the issued and outstanding common stock of BHE. BHE    
will continue to have preferred stock and debt outstanding after the Merger that
is held by third parties. All the issued and outstanding common stock of Acq.   
Co. 1 will be owned by US Holdco.                                               

   Emera also intends to use a wholly-owned special purpose financing entity
("ULC") to provide debt and non-voting preferred stock financing to Acq. Co. 1  
for the purpose of partially funding the Merger consideration. Because ULC would

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50/ Before the Merger, Acq. Co. 1 will form a wholly-owned subsidiary,          
Acquisition Co. No. 2 that will merge with and into BHE with BHE surviving.     
Thus, Acquisition Co. No. 2 is not part of the post-Merger corporate structure. 

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not own voting securities of or control the management of Acq. Co. 1 or BHE it  
would not be a holding company under the Act. The function of each Intermediate 
Holding Company is further discussed in Exhibit N-1 to the Application.         

 Because tax laws and regulations and accounting rules could change in a
manner that would require Emera to act quickly to change the Intermediate       
Holding Company structure to maintain its efficiency, Applicants request that   
the Commission authorize Emera to reorganize the Intermediate Holding Company   
structure without seeking prior Commission approval subject to the following    
conditions: (a) the companies in the Intermediate Holding Company structure     
would be wholly owned directly or indirectly by Emera; (b) the companies in the 
Intermediate Holding Company structure would not issue debt or equity to any    
company outside the Emera group and would not borrow from BHE or its            
subsidiaries; (c) the changes will not have a material impact on the financial  
condition or operations of BHE or its subsidiaries or a material adverse effect 
on Emera, and; (d) the companies in the Intermediate Holding Company structure  
would be organized in the U.S., Canada, or a country in Europe./51              

6. Financing the Merger                                               

 Emera expects to use a combination of its available cash deposits and a
credit facility entered into with one or more banks in the amount of up to $225 
million to fund the Merger consideration. The credit facility would have a      
non-revolving term of 364 days and an interest rate of, at the borrower's       
option, (1) the greater of (i) the Agent's Base Rate Canada, and (ii) the       
Federal Funds Effective Rate for overnight funds (as published by the Federal   
Reserve in the U.S.) plus 50 basis points per annum, or (2) the London Interbank
Offered Rate ("LIBOR") plus 75 to 90 basis points. Emera expects that this      
credit facility will be replaced or refinanced with longer-term debt, equity or 
preferred securities in the future. Applicants' request for financing           

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51/ See National Grid Group plc, Holding Co. Act Release No. 27154 (March 15,   
2000) (authorizing National Grid to reorganize intermediate holding company     
structure to respond to tax law and accounting changes as necessary to maintain 
an efficient structure).                                                        

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authorization included infra at Item 1.E., incorporates the debt that will be   
issued to fund and refinance the Merger.                                        

   The Merger will be accounted for under the purchase method. The excess of
the purchase price and assumed liabilities over the value of BHE's assets will  
be recorded on the books of BHE as goodwill. In accordance with new FASB        
pronouncements on goodwill, the amortization of goodwill would cease in 2002 and
thereafter the goodwill would be subject to an annual impairment test./52       

7. Management and Operations of BHE Following the Merger              

Following the Merger, BHE will be operated as a subsidiary of Emera.  
Although Emera has not yet determined the leadership of BHE and the exact       
composition of BHE's board of directors, it is expected that the President and  
CEO of BHE will be a resident of Maine and a member of BHE's board. Moreover,   
the Merger Agreement requires that when the Merger is consummated the Board of  
BHE post-merger have at least nine members, with at least four of those being   
carry-overs from the prior BHE Board of Directors. The Merger Agreement provides
that BHE's corporate headquarters will be located in Maine for not less than 10 
years following the Merger. BHE will also retain local facilities for customer  
service, maintenance and field work operations.                                 

E. Financing the Emera Registered Holding Company System              

     Applicants seek Commission authorization of the financing activities of the
Emera System for the period beginning with the effective date of an order issued
pursuant to this filing and continuing through June 31, 2004 ("Authorization    
Period").                                                                       

1. Summary of Authorization Requested                                 

Applicants seek the following Commission authorizations:              

a)   Emera requests authorization to issue and sell through the       
   Authorization Period up to $3 billion of securities at any time
         outstanding and to issue guarantees and other forms of credit support
   in an aggregate amount of $500 million at any time outstanding;

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52/ See, FASB Exposure Draft on Goodwill and Intangibles (expected to be        
finalized by June 30, 2001).                                                    

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     b)   Emera requests authority to enter into hedging transactions, including
     anticipatory hedges, with respect to its indebtedness in order 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)   The Intermediate Holding Companies request authorization to issue and
sell securities to Emera and one another, and to acquire the
securities of BHE and other Intermediate Holding Companies. 

     e)   Emera, on behalf of the Subsidiaries, requests authorization to change
       the terms of any wholly-owned Subsidiary's authorized capital stock
capitalization;                                             

     f)   BHE requests authorization to pay dividends out of capital or unearned
surplus;                                                    

     g)   Emera and the 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)   Applicants request that the Commission approve the form of agreement
        for the allocation of consolidated tax among the associate companies
in the U.S. tax filing group;                               

 i)   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;

j)   BHE requests authorization to issue and sell short-term debt;    

   k)   Emera requests authorization to invest up to 15% of its consolidated
capitalization in companies defined as "energy-related" or  
  "gas-related" under Rule 58, except that companies that derive
       revenues from Canada shall not be excluded from such definition and
       provided further that Emera's investment in its Subsidiaries at the
          time of its registration under the Act shall also be excluded from the
          investment limit. As of December 31, 2000, 15% of Emera's consolidated
capitalization was $281.45 million.                         

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l)   Emera requests authorization to issue and sell securities in an  
      aggregate amount of up to $1.5 billion, such amount to be included
          within the $3 billion overall limit proposed above, for the purpose of
         financing the acquisition of exempt wholesale generators ("EWGs") and
FUCOs.                                                      

2. Parameters for Financing Authorization                             

   To assure the continued sound financial structure of the Emera System and
because the specific terms and conditions of the financing authorizations       
requested in this Application are not established at this time, Applicants      
propose that the following general terms and conditions would apply, where      
appropriate, to the requested financing authorizations:                         

     a)   Investment Grade Credit Rating - Emera commits that all long-term debt
         issued by Emera to unaffiliated parties under the authority requested
         in this Application will, when issued, be rated investment grade by a
nationally recognized statistical rating organization./53   

 b)   Minimum Capitalization Ratio - Emera, on a consolidated basis, and
        BHE, individually, will maintain common stock equity as a percentage
of total capitalization of at least 30%.                    

     c)   Effective Cost of Money on Borrowings - The effective cost of money on
       debt financings by Emera under the authorizations requested in this
         Application will not exceed the competitive market rates available at
         the time of issuance to companies with comparable credit ratings with
          respect to debt having similar maturities. The effective cost of money
        on BHE's short-term debt will not at the time of issuance exceed 300
basis points over the comparable term LIBOR.                

d)   Maturity of Debt - The maturity of debt will not exceed 50 years.

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53/ Investment grade long-term debt is denoted by the Standard & Poor's ratings 
of AAA, AA, A and BBB, with some ratings also including a + or - to further     
differentiate creditworthiness. Moody's uses the ratings Aaa, Aa, A and Baa to  
denote investment grade long-term debt. Emera's long-term debt is rated BBB+ by 
Standard & Poor's.                                                              

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 e)   Effective Cost of Preferred Stock - The dividend rate on preferred
          stock or other types of preferred or equity-linked securities will not
    exceed at the time of issuance the rate generally obtainable for
        preferred securities having the same or reasonably similar terms and
conditions issued by utility holding companies of reasonably
   comparable credit quality, as determined by competitive capital
markets.                                                    

f)   Issuance Expenses - The underwriting fees, commissions and other 
    similar remuneration paid in connection with the non-competitive
          issue, sale or distribution of a security pursuant to this Application
      would not exceed an amount or percentage of the principal or total
        amount of the security being issued that would be charged to or paid
         by other companies with a similar credit rating and credit profile in
     a comparable arm's-length credit or financing transaction with an
unaffiliated person.                                        

    g)   EWG and FUCO Investments - Emera's "aggregate investment" in EWGs and
    FUCOs, as defined in Rule 53 under the Act, will not exceed $3.0
billion.                                                    

3. Use of Proceeds                                                    

  The proceeds from the financings authorized by the Commission under this
Application will be used for general corporate purposes, including (i)          
refinancing the Merger-related debt, (ii) financing, in part, investments by and
capital expenditures of Emera and its Subsidiaries, (iii) funding future        
investments in EWGs, FUCOs and Rule 58 Subsidiaries, (iv) repaying, redeeming,  
refunding or purchasing any securities issued by Emera or any Subsidiary, and   
(v) financing the working capital requirements of Emera and its Subsidiaries.   

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

4. Description of Emera's Existing Capital Structure                  

As of March 31, 2000, Emera had 97.77 million common shares issued and
outstanding. Emera also has a non-controlling minority interest attributable to 

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preferred shares in NSPI that are convertible into Emera common stock. NSPI has 
issued and outstanding 4.4 million shares of Series C First Preferred Shares    
("Series C") that at the option of NSPI may be redeemed on or after April 1,    
2009 for a number of shares of Emera common stock determined by dividing $25.00 
plus an amount equal to all accrued but undeclared dividends per Series C share 
up to but excluding the exchange date by the greater of $2.00 and 95% of the    
weighted average trading price of the Emera shares on the Toronto Stock Exchange
for the 20 trading days ending on the last trading day on or before the fourth  
trading day immediately prior to the time of the exchange ("Market Price"). On  
or after notice prior to July 1, 2009 or prior to each dividend payment date    
thereafter the Series C shares will be exchangeable, at the option of the       
holder, into the number of shares of Emera common stock determined by dividing  
$25.00 by the greater of $2.00 and the Market Price of the Emera shares at such 
time, subject to the right of NSPI on not less than 40 days notice prior to the 
exchange date to redeem such shares for cash or to find substitute purchasers   
for such shares.                                                                

NSPI has issued and outstanding 5.4 million shares of Series D First  
Preferred Shares ("Series D") that at the option of NSPI may be redeemed on or  
after October 15, 2015 for a number of shares of Emera common stock determined  
by dividing $25.00 plus an amount equal to all accrued but undeclared dividends 
per Series D share up to but excluding the exchange date by the greater of $2.00
and 95% of the weighted average trading price of the Emera shares on the Toronto
Stock Exchange for the 20 trading days ending on the last trading day on or     
before the fourth trading day immediately prior to the time of the exchange     
("Market Price"). On or after notice prior to January 15, 2016 or prior to each 
dividend payment date thereafter the Series D shares will be exchangeable, at   
the option of the holder, into the number of shares of Emera common stock       
determined by dividing $25.00 by the greater of $2.00 and the Market Price of   
the Emera shares at such time, subject to the right of NSPI on not less than 40 
days notice prior to the exchange date to redeem such shares for cash or to find
substitute purchasers for such shares.                                          

Emera has long-term debt composed of debentures and notes payable. All
long-term debt instruments are issued under trust indentures at fixed interest  

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rates, and are unsecured. As of December 31, 2000, Emera had an aggregate amount
outstanding of $860 million with a weighted average coupon rate of 7.59%. Emera 
also has short-term debt outstanding consisting of commercial paper, bankers'   
acceptances and LIBOR loans issued against lines of credit. As of December 31,  
2000, Emera had an aggregate amount of short-term debt outstanding of $189.9    
million.                                                                        

5. Description of Proposed Financing Program                          

a. Emera's External Financing                                         

  Emera proposes to issue long-term equity and debt securities aggregating
not more than $3 billion at any one time outstanding during the Authorization   
Period./54 Such securities could include, but would not necessarily be limited  
to, common stock, preferred stock, options, warrants, long- and short-term debt 
(including commercial paper), convertible securities, subordinated debt, bank   
borrowings and securities with call or put options. Emera may also issue        
guarantees and enter into interest rate swaps and hedges as described below.    

 Emera proposes that the following sublimits would apply, subject to the

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54/ The overall limit of $3 billion includes the Merger-related financing.      

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limit that the aggregate of all securities issuances at any one time outstanding
during the Authorization Period would not exceed $3 billion.                    

Security Type                             Limit         
------------------------------------------- --------------------------          
Common stock and securities convertible            $2 billion                   
into common stock                                                             
------------------------------------------- --------------------------          
Preferred stock                                  $500 million                   
------------------------------------------- --------------------------          
Long-term debt                                   $1.5 billion                   
------------------------------------------- --------------------------          
Short-term debt                                  $1.5 billion                   
------------------------------------------- --------------------------          

b. Common Stock                                                       

     Emera requests authorization, during the Authorization Period, to issue and
sell from time to time common stock, either: (1) through underwritten public    
offerings, (2) in private placements, (3) under its dividend reinvestment,      
stock-based management incentive and employee benefit plans, (4) in exchange for
securities or assets being acquired from other companies, and (5) in connection 
with redemptions of the Series C and Series D shares. Emera also proposes to    
issue and sell common stock or options, warrants, or other stock purchase       
rights. Emera may also buy back shares of common stock during the Authorization 
Period in accordance with Rule 42 under the Act.                                

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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.                                                    

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 executive 
officers of Emera for a maximum term of 10 years. The option price for these    
shares is the market price of the shares on the day the option is granted. Emera
may also buy back shares of such stock or such options during the Authorization 
Period.                                                                         

     Emera may seek to acquire securities of companies engaged in energy-related
businesses as described in Rule 58, exempt telecommunications companies         
("ETCs"), EWGs and FUCOs. 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 under Rule 42, 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.    

