Emera

(EMA-TSX)
Stock Rating: Market Perform Industry Rating: Market Perform

August 28, 2013 Research Comment Toronto, Ontario

Ben Pham, CFA

BMO Nesbitt Burns Inc. (416) 359-4061 ben.pham@bmo.com Assoc: Adam Johnson, CPA, CA
Price (28-Aug) Target Price
Price: High,Low,Close

Acquires 1,050MW of Merchant Natural Gas Power Assets in New England

Event
Emera has announced that it has entered into an agreement to purchase three combined-cycle natural gas assets (1,050MW) in New England for US$541 million. The transaction is expected to close by the end of 2013.

$30.24 $33.00

52-Week High 52-Week Low

$37.34 $30.13

Emera Inc. (EMA)

Earnings/Share

40 35 30 25 20 15 20
Volume (mln)

1.8 1.7 1.6 1.5 1.4 1.3 20 10 0

Impact
Modest Negative. We believe the acquisition will add long-term value to shareholders as New England sparks spreads meaningfully recover. Having said that, it is likely dilutive in the near term and requires equity financing that could overhang the stock.

10 0 200 100 0
EMA Relative to S&P/TSX Comp

200 100 0

2009

2010

2011

2012

2013

Last Data Point: August 27, 2013

Forecasts
We have updated our financial model to reflect the acquisition, effective January 1, 2014. Our 2013E EPS (f.d.) of $1.74 is unchanged, but our 2014E and 2015E EPS (f.d.) have been reduced to $1.85 (from $1.87) and $1.91 (from $1.95), respectively.

(FY-Dec.) EPS P/E

2012A $1.66

2013E $1.74 17.4x

2014E $1.85 16.3x

2015E $1.91 15.8x

Div. EV ($mm) EBITDA ($mm) EV/EBITDA Quarterly EPS 2012A 2013E 2014E Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm)

$1.36 $8,419 $624.7 13.5x Q1 $0.65 $0.68a na $1.40 $14.02 131.2 131.2 994 $3,640

$1.41 $8,514 $735.6 11.6x Q2 $0.28 $0.32a na

$1.46 $9,171 $808.1 11.3x Q3 $0.33 $0.34 na

$1.50 $10,051 $840.1 12.0x Q4 $0.40 $0.40 na 4.6% 2.2x $3,967 $3,967 $34.3 Nov (E)

Valuation
Our target price now represents a forward P/E of 17.0x (vs. 18.5x previously) our blended two-year forward EPS estimates plus $1/share of risked upside from the Lower Churchill project (50% probability of sanctioning).

Recommendation
We continue to rate the shares of Emera Market Perform, but are reducing our target price to $33 (from $36.50) due to near-term dilution from the deal and recent sector-wide valuation compression.

Yield Price/Book Mkt. Cap (mm) Float Cap (mm) Wkly $ Vol (mm) Next Rep. Date

Notes: All values in C$ Major Shareholders: Widely held First Call Mean Estimates: EMERA INC (C$) 2013E: $1.76; 2014E: $1.91; 2015E: $2.05

Changes

Annual EPS 2014E $1.87 to $1.85 2015E $1.95 to $1.91

Target $36.50 to $33.00

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 5 to 8.

