ENMAX Corporation today announced net earnings of $59.4 million in the first six months of 2004. This compares to earnings of $71.0 million in the first six months of 2003. As expected, continued restructuring of the electricity market place in Alberta is resulting in lower retail margins. Additionally, the industry is experiencing higher charges to use Alberta's transmission system.

“At the annual shareholder meeting in May, we predicted that intensifying competition would affect future net earnings. While net earnings are lower than recent years, they are still significantly higher than before ENMAX was set up as a commercial company. Second quarter results reflect that trend,” said Bob Nicolay, ENMAX president and chief executive officer.

“ENMAX is well prepared for the developments that are occurring in Alberta. Our balance sheet remains strong with a debt-to-total-capitalization ratio of just 19 per cent and our general and administrative expenses have been reduced by more than 25 per cent compared to the first six months of 2003,” said Nicolay. “We maintain a constant vigilance on cost control and deploy a disciplined approach to business opportunities enabling us to grow our earnings. As a result, a steady dividend stream to The City of Calgary was maintained with installments of $25.2 million in the first half of 2004.”

The average Power Pool price in Alberta was $55 per megawatt hour (MWh) in the first six months of 2004 compared to $68 per MWh in the same period in 2003.  Lower wholesale prices reduced electricity rates paid by customers on flow through rates. At the same time, retail competition intensified resulting in a slight decline in electricity sales volumes during the first half of 2004 compared to the same period in 2003. These factors resulted in a decline in ENMAX Energy’s net earnings in the first half of 2004 compared to the same period in 2003.

In ENMAX Power, grid charges (the cost to use Alberta’s transmission system) were $4.5 million higher during the first six months of 2004 compared to the same period in 2003. The increased costs were due to increased deferral account charges from the Alberta Electric System Operator. ENMAX has received Alberta Energy and Utilities Board (EUB) approval to recover the portion of these incremental costs related to price from customers.

The management discussion and analysis and interim financial statements for the second quarter of 2004 are available on ENMAX’s website (www.enmax.com) and on SEDAR (www.sedar.com).

On August 13, The EUB provided an initial decision regarding ENMAX’s 2004 Regulated Rate Tariff (RRT) and 2004 Distribution Tariff (DT) for electricity customers in Calgary. The overall impact of the RRT and DT decisions is estimated to be a reduction to 2004 annual net earnings of approximately $31 million. The most significant item causing this impact is the discontinuance of the historical practice of using utility rates to fund the equity needed to expand the distribution system to meet customer demand. This has been the approved practice under City of Calgary regulation for decades. The decision also reduced RRT margins and lowered recoverable costs related to water and waste water billing services provided to The City of Calgary.

The impact of the recent EUB decisions will be reflected in ENMAX’s third quarter financial results. ENMAX is required to re-file portions of both applications to reflect the directions of the EUB. A final decision is expected by the end of September.

ENMAX Corporation, a wholly owned subsidiary of The City of Calgary, provides electricity, natural gas and value-added services to more than 420,000 residential, commercial and industrial customers in Alberta through its subsidiary companies. For more information, please visit our website at enmax.com.

Questions & Answers on ENMAX’s Second Quarter Earnings Report and Response to Regulatory Decision on Regulated Rate and Distribution Tariff in Calgary August 19, 2004