 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 $3 billion external financing limit or          
applicable equity sublimit, Emera's common stock would be valued at market value

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based upon the closing price on the day before closing of the sale or based upon
average high and low prices for a period of 20 days prior to the closing of the 
sale.                                                                           

c. Preferred Stock                                                    

    Emera may issue preferred stock from time to time during the Authorization
Period. 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. All such securities will be redeemed  
no later than 50 years after the issuance thereof. The dividend rate on any     
series of preferred stock or other preferred securities will not exceed at the  
time of issuance the rate generally obtainable for preferred securities having  
the same or reasonably similar terms and conditions issued by utility holding   
companies of reasonably comparable credit quality, as determined by competitive 
capital markets. 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    
common stock.                                                                   

     It is common practice for Canadian companies to finance their capital needs
through the issuance of preferred stock. Emera has authorization in its         
Memorandum of Association, filed as Exhibit A-1 hereto, to issue preferred      
stock. Any issue of preferred stock would provide Emera with the flexibility to 
forego a dividend if sufficient cash was not available. Consequently, preferred 
stock can be considered a more flexible instrument from a cash management and   
financial leverage perspective.                                                 

     As a general matter, the dividend obligations of any preferred stock issued
by Emera would be satisfied from dividends and other cash flow that Emera       
receives from its subsidiaries, including NSPI, BHE and Emera's Nonutility      
Subsidiaries. As with the issuance of debt securities, Emera believes that a    
restriction against parent-level preferred stock 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      

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Emera's ability to implement an optimal capital structure for its business.     
Prior to issuing preferred stock, debt 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. Exhibit FS-5 includes cash flow projections for Emera through 2003. The
projections demonstrate that Emera has the financial capacity to issue preferred
securities.                                                                     

d. Long-Term Debt                                                     

 Emera proposes to issue long-term unsecured debt in accordance with the
conditions described in Item 1.E.2 above. Any long-term debt security would 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. The request for  
authorization for Emera to issue long-term debt securities is consistent with   
authorization that the Commission has granted to other registered holding       
companies. See Southern Co., Holding Co. Act Release No. 27134 (February 9,     
2000) ; Columbia Energy Group, Holding Co. Act Release No. 27035 (June 8, 1999).

Emera believes that 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.                                                                

e. Short-Term Debt                                                    

  Emera requests authorization to issue short-term debt including, but not
limited to, institutional borrowings, commercial paper and bid notes. Issuance  
of short-term debt will be in accordance with the conditions described in Item  
1.E.2 above. Proceeds of any short-term debt issuance may be used to refund     
pre-Merger short-term debt and Merger-related debt, and to provide financing for

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general corporate purposes, working capital requirements and Subsidiary capital 
expenditures until long-term financing can be obtained.                         

     Emera may sell commercial paper, from time to time, in established domestic
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.                                             

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.     
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.                        

f. Hedges and Interest Rate Risk Management                           

Emera requests authority 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 ("Hedging Instruments").     
Emera would employ Hedging Instruments as a means of prudently managing the risk
associated with any of its outstanding debt issued under the authority requested
in this application or an applicable exemption 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 in future periods for planned issuances of 
debt securities. In no case will the notional principal amount of any Hedging   
Instrument exceed that of the underlying debt instrument and related interest   
rate exposure. Thus, Emera will not engage in "leveraged" or "speculative"      

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transactions. The underlying interest rate indices of such Hedging Instrument   
will closely correspond to the underlying interest rate indices of Emera's debt 
to which such Hedging Instrument relates. Off-exchange Hedging Instruments would
be entered into only with counterparties whose senior debt ratings are          
investment grade ("Approved Counterparties").                                   

     In addition, Emera requests authorization to enter into Hedging 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 U.S. or Canadian Treasury futures contracts, U.S. or Canadian
Treasury obligations and/or a forward swap (each a "Forward Sale"), (ii) the    
purchase of put options on U.S. or Canadian Treasury obligations (a "Put Options
Purchase"), (iii) a Put Options Purchase in combination with the sale of call   
options on U.S. or Canadian Treasury obligations (a "Zero Cost Collar"), (iv)   
transactions involving the purchase or sale, including short sales, of U.S. or  
Canadian Treasury obligations, 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.                   

Emera will endeavor to comply with SFAS 80 ("Accounting for Futures   
Contracts") and SFAS 133 ("Accounting for Derivatives Instruments and Hedging   
Activities") when it is implemented or such other standards relating to         
accounting for derivative transactions as are adopted and implemented by the    
Financial Accounting Standards Board ("FASB"). 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       

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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.                                                                    

     To the extent such securities are not exempt under Rule 52(a), BHE requests
authorization to enter into the transactions described in this Item 1.E.2.f on  
the same terms applicable to Emera.                                             

g. Guarantees                                                         

  Emera requests 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 its 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 $500 million outstanding at any one time (not taking into account        
obligations exempt under Rule 45). All debt guaranteed will comply with the     
conditions in Item 1.E.2. Included in this amount are Guarantees entered into by
Emera that were previously issued in favor of its Subsidiaries. The limit on    
Guarantees is separate from the limit on Emera's external financing. Emera      
proposes to charge each Subsidiary a fee for each guarantee provided on its     
behalf that is not greater than the cost, if any, of obtaining the liquidity    
necessary to perform the guarantee. As of December 31, 2000, Emera had no       
outstanding Guarantees on behalf of Subsidiaries.                               

h. Subsidiary Financing                                               

 Emera requests authorization to lend funds to certain of its Nonutility
Subsidiaries at a mark up to Emera's cost of funds at any time during the       
Authorization Period without prior Commission authorization. The authorization  
requested would apply to all Nonutility Subsidiaries except BHE, any of BHE's   
direct or indirect subsidiaries, or NSPI. Emera requests such authority so that 

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it can match the cost of funds charged to each subsidiary with each company's   
unique investment risk profile. This is desirable as a risk management measure  
and because it avoids the cross subsidization of higher risk subsidiaries from  
lower risk subsidiaries./55                                                     

     The Nonutility Subsidiaries that would be financed in this manner would not
pass any increased costs on to BHE or its subsidiaries because they would not   
sell goods or services or lend funds to BHE or its subsidiaries. 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        
authorized by the MPUC and exempt under Rule 52(a) or through borrowings from   
Emera, directly or indirectly through the Intermediate Holding Companies. BHE   
may also 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./56 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 
will not exceed an aggregate amount of $60 million outstanding at any time      
during the Authorization Period. BHE also requests authorization to guarantee   

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55/ See, e.g., Energy East Corp., Holding Co. Act Release No. 27228 (September  
12, 2000); Entergy Corp., Holding Co. Act Release No. 27039 (June 22, 1999) (a  
requirement that the lender charge only its effective cost of capital for       
nonutility loans when market rates are greater would result in a subsidy to the 
nonutility borrower).                                                           

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

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the obligations of its subsidiaries in an aggregate amount not to exceed $30    
million. BHE may charge each subsidiary a fee for each guarantee provided on its
behalf that is not greater than the cost, if any, of obtaining the liquidity    
necessary to perform the guarantee.                                             

     NSPI generally may borrow funds at a lower cost of funds than Emera because
Emera is structurally subordinated to NSPI with respect to the majority of      
assets in the Emera group. The concept of structural subordination relates to   
the priority of claims on any asset (and its implicit cash flow). An Emera      
creditor's claim on NSPI's assets is subordinate to an NSPI creditor's claim on 
NSPI's assets. Most of the assets in the Emera system reside with NSPI. Because 
NSPI can offer creditors a direct claim on its assets rather than the indirect  
claim that Emera's creditors are offered, NSPI generally finances its capital   
needs independently of Emera. As a FUCO, NSPI's financing would be exempt under 
Section 33 of the Act unless guaranteed or otherwise supported by the credit of 
Emera.                                                                          

   Each of the Intermediate Holding Companies also requests authorization to
issue and sell securities to the other Intermediate Holding Companies and Emera,
and to acquire securities from their respective Intermediate Holding Company    
subsidiaries and BHE. Each of the Intermediate Holding Companies also seeks     
authority to issue guarantees and other forms of credit support to direct and   
indirect Intermediate Holding Company subsidiaries and BHE. In no case would the
Intermediate Holding Companies borrow, or receive any extension of credit or    
indemnity from any of their respective direct or indirect subsidiary companies. 

 Each of the Intermediate Holding Companies is intended to function as a
financial conduit to facilitate Emera's U.S. investments. For reasons of        
economic efficiency, the terms and conditions of any Intermediate Holding       
Company financings will be on an arm's length basis, except as noted above for  
financings by BHE. The Intermediate Holding Company financing proposed herein   
would be used to finance the capital requirements of BHE and any exempt or      
subsequently authorized activity that is hereafter acquired. The Intermediate   
Holding Company financing will not be used by the Intermediate Holding Companies
to carry on business or investment activities within the Intermediate Holding   
Companies.                                                                      

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i. Changes in Capital Stock of Wholly-Owned Subsidiaries              

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. As needed to accommodate such    
proposed transactions and to provide for future issues, 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 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%. 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).                                                                          

j. Payment of Dividends Out of Capital or Unearned Surplus            

    As a result of the application of the purchase method of accounting to the
Merger, the current retained earnings of BHE will be eliminated. In addition,   
the Merger will give rise to a substantial level of goodwill, the difference    
between the aggregate values allocated to all identifiable tangible and         
intangible (non-goodwill) assets on the one hand, and the total consideration to
be paid for BHE and the fair value of the liabilities assumed, on the other. In 

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accordance with the Commission's Staff Accounting Bulletin No. 54, Topic 5J, the
goodwill will be "pushed down" to BHE and reflected as additional               
paid-in-capital in its financial statements. The effect of these accounting     
practices would be to leave BHE without retained earnings, the traditional      
source of dividend payment, but, nevertheless, a strong balance sheet showing a 
significant equity level. To allow BHE to pay dividends after the Merger, BHE   
requests authorization to pay dividends out of additional paid-in-capital and to
redeem its common stock held by its associate company parent in lieu of the     
payment of dividends to the extent permitted by state law, provided in each case
that BHE maintains the required minimum 30% common equity capitalization.       

     The application of "push down" accounting represents a change in the manner
of accounting. For FERC and state commission reporting purposes, goodwill will  
be recorded in BHE's books, however, the original historical basis of BHE's     
books will not be disturbed. FASB has recently announced new goodwill reporting 
standards that cease the amortization of goodwill for fiscal years beginning    
after December 15, 2001. Rather, goodwill will be subject to an annual          
impairment test requiring write downs of goodwill if the carrying value is less 
than the fair value of the reporting unit./57                                   

     In determining whether to permit a registered holding company or subsidiary
to pay dividends out of capital surplus, the Commission considers various       
factors, including: (i) the asset value of the company in relation to its       
capitalization, (ii) the company's prior earnings, (iii) the company's current  
earnings in relation to the proposed dividend, and (iv) the company's projected 
cash position after payment of a dividend. See Eastern Utilities Associates,    
Holding Co. Act Release No. 25330 (June 13, 1991) ("EUA"), and The National Grid
Group plc, Holding Co. Act Release No. 27154 (Mar. 15, 2000). Further, the      
payment of the dividend must be "appropriate in the public interest." Id.,      
citing Commonwealth & Southern Corporation, 13 S.E.C. 489, 492 (1943).          

In support of its request, BHE asserts that each of the standards of  
Section 12(c) of the 1935 Act enunciated in the EUA case are satisfied:         

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57/  See, note 52, supra.                                                       

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(i)  After the Merger, and giving effect to the push down of goodwill,
          BHE's common equity as a percentage of total capitalization will be at
or above 30%; consistent with industry norms.               

(ii) BHE has a favorable history of prior earnings.                   

    (iii) Applicants anticipate that BHE's cash flow from operations after the
  Merger will improve. BHE's future earnings projections include
          amortization of "legacy" assets associated with its restructuring into
       a pure "wires" company and discussed further below. As BHE collects
   the revenue associated with these legacy assets, cash flow from
   operations will improve, generating operating cash in excess of
         earnings. The legacy revenues produce cash that is free and available
         for dividend payments because it is derived from BHE's former role as
    a provider of generation services. Since BHE is no longer in the
          generation business, it need not reinvest these revenues in generation
    activities to continue to provide adequate service to customers.
    Moreover, without removal of this cash from BHE in the form of a
     dividend or share repurchase BHE's common equity component of its
        capital structure will grow. The MPUC has prescribed a target common
   equity component not exceeding 40% of total capital. Applicants
          request therefore merely uses dividends or common stock redemptions to
         maintain BHE's equity level in the 30% to 40% of total capitalization
band.                                                       

   (iv) The projected cash position of BHE after the Merger will be adequate
          to meet its operating needs. As of December 31, 2000, BHE had balances
      of $12.5 million in cash and cash equivalents. The amortization of
        goodwill is a non-cash expense that will not affect the cash flow of
BHE. BHE is forecast to have sufficient cash to pay         
dividends/redemptions in the amounts contemplated.58        

   (v)  The proposed dividend payments are in the public interest. BHE is in
sound financial condition and, as noted above, the dividend 
          payments/redemptions are consistent with the interest of consumers and
   investors because they allow the capital structure of BHE to be
adjusted to more appropriate levels of debt and equity.     

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58/ Exhibit FS-5 to the Application contains cash flow projections for the years
2001 through 2003.                                                              

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As explained previously, in 1997, the State of Maine implemented the  
Restructuring Act to bring retail competition to the sale of electricity. BHE   
was required to divest its generation under the Restructuring Act and it        
completed that process in 1999. Retail competition commenced in Maine in March, 
2000, and BHE now functions as a transmission and distribution electric utility 
in this new regulatory paradigm. Nevertheless, BHE continues to have costs      
related to its legacy supply-related businesses that are recovered in rates.    

In particular, BHE has a regulatory asset that represents the cost BHE
incurred in connection with the buy out of above-market power supply contracts  
and other unamortized generation-related costs, principally from PURPA          
qualifying facilities. The MPUC has allowed for a five to six year recovery in  
rates for most of these costs. The recovery for these costs appears in BHE's    
annual revenues and is labeled "Regulatory Asset Recovery" in the financial     
projections in Exhibit FS-5. This regulatory asset will be amortized over time  
and BHE will not invest additional funds to replace it. The regulatory asset is 
a remnant of BHE's previous structure under the old regulatory scheme and can be
properly thought of as a return of capital. As such, the revenue stream         
associated with the asset is fully distributable since it has no relevance to   
the current and future business of BHE as a utility.                            

