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Application or Declaration   —   Form U-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: U-1         Application or Declaration                            28±   111K 
 2: EX-99       Exhibit H-1                                            2±     7K 

U-1   —   Application or Declaration
Document Table of Contents

File No. 70-

 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM U-1

 APPLICATION
 UNDER

THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

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

Emera Incorporated
P.O. Box 910
Halifax, Nova Scotia
Canada

B3J2W5

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

Not applicable

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

Richard J. Smith

 Corporate Secretary and General Counsel
Emera Inc.

P.O. Box 910
Halifax, Nova Scotia
Canada
B3J2W5

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

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

Joanne C. Rutkowski                        David Falck                          
Markian M.K. Melnyk                        Winthrop, Stimpson, Putman & Roberts 
LeBoeuf, Lamb, Greene & MacRae, L.L.P.     1 Battery Park Plaza                 
1875 Connecticut Avenue, N.W.              New York, N.Y. 10004-1490            
Washington, D.C.  20009                                                         

TABLE OF CONTENTS 

Item 1.  Description of Proposed Transactions                                   

A.  Introduction                                                      

B.  Description of the Companies                                      
1.  Emera Inc.                                                
2.  Bangor Hydro-Electric Company                             

C.  The Proposed Transaction                                          

D.  Utility Regulation                                                

1.  Divestiture of Generation Assets                          
2.  Divestiture of Rights to Capacity and Energy              
3.  Standard Offer Service                                    
4.  BHE's Ongoing Electric Utility Function                   

Item 2.  Fees, Commissions and Expenses                                         

Item 3.  Applicable Statutory Provisions                                        

A.  Applicable Provisions                                             
B.  Legal Analysis                                                    

1.  Section 10(b)(1)                                          
a.  Interlocking Relationships                        
b.  Concentration of Control                          
2.  Section 10(b)(2)                                          
3.  Section 10(b)(3)                                          
4.  Section 10(c)(1)                                          
5.  Section 10(c)(2)                                          
6.  Section 10(f)                                             
7.  Section 3(a)(5)                                           
          a.  Section 3(a)(5) is available to Foreign Organized Companies.
      b.  Emera complies with all standards under Section 3(a)(5).
             c.  Emera is essentially foreign and essentially engaged in utility
operations and related business.              
        d.  The US utility operations will be small in both a relative
and absolute sense.                           
             e.  The proposed exemption will not be detrimental to the protected
interests.                                    

Item 4.  Regulatory Approvals                                                   

1)  Antitrust                                                 
2)  FERC                                                      
3)  State Regulation                                          

Item 5.  Procedure                                                              

Item 6.  Exhibits and Financial Statements                                      

A.  Exhibits                                                  
B.  Financial Statements                                      

Item 7.  Information as to Environmental Effects                                

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  voting  securities  of  Bangor  Hydro-Electric
Company ("BHE") and its public-utility  subsidiary companies (the "Merger").  In
addition,  Emera  requests an order under  Section  3(a)(5) of the Act exempting
Emera and its  subsidiaries  as such from all the provisions of the Act,  except
Section 9(a)(2).                                                                

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 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./1/            

     In 1999, NSPI generated  10,668 GWh of electricity and purchased 411 GWh of
the amount  generated or  purchased,  10,882 GWh was consumed in the province of
Nova  Scotia  and 75 GWh were  exported  using  the  international  lines of New
Brunswick Power Corporation ("NB Power").  NB Power's principal  interconnection
with the US 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 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
that NSPI will  qualify for  exemption  as a foreign  utility  company or "FUCO"
within the meaning of Section 33 of the Act.                                    

------------------                                                              
1    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.
------------------                                                              

     For the  twelve  months  ending  June  30,  2000,  Emera  had  revenues  of
approximately $810 million and NSPI had operating revenues of approximately $864
million.  As of June 30, 2000,  Emera and NSPI had assets of  approximately  CDN
$2.9 billion and $2.8 billion, respectively.  Emera owns a number of non-utility
subsidiaries that are described in Exhibit K-2.                                 

2.  BHE                                                               

     BHE is a public utility and holding company currently exempt by order under
Section  3(a)(1) of the 1935 Act./2/ 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  through  BHE's  wholly-owned  subsidiary  Bangor Var Co.,  Inc.
Chester  SVC is a  single-purpose  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.                          

     BHE provides the transmission  and distribution  system for the delivery of
electricity  to  approximately  107,000 Maine  customers.  For the twelve months
ending  September  30,  2000,  BHE had  approximately  $190  million  of utility
operating  revenues./3/  As of  September  30, 2000 BHE had  approximately  $502
million in utility assets.  BHE owns a number of non-utility  subsidiaries  that
are described in Exhibit K-2.                                                   

------------------                                                              
2    Bangor Hydro-Electric  Company,  Holding Co. Act Release No. 2704 (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. 

