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                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                            FORM 10-K
     [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
           FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
                               OR
  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                 COMMISSION FILE NUMBER 1-12527

                     BAYCORP HOLDINGS, LTD.
     (Exact name of registrant as specified in its charter)

                          DELAWARE                     02-0488443
              (State or other jurisdiction of       (I.R.S. Employer
               incorporation or organization)      Identification No.)

            ONE NEW HAMPSHIRE AVENUE, SUITE 125
                 PORTSMOUTH, NEW HAMPSHIRE                03801
              (Address of principal executive          (Zip Code)
                          offices)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                         (603) 766-4990

   SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                  COMMON STOCK, $.01 PAR VALUE
                        (Title of Class)

                     AMERICAN STOCK EXCHANGE
           (Name of each exchange on which registered)

   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                              NONE

  Indicate by check mark whether the registrant (1) has filed all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes  [X]     No  [X]

  Indicate  by check mark if disclosure of delinquent  filers  to
Item 405 of Regulations S-K is not contained herein, and will not
be   contained,  to  the  best  of  registrant's  knowledge,   in
definitive  proxy  or  information  statements  incorporated   by
reference in Part III of this Form 10-K or any amendment to  this
Form 10-K.  [X]

  Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act).
  Yes [  ] No [X]

  As of June 30, 2004, (the last business day of the registrant's
most  recently  completed second fiscal  quarter)  the  aggregate
market  value  of  the registrant's Common  Stock  held  by  non-
affiliates  of the registrant was approximately $5,906,400  based
on  the last reported sale price of the registrant's Common Stock
on the American Stock Exchange.

  There  were  557,945 shares of Common Stock outstanding  as  of
March 24, 2005.

               DOCUMENTS INCORPORATED BY REFERENCE



       Incorporated Document             Location in Form 10-K
        --------------------             --------------------
 Portions of the Registrant's Proxy            Part III
Statement  furnished to Stockholders
   in connection with the Annual
              Meeting
      to be held May 17, 2005.




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                                1

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                             PART I

ITEM 1.  BUSINESS.

INTRODUCTION

  BayCorp  Holdings,  Ltd. ("BayCorp" or  the  "Company")  is  an
unregulated holding company incorporated in Delaware in 1996.  As
of  December 31, 2004, BayCorp had five wholly owned subsidiaries
including  Great  Bay  Power Marketing,  Inc.,  Great  Bay  Hydro
Corporation,  Nacogdoches Power, LLC, Nacogdoches Gas,  LLC,  and
BayCorp Ventures, LLC.  BayCorp also held a majority interest  in
HoustonStreet Exchange, Inc. as of December 31, 2004.

  Until  January  1,  2003, BayCorp had two  principal  operating
subsidiaries  that  generated and traded  wholesale  electricity,
Great  Bay  Power Corporation ("Great Bay") and Little Bay  Power
Corporation ("Little Bay").  Their principal asset was a combined
15%  joint  ownership  interest in  the  Seabrook  Nuclear  Power
Project  in  Seabrook, New Hampshire (the "Seabrook  Project"  or
"Seabrook") until November 1, 2002, when BayCorp sold Great Bay's
and  Little Bay's interest in Seabrook.  That ownership  interest
entitled  Great Bay and Little Bay to approximately 174 megawatts
("MWs")  of  the  Seabrook Project's power output.   In  December
2002, BayCorp dissolved Great Bay and Little Bay.

  In  October  2002, BayCorp formed two subsidiaries,  Great  Bay
Power  Marketing, Inc. ("Great Bay Power Marketing") and  BayCorp
Ventures,  LLC ("BayCorp Ventures").  Great Bay Power  Marketing,
incorporated in Maine as a wholly owned subsidiary,  was  created
to  hold  the purchased power agreement that Great Bay  had  with
Unitil Power Corporation ("Unitil") and to arrange for the  power
supply  to  satisfy  the agreement.  See "Pre-November  2002  and
Current  Business - Purchased Power Agreements" below.  Effective
January  1,  2003, Great Bay Power Marketing assumed  the  Unitil
contract  and  holds the letter of credit established  to  secure
Great   Bay  Power  Marketing's  obligations  under  the   Unitil
contract.   BayCorp formed BayCorp Ventures, a  Delaware  limited
liability  company, as a wholly owned subsidiary, to serve  as  a
vehicle  through which the Company can make investments following
the  Seabrook  sale  and the expiration of the  Company's  tender
offer that took place in 2003.

  In  September 2003, BayCorp formed Great Bay Hydro  Corporation
("Great  Bay  Hydro"), a New Hampshire corporation, as  a  wholly
owned  subsidiary.  Great Bay Hydro entered into a  purchase  and
sale  agreement,  dated  as of October 30,  2003,  with  Citizens
Communications  Company  ("Citizens") to acquire  the  generating
facilities  in Vermont owned by the Vermont Electric Division  of
Citizens.  Great Bay Hydro completed the acquisition and  assumed
operating responsibility of the generating facilities on April 1,
2004.    The   generating   facilities   include   an   operating
hydroelectric  facility of approximately 4 megawatts  located  in
Newport, Vermont, diesel engine generators totaling approximately
7   megawatts  located  in  Newport,  Vermont  and  non-operating
hydroelectric facilities in Troy and West Charleston, Vermont.

  In   October  2004,  BayCorp  formed  Nacogdoches  Power,   LLC
("Nacogdoches Power"), a New Hampshire limited liability company,
as  a  wholly owned subsidiary.  On October 19, 2004, Nacogdoches
Power  acquired the development rights to an approximate 1000  MW
natural  gas-fired  power plant project  in  Nacogdoches  County,
Texas,  located  in  east Texas.  The project  received  its  air
quality  permit  and  its  wastewater discharge  permit  and  has
options  to  acquire the land and a number of easements  for  the
plant.   The  proposed plant site is located  near  the  Electric
Reliability  Council of Texas ("ERCOT") and the  Southwest  Power
Pool  high  voltage transmission lines as well  as  a  source  of
cooling  water  and  natural  gas lines.   Nacogdoches  Power  is
pursuing the development of this project with an initial focus on
securing gas supply and power offtake contracts.

  In   November  2004,  BayCorp  formed  Nacogdoches   Gas,   LLC
("Nacogdoches  Gas"), a New Hampshire limited liability  company,
as  a  wholly owned subsidiary.  In the fourth quarter  of  2004,
Nacogdoches  Gas  entered into agreements with Sonerra  Resources
Corporation  ("Sonerra"), an independent oil and gas exploration,
development  and  operating company, under which Nacogdoches  Gas
acquired  an  approximate 10% working  interest  (of  a  77%  net
revenue  interest)  in two natural gas and oil  producing  wells.
Nacogdoches Gas entered into an agreement, dated January 7,  2005
with   Sonerra,  under  which  Nacogdoches  Gas  will  fund   the
development  of  three natural gas and oil wells. This  agreement
was  amended as of March 14, 2005, increasing the number of wells
from  three to four.  In addition, Nacogdoches Gas has an  option
to  participate in Sonerra's continued development of  up  to  15
additional  natural gas and oil wells over the  next  two  years.
Under the agreement with Sonerra, Nacogdoches Gas will receive  a
priority return until its aggregate investment is recovered.

  In  March 2005, BayCorp formed Great Bay Hydro Maine, LLC ("GBH
Maine"),  a  Maine limited liability company, as a  wholly  owned
subsidiary, and formed

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Great  Bay Hydro Benton, LLC ("GBH Benton"), also a Maine limited
liability company, as a wholly owned subsidiary of GBH Maine.  On
March  16,  2005, GBH Maine and GBH Benton acquired Benton  Falls
Associates, L.P., a limited partnership that owns a 4.3  megawatt
hydroelectric generation plant in Benton, Maine ("Benton Falls"),
from  The Arcadia Companies for approximately $2.2 million.   The
Company  assumed operating responsibility for Benton  Falls,  the
output  of  which  is  sold  to Central Maine  Power  Corporation
("CMP") under a power purchase agreement ("CMP PPA") that expires
in  December  2007.  The rates under the CMP PPA are  indexed  to
CMP's   standard   rates  for  energy  and   capacity   purchases
established  annually  by the Maine Public Utilities  Commission.
The  estimated average rate for April 2005 through December  2005
(based  on projected monthly generation) is approximately  $59.12
per megawatt hour ("MWh".)

  BayCorp  also owns shares representing approximately  59.7%  of
the  outstanding  common shares of HoustonStreet  Exchange,  Inc.
("HoustonStreet"), which was incorporated in  Delaware  in  1999.
HoustonStreet   developed  and  operates  HoustonStreet.com,   an
Internet-based independent crude oil and refined products trading
exchange   in   the   United  States.   A   recapitalization   of
HoustonStreet was completed in the second quarter of 2004, and as
a result, BayCorp's ownership interest in HoustonStreet increased
above   50%   and  BayCorp  began  consolidating  its   financial
statements with HoustonStreet as of May 1, 2004.  Prior to May 1,
2004,  BayCorp  held  a  minority interest in  HoustonStreet  and
accounted for HoustonStreet under the equity method.

RECENT DEVELOPMENTS

Great Bay Hydro Corporation

  In  October  2003, Great Bay Hydro entered into a purchase  and
sale agreement with Citizens to acquire the generating facilities
in  Vermont  owned by the Vermont Electric Division of  Citizens.
Great  Bay  Hydro completed the acquisition and assumed operating
responsibility  of the generating facilities on  April  1,  2004.
The  generating  facilities  include an  operating  hydroelectric
facility   of  approximately  4  megawatts  located  in  Newport,
Vermont,  diesel  engine  generators  totaling  approximately   7
megawatts   located   in  Newport,  Vermont   and   non-operating
hydroelectric  facilities in Troy and West  Charleston,  Vermont.
Great  Bay  Hydro  uses  the output of the  Newport  plant  as  a
physical  hedge for a portion of BayCorp's contractual obligation
to supply 9.06 megawatts to Unitil through 2010.  Great Bay Hydro
paid  a  nominal  purchase price to Citizens for  the  generating
facilities  and  650 acres of real property associated  with  the
generating  facilities,  and  this amount  is  reflected  in  the
Company's financial statements.  In addition, Citizens agreed  to
indemnify Great Bay Hydro for the reasonably anticipated costs of
complying  with  the  requirements of the new  operating  license
issued  by  the Federal Energy Regulatory Commission ("FERC")  on
November 21, 2003.  On September 28, 2004, Great Bay Hydro agreed
to  terminate Citizens' indemnification requirements in  exchange
for  Citizens'  payment to Great Bay Hydro of approximately  $4.4
million,  since  the  receipt  of  which  Great  Bay  Hydro  paid
approximately  $1.2 million for costs incurred  through  December
31,  2004 for FERC compliance.  The remaining approximately  $3.2
million  is  included in the Company's December 31, 2004  balance
sheet  as cash.  The balance sheet reflects corresponding  short-
term  and  long-term  liabilities  of  $719,000  and  $2,479,000,
respectively,   for  the  estimated  remaining   cost   of   FERC
compliance.

  In  June  2004, Great Bay Hydro received FERC approval  of  its
designation as an exempt wholesale generator ("EWG").   In  order
to  maintain  EWG status, Great Bay Hydro must engage exclusively
in  the  business  of owning or operating one or  more  "eligible
facilities" and selling electricity only at wholesale  (i.e.  not
to  end users) and incidental activities.  An "eligible facility"
is  a  facility  used  for  the  generation  of  electric  energy
exclusively  at wholesale or used for the generation of  electric
energy  and  leased to one or more public utility companies.   In
the  case of Great Bay Hydro, its Vermont generating facility  is
an "eligible facility."

HoustonStreet Exchange, Inc.

  Prior to April 30, 2004, in addition to its equity interest  in
HoustonStreet, the Company held an $8.4 million secured  note  in
HoustonStreet.   In  March 2001, HoustonStreet raised  additional
funding  by  selling senior secured notes to  BayCorp  and  other
investors.   Collectively, these notes were referred  to  as  the
"HoustonStreet  Series C Units."  The outstanding  principal  and
interest  of  the  note  to BayCorp as  of  April  30,  2004  was
approximately  $11  million.  The Company had written  this  note
down  to zero as of December 31, 2000.  The notes were originally
due  and  payable  in December 2001, and the  maturity  date  was
subsequently  extended to January 15, 2004.  The notes  were  not
paid  when due, and in February 2004, HoustonStreet was  formally
notified  of  the payment default.  BayCorp and the other  senior
secured   noteholders  reserved  their  rights  and  proposed   a
recapitalization of HoustonStreet that would potentially  provide
effective  control  of  HoustonStreet to  the  noteholders.   The
recapitalization  was  approved by  the  Board  of  Directors  of
HoustonStreet  in  March 2004 and was approved  by  HoustonStreet
shareholders in April 2004.

  The   effect   of   the   recapitalization   was   to   convert
HoustonStreet's secured debt into equity and convert  outstanding
preferred stock in HoustonStreet

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into either the right to receive nominal cash consideration or  a
nominal  amount  of HoustonStreet common stock.  All  outstanding
shares  of  HoustonStreet common stock prior to the restructuring
were  cancelled.  As a result of the restructuring, as of May  1,
2004,  holders  of  senior secured promissory notes  held  common
stock  of  HoustonStreet  representing approximately  ninety-nine
percent  of  the  outstanding  capital  stock  of  HoustonStreet.
Holders of preferred stock held approximately one percent of  the
outstanding capital stock as a result of the restructuring.