    Lastly, it is important to note that in no case would dividends be paid if
BHE's common stock equity as a percentage of its total capitalization was below 
30%. This restriction protects the interests of investors, consumers and the    
general public in soundly capitalized public utility companies.                 

k. Financing Entities                                                 

     Emera and the Subsidiaries seek authorization to organize new corporations,
trusts, partnerships or other entities that will facilitate financings by       
issuing income preferred securities or other securities to third parties. To the
extent not exempt under Rule 52, the financing entities 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 entity in return for   
the proceeds of the financing; (ii) acquire voting interests or equity          

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securities issued by the financing entity to establish ownership of the         
financing entity (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 entity), and;  
(iii) guarantee a financing entity's obligations in connection with a financing 
transaction. Emera and the Subsidiaries also request authorization to enter into
expense agreements with financing entities to pay the expenses of any such      
entity. Any amounts issued by a financing entity 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 entity. However,   
the underlying intra-system mirror debt and parent guarantee shall not be so    
included. The authorization sought herein with respect to financing entities 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).                                                          

l. Tax Allocation Agreement                                           

    Applicants ask the Commission to approve the agreement among certain Emera
System companies to file a consolidated tax return ("Tax Allocation Agreement").
Approval is necessary because the Tax Allocation Agreement provides for the     
retention by US Holdco or Acq. Co. 1 ("US Group Parent"), of certain payments   
for tax losses that it has incurred, rather than the allocation of such losses  
to the Subsidiaries in the U.S. tax filing group without payment as would       
otherwise be required by Rule 45(c)(5).                                         

 In this matter, US Group Parent is seeking to retain the benefit of tax
losses that have been generated by it in connection with Merger-related debt    
only. As a result of the Merger, US Group Parent will be creating tax benefits  
from the interest expense on Merger-related debt that is non-recourse to BHE and
its subsidiaries and unrelated to the financing of subsidiary operations.       
Because the debt incurred is necessary to finance US Group Parent's investment  
in BHE, US Group Parent should properly retain the related tax benefits. In     
addition, the Tax Allocation Agreement will not give rise to the types of       
problems (e.g., upstream loans) that the Act was intended to address. Compare   
Section 12(a) of the Act.                                                       

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The Commission has approved a substantially similar tax allocation    
agreement in The National Grid Group plc, Holding Co. Act Release No. 27154     
(Mar. 15, 2000). Applicants have attached the form of the proposed Tax          
Allocation Agreement among US Group Parent and the Subsidiaries as Exhibit M-1. 

m.   Direct Stock Purchase and Dividend Reinvestment Plan, Incentive  
Compensation Plans and other Employee Benefit Plans         

    Emera proposes, from time to time during the Authorization Period to issue
and/or acquire in open market transactions or by some other method that complies
with applicable law and Commission interpretations then in effect up to 5       
million shares of Emera common stock under 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.59 For example, Emera   
currently maintains the following stock-based benefit plans for employees: 1)   
Emera Senior Management Stock Option Plan, which currently has 1,706,109        
treasury shares reserved; 2) Emera Common Share Purchase Plan, which currently  
has 2,000,000 treasury shares reserved; and 3) Emera Dividend Reinvestment Plan.
The plans will remain in effect following consummation of the Merger. The plans 
are described in greater detail in Exhibit J-1 to the Application.              

F. Intra-System Service Transactions                                  

1. Emera Services                                                     

    Emera requests authorization to form a service company, Emera Services, to
provide a variety of services to the companies in the Emera System. As a general
rule, the individual system companies will continue to independently perform    
certain functions that are most efficiently and effectively provided internally 
by each company. In contrast, Emera Services will offer system-wide coordination
and strategy services, oversight services and other services where economies can
be captured by centralization of personnel, equipment, practice and procedures  

----------                                                                      

59/ Emera intends to integrate any BHE stock-based benefit plans into the plans 
administered by Emera subsequent to the Merger.                                 

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in one organization. Emera Services will also ensure adequate oversight and     
realize economies of scale by consolidating certain administrative and service  
functions for the Emera System.                                                 

 In particular, Applicants anticipate that the following services may be
offered by Emera Services to system companies:                                  

a.   Rates and Regulatory.                                            

        Emera Services may assist the Emera System companies in the analysis
        of their rate structures and in the formulation of rate policies and
      advise and assist the Emera System companies in proceedings before
        regulatory bodies involving the rates and operations of Emera System
      companies and of other competitors where such rates and operations
directly or indirectly affect the Emera System companies.   

b.   Internal Auditing.                                               

    Emera Services may conduct periodic audits of administration and
      accounting processes. Audits would include examinations of service
        agreements, accounting systems, source documents, allocation methods
  and billings to assure proper authorization and accounting for
services.                                                   

c.   Strategic Planning.                                              

  Emera Services may advise and assist system companies with the
     preparation of strategic business plans and corporate strategies.

d.   External Relations.                                              

    Emera Services may maintain relationships with government policy
       makers, conduct lobbying activities and provide community relations
support.                                                    

e.   Transmission and Distribution System Management.                 

       Emera Services may assist BHE in coordinating the management of its
     transmission and distribution system to ensure the most efficient
       provision of services and to capture economies of scale as a larger
     purchaser in the market. BHE may, however, remain as the contract
party under any agreement.                                  

f.   Legal Services, Corporate Secretary, and Risk Management.        

       Emera Services may provide various legal services and general legal
         oversight, as well as corporate secretarial functions for the benefit

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      of Emera System companies. In addition, Emera Services may provide
 insurance, claims, security, environmental and safety related
services.                                                   

g.   Marketing.                                                       

         Emera Services may assist Emera System companies to develop marketing
     strategies for product and brand name promotion. Individual Emera
    System companies may maintain independent marketing personnel to
handle the day-to-day details of marketing campaigns.       

h.   Financial Services.                                              

        Emera Services may provide various services including corporate tax,
treasury, corporate accounting and reporting, general ledger
    maintenance and all accounting recordkeeping, processing certain
         accounts such as accounts payable, cash management, and others as may
         be deemed necessary, hedging policy and oversight, financial planning
   and rates (for Utility Subsidiaries and other Subsidiaries that
         interact with regulators or regulated companies). Each Subsidiary may
         also maintain its own corporate and accounting group and engage Emera
    Services to provide advice and assistance on accounting matters,
     including the development of accounting practices, procedures and
       controls, the preparation and analysis of financial reports and the
        filing of financial reports with regulatory bodies, on a system-wide
basis.                                                      

i.   Information Systems and Technology.                              

         Emera Services may provide the Emera System companies with electronic
data processing and telecommunication network services.     

j.   Executive.                                                       

       Using Emera's executive staff working through Emera Services, Emera
     Services may assist the Emera System companies in formulating and
         executing general plans and policies, including operations, issuances
  of securities, appointment of executive personnel, budgets and
         financing plans, expansion of services, acquisitions and dispositions
of property, public relationships and other related matters.

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k.   Investor Relations.                                              

          Emera Services may maintain relationships with the financial community
and provide certain shareholder services.                   

l.   Customer Services.                                               

       Emera Services may provide billing, mailing, remittance processing,
  call center and customer communication services for customers.

m.   Employee Services.                                               

  Emera Services may offer to assist system companies to develop
        employee relations policies and programs and to train personnel in a
         coordinated manner across the Emera System. Each Emera System company
     may maintain a human resources group to handle the individualized
         application of policies and programs. Emera Services may also provide
        payroll services, management of the employee benefit plans, employee
communications and mail services.                           

n.   Engineering.                                                     

        Emera Services may provide engineering services for the Emera System
        companies. These services could include infrastructure expansion and
    improvements, right-of-way maintenance and acquisition, surveys,
mapping, laboratory, and environmental services.            

o.   Business Support.                                                

i.   Power Procurement                                      

         Emera Services may coordinate and procure power supplies on
behalf of NSPI and BHE.                           

ii.  Purchasing.                                            

             Emera Services may provide procurement services to Emera System
companies.                                        

iii. Facilities Management.                                 

           Emera Services may provide facilities management services for
offices owned by Emera System companies.          

p.   Other Services.                                                  

Emera Services may provide other services, such as business 
        development, as identified in the services agreement or requested by
the Subsidiaries.                                           

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In accordance with the services agreement, services provided by Emera 
Services will be directly assigned if possible or allocated as necessary by     
activity, project, program, work order or other appropriate basis. To accomplish
this, employees of Emera Services will record transactions using data capture   
and accounting systems currently in place at Emera as well as new systems to be 
installed for future use. Costs of Emera Services will be accumulated in        
accounts and directly assigned if possible or allocated as necessary to the     
appropriate system company in accordance with the guidelines set forth in the   
services agreement (included as Exhibit I-1 to the Application). It is          
anticipated that Emera Services will be staffed primarily by transferring       
personnel from Emera and, to a certain extent, with personnel transferred from  
NSPI and BHE. Emera Services' accounting and cost allocation methods and        
procedures would be structured to comply with the Commission's standards for    
service companies in registered holding company systems. Emera Services' billing
system will use the "Uniform System of Accounts for Mutual Service Companies"   
established by the Commission for holding-company systems, as may be adjusted to
use the FERC uniform system of accounts. Exhibit I-3 discusses the systems and  
procedures to be implemented by Emera Services.                                 

   The operations of Emera Services will be coordinated and managed with the
objective of maximizing the economical and efficient performance of services for
all associate companies in the Emera System. As compensation for services, the  
services agreement will provide for client companies to "pay to Emera Services  
the cost of such services, computed in accordance with the applicable rules and 
regulations (including, but not limited to Rules 90 and 91) under the Act and   
appropriate accounting standards." Where more than one company is involved in or
has received benefits from a service performed, the services agreement will     
provide that client companies will pay their fairly allocated pro rata share in 
accordance with the methods set out in a schedule to the services agreement.    

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Thus, charges for all services provided by Emera Services to affiliated utility 
companies, non-utility companies and the holding company will be on an "at cost"
basis as determined under Rules 90 and 91 of the Act./60                        

    No change in the organization of Emera Services, the type and character of
the companies to be serviced, the methods of allocating cost to associate       
companies, or in the scope or character of the services to be rendered subject  
to Section 13 of the Act, or any rule, regulation or order thereunder, shall be 
made unless and until Emera Services shall first have given the Commission      
written notice of the proposed change not less than 60 days prior to the        
proposed effectiveness of any such change. If, upon the receipt of any such     
notice, the Commission shall notify Emera Services within the 60-day period that
a question exists as to whether the proposed change is consistent with the      
provisions of Section 13 of the Act, or of any rule, regulation or order        
thereunder, then the proposed change shall not become effective unless and until
Emera Services shall have filed with the Commission an appropriate declaration  
regarding such proposed change and the Commission shall have permitted such     
declaration to become effective.                                                

     Emera will structure the services agreement so as to comply with Section 13
of the Act and the Commission's rules and regulations thereunder. Rule 88 (b)   
provides that "(a) finding by the commission that a subsidiary company of a     
registered holding company . . . is so organized and conducted, or is to be so  
conducted, as to meet the requirements of Section 13(b) of the Act with respect 
to reasonable assurance of efficient and economical performance of services or  
construction or sale of goods for the benefit of associate companies, at cost   
fairly and equitably allocated among them (or as permitted by Rule 90), will be 
made only pursuant to a declaration filed with the Commission on Form U-13-1, as
specified in the instructions for that form, by such company or the persons     
proposing to organize it." Notwithstanding the foregoing language, the          

----------                                                                      

60/ NSPI is a public utility company as defined in the Public Utilities Act     
(Nova Scotia) ("PUA") and is subject to regulation under the PUA by the Nova    
Scotia Utility and Review Board ("UARB"). The PUA gives the UARB supervisory    
powers over NSPI's operations and expenditures. The UARB also regulates NSPI's  
electricity rates and capital structure. The UARB would not regulate the conduct
of business by Emera Services.                                                  

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Commission has on at least two recent occasions made findings under Section     
13(b) based on information set forth in an application on Form U-1, without     
requiring the formal filing on a Form U-13-1. See Unitil Corp., 51 SEC Docket   
562 (Apr. 24, 1992); CINergy Corp., 57 SEC Docket 2353 (Oct. 21, 1994). In this 
Application, Emera Resources has submitted substantially the same application   
information as would have been submitted in a Form U-13-1.                      

Accordingly, it is appropriate for the Commission to find that Emera  
Services will be so organized and shall be so conducted as to meet the          
requirements of Section 13(b), and that the filing of a Form U-13-1 is          
unnecessary, or, alternatively, that this Application should be deemed to       
constitute a filing on Form U-13-1 for purposes of Rule 88.                     

    Emera proposes that, for a limited period of time ending on March 31, 2002
("Transition Period"), Emera will continue to provide services and sell goods to
Emera System companies. Emera will comply with the provisions of Rule 90 with   
respect to the performance of services or construction for associate companies  
on the basis of cost and with the provisions of Rule 92 with respect to the sale
of goods produced by the seller./61 The Transition Period will allow the Emera  
System to practically and efficiently implement the transition to Emera Services
as the principal provider of services to the Emera System. In particular,       
because the Emera Services will need to be organized, implement appropriate     
accounting and cost tracking systems, test the systems and train employees prior
to commencing operations, the Transition Period will allow Emera Services       
adequate time to perform these tasks. The Transition Period will also allow for 
the orderly transfer of Emera's personnel to Emera Services for the purpose of  
staffing its service operations.                                                

The relief requested here is similar to the relief granted in AGL     
Resources, Inc., Holding Co. Act Release No. 27243 (October 5, 2000) (AGL       
Resources authorized to provide services to system companies during a transition
period intended to allow for a practical and efficient transition to a          

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61/ A form of transition services agreement is attached as Exhibit I-2.         

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centralized and unified service company organization). The proposed Transition  
Period is a reasonable extension of the 30-day transition period provided in    
Rule 82(a) and its is justified under Section 13(a) of the Act as a special or  
unusual circumstance not in the ordinary course of business. In particular,     
Emera had traditionally performed the service company function for the Emera    
System but, as a registered holding company, it must now transfer all of these  
services to a new entity which must acquire and install appropriate systems and 
recruit personnel. This is a one-time-only event, not in the ordinary course of 
business. Further, the Transition Period is necessary and appropriate in the    
public interest and in the interest of investors and consumers because it allows
time to acquire new software and to fully modify existing software systems for  
the most efficient transition to a centralized service company structure without
wasteful expenditures on intermediate, temporary software modifications.        