3    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  September
     30, 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  ("MPUC"),  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.  Year to date revenues at September 30 associated with providing
     the power supply for the standard  offer  service  were  approximately  $46
million.                                                              
------------------                                                              

C.  The Proposed Transaction                                          

     Pursuant to an Agreement and Plan of Merger  entered into on June 29, 2000,
between Emera and BHE ("Merger  Agreement"),/4/  Emera will acquire all of BHE's
common shares for $26.50 per share./5/ 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./6/  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.                                                                      

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

------------------                                                              
4    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.                                          

5    All amounts are given in U.S. dollars, unless otherwise stated.            

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

     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
restructuring  law has required BHE to divest,  to the extent  practicable,  its
generation  and power  supply  assets.  Thus,  under  retail  choice,  which was
implemented  on  March  1,  2000,  BHE  has  largely  exited  the  power  supply
business./7/   Because   restructuring  has  profoundly  affected  the  way  BHE
historically operated, the economic effects of restructuring must be an integral
part of  determining  the  size of  BHE's  operations,  both in a  relative  and
absolute sense.                                                                 

1.  Divestiture of Generation Assets                                  

     In  1997,   legislation  was  enacted  to  restructure   Maine's   electric
industry./8/ 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."/9/ The 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;/10/                                         

B. Ownership interest in a nuclear power plant;/11/         

          C.  Ownership  interest  in a  facility  located  outside  the  United
States;/12/ 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./13/

------------------                                                              
7    As a  transitional  measure,  however,  pursuant to MPUC  orders,  BHE will
provide standard offer service until March 1, 2001.                   

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

9    35-A M.R.S.A.  3202(1).                                                    

10   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.  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.

11   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.                                                 

12   BHE has no facilities located outside the U.S.                             

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

     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./14/ 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./15/                               

     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./16/  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/17/ and the expansion rights to those assets; (2) BHE's
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% of 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
Agreemen  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./18/ By August 27, 1999, the
various asset sales to PP&L Global were complete.                               

------------------                                                              
14   Id.                                                                        

15   Id.; 35-A M.R.S.A. 3204(5).                                                

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

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

18   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 FERC 61,281, clarified, 87 FERC 61,057 (1999).
------------------                                                              

     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.
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./19/
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."/20/                                                                

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./21/ 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./22/  The MPUC  established  rules  requiring  the sale of remaining
capacity and energy from generation assets and generation-related business./23/ 

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

20   Id.                                                                        

21   35-A M.R.S.A. 3204(4).                                                     

22   Id.                                                                        

23   Code Me. R. 65-407, Chapter 307.                                           
------------------                                                              

     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./24/ 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 21 MW of
diesel-fired  units,/25/ and (2) 6 MW of capacity and associated energy from the
Penobscot  Energy Recovery Company ("PERC") that is committed to be sold under a
pre-existing agreement to UNITIL Power Corporation ("UNITIL")./26/              

     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./27/
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.                                                                         

------------------                                                              
24   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 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).                                                  

25   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.    

26   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.    

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

3.  Standard Offer Service                                            

     Under the  Maine  Restructuring  Act,  all  consumers  of  electricity  may
purchase  generation  services directly from competitive  electricity  providers
beginning March 1, 2000./28/  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."/29/
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./30/                                                    

     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./31/          

     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./32/  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."/33/       

     The MPUC set the standard  offer  service price and required BHE to procure
wholesale  power to provide  standard  offer service until March 1, 2001./34/ 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./35/  This  contract  with NB Power  provides  60  percent of BHE's
standard offer load  requirements.  The remainder is obtained through short-term
purchases from the NEPOOL market.                                               

------------------                                                              
28   35-A M.R.S.A.  3202(1).                                                    

29   35-A M.R.S.A.  3212.                                                       

30   35-A M.R.S.A.  3212(2).  Code Me. R. 65-407, Chapter 301.                  

31   Re Bangor Hydro-Elec. Co., No. 99-111 (Me. P.U.C. Oct. 25, 1999).          

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

33   Id.                                                                        

34   Id.                                                                        

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

     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./36/                                                                  

     Pursuant  to the  Restructuring  Act and  Chapter  301,  the MPUC is in the
process of soliciting and evaluating  bids for standard offer  providers for the
period beginning March 1, 2001./37/                                             

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
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.                                                                     

------------------                                                              
36   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).              

