James A. Lea, President and Chief Executive Officer (left),  and J. William Geldert, Vice President, Finance and Chief Financial Officer, Maritime Electric Company, Limited (right) Government of Prince Edward Island enacted regulations respecting adjustments to basic electricity rates. The new regulations came into effect on October 13, 2001 and were retroactive to January 1, 2001, permitting Maritime Electric to partially recover increased operating costs. These costs have had a significant negative impact on the Company’s earnings over the last three years. The new regulations further define incentives for performance that are fundamental to the legislation under which Maritime Electric has carried out business since 1994.  Since 1994, when the Company moved to a form of price cap regulation, Maritime Electric’s greatest risk has been its exposure to increases in purchased and produced energy costs which it was unable to recover and which were borne by the shareholder. The new regulations will restore the Company’s earnings to levels commensurate with those of other investor-owned Canadian utilities. Purchased and produced energy represents the largest single cost incurred by the Company. Over the Operations Maritime Electric Maritime Electric, the principal electric utility on  Prince Edward Island, serves approximately 67,000 customers, constituting over 90 per cent of the electricity consumers in the province, and meets a peak demand of 193 MW. The Company supplies wholesale energy to the City of Summerside, operators of the only municipal electric utility on the Island.  Maritime Electric owns and operates a fully integrated system providing for the generation, transmission and distribution of electricity in the province. The system is connected to the mainland power grid via two submarine cables under the Northumberland Strait. Most of the energy supplied to customers is purchased from  NB Power and Emera Inc. (“Emera”) through several energy purchase agreements. Maritime Electric maintains 100 MW of generating capacity on the Island. This year was one of significant positive change for Maritime Electric as the Maritime Electric serves approximately 67,000 customers on Prince Edward Island. 13 TSE:FTS FORTIS Inc. 2OO1 Annual Report