  This  recapitalization at HoustonStreet was  completed  in  the
second  quarter  of  2004 and as a result,  BayCorp  owns  shares
representing approximately 59.7% of the outstanding common shares
of  HoustonStreet.   In  accordance with  EITF  Topic  D-84,  the
Company  followed  step  acquisition  accounting  to  consolidate
HoustonStreet.   The  fair  value  of  current  assets   exceeded
BayCorp's  net investment in HoustonStreet by $278,000  resulting
in   negative  goodwill  upon  application  of  step  acquisition
accounting.  As a result, the Company recognized an extraordinary
gain of $278,000 in the second quarter of 2004 in accordance with
SFAS No. 141 "Business Combinations."

  Prior   to   the  recapitalization,  BayCorp  held  a  minority
ownership   interest   in   HoustonStreet   and   accounted   for
HoustonStreet under the equity method.

Nacogdoches Gas, LLC

  In  the  fourth quarter of 2004, Nacogdoches Gas  entered  into
agreements  with Sonerra under which Nacogdoches Gas acquired  an
approximate  10%  working interest in two  natural  gas  and  oil
producing wells.  Nacogdoches Gas entered into an agreement dated
January  7, 2005 with Sonerra, under which Nacogdoches  Gas  will
fund  the  development of three natural gas and oil wells.   This
agreement was amended as of March 14, 2005, increasing the number
of wells from three to four.  In addition, Nacogdoches Gas has an
option to participate in Sonerra's continued development of up to
15  additional natural gas and oil wells over the next two years.
Under  the agreement with Sonerra, Nacogdoches Gas will fund  the
total cost of the new wells (with the provision that up to 25% of
the working interest may be funded and acquired by other parties)
and  will  receive  a  priority return of   90%  of  the  working
interest  funded  until  its aggregate investment  is  recovered.
Once  Nacogdoches Gas has recovered all of its investment in  the
wells  from the net proceeds of all wells and any other  revenues
from the assets acquired under the development agreement, Sonerra
and  Nacogdoches  Gas  will  own equal  amounts  of  the  working
interests   funded.   The  working  interests  include  undivided
leasehold  interests  in  the gas units and  the  production  and
gathering equipment.

  Sonerra  directly  or indirectly controls approximately  36,000
acres  either through leases or as land held by production within
a project area in Nacogdoches County in east Texas.  Sonerra also
has  acquired 3D seismic data covering approximately 31,000 acres
within the project area, of which 24,000 acres are under lease or
held by production directly or indirectly by Sonerra.

  Since  entering  the  January 7, 2005 agreement  with  Sonerra,
Nacogdoches Gas has funded the development of three  wells.   The
net  revenue  interest  in  each of the  wells  being  funded  by
Nacogdoches  Gas  is 77%, which means that the working  interests
bear 100% of the operating costs of the wells but receive 77%  of
the net revenues from the wells with the remaining 23% of the net
revenues  paid  to the lessor and other royalty  interests.   The
first  of  those  wells, Round Mountain, a James Lime  horizontal
natural  gas  well, began production in January 2005 and  through
the  end  of February 2005 has produced 95 million cubic feet  of
natural  gas.   The  second  well,  Wicked  Wolf,  a  James  Lime
horizontal  natural  gas well, began production  in  early  March
2005.   The third well, Painted Horse, a Rodessa vertical natural
gas well, is being developed.

  Under  the  terms of the January 7, 2005 agreement as  amended,
Sonerra  will sequentially present five additional sets of  three
well  prospects to Nacogdoches Gas.  Upon the presentation  of  a
set  of three well prospects, Nacogdoches Gas at its option,  may
proceed  with  the  development of those  three  well  prospects.
Should Nacogdoches Gas decide not to proceed with the development
of   any  given  set  of  three  well  prospects,  its  right  to
participate in future well sets terminates.

  The total cost of an individual well typically ranges from $2.0
million  to $3.5 million and includes the acquisition  of  leases
for  the  land, the drilling and completion of the wells and  the
construction  of  extensions of the gas  gathering  system.   The
total  cost depends on the type of well (horizontal or vertical),
the  amount of land required for the production unit, the  length
of gas gathering pipeline and the completion technique.

  Other  exploration and production companies  are  operating  in
Nacogdoches  County and may seek to acquire land in or  near  the
project  area  being  developed by Sonerra and  Nacogdoches  Gas.
Nacogdoches Gas has no employees.

  Various federal, state and local laws relating to the discharge
of  materials into the environment, or otherwise relating to  the
protection of

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the  environment, directly impact the development of oil and  gas
wells  and their costs.  These laws and regulations govern, among
other   things,  emissions  to  the  atmosphere,  discharges   of
pollutants  into  the  waters of the United  States,  underground
injection of waste water, the generation, storage, transportation
and  disposal  of  waste materials and the protection  of  public
health, natural resources and wildlife.  The anticipated costs of
development of oil and natural gas wells by Nacogdoches  Gas  and
Sonerra  includes  funding  for the measures  necessary  to  meet
environmental   compliance   requirements   and   no   additional
environmental compliance costs are anticipated.

Nacogdoches Power, LLC

  On   November   16,  2004,  Nacogdoches  Power   acquired   the
development  rights to the Sterne Power project in  the  town  of
Sacul in Nacogdoches County, Texas.  The Sterne Power project was
initially  designed and has been permitted as a nominal  1000  MW
plant.   The project received its air quality permit in  December
2002,  and the air quality permit currently is effective  through
December 7, 2005.  An additional eighteen-month extension to  the
permit  may  be  requested by Nacogdoches Power.  The  wastewater
discharge permit is currently effective through August  1,  2006.
In  addition, the project has an option to purchase the land  for
the  project  and  options to acquire easements for  transmission
lines   and/or   gas  pipelines.   Those  options  have   varying
expiration  dates in 2005 and 2006 and are either being  extended
or  exercised.   Nacogdoches Power is  currently  evaluating  the
plant  configuration.  Further, Nacogdoches Power is  seeking  to
enter  into  power  offtake contracts, although  none  have  been
executed.  A schedule for the development of the project has  not
been  established.   The total cost of the  Sterne  project  will
depend  on  the  final plant design and will require  substantial
additional financing.  The amount and type of any such  financing
has not been determined.

Enron Claim

  In  January  2002,  BayCorp reported that  Great  Bay  received
notice  on  December  21, 2001 from Enron Power  Marketing,  Inc.
("Enron")  that  Enron was terminating its contracts  with  Great
Bay.   Enron owed Great Bay $1,075,200 for power delivered  prior
to  Enron's  Chapter 11 bankruptcy filing on  December  2,  2001.
Great  Bay  also  had  an unliquidated claim  against  Enron  for
damages resulting from the termination of the contracts.   During
2001,  BayCorp recorded an expense of $1,100,000 to  establish  a
reserve   for  doubtful  accounts  due  to  the  uncertainty   of
collecting remaining amounts owed by Enron to Great Bay for power
delivered  prior to Enron's Chapter 11 bankruptcy filing.   Enron
filed  a  plan  of  reorganization on July 11,  2003,  which  was
approved  by the bankruptcy court on July 15, 2004.  In  December
2003,  BayCorp  sold a $1,041,600 portion of its  power  delivery
claim  to  an institutional investor for $343,700.  In  September
2004,  BayCorp sold the remaining $175,400 of the power  delivery
claim,   as  well  as  the  claim  for  damages,  to   the   same
institutional investor for $77,200.  The Company recorded each of
these  transactions  as a recovery of bad  debt,  reducing  total
administrative and general expenses.

Issuer Tender Offer

  On  January 31, 2003, BayCorp commenced an issuer tender  offer
to purchase up to 8,500,000 shares of its common stock at a price
of $14.85 per share (the "Tender Offer" or "Offer").

  At the extended Tender Offer expiration date of March 18, 2003,
9,207,508  shares  had been properly tendered and  not  withdrawn
(including  options surrendered for repurchase and cancellation.)
The  Company  exercised  its discretion  to  purchase  up  to  an
additional  2%  of  outstanding shares,  purchasing  a  total  of
8,673,887 shares (and surrendered options) at a purchase price of
$14.85,  representing  approximately 94.3%  of  the  shares  (and
options)  tendered,  excluding odd  lots,  which  were  purchased
without  proration.  Payment for all such shares and options  was
completed   by   March   24,  2003.   The   Company   distributed
approximately $123,622,000 to tendering stockholders  and  option
holders.

Sale of Seabrook

  In   April   2002,  FPL  Energy  Seabrook,  LLC  ("FPL   Energy
Seabrook"),  a subsidiary of FPL Group, Inc., agreed to  purchase
88.2%  of  the  1,161  MW  Unit  1 and  88.2%  of  the  partially
constructed  Unit  2  of  Seabrook,  for  $836.6  million,  which
included  Great Bay's and Little Bay's approximate aggregate  15%
ownership  share,  subject to certain adjustments,  with  payment
deliverable  fully  in  cash  at closing.   FPL  Energy  Seabrook
assumed   nearly  all  of  the  Company's  Seabrook   liabilities
including the decommissioning liability for the acquired  portion
of Seabrook.  On November 1, 2002, the Company closed the sale of
its interests in Seabrook and received approximately $113 million
in  cash for its interests in the Seabrook Project (the "Seabrook
Closing").   The  Company funded certain  escrows  for  potential
closing  adjustments and paid other costs of  approximately  $4.3
million. The remaining escrow amounts were

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included  in  prepayments and the potential  closing  adjustments
were  included in other current liabilities.  The amount escrowed
was based on an estimate of those expenses.  The Company received
a  one-time  payment  following the final reconciliation  of  and
termination  of  all such escrow accounts in 2004  in  accordance
with the terms of the Escrow Agreements among the selling owners.
As  a  result  of the post-closing adjustments being settled  for
less  than the Company had previously estimated and accrued  for,
the  Company  recorded other income of approximately $572,000  in
2004.  Also in 2004, the Company negotiated a final settlement of
the  remaining accrued liability related to the sale of  Seabrook
and  paid approximately $168,000 in settlement of this liability.
As  a  result of this liability being settled for less  than  the
Company  had  previously estimated and accrued for,  the  Company
recorded other income of approximately $634,000 in 2004.

Debt Financing

  On  March  15,  2005, the Company and all of its  wholly  owned
subsidiaries  entered  into a $10,250,000 Convertible  Note  (the
"Note")  and  a  Pledge Agreement (the "Pledge  Agreement")  with
Sloan Group Ltd., a Bahamas corporation (the "Sloan Group").  The
debt,  which  accrues interest at 8% per annum  and  is  due  and
payable in full on December 15, 2005, is convertible by the Sloan
Group at any time between November 15, 2005 and December 15, 2005
(or any time after the occurrence and during the continuance of a
material  event  of  default  under  the  Note)  into  shares  of
BayCorp's  common stock, $.01 par value at a price of $14.04  per
share.   The Note does not allow BayCorp to prepay the  debt  and
provides for a 2% premium on the interest rate in the event of  a
default.  Payment of the Note may be accelerated in the event  of
a  material event of default, which is customary for this type of
financing.

  In  addition  to BayCorp, the borrowers under the Note  include
the  following  subsidiaries of BayCorp: GBH Maine,  GBH  Benton,
Great  Bay  Power  Marketing, Great Bay Hydro, BayCorp  Ventures,
Nacogdoches Power and Nacogdoches Gas.  As security for the Note,
the  borrowers entered into the Pledge Agreement with  the  Sloan
Group.   Under the Pledge Agreement, BayCorp pledged  its  equity
interests  in  GBH Maine and Nacogdoches Gas to the Sloan  Group,
GBH  Maine pledged its equity interests in GBH Benton and  Benton
Falls to the Sloan Group, GBH Benton pledged its equity interests
in  Benton  Falls  to the Sloan Group, and Nacogdoches  Gas,  GBH
Maine  and  GBH  Benton  pledged to the Sloan  Group  any  equity
interest that they may obtain in other entities while the debt is
outstanding.

  BayCorp  used  proceeds  from  the  financing  to  finance  the
acquisition  of  Benton Falls by GBH Maine  and  GBH  Benton  and
intends  to  use  proceeds  from the financing  to  continue  the
development of natural gas and oil wells in East Texas under  its
Project   Development  Agreement  with  Sonerra  and  for   other
strategic and general corporate purposes.

PRE-NOVEMBER 2002 AND CURRENT BUSINESS

  Until   November   1,   2002,  BayCorp's  principal   wholesale
electricity  generation and trading assets were its  100%  equity
interests in Great Bay and Little Bay.  The business of Great Bay
and  Little  Bay  consisted  of managing  their  joint  ownership
interests  in the Seabrook Project and the sale in the  wholesale
power  market  of  their  share of electricity  produced  by  the
Seabrook  Project.   Neither  Great  Bay  nor  Little   Bay   had
operational responsibility for the Seabrook Project.   Great  Bay
was a party to one long-term power contract for approximately  10
MW  of Great Bay's share of the Seabrook Project capacity.  Great
Bay  Power  Marketing assumed Great Bay's obligations under  that
contract  which  was  amended, effective  November  1,  2002,  to
provide  for  9.06  MW  of firm (non-unit-specific)  power.   See
"Purchased Power Agreements" below.