BMO Capital Markets

Emera

Acquires 1,050MW of Merchant Natural Gas Power Assets in New England

Maintaining Market Perform rating but reducing target price to $33 from $36.50. In our view, EMAs acquisition of three New England merchant natural gas plants should add long-term value to shareholders as New England sparks spreads meaningfully recover. Having said that, it is likely dilutive in the near term and requires equity financing that could overhang the stock. We are maintaining our Market Perform rating, but reducing our target price to $33 (from $36.50) to reflect near-term dilution and recent sector-wide valuation compression. Our target price now represents a forward P/E of 17.0x (vs. 18.5x previously) our blended two-year forward EPS estimates plus $1/share of risked upside from the Lower Churchill project (50% probability of sanctioning). Acquires merchant power natural gas assets in New England at a reasonable price. Emera has announced that it has entered into an agreement to purchase three combinedcycle natural gas assets (1,050MW) in New England for US$541 million. The facilities include Bridgeport Energy, a 520-megawatt power station in Bridgeport, Connecticut, that has been operational since 1999; Tiverton Power, a 265-megawatt power station in Tiverton, Rhode Island, that has been operational since 2000; and Rumford Power, a 265megawatt power station in Rumford, Maine, that has been operational since 2000. All three facilities sell their production into the New England wholesale power market. The implied acquisition cost of US$520/kW is lower than past natural gas power transactions in New England and is less than half the cost of building new generation in the New England region, which probably is at least US$1,200/kW. The deal will fundamentally increase the companys non-regulated exposure, but it doesnt raise any red flags as EMA will remain a highly regulated enterprise. Although acquiring merchant assets is much riskier than owning and operating regulated utility assets, we note that the assets will represent only ~5% of EMAs 2014E EBITDA; New England is a power market with which EMA is already familiar; the company has experience owning and operating merchant power assets (i.e., Bayside, Bear Swamp); and the assets may prove to be valuable and strategic to the company over the long term. We expect the company to remain highly regulated (80%+ of earnings) and do not view this transaction as a departure from past practice/strategy. The acquisition looks dilutive near term but should add value in the long term. We estimate earnings dilution of ($0.02)-($0.04) during 20142015E and earnings accretion of more than $0.05/sh as New England power markets recover on expected plant retirements (i.e.. close of the Vermont Yankee nuclear plant in 2014) and improved demand though we dont expect a meaningful recovery until the later part of the decade. Our assumptions assume $4050 million in EBITDA contribution from the New England assets over our forecast period, a depreciable life of 25 years, a notional acquisition capital structure of 50% debt and 50% equity (we assume equity raise of at least $200 million for the deal) and an interest cost of 4% (5-year credit spreads for EMA are around 120bps and 5-year bond yields are at ~1.9%). As a point of reference, more than $50 million of EBITDA contribution from the New England assets would make the deal neutral to our EPS estimates.

Page 2 August 28, 2013

BMO Capital Markets

Emera

Financing requirements could be an overhang on the stock. EMA signalled that it will finance the deal with cash and short-term credit resources on closing and ultimately expects to finance the acquisition with a combination of debt and equity consistent with maintaining existing credit ratings. Given this acquisition, we believe the company will now require common equity of $400 million during 2014 vs. $200 million previously. In the end, our view is that the market will digest that much equity given EMAs relatively low-risk business profile and proven management. It is also possible that the company could issue a portion of its common equity needs late this year and the balance next. The transaction is expected to close by the end of 2013, and is subject to regulatory approval and customary closing conditions. Reducing estimates. We have updated our financial model to reflect the acquisition, effective January 1, 2014. Our 2013E EPS (f.d.) of $1.74 is unchanged, but our 2014E and 2015E EPS (f.d.) have been reduced to $1.85 (from $1.87) and $1.91 (from $1.95), respectively. Valuation. We are maintaining our Market Perform rating, but reducing our target price to $33 (from $36.50) to reflect near-term dilution and recent sector-wide valuation compression. Our target price now represents a forward P/E of 17.0x (vs. 18.5x previously) our blended two-year forward EPS estimates plus $1/share of risked upside from the Lower Churchill project (50% probability of sanctioning). We believe our target multiple is consistent with the companys strong dividend and earnings growth profile and the recent significant increase in bond yields (though still at historically low levels).