37   35-A  M.R.S.A  3212;  Code Me. R.  65-407,  Chapter 301; see also Re Public
     Utils.  Comm., No. 2000-808 (Me. P.U.C.  Oct. 2, 2000) (Order delegating to
     the MPUC  Director of Technical  Analysis the  authority to decide  various
     matters  relating to the  solicitation  and  selection  of  standard  offer
service providers).                                                   
------------------                                                              

ITEM 2.  FEES, COMMISSIONS AND EXPENSES.                                        

     The fees,  commissions  and  expenses to be paid or  incurred,  directly or
indirectly,  in connection with the Merger are estimated to be  approximately $7
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.
Upon  completion  of the Merger,  Emera will  qualify for an order of  exemption
under Section 3(a)(5).                                                          

B.  Legal Analysis                                                    

     As  previously  stated,  prior to the closing of the Merger Emera will file
for FUCO  exemption for its  principal  subsidiary,  NSPI.  NSPI is a vertically
integrated utility serving  approximately  440,000 customers in Nova Scotia with
assets of CDN $2,800 million.  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.  Emera has no other utility  subsidiaries.  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 Section 9 & 10 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 BHE, MEPCO and Chester SVC. 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 qualify for exemption  under  Section  3(a)(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./38/   Interlocking  boards  are  typical  of  wholly-owned
subsidiaries and necessary to integrate the BHE companies into the Emera system.
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./39/  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."/40/  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./41/  Specifically,  the proposed
Merger cannot and will not harm competition in wholesale power markets because: 

* NSPI and BHE do not sell into common markets                        

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

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

------------------                                                              
38   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).                                                            

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

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

41   A copy of the FERC application is attached as Exhibit D-2.                 
------------------                                                              

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

     Other regulators will also consider the competitive  effect of the proposed
Merger./42/ In addition to the  application to the FERC under Section 203 of the
Federal  Power  Act,  notification  and  report  forms  will be  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.
1311 et seq.                                                                    

     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.  The  determination  of the  acquiror of BHE was made as a result of a
competitive  bidding process  conducted by an investment  banking firm. 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.                                             

------------------                                                              
42   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").                                            
------------------                                                              

     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./43/                                                                 

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. Post-Merger,  Emera
and BHE will  continue  to have  common  stock  equity  of at least 30% of total
capitalization as generally required by the Commission./44/                     

     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.
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, must approve the Merger.         

------------------                                                              
43   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 $7 million
     represent  approximately 3.6% 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).   

44   See,  e.g.,  National  Grid Group plc,  Holding Co. Act  Release No.  27154
(March 15, 2000). Emera provides projected debt ratios in Exhibit J-2.
------------------                                                              

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, which again is directed
to registered  rather than exempt  holding  companies,  stands for the principle
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./45/  The
proposed  Merger will impose a new holding  company  structure over the existing
BHE system; it will not affect the integration of that system./46/              

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./47/                                                             

------------------                                                              
45   Bangor Hydro-Electric  Company,  Holding Co. Act Release No. 2704 (Oct. 25,
1999).                                                                

46   Supra at 12.                                                               

47   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).   
------------------                                                              

     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
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 the high quality of
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., 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.                                                  

     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./48/  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."/49/              

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.                                                           

     The MPUC is the sole state regulator with  jurisdiction over the Merger. As
explained  in Item 4,  below,  Emera  and BHE  have  applied  for the  necessary
approval under Maine law.                                                       

7.  Section 3(a)(5)                                                   

     Following the Merger, Emera will be a holding company within the meaning of
Section  2(a)(7) of the Act. As such it will be  required  to register  with the
Commission,  and comply with the various  requirements  for  registered  holding
companies, unless it is able to qualify for exemption.                          

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

49   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).       
------------------                                                              

     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)(5) of the Act provides an exemption
where a holding  company "is not,  and  derives no material  part of its income,
directly or indirectly,  from any one or more subsidiary  companies which are, a
company or companies the principal business of which within the United States is
that of a public utility  company." For the reasons that follow,  Emera requests
and is entitled to an order under Section 3(a)(5) of the Act exempting Emera and
its  subsidiaries  as such from all the  provisions of the Act,  except  Section
9(a)(2).                                                                        

                a.  Section 3(a)(5) is available to Foreign Organized Companies.