  After   the  Company's  sale  of  Seabrook  in  November  2002,
BayCorp's  principal  operating assets have  been  its  purchased
power   contract  with  Unitil,  its  Vermont  hydro   generating
facilities and its equity interest in HoustonStreet.

Purchased Power Agreements

  Great Bay was party to a purchased power contract, dated as  of
April  1,  1993,  (the "Unitil PPA" or "PPA"), with  Unitil  that
provided  for Great Bay to sell to Unitil 0.8696% of  the  energy
and  capacity of Seabrook, or approximately 10 MWs.   The  Unitil
PPA  commenced on May 1, 1993 and continues through  October  31,
2010.   On  November  first of each year the  purchase  price  is
subject to increase at the rate of inflation less four percent.

  In  anticipation  of  the Seabrook sale,  the  Unitil  PPA  was
amended as of November 1, 2002.  The amendment primarily modified
the  existing Unitil PPA to reduce the amount of power  delivered
to  9.06  MWs and the price that Unitil pays for power to  $50.34
per  MW  hour,  subject  to an annual increase  at  the  rate  of
inflation  less four percent, and provided that Great  Bay  would
supply the power regardless of whether Seabrook is providing  the
power.

                                6

<Page>

  The  amendment also provided alternative security for  Unitil's
benefit,  to replace and discharge the mortgage on Seabrook  that
secured Great Bay's performance of the Unitil PPA.  In connection
with  the amended Unitil PPA, the Company was required to deposit
$2.5  million into a restricted account for the benefit of Unitil
should  Great Bay default.  The amount is reflected as restricted
cash  in  the accompanying balance sheet.  The amendment received
FERC  approval.  Great Bay assigned the Unitil PPA to  Great  Bay
Power Marketing as of January 1, 2003.

  Unitil has an option, expiring November 1, 2005, to extend  the
Unitil  PPA for up to 12 years, until 2022.  If Unitil  exercises
its  option to extend the PPA, the purchase price for  power  for
the  first year of the extended term, beginning November 1, 2010,
will  be  $65.00  per MW hour (in 1992 dollars) multiplied  by  a
factor  that  equals the cumulative inflation from  October  1992
through  October 2010.  For the remaining term of the  extension,
the  purchase  price will be increased annually by  the  rate  of
inflation over the previous year.

  On  March 17, 2003, Unitil announced the approval of a contract
with  Mirant  Americas  Energy Marketing,  LP  ("Mirant"),  which
provided   for  the  sale  of  Unitil's  existing  power   supply
entitlements,  including the PPA with Great Bay Power  Marketing,
effective on May 1, 2003.  Great Bay Power Marketing's  PPA  with
Unitil  has  not  been assigned to Mirant.   Rather,  Unitil  has
appointed Mirant as their agent for purposes of administering the
PPA and Mirant is purchasing Unitil's entitlement under the PPA.

NEPOOL

  Since  December 1, 2002, Great Bay Power Marketing has  been  a
member  of the New England Power Pool ("NEPOOL") and a  party  to
the  Restated  NEPOOL Agreement (the "NEPOOL Agreement").   Great
Bay  had  also  been a member of NEPOOL until  January  1,  2003.
NEPOOL  is  a voluntary association of companies engaged  in  the
electricity business in New England and its membership is open to
all  investor-owned, municipal and cooperative electric utilities
in  New England and other companies that transact business in the
region's bulk power market.  Certain end users of electricity may
also become NEPOOL members.  The NEPOOL Agreement imposes certain
obligations  on  its participants concerning generating  capacity
reserves and the right to use major transmission lines.

  Over  the  past several years, New Hampshire and  a  number  of
other  New  England states have implemented deregulation  of  the
electric   retail   utility  industry.    In   addition,   NEPOOL
restructured  to  create  and maintain open,  non-discriminatory,
competitive,  unbundled wholesale markets for  energy,  capacity,
and  ancillary  services.  The NEPOOL wholesale market  commenced
operation in May 1999.  All of the deregulation initiatives  open
retail  and wholesale electricity markets to competition  in  the
affected states.

  The  New England Generation Information System (GIS), developed
for  NEPOOL by APX Inc., enables efficient verification of retail
electric   supplier   compliance   with   various   environmental
regulations.  This system, which began operations in April  2002,
creates  a  certificate for each MWh of energy  generated  in  or
imported into New England and allows the environmental attributes
of  energy  to  be  bought and sold separately  from  the  energy
commodity.   Generators  supplying environmental  information  on
their units including fuel source and emissions data, may be able
to  receive a premium for their certificates as retail  suppliers
go   to  market  to  satisfy  regulatory  requirements  including
renewable  portfolio standards or create clean  or  low-emissions
products.   For each MWh generated at the Newport facility, Great
Bay Hydro receives a corresponding credit in the NEPOOL GIS.

  New  England's  independent system operator, ISO  New  England,
Inc.  ("ISO-NE"), was established in July 1997 and is responsible
for  maintaining  the safety and reliability of the  transmission
grid  and  bulk  power market within the NEPOOL  region.   ISO-NE
performs  these functions under a services contract with  NEPOOL.
ISO-NE  administers a bid-based wholesale market  system  in  New
England  that is designed to provide a competitive and  efficient
generation market through an hourly clearing price mechanism.  On
March  1, 2003, ISO-NE implemented a revised market system, known
as  Standard  Market  Design,  which  incorporates  location-base
pricing,  congestion  management, and day  ahead  and  real  time
energy markets.

Energy and Utility Regulation

  Great  Bay  Power Marketing, Great Bay Hydro and  Benton  Falls
are  subject to the jurisdiction of the FERC under Parts  II  and
III  of  the Federal Power Act and, as a result, are required  to
file  with FERC all contracts for the sale of electricity.   FERC
has  the authority to suspend the rates at which Great Bay  Power
Marketing,  Great  Bay  Hydro and Benton Falls  propose  to  sell
power,  to  allow such rates to go into effect subject to  refund
and to modify a proposed or existing rate if FERC determines that
such rate is not "just and reasonable."  FERC's jurisdiction also
includes,   among   other  things,  the  sale,   lease,   merger,
consolidation or other disposition of facilities, interconnection
of certain facilities, account and services and property records.

                                7

<Page>

  Because  Great Bay Hydro and Benton Falls are EWG's, and  Great
Bay  and Little Bay were EWG's, these companies are and were  not
subject  to  the  jurisdiction  of the  Securities  and  Exchange
Commission ("SEC") under PUHCA.  In order to maintain EWG status,
Great  Bay  Hydro  and Benton Falls have to, and  Great  Bay  and
Little  Bay had to, engage exclusively in the business of  owning
and/or operating all or part of one or more "eligible facilities"
and to sell electricity only at wholesale (i.e. not to end users)
and  activities incidental thereto.  An "eligible facility" is  a
facility  used for the generation of electric energy  exclusively
at  wholesale or used for the generation of electric  energy  and
leased  to  one  or  more  public utility  companies.   The  term
"facility"  may include a portion of a facility.  The  Great  Bay
Hydro  and  Benton  Falls  generating  facilities  are  "eligible
facilities."   In  the case of Great Bay and  Little  Bay,  their
combined  15%  joint ownership interest in the  Seabrook  Project
constituted an "eligible facility."

  Great   Bay   Hydro  is  the  licensee  for  the  Clyde   River
Hydroelectric Project and is subject to the terms and  conditions
of   a   FERC  operating  license,  issued  November   21,   2003
("License").  The License incorporates the conditions of a  Water
Quality  Certificate  ("WQC") issued by  the  Vermont  Agency  of
Natural Resources on August 1, 2002, as amended.  The License and
WQC  direct  Great Bay Hydro to comply with various requirements,
which  include operating the project within certain  stream  flow
and   water   level  parameters  and  installing  and   operating
downstream and upstream fish passage facilities.

  Benton Falls is the licensee for the Benton Falls Hydroelectric
Project  and  is subject to the terms and conditions  of  a  FERC
operating  license, issued in 1984 ("BF License")  and  which  is
effective thru February 2034.  The FERC license incorporates  the
conditions of the Water Quality Certification issued by the Maine
Department of Environmental Conservation.

Nuclear Waste Disposal

  In   2002,  costs  associated  with  nuclear  plant  operations
included  amounts  for  nuclear waste disposal,  including  spent
fuel,  as well as for the ultimate decommissioning of the plants.
The  liability  for  the disposal of any  low  level  waste  that
remained  at  Seabrook after November 1, 2002 was transferred  to
FPL Energy Seabrook upon closing.

Decommissioning

  NRC licensing requirements and restrictions are also applicable
to  the decommissioning of nuclear generating units at the end of
their  service  lives,  and  the NRC  has  adopted  comprehensive
regulations concerning decommissioning planning, timing,  funding
and  environmental  review.   Changes  in  NRC  requirements   or
technology can increase estimated decommissioning costs.

  Until  November  1,  2002,  Great  Bay  and  Little  Bay   were
responsible  for their pro rata share of the decommissioning  and
cancellation  costs  for Seabrook.  FPL Energy  Seabrook  assumed
this decommissioning liability as of the Seabrook Closing.

Investment in HoustonStreet

  BayCorp  owns  shares representing approximately 59.7%  of  the
voting  power  of all outstanding common shares of HoustonStreet.
HoustonStreet   developed  and  operates  HoustonStreet.com,   an
Internet-based,  independent  crude  oil  and  refined   products
trading exchange in the United States.

  HoustonStreet operates in a very competitive market.  Its  main
competitors  are  numerous  over-the-counter  ("OTC")   telephone
brokers.   HoustonStreet believes, however, that it is  currently
the  only  online  exchange for the OTC physical  crude  oil  and
refined products markets.  Other online exchanges focus primarily
on  natural gas, power, and financial crude oil markets  such  as
swaps  and  options.  HoustonStreet is focused primarily  on  the
physical crude oil and refined products markets.

  HoustonStreet's  crude  oil platform includes  several  trading
floors, organized by grade and location.  The platform allows for
user-customization where the user specifies which markets  should
appear  together  on  a floor regardless of  grade  or  location.
HoustonStreet's   refined  products  platform  includes   several
trading  floors, organized by commodity, pipeline and  geographic
location.  Bids and offers are segmented by trading period (month
and  cycle)  and  by grade.  In 2004, HoustonStreet  had  trading
volumes  of  over  128 million barrels of crude oil  and  refined
products  with  total revenues of approximately  $852,500.   This
represents  an increase of approximately 19.6% in barrels  traded
and  a decrease of approximately 3.2% in revenues as compared  to
2003.  As of December 31, 2004, HoustonStreet had five employees.

                                8

<Page>

EMPLOYEES AND MANAGEMENT

  As  of  March 24, 2005, BayCorp had seven employees, Great  Bay
Hydro  had  one  employee, Benton Falls  had  two  employees  and
HoustonStreet  had  five employees.  Great Bay  Power  Marketing,
BayCorp  Ventures, Nacogdoches Power and Nacogdoches Gas  had  no
employees.

  Executive Officers of the Registrant

  The executive officers of BayCorp are:

  <Table>
  <Caption>
NAME                          AGE     POSITION
----                          ---     --------
<S>                           <C>     <C>
Frank W. Getman Jr             41     Chairman of the Board,
                                      Chief Executive Officer
                                      And President
Anthony M. Callendrello        53     Chief Operating Officer
                                      and Secretary
Patrycia T. Barnard            49     Vice President of Finance
                                      and Treasurer

</Table>

  Frank  W. Getman Jr. has served as Chief Executive Officer  and
President  of the Company since May 1998.  Mr. Getman has  served
as  Chairman of the Board since May 2000 and has served as  Chief
Operating  Officer of the Company from September  1996  to  March
2000  and Vice President, Secretary and General Counsel of  Great
Bay  from  August  1995 to September 1996.  Mr. Getman  also  has
served  as President and Chief Executive Officer of HoustonStreet
since April 1999.  From September 1991 to August 1995, Mr. Getman
was  an  attorney with the law firm of Hale and Dorr LLP, Boston,
Massachusetts.   Mr.  Getman holds J.D. and M.B.A.  degrees  from
Boston  College  and  a  B.A.  in Political  Science  from  Tufts
University.

  Anthony  M.  Callendrello has served  as  the  Company's  Chief
Operating  Officer since April 2000 and as the Secretary  of  the
Company  since  May  2000.  Mr. Callendrello has  over  20  years
experience  in the nuclear industry.  With over 16 years  at  the
Seabrook  Project, Mr. Callendrello most recently served  as  the
plant's Manager of Environmental, Government and Owner Relations.
From  1980  to 1983, Mr. Callendrello was employed with  Stone  &
Webster  Engineering  Corporation, which  provided  engineer  and
architect   services  to  utility  and  other  industries.    Mr.
Callendrello  holds a Master of Engineering -  Mechanical  degree
and  a  Bachelor of Engineering degree from Stevens Institute  of
Technology.

  Patrycia T. Barnard has served as Vice President of Finance and
Treasurer of the Company since January 2001.  Ms. Barnard  served
as  Director  of  Accounting since May 1996  and  has  served  as
Treasurer  since 1998.  Ms. Barnard has over 20 years  experience
in  multi-national, corporate accounting and finance.  From  1978
until 1993, Ms. Barnard was employed by BTR, Plc., a conglomerate
of  highly diversified manufacturing companies, most recently  as
Assistant  Controller for Clarostat Mfg. Co.  Inc.   Ms.  Barnard
holds  an  M.B.A and a Masters in Accounting from  New  Hampshire
College.   She also holds a B.S. in Business Administration  from
the University of New Hampshire.

