Newfoundland Power Announces Second Quarter Results

Business Wire, July 23, 2004

ST. JOHN'S, Newfoundland And Labrador -- Newfoundland Power Inc. (TSX:FTS) today released its 2004 second quarter results.

"In the second quarter, Newfoundland Power delivered solid earnings," said Karl W. Smith, President and Chief Executive Officer, Newfoundland Power Inc. "A modest 1.2 per cent increase in energy sales, increased contribution from pole rentals and a lower federal tax rate contributed to earnings per common share of $1.05."Year to date earnings per common share were $2.21.

Earnings for the second quarter are not comparable to those of 2003.In June 2003, the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB) released a General Rate Order (2003 GRO) on the Company's General Rate Application.The impacts of the 2003 GRO on the first two quarters of 2003 were recorded entirely in the second quarter of 2003.On a comparative basis, quarterly earnings per common share for 2003 are estimated at $0.98.On a year to date basis, comparable earnings per common share for 2003 are estimated at $2.10.

Energy sales were 1.2 per cent higher in the second quarter of this year than in 2003.Total energy sales were 1,222.4 gigawatt hours (GWh), compared to 1,208.0 GWh in the same quarter last year. Residential energy sales for the quarter increased 12.4 GWh, while commercial and street lighting energy sales increased by 2.0 GWh over the same quarter of 2003.

The increase in residential energy sales is primarily due to higher average usage by customers while the increase in commercial and street lighting sales is attributed to growth in the service sector of the economy and activity related to the White Rose offshore oil project.

Electrical rates increased, on average, by 9.9 per cent effective July 1, 2004.Newfoundland Power will not gain any financial benefit from this rate change.The rate increase is a result of Newfoundland and Labrador Hydro's (Hydro) increase to the rate charged to Newfoundland Power for the power it purchases.As part of the normal regulatory process, the Company applied for and was granted approval by the PUB to set new electrical rates based on the increase in the cost of purchased power from Hydro, which has an impact of a 5.4 per cent increase on customers' electrical rates.The additional 4.5 per cent relates to the annual review of Hydro's Rate Stabilization Plan, which smoothes the impact that fluctuations in the price of oil have on electrical rates.

"We are committed to informing, educating and assisting our customers to better manage their electrical usage and minimize the impact that this rate increase will have on their electrical bill," added Smith.

"We continue to focus on operating efficiencies and productivity improvements to manage our own costs and minimize our impact on electrical rates.Newfoundland Power's direct impact on electrical rates since 1997 has been a decrease of approximately 1 per cent. Over the same period, we invested approximately $380 million in our electrical system to improve reliability for our customers."

Newfoundland Power's capital program was well underway in the second quarter, with upgrades and enhancements to electrical equipment of approximately $15 million.In 2004, the Company plans to invest approximately $52 million to upgrade various components of the electrical system across its service territory to improve the reliability of supply for the approximately 222,000 customers it serves each day.

All the common shares of Newfoundland Power Inc. are owned by Fortis Inc., a diversified, international electric utility holding company with assets of $3.9 billion and annual revenues of approximately $1.2 billion.The Common Shares, First Preference Shares Series C, First Preference Shares Series E, and First Preference Units of Fortis Inc. are traded on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C, FTS.PR.E and FTS.UN, respectively.Fortis Inc. information can be accessed at www.fortisinc.com.

With a customer base of approximately 222,000 accounts, Newfoundland Power is dedicated to providing the highest level of customer service and reliability of electrical supply in the most cost-efficient manner possible.For more information on Newfoundland Power's programs, services and community partnerships, please visit www.newfoundlandpower.com.