CHANGES IN ACCOUNTING POLICIES

Financial Instruments, Hedging Relationships and Other Comprehensive Income
New accounting standards will be in effect January 1, 2007 for hedge accounting, recognition and measurement of financial instruments and disclosure of comprehensive income. The adoption of these standards will result in the recognition of financial instruments and hedging relationships principally consistent with similar requirements in the United States, as currently reflected in the Company’s United States Accounting Principles note.

The Company will recognize other comprehensive income in a separate financial statement and include accumulated other comprehensive income as a component of shareholders’ equity. To the extent economic hedges do not qualify for hedge accounting, are ineffective, or are not documented as hedges in accordance with the new standards, gains and losses and any ineffectiveness will be charged to current period earnings.

If the Company were to adopt the standards at December 31, 2006, a payable to counterparties of $43.1 million, a due from ratepayers of $26.6 million, accumulated other comprehensive income of $31.2 million, a future tax liability of $16.8 million, and a charge to retained earning of $64.5 million would be recognized in the financial statements.