  BayCorp  entered  into  Management and Administrative  Services
Agreements  (the  "Services Agreements")  with  Great  Bay  Power
Marketing, BayCorp Ventures, Great Bay Hydro, Nacogdoches Gas and
HoustonStreet in 2004.  Under the Services Agreements with  Great
Bay  Power  Marketing,  BayCorp Ventures,  Great  Bay  Hydro  and
Nacogdoches Gas, BayCorp provides a full range of management  and
administrative   services,  including  general   management   and
administration,  accounting  and  bookkeeping,  budgeting,  human
resource  services and regulatory compliance.   Great  Bay  Power
Marketing  was  billed  $180,000,  BayCorp  Ventures  was  billed
$27,600, Great Bay Hydro was billed $90,000, and Nacogdoches  Gas
was  billed  $20,000  for  these services  in  2004.   Under  the
Services   Agreement   with   HoustonStreet,   BayCorp   provides
HoustonStreet  with administrative, accounting  and  bookkeeping,
budgeting and human resource services.  HoustonStreet was  billed
$30,000 in 2004 for these services.  Each Services Agreement  has
a  one-year  term  and provides for automatic one-year  renewals.
HoustonStreet   entered  into  a  Computer  Technology   Services
Agreement  with BayCorp in 2004 to provide BayCorp with  computer
technology  services including software and hardware repairs  and
updates  and server and networking connection issues, as  may  be
required  by BayCorp on an as needed basis.  BayCorp  was  billed
$30,000 for these services in 2004.

AVAILABLE INFORMATION

  BayCorp  does not maintain an Internet address and,  therefore,
BayCorp's Annual Report on Form 10-K, quarterly reports  on  Form
10-Q, current reports on Form 8-K and amendments to those reports
are  not  available on a Company Internet website.  BayCorp  will
provide paper copies of the Company's filings free of charge upon
request.

                                9

<Page>

ITEM 2.  PROPERTIES.

  Until November 1, 2002, BayCorp's principal assets included its
100%  equity  interests in Great Bay and Little  Bay.   In  turn,
Great  Bay's and Little Bay's principal asset was a combined  15%
joint ownership interest in the Seabrook Project.  On November 1,
2002,  BayCorp  sold  Great Bay's and Little  Bay's  interest  in
Seabrook.   In  December 2002, BayCorp dissolved  Great  Bay  and
Little Bay.

  BayCorp  currently wholly owns five, and is the majority  owner
of  one,  operating  subsidiaries.   Great  Bay  Power  Marketing
purchases and markets power on the open market.  Great Bay Hydro,
as  of April 1, 2004, owns generating facilities that include  an
operating  hydroelectric  facility of approximately  4  megawatts
located  in  Newport, Vermont, diesel engine generators  totaling
approximately  7 megawatts located in Newport, Vermont  and  non-
operating  hydroelectric facilities in Troy and West  Charleston,
Vermont.   On  March 16, 2005, GBH Maine and GBH Benton  acquired
Benton  Falls Associates, a limited partnership that owns  a  4.3
megawatt  hydroelectric generation plant  in  Benton,  Maine  for
approximately  $2.2  million.   The  Company  assumed   operating
responsibility for Benton Falls, the output of which is  sold  to
CMP  under  a  power purchase agreement that expires in  December
2007.

  Nacogdoches Power owns the development rights to an approximate
1000  MW  natural  gas-fired power plant project  in  Nacogdoches
County,  Texas,  located  in  east Texas  and   is  pursuing  the
development of this project with an initial focus on securing gas
supply and power offtake contracts.

  Nacogdoches  Gas,  under  agreements  with  Sonerra   Resources
Corporation, an independent oil and gas exploration,  development
and  operating  company,  acquired  an  approximate  10%  working
interest  (of a 77% net revenue interest) in two producing  wells
developed  by Sonerra in the fourth quarter of 2004.  In  January
2005, under a separate agreement, Nacogdoches Gas agreed to  fund
the  development  of  three natural  gas  and  oil  wells.   This
agreement was amended as of March 14, 2005, increasing the number
of wells from three to four.  In addition, Nacogdoches Gas has an
option to participate in Sonerra's continued development of up to
15  additional natural gas and oil wells over the next two years.
Sonerra  directly  or  indirectly controls  approximately  36,000
acres  either through leases or as land held by production within
a project area in Nacogdoches County in east Texas.  Sonerra also
has  acquired 3D seismic data covering approximately 31,000 acres
within the project area, of which 24,000 acres are under lease or
held by production directly or indirectly by Sonerra.

  Since  entering  the  January 7, 2005 agreement  with  Sonerra,
Nacogdoches Gas has funded the development of three  wells.   The
net  revenue  interest  in  each of the  wells  being  funded  by
Nacogdoches  Gas  is 77%, which means that the working  interests
bear 100% of the operating costs of the wells but receive 77%  of
the net revenues from the wells with the remaining 23% of the net
revenues  paid  to the lessor and other royalty  interests.   The
first  of  those  wells, Round Mountain, a James Lime  horizontal
natural  gas  well, began production in January 2005 and  through
the  end  of February 2005 has produced 95 million cubic feet  of
natural  gas.   The  second  well,  Wicked  Wolf,  a  James  Lime
horizontal  natural  gas well, began production  in  early  March
2005.   The third well, Painted Horse, a Rodessa vertical natural
gas well, is being developed.

  HoustonStreet,   a  majority  owned  subsidiary   of   BayCorp,
operates  HoustonStreet.com, an independent internet-based  crude
oil and refined products trading exchange.

  As  of  March  18,  2005, BayCorp's corporate headquarters  was
located   in   Portsmouth,  New  Hampshire,  where  it   occupies
approximately   1,000  square  feet  of  leased   office   space.
HoustonStreet's   corporate   headquarters,   also   located   in
Portsmouth, New Hampshire, consists of approximately 1,100 square
feet  of leased office space.  BayCorp's management believes that
the corporate headquarters in Portsmouth, New Hampshire meets the
current  requirements  of  BayCorp  and  HoustonStreet  and  that
additional  space  can be obtained to meet requirements  for  the
foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS.

  Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

  Not Applicable.

                               10

<Page>

                             PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

  Following are the reported high and low sales prices of BayCorp
common  stock ("MWH") on the American Stock Exchange as  reported
in  the Wall Street Journal daily as traded, for each quarter  of
2003 and 2004:

<Table>
<Caption>
                                        HIGH        LOW
                                        ----        ---
            <S>                      <C>            <C>
            2003
              First Quarter          $14.83         $12.00
              Second Quarter          15.17          12.40
              Third Quarter           14.50          12.90
              Fourth Quarter          14.10          13.05

                                     HIGH            LOW
                                    ----            ---
            2004
              First Quarter          $13.31         $12.81
              Second Quarter          13.28          12.50
              Third Quarter           12.60          11.40
              Fourth Quarter          12.73          12.50

</Table>

  As  of March 24, 2005, the Company had 15 holders of record  of
its  common  stock.  The Company believes that as  of  March  24,
2005, the Company had approximately 447 beneficial holders of its
common  stock.   The  number of beneficial  owners  substantially
exceeds  the  number  of  record  holders  because  many  of  the
Company's stockholders hold their shares in street name.  BayCorp
has  never  paid cash dividends on its common stock.  Any  future
dividends   depend   on  future  earnings,  BayCorp's   financial
condition and other factors.

       Equity Compensation Plan Information.  The following table
provides information about the Company's common stock that may be
issued  upon the exercise of options and rights under all of  the
Company's  existing equity compensation plans as of December  31,
2004.
  <Table>
  <Caption>



                                                                               (c)
                                                                            Number of
                                                                            securities
                                (a)                                         remaining
                             Number of                                    available for
                             securities                 (b)              future issuance
                            to be issued          Weighted-average         under equity
                           upon exercise              exercise             compensation
                           of outstanding             price of           plans (excluding
                              options,              outstanding             securities
                              warrants           options, warrants         reflected in
Plan Category                and rights              and rights            column (a))
-------------               -----------           ----------------        --------------
<S>                             <C>                     <C>                    <C>
Equity compensation
  Plans approved by
  security holders (1)        212,538                  $13.16                524,025
Equity compensation
  plans not approved
by                              N/A                     N/A                    N/A
  security holders
Totals                        212,538                  $13.16                524,025

  </Table>
  (1)  Includes the Company's 1996 Stock Option Plan and the 2001 Nonstatutory
     Stock Option Plan.

  Unregistered Sales of Equity Securities and Use of Proceeds - Share
Repurchase Plan.  The following table summarizes repurchases of BayCorp stock
during the fiscal quarter ended December 31, 2004:


<Table>
<Caption>
                                                    Total
                                                    Number             Maximum
                                                  of Shares           Number of
                                                 Purchased as        Shares that
                                                   Part of           May Yet Be
                                   Average         Publicly           Purchased
                                    Price         Announced           Under the
                     Shares          Per           Plans or           Plans or
     Period       Repurchased       Share          Programs         Programs (1)
     ------        ----------      -------        ----------       ---------------
      <S>             <C>            <C>             <C>                 <C>
  October 2004         --             --              --               100,024
 November 2004         --             --              --               100,024
 December 2004         --             --              --               100,024
     Total             --             --              --               100,024

</Table>

  (1)   On September 29, 2003, the Company announced that its Board of Directors
had  authorized the repurchase of up to ten percent of its fully diluted  common
stock on the open market or in negotiated transactions. On

                                       11

<Page>

September  15,  2004,  the Company announced that its  Board  of  Directors  had
authorized  the repurchase of up to an additional 100,000 shares of  its  common
stock  on the open market or in negotiated transactions.  The Board of Directors
did not establish expiration dates for either of these plans.


ITEM 6.  SELECTED FINANCIAL DATA.

  The  following table presents selected financial  data  of  the
Company  as  of and for the years ended December 31, 2004,  2003,
2002,  2001  and 2000.  The information below should be  read  in
conjunction   with  "Management's  Discussion  and  Analysis   of
Financial  Condition and Results of Operations" and the Company's
financial  statements,  including the  notes  thereto,  contained
elsewhere in this Report.




                             SELECTED FINANCIAL DATA
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                     For  the Years Ended December  31,
                                                     ---------------------------------
                                           2004         2003        2002         2001        2000
                                           ----         ----        ----         ----        ----
<S>                                    <C>            <C>         <C>          <C>        <C>
STATEMENT OF OPERATIONS DATA:
 Operating Revenues . . . . . .        $ 5,538        $   4,001   $  48,788    $  79,480  $  56,347
 Operating Expenses . . . . . .          9,672            8,948      47,327       58,342     68,518
 Net Income (Loss)  . . . . . .         (2,538)          (4,168)     58,873       20,804    (21,945)
 Weighted Average Shares
     Outstanding - Basic  . . .        585,044        2,421,123   8,387,767    8,341,637  8,293,475
 Weighted Average Shares
     Outstanding - Diluted  . .        585,044        2,421,123   8,671,328    8,556,994  8,293,475
 Basic Net Income (Loss)
  Per share . . . . . . . . . .        $ (4.34)       $   (1.72)  $    7.02    $    2.49  $   (2.65)
 Diluted Net Income (Loss)
  Per share . . . . . . . . . .        $ (4.34)       $   (1.72)  $    6.79    $    2.43  $   (2.65)
 BALANCE SHEET DATA:
 Cash, Cash Equivalents &
  Short Term Investments
  And Restricted Cash . . . . .         12,127            9,969     136,664       17,181     14,109
 Working Capital  . . . . . . .         11,247            8,593     133,852       22,411        283
 Total Assets . . . . . . . . .         14,082           12,904     142,591      173,971    155,355
 Decommissioning Liability  . .             -0-              -0-         -0-      85,523     73,379
 Capitalization:
   Common Equity  . . . . . . .          4,824            8,306     133,975       73,421     51,931
 Total Capitalization . . . . .          4,824            8,306     133,975       73,421     51,931

</Table>

ITEM   7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

  In  April 2002, FPL Energy Seabrook, a subsidiary of FPL Group,
Inc.,  agreed to purchase 88.2% of the 1,161 MW Unit 1 and  88.2%
of  the  partially  constructed Unit 2 of  Seabrook,  for  $836.6
million,  which included Great Bay's and Little Bay's approximate
aggregate  15%  ownership share, subject to certain  adjustments,
with  payment deliverable fully in cash at closing.   FPL  Energy
Seabrook assumed nearly all of the Company's Seabrook liabilities
including the decommissioning liability for the acquired  portion
of Seabrook.  On November 1, 2002, the Company closed the sale of
its interests in Seabrook and received approximately $113 million
in  cash for its interests in the Seabrook Project.  See "Item 1.
Recent Developments - Sale of Seabrook."

  Until   November   1,   2002,  BayCorp's  principal   wholesale
electricity  generation and trading assets were its  100%  equity
interests in Great Bay and Little Bay.  The business of Great Bay
and  Little  Bay  consisted  of managing  their  joint  ownership
interests  in the Seabrook Project and the sale in the  wholesale
power  market  of  their  share of electricity  produced  by  the
Seabrook  Project.   Neither  Great  Bay  nor  Little   Bay   had
operational responsibility for the Seabrook Project.   Great  Bay
was a party to one long-term power contract for approximately  10
MWs  of  Great  Bay's  share  of the Seabrook  Project  capacity.
During  the  period  that it owned interests in  Seabrook,  Great
Bay's  business strategy was to utilize unit contingent and  firm
forward sales contracts to maximize the value of its 174 MW power
supply.