Customers of Emera's utility subsidiaries will not be detrimentally   
affected by the services provided during the Transition Period since all        
transactions will comply with the applicable provisions under the Act, including
the provisions of Rule 90 thereunder requiring the performance of services on   
the basis of cost. In no event will Emera provide services to Emera System      
companies after the Transition Period, except in accordance with Rule 85 under  
the Act.                                                                        

G. Nonutility Reorganizations                                         

    Applicants propose to restructure Emera's nonutility holdings from time to
time as may be necessary or appropriate in the furtherance of the Emera System's
authorized nonutility activities. To that end, Emera requests authorization to  
acquire, directly or indirectly, the equity securities of one or more           
intermediate subsidiaries ("Intermediate Subsidiaries") organized exclusively   
for the purpose of acquiring, financing, and holding the securities of one or   
more existing or future Nonutility Subsidiaries. Intermediate Subsidiaries may  
also provide management, administrative, project development, and operating     
services to such entities.                                                      

Restructuring could involve the acquisition of one or more new        
special-purpose subsidiaries to acquire and hold direct or indirect interests in

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any or all of the Emera System's existing or future authorized nonutility       
businesses. Restructuring could also involve the transfer of existing           
subsidiaries, or portions of existing businesses, among the Emera associates    
and/or the reincorporation of existing subsidiaries in a different jurisdiction.
This would enable the Emera System to consolidate similar businesses and to     
participate effectively in authorized nonutility activities, without the need to
apply for or receive additional Commission approval.                            

    These direct or indirect subsidiaries might be corporations, partnerships,
limited liability companies or other entities 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 subsidiaries would engage only in       
businesses to the extent the Emera System 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 System into a new, unauthorized line of    
business.                                                                       

The Intermediate Subsidiaries would be organized for the purpose of   
acquiring, holding and/or financing the acquisition of the securities of or     
other interest in one or more EWGs, FUCOs, Rule 58 Subsidiaries, ETCs or other  
non-exempt Nonutility Subsidiaries. Intermediate Subsidiaries may also engage in
development activities ("Development Activities") and administrative activities 
("Administrative Activities") relating to the permitted businesses of the       
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, thermal "hosts," 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      

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facilities or the acquisition of securities of or interests in new businesses.  
Administrative Activities will include ongoing personnel, accounting,           
engineering, legal, financial, and other support activities necessary to manage 
Emera's investments in Nonutility Subsidiaries.                                 

 An Intermediate Subsidiary may be organized, among other things, (1) in
order to facilitate the making of bids or proposals to develop or acquire an    
interest in any EWG, FUCO, Rule 58 Subsidiary, ETC or other non-exempt          
Nonutility Subsidiary; (2) after the award of such a bid proposal, in order 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 in order, among other things, to 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 in order 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.                                                       

  Development Activities will be funded in accordance with Rules 45(b) and
52(b). To the extent that Emera provides funds or guarantees directly or        
indirectly to an Intermediate Subsidiary that are used for the purpose of making
an investment in any EWG or FUCO, or Rule 58 Subsidiary, the amount of such     
funds or guarantees will be included in Emera's "aggregate investment" in such  
entities, as calculated in accordance with Rule 53 or Rule 58, as applicable.   

H. Energy-Related and Gas-Related Subsidiaries                        

   Emera conducts various businesses in Canada that, but for their source of
revenues would qualify as "energy-related" or "gas-related" under Rule 58. For  
example, Strait Energy Inc. ("Strait Energy") is a wholly owned subsidiary of   
Emera that sells steam power. The sale of thermal energy is the type of business
that is retainable under Rule 58(b)(vi), but because Strait Energy derives      

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substantially all its revenues from Canadian sources, as a technical matter the 
exemption under the rule is unavailable.                                        

   The Commission has, however, found that certain energy-related activities
that would otherwise constitute energy-related companies under Rule 58 but for  
their operations outside the U.S. could be conducted in Canada or               
internationally by registered holding company systems. EUA Cogenex Corp.,       
Holding Co. Act Release No. 26741 (July 15, 1997) (authorizing EUA Cogenex      
Corporation and EUA Cogenex-Canada, Inc., both subsidiaries of the U.S. public  
utility holding company Eastern Utilities Associates, to organize a Canadian    
subsidiary engaged in a range of energy conservation-related business           
activities); Energy East Corp., Holding Co. Act Release No. 27224 (August 31,   
2000) (authorizing retention of Xenergy Canada, Inc., a company providing       
utility related software services); Cinergy Corp, Holding Co. Act Release No.   
26662 (February 7, 1997) (authorizing Cinergy Solutions to market energy-related
services on a domestic and international basis).                                

Accordingly, Emera requests authorization to invest up to 15% of its  
consolidated capitalization in companies that derive revenues from Canada and   
that otherwise qualify as "energy-related" or "gas-related" under Rule 58,      
provided that Emera's investment it its Subsidiaries at the time of its         
registration under the Act shall be excluded from the investment limit. Emera's 
post-Merger investment in Canadian energy-related and gas-related subsidiaries  
will be aggregated with its post-Merger investment in Rule 58 subsidiaries for  
purposes of calculating the 15% of consolidated capitalization limit. As of     
December 31, 2000, 15% of Emera's consolidated capitalization was $281.45       
million.                                                                        

I. EWG and FUCO Investments                                           

    Emera may use the proceeds of the financings proposed in this Application,
in part, for investments in EWGs and FUCOs. 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   

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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 System, 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,
2000, Emera had consolidated retained earnings of $200.4 million and an         
investment of $1,563.48 million in NSPI. Because the conditions of Rule 53(a)   
are not satisfied, Emera must demonstrate that the proposed issuance of         
securities is consistent with the standards of Rule 53(c)./62                   

    In addition, none of the provisions of Rule 53(b) are applicable to Emera.
Neither Emera nor any subsidiary having assets with a book value exceeding 10%  
or more of consolidated retained earnings has been the subject of a bankruptcy  
or similar proceeding. The average consolidated retained earnings of Emera for  
the four most recent quarterly periods has not decreased by 10% from the average
for the previous four quarterly periods. Lastly, Emera has not reported         
operating losses attributable to investments in EWGs or FUCOs.                  

   Emera requests authorization to issue and sell securities in an aggregate
amount of up to $2.0 billion, such amount to be included within the $3 billion  
overall financing limit proposed in Item 1.E.1 above, for the purpose of        
financing the acquisition of EWGs and FUCOs. As of December 31, 2000, Emera's   
investment in NSPI was $1,563.48 million. Consequently, the additional          
authorization requested and Emera's current investment in EWGs and FUCOs could  
result in an aggregate investment of approximately $3.6 billion.                

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62/ Emera also does not meet the GAAP books and records requirement in Rule     
53(a), but 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.    

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  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, 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. The full extent of the MPUC's authority 
is discussed infra. See Item 3.B.6.                                             

   Emera practices a disciplined investment review process to assure that it
identifies and minimizes or appropriately mitigates the risks associated with   
FUCO activities. Before any project investment would be made, the project would 
be analyzed in detail, including country risk, political risk, currency risk,   
regulatory risk and project specific risks. 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.         

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 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.                                                    

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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.

Emera is financially sound and experienced in the energy industry in  
Canada. Customers of BHE will not be adversely affected by Emera's EWG or FUCO  
investments because of Emera's commitment to maintain a minimum 30% common      
equity percentage and investment grade debt ratings. Moreover, the MPUC has     
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. Lastly,   
Emera commits not to seek recovery in retail rates for any failed investment in,
or inadequate returns from, an EWG or FUCO investment.                          

J. Reporting                                                          

     Applicants request an exemption from Rule 26(a)(1) under the Act, regarding
the maintenance of financial statements in conformance with Regulation S-X. The 
exemption would apply 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, if it is a material subsidiary, 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 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. 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;                                                       

  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;

   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;                                                   

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

   e.   The amount and terms of any financings consummated by any Subsidiary
utility company that are not exempt under Rule 52;          

    f.   A list of U-6B-2 forms filed with the Commission during the reporting
   period, including the name of the filing entity and the date of
filing;                                                     

    g.   Consolidated balance sheets as of the end of the reporting period and
          separate balance sheets as of the end of the reporting period for each
          company, including Emera, that has engaged in jurisdictional financing
transactions during the reporting period;                   

     h.   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.     

    i.   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.

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 Merger are estimated to be       
approximately $4.72 million.                                                    

ITEM 3. APPLICABLE STATUTORY PROVISIONS.                                        

A. Applicable Provisions                                              

The acquisition by Emera of the voting securities of BHE and the BHE  
public-utility subsidiary companies is subject to Sections 9 and 10 of the Act. 
The retention of the Subsidiaries is subject to Section 11 of the Act. The      
proposed financing transactions are subject to Sections 6, 7, and 12 of the Act 
and the proposed establishment of a Emera Services is subject to Section 13 of  
the Act.                                                                        

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B. Legal Analysis                                                     

     Section 9(a)(2) makes it unlawful, without approval of the Commission under
Section 10, "for any person to acquire directly or indirectly any security of   
any public utility company if such person is an affiliate ... of such company   
and of any other public utility or holding company, or will by virtue of such   
acquisition become such an affiliate." As a result of the Merger, Emera would   
become an affiliate of three public utility companies: BHE, MEPCO and Chester   
SVC. NSPI would not be deemed a utility affiliate under the Act.                

    As part of its obligations under the Merger Agreement, Emera has committed
that NSPI will claim exempt FUCO status. Specifically, Section 7.02(c) of the   
Merger Agreement provides:                                                      

Parent agrees that . . . each of its non-U.S. public-utility company  
   subsidiaries (and such non-utility subsidiaries or businesses, if any, as
Parent determines to place under or within any of such non-U.S. public
    utility company subsidiaries) shall claim the status of a "foreign utility
company" under Section 33 of the 1935 Act.                            

Emera has made this commitment understanding that NSPI must continue to comply  
with the requirements of Section 33 of the Act. Emera is, therefore, firmly     
committed that NSPI's business will be conducted to assure NSPI's eligibility   
for FUCO status.                                                                

To qualify as a FUCO under Section 33 of the Act:                     

    (1)  NSPI must own or operate facilities that are not located in any state
          and that are used for the generation, transmission, or distribution of
        electric energy for sale or the distribution at retail of natural or
manufactured gas for heat, light, or power;                 

  (2)  NSPI may not derive any part of its income, directly or indirectly,
         from the generation, transmission, or distribution of electric energy
         for sale or the distribution at retail of natural or manufactured gas
for heat, light, or power, within the U.S.;                 

(3)  Neither NSPI nor any of its subsidiaries may be a public utility 
company operating in the U.S.; and,                         

   (4)  NSPI must provide notice to the Commission on Form U-57 that it is a
       FUCO and, to obtain the exemptions provided under the Act, the MPUC

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          must certify to the Commission that it has the authority and resources
     to protect the ratepayers subject to its jurisdiction and that it
      intends to exercise its authority. Sections 33(a)(2) and 33(a)(3).

Ownership of Utility Facilities                                                 

NSPI is a vertically integrated utility serving approximately 440,000 
customers in Nova Scotia with assets of $1,913.3 million. Its utility assets    
include 2,183 MW of electric generating capacity, approximately 5,200 km of     
transmission lines, 24,000 km of distribution lines, associated substations and 
other facilities. NSPI has no retail gas distribution facilities. NSPI neither  
owns nor operates utility facilities located in the U.S. and derives none of its
income from the generation, transmission or distribution of electricity for     
sale, or retail gas distribution, within the U.S. NSPI has no utility           
subsidiaries.                                                                   

Source of Income                                                                

   NSPI's income comes from its utility activities in Nova Scotia. NSPI does
not derive any part of its income, directly or indirectly, from the generation, 
transmission, or distribution of electric energy for sale or the distribution at
retail of natural or manufactured gas for heat, light, or power, within the U.S.
In 2000, NSPI sold 181 GWh of electric energy within Canada or at the           
Canada/U.S. border to purchasers for consumption in Canada or export to the U.S.
These sales used the lines of New Brunswick Power which is interconnected with  
the transmission facilities of MEPCO, a 14.2% owned BHE subsidiary. At present, 
NSPI is not authorized to transmit power and energy within the U.S., and        
accordingly, all purchasers would take title to any energy sold within Canada or
at the international border for transmission via ISO-New England facilities.    

 The sale by NSPI of power at the Canadian border does not cause NSPI to
fail to qualify for FUCO status. Sales by NSPI at the Canadian border should be 
treated as Canadian sales consistent with Commission precedent. As Canadian     
sales, these transactions should not be deemed to involve income from the       
generation, transmission or distribution of electric energy for sale in the U.S.

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that would cause NSPI to fail to qualify for exempt FUCO status, so long as the 
purchaser is not a direct or indirect subsidiary of NSPI.                       

That NSPI's sales at the Canadian border are Canadian in character is 
consistent with Commission precedent concerning the treatment of sales at a     
state border in cases under Section 3(a)(1). See, e.g., Consolidated Edison,    
Inc., Holding Co. Act Release No. 27021 (May 13, 1999) ("Con Edison makes only a
small number of wholesale sales, and the majority of those sales are in New York
or at the New York border, and thus are intrastate in character."); NIPSCO      
Industries, Inc., Holding Co. Act Release No. 26975 (Feb. 10, 1999) ("Although  
Northern Indiana sells electricity at wholesale to non-Indiana customers, almost
all of those sales take place in Indiana or at the Indiana border, and therefore
do not constitute utility operations outside of Indiana.") (emphasis added). To 
establish that the applicants were entitled to an exemption under Section       
3(a)(1) of the Act, the Commission in these cases found that the holding company
and its material utility subsidiaries were "predominantly intrastate in         
character" and that they did "carry on their business substantially in a single 
state." By finding that the sales of electricity took place at the border, the  
Commission determined that applicants' operations met that standard. Similarly, 
given that NSPI is not authorized to transmit power and energy within the U.S.  
and that transactions are structured so that all purchasers take title to any   
energy sold at the international border, it is appropriate to find that these   
sales are fundamentally Canadian.                                               

     Because the sales by NSPI have taken place in Canada, they cannot be deemed
to generate income directly from the generation, transmission or distribution of
electric energy for sale in the U.S. To assure the Commission that NSPI will    
continue not to derive income directly from the generation, transmission or     
distribution of electric energy for sale in the U.S., NSPI commits that all     
future sales of electricity will take place at the border or within Canada. In  
addition, to fully protect U.S. retail customers from utility service that is   
not regulated in the U.S., NSPI will not sell electricity or transmission or    
distribution services directly to retail customers within the U.S.              

    With regard to whether NSPI's sales at the border provide it with indirect
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sale in the U.S., we note that all sales in the past were made to unaffiliated  
purchasers. Consequently, NSPI did not receive any income indirectly from these 
purchasers' subsequent resale of power in the U.S. To assure the Commission that
NSPI will continue not to derive income indirectly from the generation,         
transmission or distribution of electric energy for sale in the U.S., NSPI      
commits that no direct or indirect subsidiary of NSPI will engage in the        
generation, transmission or distribution of electric energy for sale in the U.S.