     Emera is a Canadian corporation organized under the laws of Nova Scotia. In
its 1994 Gaz  Metropolitain  decision,  the  Commission  stated  that "[t]he Act
contains no prohibition  against foreign holding  companies as such," in finding
that a Canadian  holding  company was  entitled to an  exemption  under  Section
3(a)(5)  following  its  acquisition  of a Vermont  gas  utility./50/  That case
involved  the  acquisition  of Vermont Gas Systems Inc.  ("VGS"),  a Vermont gas
utility,  by  a  subsidiary  of  Gaz  Metropolitain,   Inc.,  a  Quebec  limited
partnership  that operated a gas distribution  utility in Quebec.  Rejecting the
staff's  contention  that  Section  3(a)(5) was not  intended  to allow  foreign
companies to control domestic utilities, the Commission stated that:            

     Congress  intended  that a holding  company  system whose  operations  were
     essentially  foreign  should  not be denied an  exemption  because of minor
     domestic utility operations.  We have stated that, in order for a system to
     qualify, its domestic utility operations must "account for no material part
     of the holding  company's  income"  and be "small in size." In our view,  a
     foreign  holding  company  that meets  these  standards  may  qualify for a
     Section  3(a)(5)  exemption  even though it controls the  domestic  utility
company.                                                              

Indeed,   in  the  National  Grid  decision,   the  Commission   cited  the  Gaz
Metropolitain  decision  for the  proposition  that an exemption  under  Section
3(a)(5) was available to foreign holding  companies./51/ The difficult and novel
question before the Commission in National Grid was, instead, whether "a foreign
holding  company  could make an  acquisition  that would  require it to register
under the Act."                                                                 

------------------                                                              
50   Gaz  Metropolitain,  Inc.,  Holding Co. Act Release No. 26170 (November 23,
     1994) ("Gaz Metropolitain").  For the fiscal year ended September 30, 1992,
     Vermont Gas Systems Inc.  ("VGS") had revenues of about $38 million and net
     income of about $2.8  million.  At fiscal year end,  its total  assets were
     about $34.3  million,  with net utility  plant of about $29.8  million.  In
     contrast,  for the  same  period,  Gaz  Metropolitain,  Inc.  ("GMLP")  had
     consolidated  revenues of  approximately  CDN $1.1 billion and consolidated
assets of CDN $1.3 billion.                                           
------------------                                                              

     The Gaz  Metropolitain  and National Grid decisions provide useful guidance
as to the standards for exempt and registered foreign utility holding companies.
The exempt foreign holding company has utility operations that are small in both
a relative  and  absolute  sense and that are  confined  to a single  state./52/
National  Grid, in contrast,  has  operations in five New England states and has
recently announced the proposed acquisition of Niagara Mohawk Holdings,  Inc., a
large New York utility  holding  company./53/  There is a further  consideration
that  argues  for  exemption  on the  facts  of  this  matter.  Here,  as in Gaz
Metropolitain,  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."/54/                        

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

52   Cf. AES Corp,  Holding Co. Act Release No. 27063 (August 20, 1999) (utility
operations confined to Illinois).                                     

53   See National  Grid Group plc,  Holding Co. Act Release No. 27154 (March 15,
     2000);  National  Grid USA,  Holding Co. Act Release No.  27166  (April 14,
     2000);  and the Niagara Mohawk  website  describing the pending merger with
     National Grid as a $3 billion transaction that would form the ninth largest
     electric  utility in the United States and create a U.S.  business equal in
     size    to    National     Grid's    U.K.     business     (available    at
http://www.nimo.com/merger.html).                                     

54   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 US 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.                               
------------------                                                              

         b. Emera complies with all standards under Section 3(a)(5).

     In last summer's AES decision,  the Commission  granted an exemption  under
Section 3(a)(5) to a U.S.  independent  power producer that acquired an Illinois
electric and gas utility company.  In that matter,  the Commission stated that a
request for exemption under Section 3(a)(5) raised three issues:                

          First,  it is  necessary  to examine the  significance  of the utility
          operations  that AES will  acquire to determine if they are small in a
          relative sense (i.e., not material).  Second, we must consider whether
          they are small in an absolute sense. Finally, we must consider whether
          a  company  such  as  AES,   that  is  not  an   essentially   foreign
          public-utility  holding  company,  can qualify for the  exemption.  We
          examine  these  issues in the  context of the abuses  that the Act was
intended to address.                                        

     The first and second  issues,  concerning the relative and absolute size of
BHE's utility operations,  are discussed below. The third issue should be easily
addressed  because NSPI's history as a one-time  Canadian Crown  corporation and
its Nova Scotia-focused operations demonstrate that it is essentially a Canadian
company.                                                                        

               c.  Emera is  essentially  foreign  and  essentially  engaged  in
utility operations and related businesses.