  In  October  2002, BayCorp formed two subsidiaries,  Great  Bay
Power  Marketing and BayCorp Ventures.  Great Bay Power Marketing
was  created to hold the purchased power agreement that Great Bay
had  with Unitil and arrange for the power supply to satisfy  the
agreement.  Effective January 1, 2003, Great Bay Power  Marketing
assumed  Great  Bay's obligations under that contract  which  was
amended,  effective November 1, 2002 to provide for 9.06  MWs  of
firm  (non-unit-specific) power and holds the  letter  of  credit
established  to  secure  Great Bay Power Marketing's  obligations
under   the  Unitil  contract.   See  "Item  1.  Purchased  Power
Agreements."   In December 2002, BayCorp dissolved Great Bay  and
Little  Bay.   BayCorp created BayCorp Ventures  to  serve  as  a
vehicle

                               12

<Page>

through  which  the  Company can make investments  following  the
Seabrook sale and the expiration of the Company's Tender Offer.

  In  September  2003,  BayCorp formed  Great  Bay  Hydro,  which
entered  into a purchase and sale agreement, dated as of  October
30,  2003, with Citizens to acquire the generating facilities  in
Vermont  owned  by  the  Vermont Electric Division  of  Citizens.
Great  Bay  Hydro completed the acquisition and assumed operating
responsibility  of the generating facilities on  April  1,  2004.
The  generating  facilities  include an  operating  hydroelectric
facility   of  approximately  4  megawatts  located  in  Newport,
Vermont,  diesel  engine  generators  totaling  approximately   7
megawatts   located   in  Newport,  Vermont   and   non-operating
hydroelectric  facilities in Troy and West  Charleston,  Vermont.
Great  Bay  Hydro  uses  the output of the  Newport  plant  as  a
physical  hedge for a portion of BayCorp's contractual obligation
to supply 9.06 megawatts to Unitil through 2010.  Great Bay Hydro
paid  a  nominal  purchase price to Citizens for  the  generating
facilities  and  650 acres of real property associated  with  the
generating  facilities  and  this  amount  is  reflected  in  the
Company's financial statements.  In addition, Citizens agreed  to
indemnify Great Bay Hydro for the reasonably anticipated costs of
complying  with  the  requirements of the new  operating  license
issued by the FERC on November 21, 2003.  On September 28,  2004,
Great  Bay  Hydro  agreed to terminate Citizens'  indemnification
requirements in exchange for Citizens' payment to Great Bay Hydro
of  approximately $4.4 million, since the receipt of which  Great
Bay  Hydro paid approximately $1.2 million for costs incurred for
FERC  compliance.  The remaining approximately  $3.2  million  is
included  in  the  Company's December 31, 2004 balance  sheet  as
cash.   The  balance sheet reflects corresponding short-term  and
long-term  liabilities of $719,000 and $2,479,000,  respectively,
for the estimated remaining cost of FERC compliance.

  In  October  2004,  BayCorp  formed  Nacogdoches  Power,  which
acquired the development rights to an approximate 1000 MW natural
gas-fired  power  plant  project in  Nacogdoches  County,  Texas,
located  in  east  Texas.  The project received its  air  quality
permit  and  its wastewater discharge permit and has  options  to
acquire  the land and a number of easements for the  plant.   The
proposed  plant site is located near the ERCOT and the  Southwest
Power Pool high voltage transmission lines as well as a source of
cooling  water  and  natural  gas lines.   Nacogdoches  Power  is
pursuing the development of this project with an initial focus on
securing gas supply and power offtake contracts.

  In   November  2004,  BayCorp  formed  Nacogdoches  Gas,  which
entered  into  agreements  in the fourth  quarter  of  2004  with
Sonerra  Resources  Corporation,  an  independent  oil  and   gas
exploration,  development  and operating  company,  acquiring  an
approximate 10% working interest in two producing wells developed
by  Sonerra.   In January 2005, Nacogdoches Gas entered  into  an
agreement with Sonnera under which Nacogdoches Gas will fund  the
development of three additional natural gas and oil wells.   This
agreement was amended as of March 14, 2005, increasing the number
of wells from three to four.  In addition, Nacogdoches Gas has an
option to participate in Sonerra's continued development of up to
15  additional natural gas and oil wells over the next two years.
Under  the agreement with Sonerra, Nacogdoches Gas will fund  the
total cost of the new wells (with the provision that up to 25% of
the working interest may be funded and acquired by other parties)
and will receive a priority return of 90% of the working interest
funded  until  its  aggregate  investment  is  recovered.    Once
Nacogdoches Gas has recovered all of its investment in the  wells
from  the  net proceeds of all wells and any other revenues  from
the  assets acquired under the development agreement, Sonerra and
Nacogdoches  Gas will own equal amounts of the working  interests
funded.    The  working  interests  include  undivided  leasehold
interests  in  the  gas  units and the production  and  gathering
equipment.

  In  March 2005, BayCorp formed Great Bay Hydro Maine and  Great
Bay  Hydro  Benton.  On March 16, 2005, GBH Maine and GBH  Benton
acquired  Benton  Falls Associates, a limited  partnership  which
owns  a  4.3  megawatt hydroelectric generation plant in  Benton,
Maine, from The Arcadia Companies for approximately $2.2 million.
The  Company  assumed operating responsibility for Benton  Falls,
the  output  of  which  is  sold to CMP under  a  power  purchase
agreement that expires in December 2007.  The rates under the CMP
PPA  are  indexed to CMP's standard rates for energy and capacity
purchases  established  annually by the  Maine  Public  Utilities
Commission.

  BayCorp  owns  shares representing approximately 59.7%  of  the
outstanding common shares of HoustonStreet Exchange, Inc.,  which
developed   and  operates  HoustonStreet.com,  an  Internet-based
independent  crude oil and refined products trading  exchange  in
the  United  States.   A  recapitalization of  HoustonStreet  was
completed  in  the  second quarter of  2004,  and  as  a  result,
BayCorp's ownership interest in HoustonStreet increased above 50%
and  BayCorp  began consolidating its financial  statements  with
HoustonStreet  as of May 1, 2004.  Prior to May 1, 2004,  BayCorp
held  a  minority  interest in HoustonStreet  and  accounted  for
HoustonStreet under the equity method.  In January 2003, the FASB
issued  Interpretation No. ("FIN") 46, Consolidation of  Variable
Interest  Entities - An Interpretation of ARB No. 51, as  amended
by   FIN   46R.   The  interpretation  requires  that  a  company
consolidate  the  financial statements of an entity  that  cannot
finance its activities without outside financial support, and for
which that company provides the majority of support.  The Company
deemed  that  its investment, HoustonStreet, was not  a  variable
interest  entity prior to May 1, 2004 and therefore, the  Company
did not consolidate HoustonStreet prior to May 1, 2004.

                               13

<Page>

  BayCorp's   net   losses  in  2004  and  2003  were   primarily
attributable  to  the cost of purchased power  and  the  non-cash
charge  to  earnings for unrealized losses on  its  firm  forward
energy  contract exceeding the revenue from that  contract.   The
net income in 2002 was primarily attributable to the gain on sale
of the Seabrook assets to FPL Energy Seabrook.

  The  following discussion focuses solely on operating  revenues
and  operating  expenses that are presented  in  a  substantially
consistent manner for all of the periods presented.

  Operating Revenues

  BayCorp's  total operating revenues in 2004 were  approximately
$5,538,000.   Total  revenues included  approximately  $4,006,000
generated from Great Bay Power Marketing's long-term power  sales
contract  with Unitil and approximately $82,000 in  net  revenues
from   Great  Bay  Power  Marketing's  energy  commodity  trading
activity.   The  gross retail sales volume of such  activity  was
approximately  $1,999,600,  net of  approximately  $1,917,600  of
related  costs of sales.  Great Bay Hydro generated 2004 revenues
of  approximately  $628,000  from the  sale  of  electricity  and
generated  revenues  of approximately $131,000  from  NEPOOL  GIS
certificates.   For  each  MWh generated  at  Great  Bay  Hydro's
Newport facility, Great Bay Hydro receives a corresponding credit
in  the NEPOOL GIS.  These credits are available for sale.  Great
Bay Hydro's Newport certificates qualify for Connecticut Class  I
renewable  status during certain operating periods  and  in  2004
were sold in the Connecticut energy market.  See "Part I. Item I.
Business  -  NEPOOL."  Nacogdoches Gas reported 2004 revenues  of
approximately $62,000 from sales of natural gas and HoustonStreet
generated  2004 revenues of approximately $629,000.  Consolidated
operating revenues in 2003 were approximately $4,001,000 and were
derived  solely from Great Bay Power Marketing's long-term  power
sales contract with Unitil.

  The  Company  realized an average selling price for electricity
sold  under the Unitil sales contract and from the sale of  Great
Bay  Hydro generation of 5.03 cents per kilowatt hour ("kWh")  in
2004  as  compared to an average selling price of 5.04 cents  per
kWh for the twelve months ended December 31, 2003.  The Company's
cost of power (determined by dividing total operating expenses by
kWhs  sold  during the applicable period) decreased approximately
22.5%  to  8.73 cents per kWh in 2004 as compared to 11.26  cents
per  kWh  in  2003.   The decrease was primarily  the  result  of
increased  kWhs  sold in 2004 due to additional  generation  from
Great Bay Hydro.

  BayCorp's   operating  revenues  in  2003  were   approximately
$4,001,000  and were derived solely from the Company's  long-term
power  sales  contract with Unitil.  Operating revenues  in  2002
were  approximately $48,788,000 and were primarily from the  sale
of  the  Company's share of Seabrook generation.  On November  1,
2002,  the  Company closed the sale of its interests in  Seabrook
and received approximately $113 million in cash for its interests
in   the   Seabrook  Project.   See  "Part  1.  Item  1.   Recent
Developments - Sale of Seabrook."

  The  Company  realized  a  higher  average  selling  price  for
electricity  in  2003  as compared to 2002.   During  the  twelve
months  ended  December  31,  2003,  the  average  selling  price
increased  31.9%  to  5.04  cents per kilowatt  hour  ("kWh")  as
compared  to an average selling price of 3.82 cents per  kWh  for
the twelve months ended December 31, 2002.  The Company's cost of
power  (determined by dividing total operating expenses  by  kWhs
sold  during the applicable period) increased 204% to 11.26 cents
per  kWh in 2003 as compared to 3.70 cents per kWh in 2002.   The
increase was primarily the result of decreased kWhs sold in  2003
as 2003 Company sales were solely to Unitil under the Unitil PPA.

  Expenses

  BayCorp's  total  operating  expenses  increased  approximately
$724,000,  or  8.1%,  to  $9,672,000  in  2004  as  compared   to
$8,948,000 in 2003.   The increase was primarily attributable  to
an increase in unrealized losses on the Unitil PPA, the Company's
long-term  energy contract.  The Unitil PPA meets the  definition
of a derivative under Statement of Financial Accounting Standards
("SFAS")  No.  133.  Accordingly, the Company marks  this  energy
contract  to  market  and  recognized  an  unrealized   loss   of
$3,428,000 in 2004 and an unrealized loss of $2,189,000 in  2003.
The  mark-to-market value of this long-term contract is based  on
current  projections  of  power  prices  over  the  life  of  the
contract.   Forward power prices increased more significantly  in
the twelve months ended December 31, 2004 as compared to the same
period  in 2003 primarily due to increases in the forward  prices
of natural gas during those periods.  In NEPOOL, power generating
plants are usually dispatched in the order of increasing variable
costs.  The plants that are called upon to supply the last amount
of demand are considered to be on the margin and set the price of
power  for  all  plants  selling  into  the  market.   Since  the
completion of a significant amount of new gas-fired generation in
NEPOOL,  plants  that  use  natural gas  as  a  fuel  source  are
frequently on the margin and

                               14

<Page>

therefore  set  the price of power in NEPOOL.   Accordingly,  the
price  of  power in NEPOOL is highly influenced by the  price  of
natural gas.

  In  accordance  with  the Emerging Issues Task  Force  ("EITF")
Issue  No.  02-03,  the  inception gain (initial  value  of  $2.1
million)  on the energy contract has been deferred and  is  being
recognized over the life of the contract.  The Company recognized
approximately $263,000 of deferred gain on the Unitil contract in
2004  and  in  2003.   Operating expenses included  approximately
$4,058,000 and $3,901,000 for purchased power in 2004  and  2003,
respectively.   The  Company  purchased  power  to  satisfy   its
obligation under its long-term energy contract with Unitil at  an
average  purchase price of 5.10 cents per Kwh in  2004  and  4.93
cents  per  Kwh  in  2003.   Administrative and general  expenses
decreased approximately $534,000, or 19.7%, to $2,171,000 in 2004
as  compared  to $2,705,000 in 2003.  The Company has  undertaken
numerous  cost  savings measures that reduced administrative  and
general  expenses  in  2004, including relocating  its  corporate
offices  to  smaller  space and reducing headcount  in  2003  and
reducing the salaries of its President and COO late in the second
quarter  of  2003  that have reduced administrative  and  general
expenses  in  2004.  In 2003, the Company incurred administrative
and  general  expenses related to the Tender Offer, the  Seabrook
sale and other business planning activities, including legal, tax
and   other  professional  services.   Taxes  other  than  income
decreased  approximately $283,000, or 68%, to $133,000  in  2004,
primarily  for  Great Bay Hydro property taxes,  as  compared  to
$416,000  in  2003, primarily for taxes associated with  Seabrook
closing costs.