   In other contexts, the Division has concurred in the view that a FUCO can
own a U.S. exempt wholesale generator ("EWG") without being deemed to derive a  
portion of its income from the generation, transmission, or distribution of     
electric energy for sale within the United States for purposes of Section 33.   
Central and South West Corporation, SEC No-Action Letter (Sept. 13, 1995),      
involved the proposed acquisition by Central and South West Corporation ("CSW") 
of a UK regional electric company (the "REC"). Although the REC was engaged     
primarily in the distribution of electric energy in the United Kingdom, it also 
owned two U.S. qualifying cogeneration facilities through a U.S. EWG. CSW       
argued, among other things, that the Commission should reject a reading that    
would elevate form over status, in contravention of the purposes of the Act. So,
too, in this matter, the Commission should reject a reading of Section 33 that  
could have the unintended effect of discouraging sales from Canada into New     
England at a time the region is facing skyrocketing energy costs and potential  
power outages, in contravention of the Act's policy against uneconomic          
operations./63                                                                  

     To summarize, sales by NSPI at the Canadian border to an entity that is not
a direct or indirect subsidiary of NSPI should not be deemed to involve income  
from the generation, transmission or distribution of electric energy for sale in
the U.S. that would cause NSPI to fail to qualify for exempt FUCO status. To    

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63/ Accord, The National Grid Group plc, Holding Co. Act Release No. 27154 (Mar.
15, 2000) at 23 (granting FUCO status to a subsidiary of a foreign holding      
company to facilitate a U.S. utility acquisition where the FUCO status was      
"consistent with the fundamental purpose of the Act to protect consumers and    
investors").                                                                    

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assure that NSPI will continue to qualify as a FUCO, Emera commits that: (1)    
NSPI will not sell directly to retail customers within the U.S.; (2) sales will 
only take place at the Canadian border or within Canada, and; (3) no direct or  
indirect subsidiary of NSPI will engage in the generation, transmission or      
distribution of electric energy for sale in the U.S.                            

We note that the current administration has recently announced energy 
policies that support increased ties between the U.S. and Canada, including     
power flows across the border. President Bush's "National Energy Policy: Report 
of the National Energy Policy Development Group" (dated May 17, 2001) (the      
"Report"), discusses the importance of Canadian power in U.S. markets. According
to the Report, Canadian sources of power "provide important trade and clean air 
benefits, while allowing both [the U.S. and Canada] to benefit from load sharing
and integration." Report at 8-8. The Report also notes that "Longstanding U.S.  
policy supports a liberalized global energy sector that is open to international
trade and investment. The United States benefits from international investments 
at home that have increased our energy sector's capacity and its                
infrastructure." Report at 8-5 and 8-6. The findings and policy recommendations 
of the Report strongly suggest that the Commission's interpretation of Section  
33 should foster a flexible environment between Canadian FUCOs and their U.S.   
affiliates.                                                                     

Utility Operations in the U.S.                                                  

 NSPI does not, directly or through subsidiaries, own or operate utility
assets, as defined under the Act, located in the U.S.                           

Notice on Form U-57 and MPUC Certification                                      

Prior to the closing of the Merger, Emera will file Form U-57 with the
Commission, claiming FUCO status for NSPI. Because BHE will become NSPI's       
affiliate after the Merger, Applicants also must satisfy Section 33(a)(2) of the
Act to obtain the exemption from the Act available to FUCOs. Applicants have    
obtained certification from the MPUC under Section 33(a)(2), that it has the    
authority and resources to protect the ratepayers subject to its jurisdiction   
and that it intends to exercise its authority. The MPUC certification is        
included in this Application as Exhibit D-3.                                    

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Nonutility Subsidiaries                                                         

     NSPI has no subsidiaries. Consequently, its exemption under Section 33 does
not raise any issue with respect to whether certain nonutility businesses may or
may not be retainable by a FUCO./64                                             

    Under Section 33(a)(1) of the Act, a FUCO is generally exempt from all the
provisions of the Act and is not considered a public utility company under the  
Act. Accordingly, NSPI will not be a public utility subsidiary of Emera for     
purposes of Sections 9 and 10 of the Act.                                       

  The statutory standards to be considered by the Commission in evaluating
the Merger are set forth in Section 10 of the Act. As explained more fully      
below, the Merger complies with all of the applicable provisions of Section 10  
and should be approved. Upon completion of the Merger, Emera will register as a 
holding company under Section 5 of the Act.                                     

1. Section 10(b)(1)                                                   

Section 10(b)(1) precludes approval of an acquisition that "will tend 
towards interlocking relations or the concentration of control of public utility
companies, of a kind or to an extent detrimental to the public interest or the  
interests of investors or consumers."                                           

a. Interlocking Relationships.                                        

 By its nature, any acquisition results in new links between theretofore
unrelated companies./65 Interlocking boards are typical of wholly-owned         
subsidiaries and necessary to integrate the BHE companies into the Emera system.

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64/ See, Foreign Utility Companies, Holding Co. Act Release No. 27342 (January  
31, 2001) (proposing for comment rules 55 and 56 regarding investments in FUCOs 
and suggesting that the Commission should establish standards for the type of   
businesses in which a FUCO could engage).                                       

65/ Cf. Northeast Utilities, Holding Co. Act Release No. 25221 (Dec. 21, 1990), 
as modified, Holding Co. Act Release No. 25273 (March 15, 1991), aff'd sub nom. 
City of Holyoke v. SEC, 972 F.2d 358 (D.C. Cir. 1992) (stating that interlocking
relationships are necessary to integrate two merging entities).                 

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The interlocks, therefore, will be in the public interest and the interests of  
investors and consumers, and thus not prohibited by Section 10(b)(1).           

b. Concentration of Control.                                          

Section 10(b)(1) is intended to avoid "an excess of concentration and 
bigness" while preserving the "opportunities for economies of scale, the        
elimination of duplicate facilities and activities, the sharing of production   
capacity and reserves and generally more efficient operations" afforded by the  
coordination of local utilities into an integrated system./66 In applying       
Section 10(b)(1) to utility acquisitions, the Commission must determine whether 
the acquisition will create "the type of structures and combinations at which   
the Act was specifically directed."/67                                          

     As explained more fully in the application of BHE to the FERC under Section
203 of the Federal Power Act, the proposed Merger will not have any adverse     
effect on competition, rates or the effectiveness of federal or state           
regulation./68 Specifically, the proposed Merger cannot and will not harm       
competition in wholesale power markets because:                                 

o    NSPI and BHE do not sell into common markets.                    

  o    NSPI does not own or control any generation in the NEPOOL, the only
market in which BHE sells power.                            

o    All of NSPI's generation is located in Nova Scotia and there is  
          virtually no available transfer capability ("ATC") between Nova Scotia
and BHE.                                                    

BHE also possesses no market power over transmission as in 1997 it    
transferred operational control of its higher voltage transmission facilities to
ISO New England, Inc. ("ISO-NE") and offers service over its lower voltage      
facilities pursuant to a FERC accepted open access transmission tariff.         

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66/ American Electric Power Co., 46 S.E.C. 1299, 1309 (1978).                   

67/ Vermont Yankee Nuclear Corp., 43 S.E.C. 693, 700 (1968).                    

68/ The order of the FERC approving the Merger is attached hereto as Exhibit    
D-5.                                                                            

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 Other regulators have considered the competitive effect of the proposed
Merger./69 The FERC considered competitive issues when it approved the Merger   
under Section 203 of the Federal Power Act, and notification and report forms   
were filed with the Antitrust Division of the Department of Justice and the     
Federal Trade Commission pursuant to the Hart-Scott-Rodino Antitrust            
Improvements Act of 1976, 15 U.S.C. ss.1311 et seq. The Federal Trade Commission
granted Emera early termination of the notice period on February 28, 2001,      
thereby permitting consummation of the transaction as of that date.             

    For these reasons, the Merger will not "tend toward interlocking relations
or the concentration of control" of public utility companies, of a kind or to   
the extent detrimental to the public interest or the interests of investors or  
customers within the meaning of Section 10(b)(1).                               

2. Section 10(b)(2)                                                   

Section 10(b)(2) requires the Commission to determine whether the     
consideration Emera is giving for BHE is reasonable and whether it bears a fair 
relation to investment in and earning capacity of the utility assets being      
acquired. A competitive bidding process conducted by an investment banking firm 
determined who would acquire BHE. The firm contacted numerous parties to        
determine interest, and conducted due diligence with companies that had         
submitted indications of interest. BHE's board then accepted definitive         
proposals from two remaining companies at the conclusion of the due diligence   
process. The resulting price and terms and conditions for the acquisition are   
the product of arms'-length negotiations between the buyer and seller. In light 
of this evidence, Emera believes that the consideration for the acquisition     
bears a fair relationship to the sums invested in and the earning capacity of   
the BHE utility assets.                                                         

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69/ See, e.g., Northeast Utilities, Holding Co. Act Release No. 25221 (Dec. 21, 
1990) (finding that "antitrust ramifications of an acquisition must be          
considered in light of the fact that public utilities are regulated monopolies  
and that federal and state administrative agencies regulate the rates charged   
consumers").                                                                    

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     Further, Emera believes that the estimated fees and expenses in this matter
bear a fair relation to the value of BHE and the strategic benefits to be       
achieved by the Merger and, further, that the fees and expenses are fair and    
reasonable./70                                                                  

3. Section 10(b)(3)                                                   

  Section 10(b)(3) requires the Commission to determine whether a proposed
acquisition will unduly complicate the acquirer's capital structure or will be  
detrimental to the public interest or the interest of investors or consumers or 
the proper functioning of the resulting system.                                 

 The proposed Merger will not unduly complicate the capital structure of
Emera or its public-utility subsidiaries. The proposed Merger does not involve  
the creation of any minority interests nor will the existing senior debt and    
senior equity securities of Emera be affected by the Merger.                    

Section 10(b)(3) also directs the Commission to consider whether an   
acquisition will be detrimental to the public interest or the interest of       
investors or consumers, or the proper functioning of the resulting holding      
company system. The acquisition of BHE will not be detrimental to the protected 
interests or to the proper functioning of the resulting holding company system. 
The BHE board of directors determined that BHE's small size, and the possibility
of further shrinkage of its revenue base as additional aspects of its business  
become subject to competition, would make it increasingly difficult to maintain 
regulated rates at reasonable levels and attract capital on reasonable terms.   

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70/ See Northeast Utilities, Holding Co. Act Release No. 25548 (June 3, 1992),  
modified on other grounds, Holding Co. Act Release No. 25550 (June 4, 1992)     
(noting that fees and expenses must bear a fair relation to the value of the    
company to be acquired and the benefits to be achieved in connection with the   
acquisition). The total estimated fees and expenses of $4.72 million represent  
2.4% of the value of the consideration Emera will pay for BHE, and are          
consistent with percentages previously approved by the Commission. See, e.g.,   
Entergy Corp., Holding Co. Act Release No. 25952 (Dec. 17, 1993) (fees and      
expenses represented approximately 1.7% of the value of the consideration paid  
to the shareholders of Gulf States Utilities); Northeast Utilities, Holding Co. 
Act Release No. 25548 (June 3, 1992) (approximately 2% of the value of the      
assets to be acquired).                                                         

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BHE's board of directors believes that Emera and its principal subsidiary, NSPI,
represent a good fit for BHE. NSPI serves a geographical area like BHE's, and   
its management has experience operating a utility with challenges similar to    
those faced by BHE. In turn, BHE's management and employees have experience     
doing business with Canadian utility companies. The BHE board of directors also 
believes that the Merger will provide future benefits to BHE's customers and    
employees as the best practices of both firms are shared and implemented.       
Perhaps more importantly, the MPUC, the agency that is most directly responsible
for the protection of Maine utility consumers, has approved the Merger./71      

4. Section 10(c)(1)                                                   

Under this section, the Commission cannot approve "an acquisition of  
securities, or of any other interest, which is unlawful under the provisions of 
Section 8 or is detrimental to the carrying out of the provisions of Section    
11." Section 8, which governs the combination of electric and gas operations,   
does not apply to the instant transaction. Section 11 requires that a registered
holding company should be generally limited to a single integrated              
public-utility system. In connection with its previous order, the Commission    
concluded that BHE's existing utility operations constitute a single, integrated
electric-utility system within the meaning of the Act./72 The proposed Merger   
will impose a new holding company structure over the existing BHE system; it    
will not affect the integration of that system./73                              

     Section 11 also requires that a registered holding company system should be
limited to "such other businesses as are reasonably incidental, or economically 
necessary or appropriate to the operations of such integrated public utility    
system." Although the Commission has traditionally interpreted this provision to
require an operating or functional relationship/74 between the non-utility      
activity and the system's core non-utility business, in its release promulgating

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71/ See Exhibit D-2, Order of the MPUC dated January 5, 2001 and infra Item     
3.B.7.e.                                                                        

72/ Bangor Hydro-Electric Company, Holding Co. Act Release No. 27094 (Oct. 25,  
1999).                                                                          

73/ Supra at 12.                                                                

74/ Michigan Consolidated Gas. Co., 44 SEC 361 (1970), affd. Michigan           
Consolidated Gas Company v. SEC, 444 F.2d 913 (1970).                           