     In Gaz Metropolitain and in AES, the Commission departed from earlier cases
that had held that, in order to qualify for an exemption under Section  3(a)(5),
an applicant must be a U.S.  holding company with  "essentially  foreign utility
operations."/55/ In AES, the Commission explained:                              

          . . . we do not,  however,  believe  that it is necessary to limit the
          section 3(a)(5)  exemption to an U.S. holding company whose operations
          are essentially  foreign to achieve the policy  objectives of the Act.
          On the facts of this matter,  a grant of exemption is consistent  with
          the  underlying  rationale of the exemption and the Act's  legislative
          history (including  subsequent  amendments to the Act).  Following the
          acquisition  of  CILCO,  AES will be a U.S.  holding  company  that is
          essentially engaged in utility businesses that Congress has determined
          should not be subject to  regulation  under the Act.  Just as Congress
          determined  that the public  interest  does not require  regulation of
          public-utility   holding   companies  whose  utility   operations  are
          essentially  foreign,  except for a small domestic utility, the public
          interest does not require  regulation of a U.S.  holding company whose
          utility operations are exclusively exempt, except for a small domestic
utility.                                                    

Emera is both  "essentially  foreign"  as in the case of Gaz  Metropolitain  and
"essentially  engaged in utility  businesses that Congress has determined should
not be subject to regulation  under the Act," as in the case of AES./56/        

------------------                                                              
55   See AES,  citing Cities Service Co., 8 S.E.C.  318 (1940) and Electric Bond
and Share Co., 33 S.E.C. 21 (1952).                                   
------------------                                                              

               d. The US utility operations will be small in both a relative and
absolute sense.                             

     To  qualify  under  Section  3(a)(5),  Emera may not  derive,  directly  or
indirectly,  a material part of its income from one or more subsidiary companies
the  principal  business of which  within the U.S.  is that of a public  utility
company.  Historically,  the Commission has required that the utility operations
be both  small  in a  relative  sense  (i.e.,  not  material),  and  small in an
"absolute" sense./57/                                                           

     Concerning  materiality,  the Commission can consider a variety of measures
in  determining  what is a material part of income.  In practice,  however,  the
Commission  has  generally  relied  on  a  comparison  of  gross  revenues  (the
"gross-to-gross"  test)./58/ In its 1999 NIPSCO order,  the Commission  approved
the use of "net  operating  revenues"  also referred to as  "operating  margin,"
(which  net out the cost of  purchased  gas and fuel  for  generation)  to avoid
distortion  when a company that was  predominantly  electric  acquired a company
that  was  exclusively   gas./59/  In  NIPSCO,  the  Commission  found  that  an
out-of-state  utility subsidiary which contributed the following  percentages of
the  consolidated  holding company figures would not be material for purposes of
Section 3(a)(1):                                                                

Measure                  NIPSCO Range of Values                     
Gross Operating Revenues        16.0-16.2%                                  
Operating Margin                10.8-11.2%                                  
Utility Operating Income        7.1-8.7%                                    

Thereafter,  in AES, the  Commission  noted that an adjustment to gross revenues
was appropriate  because "one of the companies in this matter is subject to rate
regulation  and the other  largely is  not."/60/  There the  Commission  found a
subsidiary that  contributed  12.8% of the holding  company's gross revenues and
10.4% of net operating revenues was not material for purposes of exemption under
Section 3(a)(5)./61/                                                            

------------------                                                              
56   NSPI is the primary electric  utility in Nova Scotia,  with over 95% of the
     generation, transmission and distribution in the province. Emera's electric
     utility  revenues from NSPI in 1999 accounted for CDN $790.2 million out of
total consolidated revenues of CDN $ 824.6.                           

57   AES, supra.                                                                

58   Id.                                                                        

59   NIPSCO Industries, Inc., Holding Co. Act Release No. 26973 (Feb. 10, 1999).
     The Commission, in NIPSCO, explained that: "Under such circumstances, where
     there is a combination of gas and electric  operations,  the netting out of
     fuel costs is often necessary to avoid  overstating the size, and therefore
     materiality,  of the acquired company.  This is because  pass-through costs
     represent a much larger  part of revenues in the gas  business  than in the
electric business."                                                   

60   The order explains that: "As a result, a larger portion of CILCO's revenues
     represent  pass-throughs  of fuel  cost,  while a larger  portion  of AES's
     revenues  represent  a mark-up  over fuel costs,  or profit.  . . . Because
     AES's revenues include a much larger profit component, if the pass-throughs
     are not netted out from both companies,  CILCO's  revenues  relative to the
size of AES's revenues may be overstated."                            