  Interest  and dividend income decreased approximately $288,000,
or  57.3%,  to  approximately $215,000 in  2003  as  compared  to
approximately  $503,000 in 2002, primarily due to higher  average
cash balances in 2003.

  Other income increased approximately $877,000, to $1,153,000 in
2004  as  compared  to  $276,000  in  2003.   This  increase  was
primarily  due  to  receipt by the Company in  2004  of  one-time
payments  totaling  approximately $572,000  following  the  final
reconciliation  and termination of certain escrow  accounts  that
had been funded for potential closing adjustments and other costs
specific  to the Company's sale of its interests in the  Seabrook
Nuclear  Power  Plant in November 2002.  See  "Part  I.  Item  1.
Recent  Developments."    The  Company  also  received  insurance
refunds  related  to  its  previous  ownership  in  Seabrook   of
approximately $190,000 in 2004.  In 2004, the Company  negotiated
a  final settlement of the remaining accrued liability related to
the   sale  of  Seabrook  and  paid  approximately  $168,000   in
settlement  of  this liability.  As a result  of  this  liability
being  settled for less than the Company had previously estimated
and   accrued   for,  the  Company  recorded  other   income   of
approximately  $634,000 in 2004.  Offsetting these income  items,
the  Company recorded a deduction of $255,000 for a directors and
officers  liability insurance policy covering  claims,  including
nuclear  related claims, for events that may have occurred  prior
to  July  2004.  The Company is currently in non-nuclear  related
energy  businesses, and as such, directors and officers liability
insurance  coverage is available at significantly lower  premiums
for  current operations.  Other Income in 2003 was primarily from
a  distribution representing the Company's share of distributions
under mutual insurance company policies associated with Seabrook.

  The  Company  recognized an extraordinary gain of  $278,000  in
2004 upon the consolidation of HoustonStreet.  As of May 1, 2004,
BayCorp's ownership in HoustonStreet was 59.7%, and in accordance
with  ARB  51  the  Company  reconsolidated  HoustonStreet.   The
Company  accounted  for the reconsolidation of  HoustonStreet  in
accordance  with EITF Topic D-84, and accordingly, followed  step
acquisition  accounting.   The  fair  value  of  current   assets
exceeded  BayCorp's net investment in HoustonStreet by  $278,000,
resulting   in  negative  goodwill  upon  application   of   step
acquisition   accounting.    See  "Part   I.   Item   1.   Recent
Developments."

  BayCorp's   total   operating   expenses   were   approximately
$8,948,000  in  2003  and  approximately  $47,327,000  in   2002.
Included  in 2003 operating expenses was approximately $3,901,000
for  purchased power.  The Company purchased power to satisfy its
obligation  under its long-term power sales contract with  Unitil
at  an average purchase price of 4.91 cents per Kwh.  The Company
recognized an unrealized loss of $2,189,400 in 2003.  The Company
recognized approximately $263,000 of deferred gain on the  Unitil
contract in 2003.  Also included in 2003 operating expenses  were
approximately $2,705,000 in administrative and general  expenses,
which  included  approximately $785,800 in Company  salaries  and
related  benefits, $409,600 in non-cash charges for the  variable
accounting for stock options, and approximately $179,000  for  an
accrual for estimated payments to Mr. Getman and Mr. Callendrello
for achieving certain goals and financial incentives for specific
objectives  established  by the Board  under  the  Company's  Key
Employee  Retention and Incentive Plan.  The Company has  accrued
approximately  $411,000 for such incentive  payments.   Corporate
insurance expense was approximately $226,400 in 2003.  Legal  and
other  outside services were approximately $1,379,200,  primarily
for  services  associated with the Company's  Tender  Offer,  SEC
filing  requirements  and  costs  associated  with  new  business
development  efforts.  Administrative and general  expenses  were
reduced by approximately $343,700 after receiving these funds  in
recovery of a previously recorded bad debt.  See "Part I.Item  1.
Recent Developments - Enron Claim."  Taxes other than income were
approximately  $416,000,  primarily  for  taxes  associated  with
Seabrook closing costs.  Operating expenses in 2002 included  ten
months  of  Seabrook  operating  costs  in  addition  to  BayCorp
corporate expenses.

                               15

<Page>

  Interest  and dividend income decreased approximately $380,000,
or  43%,  to  approximately  $503,000  in  2003  as  compared  to
approximately  $883,000 in 2002, primarily due to higher  average
cash   balances  in  2002  and  higher  earnings  on  investments
available to the Company.  Other Income in 2003 was approximately
$276,000,   primarily  from  a  distribution   representing   the
Company's  share of distributions under mutual insurance  company
policies associated with Seabrook.  Other income in 2002 included
approximately  $59,774,000  from  the  sale  by  BayCorp  of  its
ownership interest in Seabrook.

  Net Operating Losses

  At  December  31, 2003 and 2004, the Company had net  operating
loss  carryforwards ("NOLs") for federal income tax  purposes  of
approximately $167 million and $188 million, respectively, before
limitations.   The Company's NOL before limitations  at  December
31,  2004 includes $167 million attributable to BayCorp  and  $21
million  attributable  to HoustonStreet.  The  Company's  federal
NOLs  will  expire  during  the years ending  December  31,  2005
through  2023  if not used to offset future taxable  income.   An
ownership  change  occurs within the meaning of Internal  Revenue
Code  ("IRC") Section 382 when the ownership percentage of 5%  or
greater shareholders in a company increases by more than 50% over
a  three-year period.  The Company believes that the Tender Offer
in  March  2003 and related transactions resulted in a change  in
ownership of BayCorp within the meaning of IRC Section  382.   As
such,  BayCorp  may be precluded from utilizing its  federal  and
state  NOLs  originating prior to the ownership change.   BayCorp
estimates  that approximately $165 million of its NOL is  subject
to  an  annual  limitation for purposes of  IRC  Section  382  of
approximately $390,000 per year.  As a result of this limitation,
all  or  a portion of BayCorp's federal and state NOLs may expire
unused.   Additional  NOLs  and other  tax  attributes  generated
subsequent  to the Tender Offer may be limited in  the  event  of
certain  future changes of ownership by significant shareholders.
The   Company   also  believes  that  all   or   a   portion   of
HoustonStreet's  NOLs  may  be subject  to  an  IRC  Section  382
limitation.   Accordingly,  all or a portion  of  HoustonStreet's
federal and state NOLs may expire unused.

  The  following  selected  quarterly  financial  information  is
unaudited  and  includes  all adjustments  consisting  of  normal
recurring  accruals  which  are, in the  opinion  of  management,
necessary for a fair statement of results of operations for  such
periods (dollars are in thousands, except per share data):


<Table>
<Caption>


                                                 Quarter Ended
                                                 -------------
                                                                                12-Months
2004                              March     June       September    December      Ended
----                              -----     ----       ---------    --------      -----
<S>                             <C>        <C>         <C>          <C>         <C>
Operating Revenues                $1,034   $1,443       $1,442      $1,619       $5,538
Operating Loss                    (2,162)    (891)        (705)       (376)      (4,134)
Net Income (Loss)                 (2,098)      95         (250)       (285)      (2,538)
Earnings (Loss)
  per share of common
  stock - basic and
  diluted                         ($3.33)   $0.16       ($0.45)     ($0.51)      ($4.34)
2003
----
Operating Revenues                  $991     $996       $1,007      $1,007       $4,001
Operating Loss                    (2,171)    (317)        (931)     (1,528)      (4,947)
Net Income (Loss)                 (1,762)      35         (936)     (1,505)      (4,168)
Earnings (Loss)
  per share of common
  stock - basic and
  diluted                         ($0.22)   $0.05       ($1.45)     ($2.33)      ($1.72)
2002
----
Operating Revenues               $15,368   10,126      $15,559      $7,735      $48,788
Operating Income (Loss)            3,672   (1,999)       4,656      (4,868)       1,461
Gain on Sale of Seabrook               -        -            -      59,774       59,774
Net Income (Loss)                  3,644   (1,723)       4,831      52,121       58,873
Earnings (Loss) per
  share of  common
  stock - basic                    $0.43   ($0.20)       $0.58       $6.21        $7.02
Earnings (Loss) per
  share of common
  stock - diluted                  $0.43   ($0.20)       $0.55       $5.94        $6.79

</Table>

  On  November  1,  2002,  the Company closed  the  sale  of  its
interests   in  Seabrook  and  received  cash  consideration   of
approximately  $113  million for its interests  in  the  Seabrook
Project.  The Company realized a gain on the sale of its Seabrook
assets of approximately $60 million, or $7.12 and $6.81 per basic
and diluted share, respectively.

LIQUIDITY AND CAPITAL RESOURCES

  BayCorp's long-term energy sales contract with Unitil  and  the
sale of electricity generated at Great Bay Hydro were the primary
sources  of operating revenues in 2004.  The cash generated  from
these activities was not sufficient to meet the Company's ongoing
cash  requirements  in 2004.  The Company sold  power  under  the
Unitil  PPA in 2004 at 5.04 cents per kWh and incurred  purchased
power costs at an average purchase price of 5.10 cents per

                               16

<Page>

kWh.   The  average  selling price for electricity  generated  by
Great Bay Hydro was 5.01 cents per kWh.  As of December 31, 2004,
the  Company  had  approximately  $9,627,000  in  cash  and  cash
equivalents and $2,500,000 in restricted cash.

  The Company had a net loss in 2004 of approximately $2,538,000.
There was a non-cash charge for an unrealized loss on the mark-to-
market  of the Unitil PPA of approximately $3,428,000 and a  non-
cash   recognition  of  deferred  gain  on  the  Unitil  PPA   of
approximately $263,000.  The value of this contract is  based  on
current  projections  of  power  prices  over  the  life  of  the
contract.   Forward power prices increased during 2004  primarily
due  to  increases  in the forward price of natural  gas.   Power
generating  plants  that use natural gas as  a  fuel  source  are
increasingly on the margin and therefore are setting the  forward
price  of  power in NEPOOL.  Accordingly, the price of  power  in
NEPOOL  is  highly dependent on the price of natural gas.   Other
non-cash  charges included compensation expense of  approximately
$172,000  for  the variable accounting of certain employee  stock
options.  The  Company  also recognized a non-cash  extraordinary
gain  of $278,000 in 2004 upon the consolidation of HoustonStreet
as of May 1, 2004.

  An  increase  in  accounts receivable in 2004 of  approximately
$207,000  was  primarily attributable to accounts  receivable  at
Great  Bay  Hydro  and Nacogdoches Gas, both of  which  were  new
companies created in 2004, and HoustonStreet accounts receiveable
of  approximately $122,000 which are reflected in  the  Company's
statements  as a result of the consolidation of HoustonStreet  in
2004.  See "Part I. Item I. Recent Deveopments - HoustonStreet."

  A  decrease of approximately $2,027,000 in prepaids  and  other
assets was primarily attributable to the final reconciliation and
termination of certain escrow accounts that had been  funded  for
potential  closing adjustments and other costs  specific  to  the
Company's  sale  of its interests in Seabrook in  November  2002.
The  Company received approximately $572,000 in 2004 relative  to
the  termination of these accounts and, as a result of the  total
liability  being settled for less than the Company had previously
estimated  and  accrued  for,  these  accounts  were  reduced  by
approximately  $939,000.  In addition, there was a  reduction  in
the deposit required by NEPOOL in 2004 of approximately $990,000.
The  decrease  in prepaids and other assets was also attributable
to  a  reduction  of  approximately $91,000 in prepaid  insurance
costs.   The  Company was able to reduce its annual  premium  for
directors  and officers liability insurance by approximately  74%
in  2004  because  the  the Company is currently  in  non-nuclear
related  energy businesses, and as such, directors  and  officers
liability insurance coverage is available at significantly  lower
premiums for current operations.

  A   decrease  in  accounts  payable  and  accrued  expenses  of
approximately $221,000 was primarily attributable to  the  timing
of  purchased power payments by Great Bay Power Marketing.  As  a
result  of  a  change in NEPOOL policy, purchased power  payments
from  Great Bay Power Marketing to NEPOOL were due weekly  as  of
July  15, 2004, whereas prior to that date they had been due  and
payable on a monthly basis.

  The  Company recorded a net increase in miscellaneous and other
liabilities of 1,448,000 in 2004.  This increase was due in  part
to  the  cash  settlement  the  Company  received  in  2004  from
Citizens.   On  September 28, 2004, Great  Bay  Hydro  agreed  to
terminate Citizens' indemnification requirements in exchange  for
Citizens'  payment  to  Great  Bay Hydro  of  approximately  $4.4
million.   After  receipt of these funds, Great  Bay  Hydro  paid
approximately  $1.2  milllion for costs incurred  in  2004.   The
remaining approximately $3.2 million is included in the Company's
balance  sheet  as cash along with corresponding  short-term  and
long-term  liabilities of $718,000 and $2,479,000,  respectively,
for  the estimated remaining cost of FERC compliance.  See  "Part
I.  Item  1.  Recent  Developments -  Great  Bay  Hydro."   Other
liabilites  were  also reduced by approximately $1,741,000  as  a
result  of  the final reconciliation and termination  of  certain
escrow  accounts  that  had  been funded  for  potential  closing
adjustments and other costs specific to the Company's sale of its
interests  in  Seabrook in November 2002 being settled  for  less
than the Company had previously estimated and accrued.