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Rule 58,/75 the Commission stated that it "has sought to respond to developments
in the industry by expanding its concept of a functional relationship." The     
Commission concluded in the Rule 58 Release "that various considerations,       
including developments in the industry, the Commission's familiarity with the   
particular non-utility activities at issue, the absence of significant risks    
inherent in the particular venture, the specific protections provided for       
consumers and the absence of objections by the relevant state regulators, made  
it unnecessary to adhere rigidly to the types of administrative measures" used  
in the past. Furthermore, in its 1995 report entitled "The Regulation of        
Public-Utility Holding Companies" (the "1995 Report"),/76 the Commission's staff
recommended that the Commission replace the use of bright-line limitations with 
a more flexible standard that would take into account the risks inherent in the 
particular venture and the specific protections provided for consumers./77 With 
respect to diversified activities that fall outside the scope of Rule 58, the   
Commission staff recommended "a more flexible interpretation of the provisions  
of the Act concerning diversification. Specifically the staff advocated an      
interpretation of the language of Section 11(b)(1) that would allow registered  
holding companies to engage in non-utility businesses that are economically     
appropriate and in the public interest, regardless of whether such activities   
are ancillary to the utility business."/78                                      

                  As set forth below, all of Emera's non-utility  businesses are
retainable.                                                                     

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75/ Exemption of Acquisition by Registered Public-Utility Holding Companies of  
Securities of Nonutility Companies Engaged in Certain Energy-Related and        
Gas-Related Activities, Holding Co. Act Release No. 26667 (February 14, 1997)   
("Rule 58 Release").                                                            

76/ The Regulation of Public-Utility Holding Companies, Report of the Division  
of Investment Management to the U.S. Securities and Exchange Commission, (June  
1995).                                                                          

77/ 1995 Report at 81-87, 91-92.                                                

78/ 1995 Report at 91.                                                          

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   1. NS Power Services Ltd., a wholly owned subsidiary of Emera, was in the
business of providing energy services. NS Power Services Ltd. is currently      
inactive./79                                                                    

1.1. NSP Trigen Inc., is 50% owned by NS Power Services Ltd., and the 
remainder is owned by a nonaffiliate. NSP Trigen Inc. is currently inactive.    

   2. Enercom Inc., a wholly owned subsidiary of Emera, is a holding company
for Emera's diversified activities within the energy industry. Enercom Inc. is  
retainable as an intermediate holding company under New Century Energies, Inc., 
Holding Co. Act Release No. 27000 (April 7, 1999) (authorizing organization and 
capitalization of one or more "intermediate" nonutility subsidiaries to act as  
holding companies over other nonutility subsidiaries).                          

     2.1 Cablecom Ltd., is a wholly owned subsidiary of Enercom Inc. The company
is engaged in the design and engineering, project management, construction,     
structured cabling, maintenance and installation of fiber optic and wireless    
communications applications. Before the Merger, Cablecom Ltd. ("Cablecom") will 
file an application with the Federal Communications Commission ("FCC") to       
qualify itself and its subsidiaries as exempt telecommunications companies      
("ETCs") under Section 34(a) of the Act. As an ETC, Cablecom will be retainable.

 2.1.1 Fibretek Inc., is a wholly owned subsidiary of Cablecom Ltd. that
engages in the same activities as its parent. Accordingly, Fibretek Inc. will   
qualify as an exempt telecommunications company under Section 34(a) of the Act  
and will be retainable.                                                         

2.2 Emera Fuels Inc. ("Emera Fuels") is a wholly-owned subsidiary of  
Enercom Inc. that is engaged principally in the retail and wholesale supply of  
furnace and heavy fuel oil, but also to a much lesser extent, lubricants, diesel
fuel and gasoline products, in Nova Scotia and southern New Brunswick. Emera    
Fuels had revenues of $49.7 million in 2000 (its cost of fuel oil sold was $45.6

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79/ In the event Emera seeks to reactivate any of its inactive Subsidiaries it  
will file a post-effective amendment seeking authorization to engage in the     
proposed activities if such authorization is required under the 1935 Act.       

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million), compared with Emera's total revenues of $604.2 million./80 Emera Fuels
is retainable because it is an energy supply and marketing company. This is a   
similar business to the business permitted under Rule 58(b)(1)(v), the          
"brokering and marketing of energy commodities, including but not limited to    
electricity, natural or manufactured gas and other combustible fuels."          

    The Commission has also approved the retention of the following businesses
that supply energy products other than electricity and natural gas on a         
wholesale and retail basis: Whiting Petroleum Corp., a subsidiary of Alliant,   
"purchases, develops, and produces crude oil and natural gas," WPL Holdings,    
Inc., Holding Co. Act Release No. 26856 (April 14, 1998); Harbor Coal Company,  
an indirect subsidiary of NiSource, Inc., pulverizes coal and delivers it to a  
manufacturing facility for use as blast furnace fuel, NiSource, Inc., Holding   
Co. Act Release No. 27265 (November 1, 2000); SCANA Energy Marketing Inc.,      
markets electricity, natural gas and other light hydrocarbons, SCANA Corp.,     
Holding Co. Act Release No. 27133 (February 9, 2000); Energy East Solutions,    
LLC, sells natural gas, fuel oil and other services and markets a full range of 
energy-related planning, financial, operational and maintenance services to     
commercial, industrial and municipal customers, Energy East Corp., Holding Co.  
Act Release No. 27224 (August 31, 2000); EnergyNorth Propane, Inc. sells propane
to approximately 15,300 customers in New Hampshire, Keyspan Corp., Holding Co.  
Act Release No. 27271 (November 7, 2000). Applicants submit that the            
distribution of furnace oil, fuel oil and related products is essentially no    
different than the distribution of propane or coal for use as fuel. All of these
activities are related to a registered holding company system's role of energy  
and energy service provider and these activities are well within the existing   

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80/ Only 4% of Emera Fuels' revenues were derived from wholesale sales of       
gasoline. Emera Fuels has no retail gasoline sales operations. The overwhelming 
majority of Emera Fuels' revenues are derived from the wholesale sale of heavy  
and light fuel oils (50%) and the retail sale of light fuel oil (46%),          
principally by delivery to homes, commercial and industrial facilities for use  
as a heating fuel. These activities are part of Emera Fuels strategy of         
delivering total energy products and services.                                  

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base of expertise, experience and knowledge of Emera. Moreover, considering the 
current scale of Emera Fuels' operations, these activities present no           
significant risks to the financial soundness of the Emera System. Consequently, 
Emera Fuels is retainable under the Act.                                        

 3. Stellarton Basin Coal Gas Inc. is a wholly owned subsidiary of Emera
that was formed to participate in a joint venture to explore and develop methane
gas reserves in Nova Scotia. This type of business is retainable under American 
Electric Power Company, Inc., Holding Co. Act Release No. 26933 (November 2,    
1998) (authorizing AEP to acquire energy assets including, without limitation,  
natural gas production, gathering, processing, storage and transportation       
facilities and equipment, liquid oil reserves and storage facilities, and       
associated facilities) (the "AEP Energy Assets Order").                         

4. Strait Energy Inc. is a wholly owned subsidiary of Emera that sells
steam energy. The sale of thermal energy is a retainable business under Rule    
58(b)(1)(vi).                                                                   

  5. 510845 N.B. Inc. is a wholly owned subsidiary of Emera engaged in the
provision of utility services, in particular, the supply and maintenance of     
electric transformers. This type of business is retainable under Rule           
58(b)(1)(vii).                                                                  

    6. NSP Pipeline Management Ltd. is a wholly owned subsidiary of Emera that
owns a 12.5% interest in Maritimes and Northeast Pipeline Management Ltd. NSP   
Pipeline Management Ltd. is retainable under the AEP Energy Assets Order.       

    6.1 Maritimes and Northeast Pipeline Management Ltd. is 12.5% owned by NSP
Pipeline Management Ltd. and the remainder is owned by nonaffiliates. Maritimes 
and Northeast Pipeline Management Ltd. is the general partner of, and owns a    
0.125% interest in, Maritimes and Northeast Pipeline Limited Partnership.       
Maritimes and Northeast Pipeline Management Ltd. operates and manages the       
Canadian portion of the Maritimes and Northeast Pipeline, a natural gas pipeline
with its origin in Nova Scotia and its terminus near Boston. Maritimes and      
Northeast Pipeline Management Ltd. is retainable under the AEP Energy Assets    
Order.                                                                          

7. NSP Pipeline Inc. is a wholly owned subsidiary of Emera that owns a
12.375% interest in the Maritimes and Northeast Pipeline Limited Partnership.   
NSP Pipeline Inc. is retainable under the AEP Energy Assets Order.              

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   7.1 Maritimes and Northeast Pipeline Limited Partnership is 12.375% owned
by NSP Pipeline Inc. and the remainder is owned by nonaffiliates. Maritimes and 
Northeast Pipeline Limited Partnership owns the Canadian portion of the         
Maritimes and Northeast Pipeline. Maritimes and Northeast Pipeline Limited      
Partnership is retainable under the AEP Energy Assets Order.                    

8. NSP US Holdings Inc. is a wholly owned subsidiary of Emera that    
indirectly owns a 12.5% interest in Maritimes and Northeast Pipeline L.L.C.     
through the holding companies identified below. NSP US Holdings Inc. is         
retainable under the AEP Energy Assets Order.                                   

     8.1 NSP Investments Inc., a wholly owned subsidiary of NSP US Holdings Inc.
was established to facilitate the financing of the acquisition of Emera's       
interest in Maritimes and Northeast Pipeline, L.L.C. It is retainable under the 
AEP Energy Assets Order.                                                        

  8.2 Scotia Holdings Inc. is a wholly owned holding company subsidiary of
NSP US Holdings Inc. Scotia Holdings Inc. is retainable under the AEP Energy    
Assets Order.                                                                   

     8.2.1 Nova Power Holdings Inc. is a wholly owned holding company subsidiary
of Scotia Holdings Inc. Nova Power Holdings Inc. is retainable under the AEP    
Energy Assets Order.                                                            

     8.2.1.1 Scotia Power U.S. Ltd. is a wholly owned holding company subsidiary
of Nova Power Holdings Inc.. Scotia Power U.S. Ltd. is retainable under the AEP 
Energy Assets Order.                                                            

     8.2.1.1.1 Maritimes and Northeast Pipeline, L.L.C. is 12.5% owned by Scotia
Power U.S. Ltd. and the remainder is owned by nonaffiliates. Maritimes and      
Northeast Pipeline L.L.C. owns the U.S. portion of the Maritimes and Northeast  
Pipeline. Maritimes and Northeast Pipeline, L.L.C. is retainable under the AEP  
Energy Assets Order.                                                            

9. 1447585 Ontario Ltd. is a wholly owned subsidiary of Emera that was
incorporated in the event it was needed in connection with the acquisition of   
BHE. 1447585 Ontario Ltd. is inactive and will not be used to effect the Merger.

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     10. 3054167 Nova Scotia Ltd. is a wholly owned subsidiary of Emera that was
incorporated to acquire an interest in the Sable Offshore Energy Project. It is 
retainable under the AEP Energy Assets Order.                                   

 As set forth below, all of BHE's active non-utility businesses also are
retainable:                                                                     

  1. Bangor Energy Resale, Inc., a wholly owned subsidiary of BHE, permits
BHE to use a power sales agreement as collateral for a bank loan. Bangor Energy 
Resale, Inc. is retainable as a special-purpose financing entity under The      
Southern Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000); New Century 
Energies, Inc., Holding Co. Act Release No. 27000 (April 7, 1999) (SEC approved 
a special-purpose subsidiary of trust that was formed for the purpose of        
facilitating a financing transaction); and Exelon Corporation, Holding Co. Act  
Release No. 27256 (Oct. 19, 2000) (authorizing retention of several existing    
special-purpose financing entities).                                            

     2. CareTaker, Inc. ("CareTaker"), a wholly owned subsidiary of BHE provides
security alarm services. Before the Merger, CareTaker will file an application  
with the FCC to qualify itself as an ETC under Section 34(a) of the Act. As an  
ETC, CareTaker will be retainable.                                              

    3. Bangor Fiber Company, Inc. ("Bangor Fiber") owns and leases fiber optic
communications cable. Before the Merger, Bangor Fiber will file an application  
with the FCC to qualify itself as an ETC under Section 34(a) of the Act. As an  
ETC, Bangor Fiber will be retainable.                                           

4. Bangor Line Company constructs and maintains transmission and      
distribution lines and provides engineering services. It is retainable under    
Rule 58(b)(1)(vii).                                                             

 The remaining BHE Nonutility Subsidiaries presented below own or manage
interests in water rights or real-estate that were acquired and used in         
connection with BHE's utility business. These subsidiaries are all presently    
inactive and are retainable under Energy East Corp., Holding Co. Act Release No.
27224 (August 31, 2000) (a corporation formed to hold property used in          
connection with public utility operations is retainable, but corporation commits

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to divest holdings of agricultural lands without utility purpose); Conectiv,    
Inc., Holding Co. Act Release No. 26832 (February 25, 1998) (corporation that   
manages real estate that was acquired for an intended utility purpose that has  
ceased to exist is retainable as a vehicle for the development and sale of such 
properties); and Central Maine Power Co., Holding Co. Act Release No. 7985      
(February 24, 1948) (corporation owning land around dams and flowage rights is  
retainable because it allows control of riparian rights needed to assure the    
maximum flow of water to certain hydro-electric dams).                          

The following subsidiaries fall into this category:                   

     3. East Branch Improvement Company ("EBIC") formerly provided water storage
services for hydroelectric facilities. BHE owns 60% of the common stock of EBIC.

     3.1 Godfrey's Falls Dam Company holds rights that would permit future water
storage development in the basin of the East Branch of the Penobscot River.     
Godfrey's Falls Dam Company is wholly owned by EBIC.                            

 3.2 The Sawtelle Brook Dam & Improvement Company controls certain water
rights in the basin of the East Branch of the Penobscot River. The Sawtelle     
Brook Dam & Improvement Company is wholly owned by EBIC.                        

    4. The Sebois Dam Company improved the navigation of certain of the Sebois
waters entering the Piscataquis River. The Sebois Dam Company is wholly owned by
BHE.                                                                            

5. The Pleasant River Gulf Improvement Company was engaged in water   
improvement. It is wholly owned by BHE.                                         

BHE also holds 7% of the outstanding common stock of Maine Yankee, a  
company that owns and, prior to its permanent closure in 1997, operated an 880  
MW nuclear generating plant in Wiscasset, Maine. Maine Yankee is being          
decommissioned and should be retainable until that process is complete and the  
facility can be sold.                                                           

  Applicants also request that the Commission authorize the acquisition of
certain projects that Emera and BHE have in development. Emera has offered to   
purchase 8.4% of the Sable Offshore Energy Project ("SOEP") infrastructure      

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assets comprising a gas processing plant at Goldboro, Nova Scotia; a natural gas
liquids fractionation plant at Point Tupper, Nova Scotia; a natural gas liquids 
line connecting the Goldboro and Point Tupper operations; and offshore          
production platforms and sub-sea gathering pipelines. The AEP Energy Assets     
Order supports the acquisition of SOEP. Applicants request Commission           
authorization to acquire the SOEP assets, if they have not been acquired prior  
to Emera's registration under the Act, and to retain the SOEP assets if they    
have already been acquired when Emera registers.                                