61   Similarly, in NIPSCO, a utility's contribution to net operating revenues of
     10.8% to 11.2% was not  material in the context of a request for  exemption
under Section 3(a)(1).                                                
------------------                                                              

     In this  matter,  a holding  company  with  vertically  integrated  utility
operations  (NSPI) is acquiring a  disaggregated  "wires"  utility (BHE).  As in
NIPSCO and AES, a strict  application of the "gross to gross" test would provide
a distorted picture of the relationship between the holding company and the U.S.
utility.  Among other  things,  although BHE has divested  its  generation,  the
company's  gross  revenues  still  reflect  certain  energy costs related to the
recovery of stranded  costs  associated  with BHE's  historical  operations.  We
explain the nature of these "legacy" or "transition" costs below./62/           

------------------                                                              
62   The BHE revenues  discussed  herein are presented on a consolidated  basis.
     MEPCO is  accounted  for  under  the  equity  method  and  consequently  it
     contributes nothing to BHE's consolidated revenues. Dividends received from
     MEPCO,  which in 1999 were  approximately  $199,000,  are applied to offset
     BHE's  expenses and,  consequently,  they benefit BHE's  ratepayers.  BHE's
revenues from Chester SVC were zero for the same period.              
------------------                                                              

     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 divested  generation  assets and power supply  contracts that are
recovered in rates. These costs fall into two categories.                       

     First,  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.  When this  regulatory  asset is fully  amortized,  BHE will no
longer  receive  these  revenues.  The  regulatory  asset is a remnant  of BHE's
previous  structure under the old regulatory scheme. As such, the revenue stream
associated with the asset has no relevance to the current and future business of
BHE as a utility.                                                               

     BHE also has a second  category of costs that are  described as  "Purchased
Power Recovery" on the financial projections in Exhibit FS-5. These costs relate
to all the residual  power supply  contracts that BHE did not buy out because it
was not economically justifiable.  Since BHE cannot be a supplier of electricity
under Maine law,  BHE  periodically  auctions  the rights to the power under the
contracts to third  parties.  The  difference  between the auction  proceeds and
BHE's costs under the power supply contracts, i.e., BHE's net residual costs, is
labeled  Purchased  Power Recovery and is collected from BHE's  ratepayers.  The
revenue  from  Purchased  Power  Recovery  will  continue  for  the  term of the
remaining  power supply  contracts as long as BHE's biennial  auctions result in
proceeds to BHE that are less than the contract  cost./63/                      

     As with the Regulatory Asset Recovery, the Purchased Power Recovery relates
to power supply which BHE procured under the prior regulatory scheme when it was
a vertically  integrated  utility.  These are charges that do not reflect  BHE's
ongoing  utility  operations.  Accordingly,  it would be a distortion to include
BHE's revenues  attributable to Purchased Power and Regulatory Asset Recovery in
a materiality  analysis  under Section  3(a)(5)  because they do not reflect the
revenues  that BHE earns from the service  that it is  currently  authorized  to
provide to its customers.                                                       

------------------                                                              
63   If future auctions  provide  proceeds in excess of BHE's costs,  the excess
would reduce BHE's revenue, i.e., reduce customer rates.              
------------------                                                              

     Before the Restructuring  Act, BHE's revenues were attributable to revenues
from (i) transmission and  distribution,  (ii) fixed  obligations for generation
and   power   supply   based   on   prior   and   ongoing   commitments   (which
post-restructuring,  became "stranded"  costs),  and (iii) fuel and market-based
purchased power variable costs.  Revenues were roughly divided in thirds between
the categories. After BHE's divestiture and commencing March 1, 2000 when retail
competition  began in  Maine,  revenue  recovery  for fuel and  purchased  power
variable costs has been eliminated since BHE no longer owns generating assets or
provides  generation-related  service.  Revenues from generation and supply have
also  been  eliminated  and  replaced  by  steadily   decreasing  revenues  from
Regulatory Asset and Purchased Power Recovery. Absent stranded costs, which will
eventually be recovered,  BHE's  revenues  immediately  following  restructuring
would be a mere one-third of their  pre-divestiture  levels. This definite trend
and  dramatic  change in BHE's  utility  business  should be  recognized  by the
Commission  in its  application  of the  standards  of  Section  3(a)(5)  of the
Act./64/                                                                        

     If the Regulatory  Asset  Recovery and Purchased  Power Recovery are backed
out of  BHE's  revenues,  the  company  would  contribute  9.8% of the  combined
entity's  revenues  in year  one,  9.1%  in year  three  and  only  9.3% by year
five./65/  Consequently,  BHE will not  contribute a material  amount of Emera's
revenues, consistent with Commission precedent.                                 