Exhibit 1: Summary of Financial Forecasts

Emera Inc. Financial Estimates (in $mm) Nova Scotia Power Maine Utilities Services, Renewables, Other Pipelines Caribbean Corporate and Other Total Adjusted Earnings Average Shares Outstanding (basic) Average Shares Outstanding (diluted) Dividends Per Share EPS - reported (diluted) Adjusted EPS - basic Adjusted EPS - diluted Source: BMO Capital Markets 2011 $123.5 37.0 15.0 27.9 18.8 (21.1) 201.1 121.0 126.2 $1.31 $1.97 $1.66 $1.66 Q1/12 $59.6 8.5 6.9 6.8 3.9 (4.6) 81.1 123.6 128.5 $0.34 $0.64 $0.66 $0.65 Q2/12 $16.8 7.3 4.5 7.3 5.4 (6.6) 34.7 124.1 125.0 $0.34 $0.43 $0.28 $0.28 Q3/12 $22.6 11.0 4.6 6.8 7.2 (11.1) 41.1 124.9 125.3 $0.34 $0.36 $0.33 $0.33 Q4/12 $27.0 8.6 4.7 7.0 6.7 (3.1) 50.9 126.6 127.0 $0.35 $0.34 $0.40 $0.40 2012 $126.0 35.4 20.7 27.9 23.2 (25.4) 207.8 124.9 125.3 $1.36 $1.76 $1.66 $1.66 Q1/13 $63.2 8.9 16.3 7.2 4.1 (9.2) 90.5 131.8 136.1 $0.35 $0.92 $0.69 $0.68 Q2/13 $18.5 8.9 3.6 6.8 7.7 (2.9) 42.6 132.4 132.7 $0.35 $0.34 $0.32 $0.32 Q3/13E $20.4 11.6 6.5 6.7 8.0 (8.0) 45.2 132.3 132.7 $0.35 $0.34 $0.34 $0.34 Q4/13E $23.9 9.0 11.3 6.9 7.6 (6.0) 52.7 132.3 132.7 $0.36 $0.40 $0.40 $0.40 2013E $126.0 38.4 37.7 27.6 27.5 (26.1) 231.0 132.3 132.7 $1.41 $2.00 $1.75 $1.74 2014E $131.9 43.3 56.7 28.1 31.2 (29.0) 262.1 141.1 141.5 $1.46 $1.85 $1.86 $1.85 2015E $136.9 47.4 71.0 29.3 32.5 (30.1) 287.0 149.7 150.1 $1.50 $1.91 $1.92 $1.91 3.4% 11-15E CAGR 2.6% 6.4% 47.5% 1.2% 14.7% 9.3% 9.3%

3.6% 3.6%

Page 3 August 28, 2013

BMO Capital Markets

Emera

Exhibit 2: Consolidated Summary Sheet

Market Perform
12-Month Target Price: $33.00 Analyst: Ben Pham, CFA (416) 359-4061 Current Price: $30.24

Emera Inc. (EMA)

ROR:

13.8% CAGR 2012A2015E 4.8% 4.9% 8.0% 4.9%

2006 Adjusted EPS (Basic) Adjusted EPS (Diluted) First Call Consensus Cash Flow Per Share Dividends Per Share Payout Ratio (% of EPS) Payout Ratio (% of FFO) Average Shares (basic - mm) Average Shares (diluted - mm) Net Book Value Market Valuation Price: High Price: Low Price: Current P/E Ratio: High P/E Ratio: Low P/E Ratio: Current EV/EBITDA: High EV/EBITDA: Low EV/EBITDA: Current Yield: High Price Yield: Low Price Yield: Current Balance Sheet ($mm) Debt (S-T) Debt (L-T) Preferred Shares Shareholders' Equity Balance Sheet (%) Debt (S-T) Debt (L-T) Preferred Shares Shareholders' Equity Income & Cash Flow Metrics ($mm) Total Revenue EBITDA Net Earnings Funds from Operations Capital Expenditures Financial Leverage Net Debt Net Debt/EBITDA Net Debt/Total Capitalization Source: BMO Capital Markets, Company Reports 1,786.4 3.5x 51.7% 3.7% 48.0% 7.5% 40.8% 100.0% 1,166.0 514.7 120.9 326.5 (193.7) 129.0 1,657.4 260.7 1,408.1 3,455.2 $22.91 $17.70 21.0 16.2 8.9 7.8 3.9% 5.0% $2.95 $0.89 81.4% 30.1% 110.5 123.9 $12.69 $1.09 $1.09