5. Section 10(c)(2)                                                   

 The standards of Section 10(c)(2) are satisfied because the Merger will
tend toward the economical and efficient development of an integrated public    
utility system, thereby serving the public interest, as required by that section
of the Act.                                                                     

    The Commission has previously found that a transaction such as the instant
one, involving the imposition of a new holding company over an existing         
integrated system, results in financial and organizational benefits for the     
utility system./81                                                              

    The Merger will result in significant financial benefits for shareholders,
rate payers and the community in general. As a result of the Merger, BHE will be
in a position to achieve synergies typically associated with a merger of two    
similar businesses. For example, cost of capital and risks will be reduced as a 
result of BHE's affiliation with a larger and more diversified company. In terms
of future rates, Emera has committed to freeze BHE's total PUC jurisdictional   
revenue requirement until MPUC consideration and approval of an alternative rate
plan.                                                                           

Emera plays a vital role in the economy of Nova Scotia as does BHE in 
Maine. Both companies serve a very similar customer base, including substantial 
service to the pulp and paper industry. Emera understands the importance of this
industry to the economy of the region as a whole and is committed to providing  
reliable power at fair rates that allow the industry to continue to operate on a

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81/ WPL Holdings, Inc., Holding Co. Act Release No. 25377 (Sept. 18, 1991); see 
also Chevron Corp., Holding Co. Act Release No. 27122 (Dec. 27, 1999); Roanoke  
Gas Co., Holding Co. Act Release No. 26996 (April 1, 1999); BEC Energy, Holding 
Co. Act Release No. 26874 (May 15, 1998); Western Resources, Inc., Holding Co.  
Act Release No. 26783 (Nov. 24, 1997).                                          

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competitive basis with other pulp and paper producers around the world. Emera   
and BHE also serve other common customer groups and Emera will continue its     
commitment to these customers in its operation of the combined entity after the 
Merger.                                                                         

In addition, the Merger will help ensure continuity of high quality   
customer service. The Merger will permit BHE access to management resources     
available from Emera, a company with historic success in the delivery of        
services. Emera and BHE will share best practices learned from their extensive  
experience in operating their respective utility systems.                       

                  The  Merger   will   provide   substantial   benefits  to  the
communities within and outside of BHE's service area. After the Merger, BHE will
maintain  its  community   involvement  and  charitable   contributions  at  the
pre-Merger level.  Seventy-seven Maine municipalities,  approximately 15% of the
communities  in the State,  will benefit as a result of the 825,000  outstanding
warrants held by those  municipalities  through the Municipal Review  Committee,
Inc.  ("MRC"),  in conjunction  with BHE's  involvement with PERC. The increased
value in market price of the  warrants  will result in an  incremental  value of
approximately $9.1 million, a substantial profit for the municipalities./82     

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82/ The MRC is the designated agent of the 130 municipalities that entered into 
long-term waste disposal agreements with PERC. BHE, PERC Management Company     
L.P., Energy National, Inc. and the MRC entered into a series of agreements to  
modify certain rights under the power purchase agreement between PERC Management
Company and BHE which agreements provided for the issue of 2,000,000 warrants to
the parties. The MRC received 1,000,000 warrants and PERC Management and Energy 
National received the other 1,000,000. As of May 22, 2001 there are 1,042,287   
warrants outstanding held as follows: MRC - 720,500, PERC Management - 178,215, 
and Energy National - 143,572. Each warrant entitles the holder to purchase up  
to one million shares of BHE common stock at an exercise price of $7 per share. 
Under the warrant, BHE may pay cash equal to the difference between the exercise
price and the market price of BHE common stock at the exercise date, multiplied 
by the number of warrant shares exercised. By agreement dated December 12, 2000,
MRC and BHE agreed that upon MRC's exercise of the warrant on the date of the   
Merger, BHE will pay MRC $19.50 ($26.50-$7.00) for each warrant share by        
delivery of a promissory note bearing interest at 5% per annum and maturing in  
June 2008. Although BHE cannot compel the other warrant holders to exercise     
their warrants, BHE expects that they will be exercised. Warrants held after the
closing of the Merger are entitled to cash payment only, not equity securities  
of BHE.                                                                         

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On October 24, 2000, BHE shareholders approved the Merger, which will 
result in a cash payment to shareholders of $26.50 per share. The closing price 
of BHE on June 29, 2000, the day before the Merger announcement, was $15.13 per 
share. Because BHE shareholders are protected by the purchase of their shares at
a premium and their voting rights, it is clear that the Merger will be          
beneficial to shareholders.                                                     

   Although some of the anticipated benefits are strategic and will be fully
realizable only in the longer term, they are properly considered in determining 
whether the standards of Section 10(c)(2) are met./83 The Commission has        
recognized that potential benefits are entitled to be considered, regardless of 
whether they can be precisely estimated: "[S]pecific dollar forecasts of future 
savings are not necessarily required; a demonstrated potential for economies    
will suffice even where these are not precisely quantifiable."/84               

6.   Section 10(f)                                          

Section 10(f) provides that:                      

             The Commission shall not approve any acquisition as to which an
             application is made under this section unless it appears to the
              satisfaction of the Commission that such State laws as may apply
            in respect to such acquisition have been complied with, except
             where the Commission finds that compliance with such State laws
            would be detrimental to carrying out the provisions of section
11.                                               

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83/ National Grid Group plc, supra; see American Electric Power Co., 46 S.E.C.  
1299, 1320-1321 (1978).                                                         

84/ Centerior Energy Corp., Holding Co. Act Release No. 24073 (April 29, 1986)  
(citation omitted). See also Energy East Corporation, Holding Co. Act Release   
No. 26976 (Feb. 12, 1999) (authorizing acquisition based on strategic benefits  
and potential, but unquantifiable, savings).                                    

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The MPUC is the sole state regulator with jurisdiction over the Merger. As      
explained above, the MPUC has approved the Merger.                              

 By order dated January 5, 2001, the MPUC approved a stipulation entered
into among the Public Advocate, the Municipal Review Committee, the Industrial  
Energy Consumers Group, Emera, BHE, MEPCO and Chester SVC (the "Stipulation")   
and incorporated the Stipulation by reference into its order/85 The approval of 
the Stipulation resolved all issues in the proceeding before the MPUC and       
permits the Merger to proceed./86                                               

  The Stipulation subjects Emera and BHE to several conditions intended to
preserve MPUC authority and to assure BHE's service quality. In particular, the 
Stipulation provides that:                                                      

    o    Applicants (i.e., Emera, BHE, MEPCO and Chester SVC) will comply with
     Maine statutes and MPUC regulations regarding reorganizations and
        affiliated transactions of BHE. To the extent that the activities of
      Emera and any of its affiliates relate to or in any way impact the
operations, costs or revenues of BHE in Maine, Emera and its
          affiliates will be subject to MPUC jurisdiction for discovery purposes
         and participate as a party in any proceeding when deemed necessary by
the MPUC.                                                   

     o    All contracts or transactions between BHE and its affiliated interests
         that constitute affiliated transactions which require approval of the
        MPUC under Maine law must explicitly provide that no charges made or
     incurred, and that no costs incurred or revenues earned under the
          contracts, will be reflected in BHE's rates except as permitted by the
        MPUC in accordance with Maine law, except where compliance with both
         state and federal requirements is impossible or where compliance with
     state law would cause BHE or an affiliate to violate federal law.
    Further, to the extent that the SEC must approve such contracts,
         Applicants agree to petition the SEC for an explicit finding that the
         terms in the contract required by this provision are not inconsistent
with "SEC law or regulation."                               

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85/ The MPUC order and the Stipulation is included in Exhibit D-2 to this       
Application.                                                                    

86/ The Stipulation at 3 notes that "[t]he parties agree that the Commission    
issue an order which approves and adopts this Stipulation and finds that,       
subject to the provisions herein, the proposed reorganizations are consistent   
with the interests of the ratepayers and investors of the Maine public utility  
Applicants and approves the proposed reorganizations under 35-A MRSA ss.708 and 
such other provisions in Title 35-A as might be applicable.                     

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    o    Applicants agree to waive the defense that the MPUC's jurisdiction to
          approve a reorganization or affiliate transaction of BHE or to set the
          rates of BHE with regard to a transaction between BHE and an affiliate
      is preempted by the existence or exercise of SEC jurisdiction over
  reorganizations or affiliate transactions of BHE, except where
        compliance with both state and federal requirements is impossible or
      where compliance with state law would cause BHE or an affiliate to
violate federal law.                                        

    o    Emera will make available to the MPUC upon request, and at a location
        in the State of Maine convenient to the MPUC, such books and records
         of Emera and its affiliates as the MPUC may require Emera to produce.
  Emera is entitled to notice and opportunity to be heard on the
        production requests and may be accorded confidential treatment where
appropriate.                                                

o    The parties agree that BHE's service quality not deteriorate as a
       consequence of the Merger. To maintain service quality, performance
          consistent with certain service quality benchmarks and related reports
     were required. The remedy for failure to maintain service quality
could include a prohibition on the payment of dividends.    

o    BHE is required to file various capital budget and expenditure   
      information and, in the event its actual capital expenditures fall
      materially below its budgeted capital expenditures, or if the MPUC
   should otherwise become concerned about BHE's capital budget or
         expenditures, the MPUC may open an investigation to inquire into such
capital budget issues and into what remedy, if any, would be
appropriate.                                                

o    The MPUC may order the divestiture of BHE by Emera upon a        
      determination by the Commission after notice and opportunity to be
          heard that no other available remedy is adequate to reasonably address
the harm./87                                                

The parties to the Stipulation agreed and recommended that the MPUC's 
acceptance of the Stipulation constitutes a finding that the MPUC has the       
authority and resources to protect ratepayers subject to its jurisdiction and   
that it intends to exercise its authority./88 The extensive powers of the MPUC  
over Emera and BHE demonstrate that the proposed acquisition would not be       
detrimental to the public interest or the interest of investors or consumers.   
The judgment of the MPUC is entitled to considerable deference in this matter.  

     The acquisition of BHE by Emera will not give rise to any of the evils that
the Act was intended to address. Emera is a publicly held company subject to    

----------                                                                      

87/ Stipulation at 5-10.                                                        

88/ Stipulation at 10.                                                          

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continuous reporting requirements under the Canadian securities laws. A         
transaction that links companies in a narrowly defined geographic area does not 
create a problem of "scatteration" for purposes of the Act.                     

    The Commission may also draw comfort from the findings of the order of the
Federal Energy Regulatory Commission ("FERC") approving the Merger. The FERC    
found that the Merger was consistent with the public interest, that the Merger  
did not pose competitive concerns, that there would be no adverse rate effects  
and the Merger would not adversely effect either federal or state regulation./89

   There is a further consideration that argues for Commission authorization
on the facts of this matter. The proposed transaction will unite Canadian and   
U.S. utilities. As the Commission in Gaz Metropolitain noted, the U.S. and      
Canada enjoy a unique relationship. Both countries have a long history of       
friendship and cooperation evidenced by, among other things, the North American 
Free Trade Agreement ("NAFTA") and the NAFTA Implementation Act (Pub. L.        
103-182, 107 Stat. 2057-2225 (1993)), which were "designed to remove barriers to
trade and enhance investment opportunities between the United States and        
Canada."/90                                                                     

----------                                                                      

89/ The order of the FERC approving the Merger is included in Exhibit D-5 to    
this Application.                                                               

90/ Gaz Metropolitain at 15. In Gaz Metropolitain, the Commission found that the
combination of the Canadian and Vermont gas operations resulted in a single     
integrated gas utility system. While Emera could acquire a firm contract path to
interconnect the Canadian and U.S. electric operations, it is not necessary to  
do so because NSPI intends to conduct its affairs so as to qualify for exemption
as a FUCO. Thus, although the transaction will require prior approval under     
Sections 9 and 10, the question of integration will be confined to the BHE      
utility operations, which the Commission has previously found to be an          
integrated electric utility system. Section 10(c)(2) of the Act is satisfied    
because BHE is currently an integrated electric utility system and will remain  
so after the Merger. Because here, as in Gaz Metropolitain, the transaction will
result in a single, integrated public-utility system, the Emera-BHE Merger falls
comfortably within the Gaz Metropolitain precedent.                             

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 In a letter to the Commission in support of the Merger, the Governor of
Maine, Angus King, Jr., states that Maine and New England have long fostered a  
close relationship with Canada, particularly the eastern Canadian provinces. For
example, a conference of New England Governors and Eastern Canadian Premiers has
worked for the past 26 years to promote the common economic, cultural and       
political interests of the region which is viewed by many as an interdependent  
market. Governor King called the Merger a "good fit" and stated that he viewed  
it as "being entirely consistent with the economic development aims of Maine and
with the goal of strengthening the ties between New England and Eastern         
Canada."/91                                                                     

     The Stipulation requires the Applicants to petition this Commission to make
an explicit finding in its order approving the Merger "that its approval of the 
merger transaction does not preempt MPUC exercise of its jurisdiction under     
Maine law with respect to reorganizations, affiliate transactions of BHE or     
ratemaking for BHE regarding the costs associated with its affiliate            
transactions, and that it is the SEC's intention that its approval of the merger
transaction does not affect the MPUC's right to review and disallow BHE's costs 
for services rendered between BHE and its affiliated interests that might       
otherwise be subject to recovery in rates./92 Applicants request that the       
Commission make the above findings explicitly in its order approving this       
Application.                                                                    

7. Intermediate Holding Companies                                     

   Following the Merger, Emera will hold a subsidiary interest in three U.S.
utility companies, BHE, MEPCO and Chester SVC. As illustrated by the post-Merger
organization chart in Exhibit E-1, Emera will hold BHE through two intermediate 
holding companies. It is common practice for foreign-based corporations to hold 
an interest in a corporation that is outside of the home country through one or 
more intermediary companies. This ownership structure is used to minimize taxes 

----------                                                                      

91/ Letter from Angus S. King, Jr., Govenor of Maine to Jonathan G. Katz,       
Secretary of the Securities and Exchange Commission (dated February 22, 2001).  

92/ See Stipulation at 5.                                                       

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on the repatriation of foreign subsidiary profits./93 Each of the intermediate  
holding companies will be organized in the State of Delaware and will have no   
utility affiliates, other than BHE and its utility subsidiaries, except as      
authorized by the Commission. The intermediate holding companies will be        
wholly-owned, directly or indirectly, by Emera and will have no third-party     
public or private institutional equity or debt holders. The intermediate holding
companies will be capitalized with equity and/or debt, all of which will be held
either by Emera or an intermediate holding company.                             