  Cash   flows  from  investing  activities  included   cash   of
approximately   $393,000  recorded  upon  the  consolidation   of
HoustonStreet.    See  "Part  I. Item 1.  Recent  Developments  -
HoustonStreet."   Investing  activities  in  2004  also  included
$45,000  paid by the Company's subsidiary, Nacogdoches Power,  to
acquire development rights to an approximate 1000 MW natural gas-
fired  power plant project in Nacogdoches County, Texas.  In  the
fourth  quarter of 2004, Nacogdoches Gas entered into  agreements
with  Sonerra under which Nacogdoches Gas acquired an approximate
10%  working interest in two natural gas and oil producing  wells
for approximately $690,000.

  During  2004,  the  Company repurchased 88,551  shares  of  its
common  stock  for approximately $1,157,000, at  an  average  per
share  price  of  approximately  $13.06.   The  Company  received
approximately $41,000 from the exercise of employee stock options
in 2004.

                               17

<Page>

  The  Company's contractual obligations as of December 31,  2004
were as follows:


  <Table>
  <Caption>


                                                                            More
  Contractual                    Less Than     1-3           3-5            Than
  Obligations         Total      One Year     Years         Years          5 Years
  -----------         -----      --------     -----         -----           -----
  <S>              <C>          <C>            <C>           <C>             <C>
  Office Space
  Lease              $8,800       $8,800        0             0               0

</Table>


  Following  the sale of Seabrook in the fourth quarter  of  2002
and  the  completion of the Company's Tender Offer in  the  first
quarter of 2003, the Company evaluated and pursued energy-related
investment opportunities.  The Company continues to focus on  the
acquisition of energy-related assets.

  BayCorp  has  continued to seek to acquire either  complete  or
partial  ownership  interests in electric generating  facilities.
This  is an area where BayCorp has a solid understanding  of  the
market and the value of and risks related to those assets.  There
are  also  a  large number of generating assets  that  have  been
offered  or  are currently being offered for sale.  These  plants
consist  of  both  merchant  and contracted  facilities  using  a
variety   of   fuels   and   located   both   domestically    and
internationally.  There is, however, substantial competition  for
the   acquisition  of  these  assets,  with  a  number   of   new
participants entering the market, including private equity funds,
hedge  funds,  insurance  companies, Canadian  income  funds  and
investment  banks.   The  Company  remains  focused  on  pursuing
opportunities and assets that it believes will provide  a  return
to stockholders commensurate with the risks.

  Generally,   BayCorp  has  targeted  the  following   operating
assets:  (1) merchant plants in regions with developed  wholesale
power  markets such as New England, New York, PJM and Texas,  (2)
international   assets  that  have  stable,  long-term   off-take
contracts,  and  (3)  merchant  or contracted  renewable  assets.
BayCorp   is   also  pursuing  other  energy-related  investments
including  development  of  new power generation  facilities  and
hydrocarbon  (natural  gas  and oil)  reserves  and  the  further
development of HoustonStreet, its online trading platform.

  BayCorp's  first  acquisition following its  sale  of  Seabrook
was  the  acquisition  through Great Bay  Hydro  of  the  Vermont
generating  plants  owned  by the Vermont  Electric  Division  of
Citizens.    The  generating  facilities  include  an   operating
hydroelectric facility of approximately 4 MWs located in Newport,
Vermont,  diesel engine generators totaling approximately  7  MWs
located  in  Newport,  Vermont  and  non-operating  hydroelectric
facilities in Troy and West Charleston, Vermont.  Great Bay Hydro
assumed operating responsibility for these facilities on April 1,
2004  and  is using the output of the Newport plant as a physical
hedge for a portion of BayCorp's contractual obligation to supply
9.06 megawatts to Unitil through 2010.

  Great  Bay Hydro paid a nominal purchase price to Citizens  for
the   generating  facilities  and  650  acres  of  real  property
associated  with the generating facilities, and  this  amount  is
reflected  in  the Company's financial statements.  In  addition,
Citizens  agreed to indemnify Great Bay Hydro for the  reasonably
anticipated costs of complying with the requirements of  the  new
operating  license issued by the FERC on November 21,  2003.   On
September 28, 2004, Great Bay Hydro agreed to terminate Citizens'
indemnification requirements in exchange for Citizens' payment to
Great  Bay Hydro of approximately $4.4 million, since the receipt
of  which  Great  Bay Hydro paid approximately $1.2  million  for
costs incurred as of December 31, 2004 for FERC compliance.   The
remaining approximately $3.2 million is included in the Company's
December  31,  2004  balance sheet as cash.   The  balance  sheet
reflects  corresponding short-term and long-term  liabilities  of
$719,000   and   $2,479,000,  respectively,  for  the   estimated
remaining  cost  of  FERC  compliance.  The  Company  expects  to
complete the requirements of FERC license within those amounts.

  The  Company  formed Nacogdoches Power in 2004, and  thru  this
subsidiary,  acquired the development rights to the Sterne  Power
project  in the town of Sacul in Nacogdoches County, Texas.   The
Sterne project was inititally designed and has been permitted  as
a  nominal  1000 MW plant.  The project received its air  quality
permit in December 2002, and the air quality permit currently  is
effective through December 7, 2005.  An additional eighteen-month
extension  to  the permit may be requested by Nacogdoches  Power.
The  wastewater  discharge permit is currently effective  through
August  1, 2006.  The project has an option to purchase the  land
for the project and options to acquire easements for transmission
lines   and/or   gas  pipelines.   Those  options  have   varying
expiration  dates in 2005 and 2006 and are either being  extended
or  exercised.    Nacogdoches Power is currently  evaluating  the
plant  configuration.  Further, Nacogdoches Power is  seeking  to
enter  into  power  offtake contracts, although  none  have  been
executed.  A schedule for the development of the project has  not
been  established.   The total cost of the  Sterne  project  will
depend  on  the  final plant design and will require  substantial
additional financing.  The amount and type of any such  financing
has not been determined.

                               18

<Page>

  As  part of its efforts to secure a natural gas supply for  the
Sterne  Power  project, the Company determined  that  significant
natural  gas  and oil exploration and production activities  were
being  carried out in Nacogdoches County, Texas near the location
of  the  Sterne Power project.  It was through this process  that
the  Company  identified the oil and gas development  opportunity
with Sonerra.

  The  Company formed Nacogdoches Gas in 2004, and in the  fourth
quarter  of  2004, Nacogdoches Gas entered into  agreements  with
Sonerra  under which Nacogdoches Gas acquired an approximate  10%
working  interest (of a 77% net revenue interest) in two  natural
gas  and  oil producing wells.  Nacogdoches Gas entered  into  an
agreement  dated  January  7,  2005  with  Sonerra,  under  which
Nacogdoches  Gas will fund the development of three  natural  gas
and  oil wells.  This agreement was amended as of March 14, 2005,
increasing the number of wells from three to four.  In  addition,
Nacogdoches  Gas  has  an  option  to  participate  in  Sonerra's
continued development of up to 15 additional natural gas and  oil
wells over the next two years.  Under the agreement with Sonerra,
Nacogdoches  Gas will fund the total cost of the new wells  (with
the  provision  that  up to 25% of the working  interest  may  be
funded and acquired by other parties) and will receive a priority
return  of 90% of the working interest funded until its aggregate
investment is recovered.  Once Nacogdoches Gas has recovered  all
of its investment in the wells from the net proceeds of all wells
and  any  other  revenues  from the  assets  acquired  under  the
development agreement, Sonerra and Nacogdoches Gas will own equal
amounts  of the working interests funded.  The working  interests
include  undivided leasehold interests in the gas units  and  the
production and gathering equipment.

  Sonerra  directly  or indirectly controls approximately  36,000
acres  either through leases or as land held by production within
a project area in Nacogdoches County in east Texas.  Sonerra also
has  acquired 3D seismic data covering approximately 31,000 acres
within the project area, of which 24,000 acres are under lease or
held by production directly or indirectly by  Sonerra.

  Since  entering  the  January 7, 2005 agreement  with  Sonerra,
Nacogdoches Gas has funded the development of three  wells.   The
net  revenue  interest  in  each of the  wells  being  funded  by
Nacogdoches  Gas  is 77%, which means that the working  interests
bear 100% of the operating costs of the wells but receive 77%  of
the net revenues from the wells with the remaining 23% of the net
revenues  paid  to the lessor and other royalty  interests.   The
first  of  those  wells, Round Mountain, a James Lime  horizontal
natural  gas  well, began production in January 2005 and  through
the  end  of February 2005 has produced 95 million cubic feet  of
natural  gas.   The  second  well,  Wicked  Wolf,  a  James  Lime
horizontal  natural  gas well, began production  in  early  March
2005.   The third well, Painted Horse, a Rodessa vertical natural
gas well, is being developed.

  Under  the  terms of the January 7, 2005 agreement as  amended,
Sonerra  will sequentially present five additional sets of  three
well  prospects to Nacogdoches Gas.  Upon the presentation  of  a
set  of three well prospects, Nacogdoches Gas, at its option, may
proceed  with  the  development of those  three  well  prospects.
Should Nacogdoches Gas decide not to proceed with the development
of   any  given  set  of  three  well  prospects,  its  right  to
participate in future well sets terminates.

  The total cost of an individual well typically ranges from $2.0
million  to $3.5 million and includes the acquisition  of  leases
for  the  land, the drilling and completion of the wells and  the
construction  of  extensions of the gas  gathering  system.   The
total  cost  depends  on the type of well,  the  amount  of  land
required  for  the production unit, the length of  gas  gathering
pipeline and the completion technique.

  Other  exploration and production companies  are  operating  in
Nacogdoches  County and may seek to acquire land in or  near  the
project  area  being  developed by Sonerra and  Nacogdoches  Gas.
Nacogdoches Gas has no employees.

  Various federal, state and local laws relating to the discharge
of  materials into the environment, or otherwise relating to  the
protection of the environment, directly impact the development of
oil  and  gas  wells and their costs.  These laws and regulations
govern,   among  other  things,  emissions  to  the   atmosphere,
discharges  of  pollutants into the waters of the United  States,
underground  injection of waste water, the  generation,  storage,
transportation and disposal of waste materials and the protection
of   public   health,  natural  resources  and   wildlife.    The
anticipated costs of development of oil and natural gas wells  by
Nacogdoches  Gas  and Sonerra includes funding for  the  measures
necessary  to meet environmental compliance requirements  and  no
additional environmental compliance costs are anticipated.

  On  March  15,  2005, the Company and all of its  wholly  owned
subsidiaries entered into a $10,250,000 Convertible  Note  and  a
Pledge  Agreement  with Sloan Group Ltd., a Bahamas  corporation.
The  debt, which accrues interest at 8% per annum and is due  and
payable in full on December 15, 2005, is convertible by the Sloan
Group at any time between November 15, 2005 and December 15, 2005
(or any time after the occurrence and during the continuance of a
material  event  of  default  under  the  Note)  into  shares  of
BayCorp's  common stock, $.01 par value at a price of $14.04  per
share.   The Note does not allow BayCorp to prepay the  debt  and
provides for a 2% premium on the

                               19

<Page>

  interest  rate in the event of a default.  Payment of the  Note
may  be  accelerated in the event of a material event of default,
which is customary for this type of financing.

  In  addition  to BayCorp, the borrowers under the Note  include
the  following  subsidiaries of BayCorp: GBH Maine,  GBH  Benton,
Great  Bay  Power  Marketing, Great Bay Hydro, BayCorp  Ventures,
Nacogdoches Power and Nacogdoches Gas.  As security for the Note,
the  borrowers entered into the Pledge Agreement with  the  Sloan
Group.   Under the Pledge Agreement, BayCorp pledged  its  equity
interests  in  GBH Maine and Nacogdoches Gas to the Sloan  Group,
GBH  Maine pledged its equity interests in GBH Benton and  Benton
Falls to the Sloan Group, GBH Benton pledged its equity interests
in  Benton  Falls  to the Sloan Group, and Nacogdoches  Gas,  GBH
Maine  and  GBH  Benton  pledged to the Sloan  Group  any  equity
interest that they may obtain in other entities while the debt is
outstanding.

  BayCorp  used  proceeds  from  the  financing  to  finance  the
acquisition  of  Benton Falls by GBH Maine  and  GBH  Benton  and
intends  to  use  proceeds  from the financing  to  continue  the
development of natural gas and oil wells in East Texas under  its
Project   Development  Agreement  with  Sonerra  and  for   other
strategic and general corporate purposes.

  In  March  2005, BayCorp formed GBH Maine and GBH  Benton.   On
March  16,  2005, GBH Maine and GBH Benton acquired Benton  Falls
Associates,  a  limited  partnership that  owns  a  4.3  megawatt
hydroelectric generation plant in Benton, Maine from The  Arcadia
Companies  for approximately $2.2 million.   The Company  assumed
operating responsibility for Benton Falls, the output of which is
sold  to  CMP  under a power purchase agreement that  expires  in
December 2007.  The rates under the CMP PPA are indexed to  CMP's
standard  rates  for  energy and capacity  purchases  established
annually by the Maine Public Utilities Commission.

