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GBPC Response to PWC Audit

July 18, 2012

The Grand Bahama Power Company ('GBPC') welcomed the results of an independent audit of the accuracy of its billings and fuel surcharge calculations as well as metering and billing processes. The results provide valuable feedback to aid the company in its ongoing improvement plans. Overall, the report confirmed the integrity of billing practices and validated the accuracy in the company's fuel surcharge calculations. In all cases both the bill calculations and fuel surcharge calculations were found to be accurate.

Immediately after Emera gained majority ownership of GBPC, an internal review of many of GBPC's business processes was conducted. Those internal audits identified the need for improvements to GBPC's documentation of processes and training program for employees. As part of a three year turnaround plan for GBPC an improvement plan was developed to address these issues. This audit has assisted in directing those efforts that will ensure related processes at GBPC are modified to align with accepted best practices. Some improvements have already been made, with an expected completion date of 2013 for all recommendations.

For the most part, the recommendations put forth by the independent auditors are not the result of a deficiency within GBPC's processes, but involve formalizing and improving our procedures. For example, the audit identified that there were inconsistencies in the way meter anomalies are recorded; some manually and others entered into an electronic handheld device. While this inconsistency didn't necessarily result in incorrect billing, we will be establishing and implementing a recording protocol to bring more consistency to our business and customers.

"For us, the value of the audit comes with the opportunities it identifies to strengthen some of our processes," said Tony Lopez, GBPC's CFO. "It supports and enhances an internal improvement program currently underway that ensures we are working toward alignment with accepted best practices."

Included in the GBPC improvement plan, and now supported by third party audit findings, are enhancements to standards and procedures for metering and customer service, and training for metering and customer service staff.

"With the high price of fuel, we know electricity is not an insignificant cost," added Mr. Lopez. "We take our responsibility to provide our customers with the best product at the best price seriously. With the dedication of our employees, we made significant progress on several fronts over the past year, but we know there is still a lot of room for improvement. We're working on it."

GBPC is reviewing all of the audit's recommendations, and will prioritize and plan for improvements that will help better serve its customers. In fact, the utility has already adopted the recommendation to have the fuel charge and the base tariff separated, as reflected in the recent tariff restructuring.