    BHE, in turn, will hold a minority (14.2%) interest in MEPCO directly, and
a 50% interest in Chester SVC through its ownership of Bangor Var. Each of the  
intermediate holding companies, BHE and Bangor Var will be a holding company    
within the meaning of Section 2(a)(7) of the Act. As such each would be required
to register with the Commission, and comply with the various requirements for   
registered holding companies, unless able to qualify for exemption.             

    Section 3 of the Act provides that the Commission upon application "shall"
by order exempt any person from the provisions of the Act if such person meets  
the requirements for any exemption contained in Sections 3(a) and if the        
exemption is not detrimental to the public interest or the interest of investors
or consumers. Of interest here, Section 3(a)(1) of the Act provides an exemption
where a                                                                         

    holding company, and every subsidiary company thereof which is a
   public utility company from which such holding company derives,
directly or indirectly, any material part of its income, are
     predominantly intrastate in character and carry on their business
     substantially in a single state in which such holding company and
every such subsidiary company thereof are organized.        

Because they do not qualify for exemption, the intermediate holding companies   
will register under the Act. However, for the reasons that follow, BHE and      
Bangor Var request and are entitled to an order under Section 3(a)(1) of the Act

----------                                                                      

93/ See The National Grid Group plc, Holding Co. Act Release No. 27154 (March   
15, 2000) at 42-43 (employing intermediate holding companies to maximize tax    
relief in the U.K. and noting further that U.S. holding companies use similar   
structures in connection with their foreign investments).                       

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exempting them as holding companies from the Act. BHE and Bangor Var will       
continue to be direct or indirect subsidiaries of Emera and therefore subject to
the Act's provisions relating to subsidiaries. In addition, BHE and Bangor Var  
commit not to engage in any transactions such as upstream loans or certain      
service transactions that would otherwise be prohibited for registered holding  
companies.                                                                      

  In the first instance, the inquiry regarding exemption concerns material
utility subsidiaries. Chester SVC is an immaterial utility subsidiary because it
provides no income or revenue to Bangor Var. MEPCO is also immaterial. BHE's    
14.2% investment in MEPCO is accounted for on the equity method. For the twelve 
months ended December 31, 2000, BHE's proportional interest in MEPCO's income   
was approximately $224, 000. This income is accounted for under the equity      
method and is applied to offset BHE's expenses and, consequently, benefits BHE's
ratepayers. BHE is the sole material utility subsidiary in the Emera system.    

In the second part of the Section 3(a)(1) evaluation, both the holding
company and every material utility subsidiary must be predominantly intrastate  
in character and carry on its business substantially in a single state in which 
both the holding company and subsidiary are organized. BHE and Bangor Var are   
predominantly Maine companies. All of BHE's utility operating revenues are      
derived from utility operations conducted in Maine./94 Bangor Var holds only an 
interest in Chester SVC, whose sole utility assets are located in Maine. BHE and
Bangor Var are also organized in Maine.                                         

Because BHE and Bangor Var will be regulated as subsidiaries of a     
registered holding company, a grant of an exemption under Section 3(a)(1) with  
respect to their holding company status would not be detrimental to the public  

----------                                                                      

94/ See Sierra Pacific Resources, Holding Co. Act Release No. 24566 (Jan. 28,   
1988), aff'd sub nom. Environmental Action, Inc. v. SEC, 895 F.2d 1255 (9th Cir.
1990) (exemption granted where out-of-state operations represented approximately
9.9% of the holding company's utility revenues.                                 

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interest or the interest of investors or consumers. For these reasons, the      
Commission should grant the requested exemptions.                               

8. Financing the Emera System                                         

  Emera's capital structure as of March 31, 2001, and adjusted to show the
effect of the Merger, is shown in the following table:                          

                                                        [Enlarge/Download Table]


-------------------------------------------------------------------------------------------------------------
                                          Emera Capital Structure                                            
-------------------------------------------------------------------------------------------------------------
                         Emera Pre-Merger          BHE Pre-Merger                                            
-------------------- ------------------------- ---------------------- --------- ------------- ---------------
                     $           % of Total    $          % of        Adjust-    Pro Forma      % of Total   
                     millions   Capitaliza-    millions   Total       ments     Capitaliza-     Pro Forma    
                                tion                      Capitali-             tion            Capitaliza-  
                                                          zation                                tion         
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
                                                                                                             
Common                   786.8           39.1      137.3        42.4   (137.3)         786.8            33.5 
stockholders'                                                                                                
equity.                                                                                                      
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
Preferred stock          175.4            8.7        4.7         1.5        --         180.1             7.7 
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
Minority interests          --             --         --          --        --            --              -- 
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
Long-term debt           848.9           42.2      181.8        56.1        --       1,030.7            43.9 
(including current                                                                                           
portion)                                                                                                     
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
Short-term debt          200.9           10.0         --         0.0     151.8         352.7            15.0 
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------
Total                  2,011.9            100      323.8         100                 2,350.2             100 
capitalization                                                                                               
-------------------- ---------- -------------- ---------- ----------- --------- ------------- ---------------


Adjustment Notes                                                                

Common equity                                                                   

Upon merger, BHE's net assets and liabilities are recorded on Emera's 
balance sheet. Consolidated common equity is unchanged.                         

Short term debt                                                                 

 The purchase will be financed with proceeds from short term investments
currently held by Emera and short term debt.                                    

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The  capital  structure  for Emera and BHE in the  preceding  two years is shown
below.                                                                          

                                                        [Enlarge/Download Table]


-------------------------------------------------------------------------------------------------------------
                     Emera and BHE Capital Structures as of December 31, 1999 and 1998                       
-------------------------------------------------------------------------------------------------------------
                           Emera 1999            Emera 1998             BHE 1999              BHE 1998       
-------------------- ---------------------- --------------------- --------------------- ---------------------
                     $          % of        $          % of       $          % of       $          % of      
                     millions   Total       millions   Total      millions   Total      millions   Total     
                                Capitali-              Capitali-             Capitali-             Capitali- 
                                zation                 zation                zation                zation    
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
                                                                                                             
Common                   636.7        34.1      615.7       33.6      132.7         39      118.9       27.5 
stockholders'                                                                                                
equity.                                                                                                      
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Preferred stock          156.3         8.4      135.1        7.4        4.7        1.5       12.3        2.9 
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Minority interests          --          --         --         --         --         --         --         -- 
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Long-term debt           857.2        45.9      842.7       46.0      202.8       59.6      288.5       66.8 
(including current                                                                                           
portion)                                                                                                     
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Short-term debt          216.5        11.6      239.1       13.0         --         --       12.0        2.8 
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Total                  1,866.6         100    1,832.6        100      340.2        100      431.7        100 
capitalization                                                                                               
-------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------


     The financing authorizations requested in the Application are substantially
similar to financing authorizations granted to other newly-formed 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 by the Commission, in particular,
the minimum 30% common equity standard and the commitment not to issue debt     
unless it is rated investment grade. The pro forma capitalization of the        
combined system presented above also illustrates that Emera will be financially 
sound upon consummation of the merger. 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.      

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ITEM 4. REGULATORY APPROVALS.                                                   

Set forth below is a summary of the regulatory approvals that will be 
obtained in connection with the acquisition.                                    

1. Antitrust                                                          

 The acquisition is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and the rules and regulations thereunder,   
which provide that certain acquisition transactions may not be consummated until
certain information has been furnished to the Antitrust Division of the         
Department of Justice and the Federal Trade Commission, and until certain       
waiting periods have been terminated or have expired. The Federal Trade         
Commission granted Emera early termination of the notice period on February 28, 
2001, thereby permitting consummation of the transaction as of that date.       

2. Federal Energy Regulatory Commission                               

    Under Section 203 of the Federal Power Act, the FERC has jurisdiction when
a public utility sells or otherwise disposes of facilities that are subject to  
its jurisdiction. A disposition is deemed made when there is a change in control
of the public utility that owns the facilities. By order dated January 24, 2001,
the FERC approved the Merger. See Exhibit D-5.                                  

3. Committee on Foreign Investment in the United States               

    Section 721 of the Defense Production Act of 1950 authorizes the Committee
on Foreign Investment in the United States ("CFIUS") to suspend or prohibit any 
merger, acquisition or takeover, by or with a foreign person, of a person       
engaged in interstate commerce in the United States when, in the Committee's    
view, the foreign interest exercising control over that person might take action
that threatens to impair the national security. Applicants have filed an        
application with the CFIUS.                                                     

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4. State Regulatory Approval                                          

Under Maine law, the approval of the MPUC is required for the indirect
transfer of control of BHE resulting from the Merger, under a standard that     
requires a finding that the Merger is consistent with the interests of BHE's    
customers and investors. In addition, in rendering a decision, the MPUC must    
find that it can continue to adequately regulate the reorganized utility. Under 
Maine law, once an application for approval is filed, the MPUC must act         
definitively within 180 days of the date of filing. Emera and BHE filed a joint 
petition with the MPUC on August 4, 2000.                                       

 By order dated January 5, 2001, the MPUC made all required findings and
approved the Merger. See Exhibit D-2.                                           

ITEM 5. PROCEDURE.                                                              

 The Commission is respectfully requested to issue and publish not later
than May 18, 2001 the requisite notice under Rule 23 with respect to the filing 
of this Application, such notice to specify a date not later than June 12, 2001 
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
15, 2001.                                                                       

                  Emera  believes  that a  recommended  decision by a hearing or
other  responsible  officer of the  Commission is not needed for approval of the
Merger.  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-1      Memorandum of Association of Emera (previously filed).                 

A-2      Articles of Association of Emera (previously filed).                   

A-3      Certificate of Organization of BHE (previously filed).                 

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A-4      By-Laws of BHE (previously filed).                                     

A-5      Articles of Incorporation of Bangor Var (previously filed).            

A-6      By-laws of Bangor Var (previously filed).                              

A-7      Partnership Agreement Creating Chester SVC Partnership (previously     
filed).                                                       

B-1      Agreement and Plan of Merger (incorporated by reference to SEC File    
No. 001-10922, filed September 18, 2000).                     

C-1      Definitive Proxy Statement relating to the special meeting of          
       shareholders of BHE to approve the Merger with Emera (incorporated by
 reference to SEC File No. 001-10922, filed September 18, 2000).

D-1      Petition to the Maine Public Utilities Commission, filed on August 4,  
       2000, together with testimony and exhibits (filed under cover of Form
SE).                                                          

D-2      Order of the Maine Public Utilities Commission, dated January 5, 2001  
(previously filed).                                           

D-3      Certification  of the  Maine  Public  Utilities  Commission  under     
Section 33(a)(2) of the Act (previously filed).               

D-4      Application  to FERC together  with  testimony and exhibits (filed     
under cover of Form SE).                                      

D-5      FERC Order dated January 24, 2001 (previously filed).                  

E-1      Organizational  Chart of the combined  Emera/BHE system  post-Merger   
(filed under cover of Form SE).                               

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E-2      Maps of BHE and NSPI service territories (filed under cover of Form    
SE).                                                          

F-1      Opinion of counsel of Emera (to be filed by amendment).                

F-2      Opinion  of counsel of BHE (to be filed by amendment).                 

F-3      Past tense opinion of counsel (to be filed by amendment).              

G-1      Emera's 1999 Annual Report (previously filed).                         

G-2      BHE's Annual Report on Form 10-K for the fiscal year ended December    
31, 1999 (incorporated by reference to SEC File No.           
001-10922, filed March 30, 2000, and amended April 28, 2000). 

H-1      Proposed form of notice (previously filed).                            

I-1      Form of  Services Agreement (to be filed by amendment).                

I-2      Form of Master Transition Services Agreement (to be filed by           
amendment).                                                   

I-3      Services Company Policies and Procedure Manual (to be filed by         
amendment).                                                   

J-1      Stock-based employee benefits plans (to be filed by amendment).        

K-1      Emera Group of Companies (previously filed).                           

L-1      Appointment of Agent for Service of Process (to be filed by amendment).

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M-1      Form of Federal and State Income Tax Allocation Agreement (to be filed 
by amendment).                                                

N-1      Description of Intermediate Holding Companies.                         

O-1      Memorandum of Understanding with Penobscot Hydro, LLC, dated January   
5, 1999.                                                      

Financial Statements                                                            

FS-1     Balance sheet and income statement of Emera consolidated for the year  
     ended December 31, 1999 (incorporated by reference to Exhibit G-1).

FS-2     Balance sheet and income statement of BHE consolidated for the year    
       ended December 31, 1999 and for the quarters ended March 31, 2000 and
        June 30, 2000 (incorporated by reference to SEC File No. 001-10922, on
    Form 10-K for the year-end report filed March 30, 2000 and amended
      April 28, 2000, and on Forms 10-Q for the quarterly statements filed
May 12, 2000 and August 10, 2000, respectively).              

FS-3     Balance sheet and income statement of BHE consolidated for the years   
ended December 31, 1998 and December 31, 1997 (incorporated by
    reference to SEC File No. 001-10922, on Form 10-K for the year end
 reports filed March 30, 1999 and March 27, 1998, respectively).

FS-4     Pro-forma financial statements (to be filed by amendment).             

FS-5     Financial projections (confidential treatment requested under Rule     
104; to be filed by amendment).                               

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ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.                                

 The Merger neither involves 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.                                                                    

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:  May  25, 2001        Emera Incorporated                                  
      Nova Scotia Power Incorporated

By: /s/ Richard J. Smith

Name: Richard J. Smith  
                       Title:  Corporate Secretary and General Counsel

-----------------------------------------------------------------------------   
Date:  May  25, 2001        Bangor Hydro-Electric Company                       

 By: /s/ Frederick S. Samp

Name: Frederick S. Samp 
                Title:  Vice President - Finance and Law

-----------------------------------------------------------------------------   

Date:  May  25, 2001        Bangor Var Co., Inc.                                

By: /s/ Carroll Lee     

Name: Carroll Lee       
Title: President        

-----------------------------------------------------------------------------   

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 Exhibit Index

N-1      Description of Intermediate Holding Companies.                         

O-1      Memorandum of Understanding with Penobscot Hydro, LLC, dated January   
5, 1999.                                                      

90

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