     The  Commission  in the past has imposed an additional  condition  that the
utility  operations of holding companies exempt under Section 3(a)(3) or 3(a)(5)
be "small in an absolute as well as a relative  sense."/66/  The  limitation was
imposed in early cases to address  the  situation  in which "any public  utility
holding  company could insulate itself from the Act by acquiring and holding the
stocks of  companies  doing some  business  other than that of a retail  utility
business."/67/  The Commission in AES stated that: "This approach is intended to
ensure that the  exemption is not  available  to a company with a large  utility
business and a total  business that is  predominantly  nonutility in nature just
because the nonutility holdings dwarf the utility operations."                  

------------------                                                              
64   As noted supra at 12, in the first year  following  restructuring,  BHE has
     been required by the MPUC to acquire power in connection with the provision
     of standard  offer service on a full cost  reimbursement  basis.  Under the
     Restructuring Act, the MPUC is generally expected to source this power from
third-party providers through a competitive bidding process.          

65   On a  gross-to-gross  basis,  BHE would  contribute  15.0% of the  combined
     entity's  revenues in year one,  13.8% in year three and only 12.8% by year
five.                                                                 

66   Electric Bond and Share Co., 33 S.E.C. 21 (1952), quoting Standard Oil Co.,
10 S.E.C. 1122, 1129 (1942).                                          

67   Id.                                                                        
------------------                                                              

     BHE is small in an absolute  sense.  As of and for the year ended  December
31, 1999, BHE had approximately 107,000 customers, total assets of $544 million,
gross  utility  revenues  of $198  million and net income of $18.3  million.  In
comparison, as of and for the year ended December 31, 1998, CILCORP, the utility
acquired by AES, had  approximately  253,000  customers,  total assets of $1,024
million,  gross utility  revenues of $532 million and net income of $41 million.
Although BHE is larger than the utility acquired in Gaz Metropolitain,/68/  like
VGS and CILCO,  BHE operates only in one state and is subject to effective state
regulation. The utilities that the Commission found to be impermissibly large in
the past,  Cities  Service  and  Electric  Bond and  Share,  both had  extensive
operations  in  multiple  states and  represented  significant  portions  of the
regional and national utility markets.  In contrast,  BHE serves only 15% of the
Maine  electricity  market and 1.6% of the New England  market,  measured on the
basis of total kilowatt-hour sales (i.e., the amount of electricity  consumed in
the respective regions in 1999).                                                

------------------                                                              
68   At the time of the Gaz Metropolitain decision, VGS served 24,600 customers,
     had $34.3 million in assets, revenues of $38 million and net income of $2.8
million.                                                              
------------------                                                              

               e.  The  proposed  exemption  will  not  be  detrimental  to  the
protected interests.                              

     As  noted  above,   notwithstanding  an  applicant's  compliance  with  the
objective  requirements of Section 3(a)(1), the Commission can deny or condition
an exemption,  "insofar as [the Commission]  finds the exemption  detrimental to
the public  interest or the interest of investors  or  consumers."  In assessing
this standard, the Commission has traditionally focused on the presence of state
regulation on the theory that federal  intervention  is  unnecessary  when state
control is adequate./69/  The proposed Merger will not have an adverse effect on
BHE's existing utility operations, or on the way that rates are regulated by the
MPUC or the ability of that commission to effectively regulate the operations of
the BHE utilities.                                                              

     Chapter 6 of the 1995 report on The  Regulation of  Public-Utility  Holding
Companies (the "1995 Report") discusses the background and administration of the
Act's  exemptive  provisions  and explains  that:  "Congress  subjected  holding
companies to the requirements of the Act because  meaningful state regulation of
their abuses was often  obstructed by their control of  subsidiaries  in several
states   and  by  the   constitutional   doctrines   limiting   state   economic
regulation."/70/  The  legislative  history  makes  clear that  exemptions  from
registration are available where the holding company is susceptible to effective
state  regulation  or is otherwise  not the type of company at which the Act was
directed./71/ Both of those factors are present in this matter.                 

     The proposed  transaction will require the approval of the MPUC. In matters
involving  exempt  holding  companies,  the SEC has  traditionally  given  great
deference to the views of the affected state regulators. In NIPSCO, for example,
the Commission noted that:  "Each of Bay State's and Northern's  regulators made
the finding  aware of the fact that, if we approved the  application,  Bay State
and  Northern  would be owned by an  out-of-state  holding  company  exempt from
registration  under  the Act.  The  Commission  has  given  weight  to a state's
judgment concerning its ability to exercise effective regulatory control."/72/  

------------------                                                              
69   See,  e.g.,  KU Energy Corp.,  Holding Co. Act Release No. 25409 (Nov.  13,
 1991); CIPSCO Inc., Holding Co. Act Release No. 25212 (Sept. 18, 1990).