2007 $1.24 $1.22 $3.28 $0.90 72.5% 27.5% 111.2 124.6 $12.20 $22.84 $19.20 18.8 15.8 8.6 7.9 3.9% 4.7% 199.2 1,600.2 260.0 1,359.8 3,419.2 5.8% 46.8% 7.6% 39.8% 100.0% 1,339.5 532.7 138.1 364.5 (251.6) 1,799.4 3.4x 52.6%

2008 $1.28 $1.26 $2.84 $0.97 75.8% 34.2% 111.9 124.9 $13.78 $23.56 $18.63 18.7 14.8 10.9 9.7 4.1% 5.2% 277.1 2,159.2 260.0 1,546.2 4,242.5 6.5% 50.9% 6.1% 36.4% 100.0% 1,331.9 490.6 143.2 317.5 (545.8) 2,436.3 5.0x 57.4%

2009 $1.56 $1.52 $2.94 $1.03 66.0% 35.0% 112.5 121.3 $13.31 $25.49 $18.79 16.8 12.4 10.4 9.1 4.0% 5.5% 387.9 2,319.9 135.0 1,503.5 4,346.3 8.9% 53.4% 3.1% 34.6% 100.0% 1,465.5 547.2 175.7 331.3 (326.6) 2,707.8 4.9x 62.3%

2010 $1.67 $1.65 $2.94 $1.16 69.5% 39.5% 114.2 120.4 $14.19 $32.54 $23.10 19.7 14.0 13.2 11.2 3.6% 5.0% 231.4 3,006.9 281.7 1,626.9 5,146.9 4.5% 58.4% 5.5% 31.6% 100.0% 1,553.7 548.8 191.1 336.1 (527.2) 3,238.3 5.9x 62.9%

2011 $1.66 $1.66 $3.63 $1.31 79.0% 36.1% 121.0 126.2 $11.83 $33.65 $28.14 20.3 17.0 13.7 12.6 3.9% 4.7% 169.1 3,273.5 279.3 1,452.5 5,174.4 3.3% 63.3% 5.4% 28.1% 100.0% 2,064.4 567.5 201.1 439.8 (472.1) 3,442.6 6.1x 66.5%

2012 $1.66 $1.66 $3.29 $1.36 81.9% 41.4% 124.9 125.3 $12.66 $35.35 $32.42 21.3 19.5 13.7 13.1 3.9% 4.2% 427.1 3,201.1 524.2 1,658.8 5,811.2 7.3% 55.1% 9.0% 28.5% 100.0% 2,058.6 624.7 207.8 411.2 (433.6) 3,628.2 5.8x 62.4%

2013E $1.75 $1.74 $1.76 $3.74 $1.41 80.9% 37.8% 132.3 132.7 $14.20 $30.24 17.4 11.6 4.7% (147.7) 3,938.2 724.2 1,895.8 6,410.5 -2.3% 61.4% 11.3% 29.6% 100.0% 2,217.6 735.6 231.0 494.5 (729.0) 3,790.5 5.2x 59.1%

2014E $1.86 $1.85 $1.92 $3.85 $1.46 78.7% 38.0% 141.1 141.5 $16.56 16.3 11.3 4.8% (105.4) 4,284.7 724.2 2,463.0 7,366.5 -1.4% 58.2% 9.8% 33.4% 100.0% 2,500.4 808.1 262.1 543.2 (605.7) 4,179.3 5.2x 56.7%

2015E $1.92 $1.91 $2.09 $3.69 $1.50 78.2% 40.6% 149.7 150.1 $17.56 15.8 12.0 5.0% 174.6 4,624.1 724.2 2,646.7 8,169.7 2.1% 56.6% 8.9% 32.4% 100.0% 2,607.8 840.1 287.0 553.2 (974.0) 4,798.7 5.7x 58.7%

12.6% 16.0% 17.5% 16.0%

Page 4 August 28, 2013

BMO Capital Markets

Emera

Emera Inc. (EMA)

Quarterly Price 40 35 30 25 20 15 35 30 25 20 1) OP 25 15 20 EMA Relative to S&P/TSX Comp. EMA Relative to Electric Utilities 100 100 EMA Relative to S&P/TSX Comp. EMA Relative to Electric Utilities 20 25 35 35 Target Price Share Price 40