70   1995 Report at 109, note 4.                                                

71   See Sen. Rep. No. 621, 74th Cong., 1st Sess. (1935).                       

72   The NIPSCO order cited Wisconsin Energy Corp.,  Holding Co. Act Release No.
     24267 (Dec.  18, 1996) ("the judgment of a state's  legislature  and public
     service  commission as to what will benefit their  constituents is entitled
     to  considerable  deference  when not in conflict  with the policies of the
     Act");  Northern States Power Co., 36 S.E.C.  1, 8 (1954) ("The  considered
     conclusion  of the local  authorities,  deriving  their power from specific
     State legislation,  should be given great weight in determining whether the
     public  interest would in fact be adversely  affected . . . ."), cited with
     approval in Houston  Industries,  Inc.,  Holding Co. Act Release No.  26744
(July 24, 1997).                                                      
------------------                                                              

     Further, exemption of 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
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.  Further,  there is
nothing  in the  history  of Emera or BHE to suggest  that the  holding  company
structure will be used to evade state and local  regulation,  or that regulation
under the Act is needed  to  supplement  state  regulation  in order to  prevent
detriment to the interests protected by the Act.                                

     Finally,  the  Commission  always has the  authority  under the "unless and
except" clause to condition or deny an exemption that it finds to be detrimental
to the protected  interests.  This point is well-illustrated by the Commission's
decisions  denying  orders of exemption in Cities  Service and Electric Bond and
Share, even though those companies met the objective requirements for exemption.
As the Commission explained in AES:                                             

     In those cases,  there was both an attempt to evade  section  3(a)(3) . . .
     and a history,  and future  likelihood,  of abuses the Act was  intended to
     prevent.  In each of  these  cases,  the  Commission  determined  that  the
     applicant was  essentially the type of company at which the purposes of the
     Act were directed and noted that the exemption would have been denied under
     the unless and except  clause,  even if the applicant had satisfied all the
objective criteria for exemption.                                     

Section 3(c) of the Act further provides:                                       

     Whenever the  Commission,  on its own motion,  or upon  application  by the
     holding  company or any subsidiary  company  thereof  exempted by any order
     issued under  subsection (a), or by the subsidiary  company exempted by any
     order issued under subsection (b), finds that the circumstances  which gave
     rise to the issuance of such order no longer exist, the Commission shall by
order revoke such order.                                              

Should  Emera's  Section  3(a)(5)  exemption  become  contrary to the  protected
interests under the Act at any time in the future, the Commission could withdraw
the exemption and cause Emera to divest BHE or register under the Act.          

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.                           

(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.  For this  reason,  the prior
approval  of the FERC is  required to complete  the  Merger.                    

(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 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.                                      

(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. The applicants expect the MPUC's order
to be issued by February 1, 2001.                                               

ITEM 5. PROCEDURE.                                                              

     The  Commission  is  respectfully  requested to issue and publish not later
than  January 30, 2001 the  requisite  notice  under Rule 23 with respect to the
filing  of this  Application,  such  notice to  specify  a date not  later  than
February  25,  2001 by which  comments  may be entered and a date not later than
March 31, 2001 as the date after which an order of the  Commission  granting and
permitting  this   Application  to  become  effective  may  be  entered  by  the
Commission.                                                                     

     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 (to be filed by amendment).             

A-2  Articles of Association of Emera (to be filed by amendment).               

A-3  Articles of Incorporation of BHE (to be filed by amendment).               

A-4  By-Laws of BHE (to be filed by amendment).                                 

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 (to be filed by amendment).      

D-2  Application  to FERC together  with  testimony and exhibits (to be filed in
paper format under cover of Form SE).                                 

D-3  FERC Order approving the Merger (to be filed by amendment).                

E-1  Organization  Chart of the combined  Emera/BHE  system  post-Merger  (to be
filed in paper format under cover of Form SE).                        

E-2  Map of proposed  combined  service  territory  (to be filed in paper format
under cover of Form SE).                                              

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

F-2  Past tense opinion of counsel (to be filed by amendment).                  

G-1  Emera's 1999 Annual Report (to be filed by amendment).                     

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.                                                   

K-1  Non-utility Subsidiaries of Emera and BHE (to be filed by amendment).      

K-2  Comparison  of size of BHE on a Local,  Regional and National  basis (to be
filed by amendment).                                                  

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).   

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.                                                                    

SIGNATURE 

     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:  November 6, 2000                  /s/ Richard J. Smith                   
                        ______________________
                  Richard J. Smith
                                         Corporate Secretary and General Counsel
                    Emera Incorporated

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