30

2) Mkt

4) Mkt 3) NR

30

140 130 120

140 130 120 110 100

80

80 110

60 1995 2000 2005 Revenue / Share Price / Revenue 2010

60

100 90 2011 2012 2013

90

20 15 10

4 2 0

BMO 2013FY EPS ( Aug 13 = 1.74 ) IBES 2013FY Cons.EPS ( Aug 13 = 1.76 ) 2.0 1.8 1.6 BMO 2014FY EPS ( Aug 13 = 1.87 ) IBES 2014FY Cons.EPS ( Aug 13 = 1.91 ) 2.0 1.8 2011 2012 2013 2.0 1.8 2.0 1.8 1.6

2 1 1995

EPS (4 Qtr Trailing) Price / Earnings

40 20

2000

2005

2010

FYE (Dec.) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Range*: Current* Growth(%): 5 Year: 10 Year: 20 Year:

EPS $ 1.07 1.10 1.11 1.05 1.07 0.99 1.16 1.22 1.16 0.90 1.16 1.16 1.04 1.09 1.22 1.26 1.52 1.65 1.65 1.66

P/E Hi - Lo 12.3 12.2 11.3 14.3 16.4 20.3 16.6 14.9 15.7 20.1 15.5 17.1 20.2 21.1 18.8 18.9 16.8 19.9 20.8 21.5 21.5 9.7 9.7 9.6 11.1 12.4 14.9 11.2 9.4 13.4 17.3 12.2 14.1 16.6 16.2 15.6 14.3 12.0 13.9 12.1 19.1 9.4

DPS $ 0.75 0.76 0.78 0.80 0.81 0.82 0.83 0.84 0.85 0.86 0.86 0.88 0.89 0.89 0.91 1.01 1.09 1.30 1.35 1.40

Yield% Hi - Lo 7.2 7.2 7.3 6.9 6.1 5.6 6.4 7.3 5.5 5.5 6.1 5.4 5.1 5.0 4.8 5.6 6.0 5.7 6.8 4.4 7.3 5.7 5.7 6.2 5.3 4.6 4.1 4.3 4.6 4.7 4.8 4.8 4.4 4.2 3.9 4.0 4.2 4.3 4.0 3.9 3.9 3.9

Payout % 70 69 70 76 76 83 72 69 73 96 74 76 86 82 75 80 72 79 82 84

BV $ 9.1 9.4 9.8 10.0 10.3 10.5 10.8 11.2 12.1 12.4 12.1 12.3 12.4 12.7 12.2 13.8 13.3 14.2 11.8 12.7

P/B Hi - Lo 1.4 1.4 1.3 1.5 1.7 1.9 1.8 1.6 1.5 1.5 1.5 1.6 1.7 1.8 1.9 1.7 1.9 2.3 2.9 2.8 2.9 1.1 1.1 1.1 1.2 1.3 1.4 1.2 1.0 1.3 1.3 1.2 1.3 1.4 1.4 1.6 1.3 1.4 1.6 1.7 2.5 1.0

ROE % 12 12 11 11 10 11 11 10 7 9 10 8 9 10 10 11 12 13 14

EMA - Rating as of 16-Sep-10 = Mkt Date 24-Sep-10 17-Jan-11 21-Feb-12 6-Apr-12 Rating Change Mkt to OP OP to Mkt Mkt to NR NR to Mkt Share Price $28.33 $32.55 $33.18 $33.75

1 2 3 4

1.73

18.9

1.40

4.3

81

14.0

2.3

12

1.5 5.2 5.1

8.1 5.0 3.2

2.8 1.3 2.4

* Current EPS is the 4 Quarter Trailing to Q2/2013. * Valuation metrics are based on high and low for the fiscal year. * Range indicates the valuation range for the period presented above.

Last Price ( August 27, 2013): $30.35 Sources: IHS Global Insight, Thomson Reuters, BMO Capital Markets.

Page 5 August 28, 2013

BMO Capital Markets

Emera

IMPORTANT DISCLOSURES Analyst's Certification I, Ben Pham, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Ltd. are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Company Specific Disclosure Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to this issuer within the past 12 months. Disclosure 2: BMO Capital Markets has provided investment banking services with respect to this issuer within the past 12 months. Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to this issuer within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from this issuer within the past 12 months. Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months. Disclosure 6: This issuer is a client (or was a client) of BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12 months: Investment Banking Services & Non-Securities Related Services. Disclosure 8: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of this issuer. Methodology and Risks to Price Target/Valuation Methodology: Our target price is approximately 17.0x our blended 2-year forward EPS estimates plus $1/share of risked upside from the Lower Churchill project (50% probability of sanctioning). Risks: Operations are subject to complex regulation by a variety of provincial, state and federal (Canada, U.S., Caribbean) agencies. Changes in regulation may adversely affect performance. Distribution of Ratings (June 30, 2013) Rating BMOCM US BMOCM US BMOCM US BMOCM BMOCM Starmine Category BMO Rating Universe* IB Clients** IB Clients*** Universe**** IB Clients***** Universe Buy Outperform 37.9% 17.6% 52.7% 39.6% 51.0% 53.2% Hold Market Perform 56.8% 10.2% 45.9% 53.9% 45.5% 41.1% Sell Underperform 5.3% 3.2% 1.4% 6.5% 3.5% 5.6% * Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts. ** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage within ratings category. *** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage of Investment Banking clients. **** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts. ***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as percentage of Investment Banking clients. Rating and Sector Key (as of April 5, 2013): We use the following ratings system definitions: OP = Outperform - Forecast to outperform the analysts coverage universe on a total return basis Mkt = Market Perform - Forecast to perform roughly in line with the analysts coverage universe on a total return basis Und = Underperform - Forecast to underperform the analysts coverage universe on a total return basis on a total return basis (S) = speculative investment; NR = No rating at this time; R = Restricted Dissemination of research is currently restricted. BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large Cap, US Small cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating). Prior BMO Capital Markets Ratings System (January 4, 2010April 5, 2013): http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf

Page 6 August 28, 2013

BMO Capital Markets

Emera

Other Important Disclosures For Other Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3. Dissemination of Research Our research publications are available via our web site http://www.bmocm.com/research/. Institutional clients may also receive our research via FIRST CALL, FIRST CALL Research Direct, Reuters, Bloomberg, FactSet, Capital IQ, and TheMarkets.com. All of our research is made widely available at the same time to all BMO Capital Markets client groups entitled to our research. Additional dissemination may occur via email or regular mail. Please contact your investment advisor or institutional salesperson for more information. Conflict Statement A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy for managing conflicts of interest in connection with investment research which is available at http://researchglobal.bmocapitalmarkets.com/Public/Conflict_Statement_Public.aspx. General Disclaimer BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO Financial Group) has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein. Additional Matters To Canadian Residents: BMO Nesbitt Burns Inc., affiliate of BMO Capital Markets Corp., furnishes this report to Canadian residents and accepts responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Tony Robson, or Edward Sterck: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital Markets Limited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the equity of the issuer. Canadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited will only disclose its and its affiliates ownership interest in the subject issuer if such ownership exceeds 5% of the equity of the issuer. To U.S. Residents: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this report to U.S. residents and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd. To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial Conduct Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as relevant persons). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.

Page 7 August 28, 2013

BMO Capital Markets

Emera

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and commercial banking clients are served by BMO Harris Bank N.A., (Member FDIC). Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets. BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A (Member FDIC), BMO Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), BMO Nesbitt Burns Securities Limited (Member SIPC) and BMO Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada, Europe and Asia, BMO Capital Markets Limited in Europe, Asia and Australia and BMO Advisors Private Limited in India. Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. BMO Capital Markets is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license. Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. TM Trademark Bank of Montreal

COPYRIGHT 2013 BMO CAPITAL MARKETS CORP

A member of BMO Financial Group

Page 8 August 28, 2013