  The  Company  intends to pursue investments that  will  require
additional  equity or debt financing.  The Company believes  that
such  financing is available, but there can be no assurance  that
the Company would be successful in obtaining such financing.   If
the  Company is not successful in obtaining additional financing,
the  Company  may  not  be  able  to  pursue  certain  investment
alternatives.   In  such a case, the Company may  be  limited  to
opportunities  that  it can pursue given its  current  resources.
The  Company  believes that its current cash, together  with  the
anticipated  proceeds from the sale of electricity by  Great  Bay
Power  Marketing,  Great  Bay Hydro and  Benton  Falls,  and  the
proceeds from the sale of natural gas by Nacogdoches Gas, will be
sufficient  to  enable the Company to meet the  anticipated  cash
requirements of its current operations in 2005.  If  the  Company
is unsuccessful in identifying and making additional investments,
the Company may pursue alternative strategies, including sale  of
the Company or its assets, or deregistration.

  The  Company  filed its 2002 tax return in September  2003  and
requested  a refund of approximately $941,000 from the  State  of
New  Hampshire for overpayment of 2002 state income  taxes.   The
State  of  New  Hampshire  Department of  Revenue  Administration
("NHDRA")  began an examination of the Company's 2000,  2001  and
2002  tax returns in December 2003.  Given the uncertainty as  to
the  outcome  of  the  audit,  the Company  did  not  record  the
requested  refund  as  of  December  31,  2003.   The  audit  was
concluded in January 2005.  A settlement was reached between  the
Company and the NHDRA in February 2005 and the Company received a
refund  of  $225,000 in Feburary 2005 which  it  will  record  as
income during 2005.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

  This  Annual  Report contains forward-looking statements.   For
this  purpose, any statements contained in this report  that  are
not  statements of historical fact may be deemed to  be  forward-
looking  statements.  Without limiting the foregoing,  the  words
"believes,"  "anticipates,"  "plans,"  "expects,"  "intends"  and
similar  expressions  are  intended to  identify  forward-looking
statements.  There are a number of important factors  that  could
cause  the  results of BayCorp and/or its subsidiaries to  differ
materially   from   those  indicated  by   such   forward-looking
statements.  These factors include, without limitation, those set
forth below and elsewhere in this report.

  Business  Opportunities  and  Development.   As  described   in
"Management's Discussion and Analysis of Financial Condition  and
Results  of  Operations - Liquidity and Capital  Resources,"  the
Company  has  evaluated  and  pursued  energy-related  investment
opportunities, has focused on the acquisition of natural gas  and
oil,   electric   generating  assets  and  other   energy-related
investments  and  is  considering  the  further  development   of
HoustonStreet.  There can be no assurance that the  Company  will
be able to identify business opportunities that it believes to be
attractive,  or that it will be successful in pursuing  any  such
opportunities,  in view of factors that include  competition  for
the  acquisition  of  assets, the fact that  many  energy-related
activities are subject to government regulatory requirements, the
Company's limited resources and the need to obtain debt or equity
financing in order to pursue certain opportunities.

                               20

<Page>

  History  of Losses. BayCorp reported operating losses  in  2004
and  in  2003  and reported operating income for 2002  and  2001.
Prior to 2001, BayCorp had never reported an operating profit for
any year since its incorporation.

  Liquidity   Need.   As  of  December  31,  2004,  BayCorp   had
approximately  $12.1  million  in  cash  and  cash   equivalents,
restricted cash and short-term investments.  On March  15,  2005,
BayCorp  closed a $10.25 million convertible debt financing  with
Sloan  Group Ltd.  The debt, which accrues interest at 8% and  is
due  on  December  15, 2005, is convertible at any  time  between
November  15,  2005  and December 15, 2005  into  shares  of  the
Company's  common stock at a price of $14.04 per share.   BayCorp
used  proceeds  from the financing to finance the acquisition  of
Benton  Falls  by  GBH Maine and GBH Benton and  intends  to  use
proceeds  from  the  financing  to continue  the  development  of
natural  gas  and  oil  wells in East  Texas  under  its  Project
Development  Agreement with Sonerra and for other  strategic  and
general corporate purposes.  The Company believes that such cash,
together  with  the  anticipated  proceeds  from  the   sale   of
electricity  by Great Bay Power Marketing, Great  Bay  Hydro  and
Benton  Falls,  and  from  the sale of natural  gas  and  oil  by
Nacogdoches Gas, will be sufficient to enable the Company and its
wholly  owned  subsidiaries to meet their  cash  requirements  in
2005.  The direction of the Company's business and circumstances,
foreseen  or  unforeseen,  may  cause  cash  requirements  to  be
materially higher than anticipated and the Company or its wholly-
owned  subsidiaries may be required to raise additional  capital,
either  through a debt financing or an equity financing, to  meet
ongoing  cash  requirements.  There  is  no  assurance  that  the
Company  or its subsidiaries would be able to raise such  capital
or  that  the terms on which any additional capital is  available
would  be  acceptable.   Moreover, the Company's  need  to  raise
additional  capital in order to pursue certain opportunities  may
affect  the Company's competitive position with respect  to  such
opportunities.  If additional funds are raised by issuing  equity
securities, dilution to then existing stockholders will result.

  Purchased  Power  Price  Risk.  The  price  of  electricity  is
subject  to  fluctuations resulting from changes  in  supply  and
demand.  The Company is party to a purchased power contract  with
Unitil  that provides for Great Bay Power Marketing  to  sell  to
Unitil  9.06  MWs  at $50.34 per MWh.  The Unitil  PPA  continues
through  October  31,  2010, and Unitil has an  option,  expiring
November  1,  2005, to extend the Unitil PPA for up to  12  years
until  2022.   The  Company  must  purchase  power  to  meet  its
obligation  under the PPA.  The prices at which Great  Bay  Power
Marketing   must   purchase  its  power  supply  could   increase
significantly from current levels.

  Extensive  Government Regulation of Electric  Energy  Industry.
The  electric energy industry is subject to extensive  regulation
by  federal and state agencies.  Great Bay Power Marketing, Great
Bay Hydro and Benton Falls are subject to the jurisdiction of the
FERC  and,  as  a  result, are required to  file  with  FERC  all
contracts for the sale of electricity.  FERC's jurisdiction  also
includes,   among   other  things,  the  sale,   lease,   merger,
consolidation or other disposition of facilities, interconnection
of  certain  facilities, accounts, service and property  records.
The  Sterne  Power  project  is  subject  to  the  terms  of  its
environmental permits.  The Sterne Power project currently has an
air  quality permit and wastewater discharge permit issued by the
Texas   Commission   on   Environmental   Quality.     Additional
environmental  permits will be required prior  to  the  start  of
operation of the project.  In addition, prior to operation of the
Sterne Power project, Nacogdoches Power will seek designation  by
FERC as an EWG.

  Extensive Government Regulation of Oil and Gas Industry.  There
are numerous federal and state laws and regulations governing the
oil  and gas industry that are often changed in response  to  the
current political or economic environment.  Compliance with  this
regulatory  burden is often difficult and costly  and  may  carry
substantial penalties for noncompliance.  The following are  some
specific regulations that may affect oil and gas activities.  The
impact  of  these or future legislative or regulatory initiatives
cannot be predicted.

  Federal  Energy  Bill.   After failing to pass  legislation  in
2003  and  2004, Congress is currently considering a  new  energy
bill.   The potential effect of this legislation is unknown,  but
it  may  include certain tax incentives for oil and gas producers
and changes in the federal regulatory framework.

  Federal    Regulation   of   Natural   Gas.    The   interstate
transportation  and  certain sales for  resale  of  natural  gas,
including transportation rates charged and various other matters,
is subject to federal regulation by FERC.  Federal wellhead price
controls on all domestic gas were terminated on January 1,  1993,
so   gathering  systems  are  currently  not  subject   to   FERC
regulation.   The impact of future government regulation  on  any
natural  gas  facilities  cannot be predicted.   Although  FERC's
regulations should generally facilitate the transportation of gas
produced from producing properties and the direct access to  end-
user markets, the future impact of these regulations on marketing
production or on gas transportation business cannot be predicted.
BayCorp  and  its subsidiaries, however, should not  be  affected
differently than competing producers and marketers.

                               21

<Page>

  Federal Regulation of Oil.  Sales of crude oil, condensate  and
natural  gas liquids are not currently regulated and are made  at
market  prices.  The net price received from the  sale  of  these
products is affected by market transportation costs.  Under rules
adopted  by FERC effective January 1995, interstate oil pipelines
can  change rates based on an inflation index, though other  rate
mechanisms may be used in specific circumstances.

  State  Regulation.   Oil  and  gas operations  are  subject  to
various types of regulation at the state and local levels.   Such
regulation includes requirements for drilling permits, the method
of  developing new fields, the spacing and operations  of  wells,
and  waste prevention.  The production rate may be regulated  and
the maximum daily production allowable from oil and gas wells may
be  established on a market demand or conservation  basis.  These
regulations may limit production by well and the number of  wells
that  can  be drilled.  To the extent that such gas is  produced,
transported and consumed wholly within one state, such operations
may,   in   certain  instances,  be  subject   to   the   state's
administrative authority charged with regulating pipelines.   The
rates that can be charged for gas, the transportation of gas, and
the construction and operation of such pipelines would be subject
to  the regulations governing such matters.  Certain states  have
recently  adopted regulations with respect to gathering  systems,
and  other  states are considering similar regulations.   Whether
new  regulations will be adopted or, if adopted, the effect these
rules may have on gathering systems cannot be predicted.

  Federal,  State  or  Native  American  Leases.   Operations  on
federal, state or Native American oil and gas leases are  subject
to  numerous restrictions, including nondiscrimination  statutes.
Such  operations  must be conducted pursuant to  certain  on-site
security regulations and other permits and authorizations  issued
by the Bureau of Land Management, Minerals Management Service and
other agencies.

  Environmental  Regulations.  Various federal, state  and  local
laws  regulating the discharge of materials into the environment,
or  otherwise  relating  to the protection  of  the  environment,
directly   impact  oil  and  gas  exploration,  development   and
production operations, and consequently may impact operations and
costs.   These  laws and regulations govern, among other  things,
emissions to the atmosphere, discharges of pollutants into waters
of  the United States, underground injection of waste water,  the
generation,  storage,  transportation  and  disposal   of   waste
materials,  and  protection of public health, natural  resources,
and  wildlife.  These laws and regulations may impose substantial
liabilities for noncompliance and for any contamination resulting
from  operations and may require the suspension or  cessation  of
operations in affected areas.  To date, BayCorp has not  expended
any  material  amounts  to  comply  with  such  regulations,  and
management  does not currently anticipate that future  compliance
will  have  a materially adverse effect on BayCorp's consolidated
financial   position  or  results  of  operations.   BayCorp   is
committed to environmental protection and believes that it is  in
substantial  compliance  with applicable environmental  laws  and
regulations.   There are no known issues that have a  significant
adverse  effect  on  the permitting process or permit  compliance
status  of any of its facilities or operations.  BayCorp  expects
that  it  will  make  expenditures  in  efforts  to  comply  with
environmental  regulations  and requirements.   These  costs  are
considered a normal, recurring cost of ongoing operations and not
an extraordinary cost of compliance with government regulations.

  Risks   Related  to  HoustonStreet.   HoustonStreet's  revenues
depend  on continued and expanded use of Internet-based wholesale
energy trading platforms.  Electronic trading of wholesale energy
may  not  achieve widespread market acceptance  or  emerge  as  a
sustainable  business.  In addition, HoustonStreet will  need  to
enhance  trading  liquidity  in order  to  increase  and  sustain
revenues.   As  a  technology dependent business, HoustonStreet's
business  could suffer due to computer or communications  systems
interruptions  or  failures,  technological  change  or   adverse
competitive   developments.   Further,  as  electronic   commerce
evolves,   federal,  state  and  foreign  agencies  could   adopt
regulations  covering  issues such as user privacy,  content  and
taxation  of  products  and  services.   If  enacted,  government
regulations  could  materially adversely  affect  HoustonStreet's
business.  Although HoustonStreet currently is not aware that  it
infringes  any other patents, it is possible that HoustonStreet's
technology   infringes  patents  held  by  third   parties.    If
HoustonStreet  were  to be found infringing,  the  owner  of  the
patent could sue HoustonStreet for damages, prevent HoustonStreet
from making, selling or using the owner's patented technology  or
could  impose substantial royalty fees for those privileges.   If
any  of  the foregoing risks materialize, or other risks  develop
that adversely affect HoustonStreet, or if HoustonStreet fails to
grow  its revenues and net income, BayCorp could lose all of  the
value of its investment in HoustonStreet.

CRITICAL ACCOUNTING POLICIES

  Preparation of the Company's financial statements in accordance
with generally accepted accounting principles requires management
to  make  estimates  and  assumptions that  affect  the  reported
amounts  of assets and liabilities, the disclosures of contingent
assets and liabilities and revenues and expenses.  Note 1 to  the
Consolidated Financial Statements is a summary of the significant
accounting  policies  used in the preparation  of  the  Company's
financial statements.  The following is a discussion of the  most
critical accounting policies used historically by the Company.

                               22

<Page>

  Decommissioning

  Great  Bay and Little Bay recognized a liability based  on  the
present  value of the estimated future cash outflows required  to
satisfy their obligations using a risk free rate.  As of December
31,  2004  and 2003, the decommissioning liability was  $0  as  a
result  of  the  sale  of  Seabrook  and  FPL  Energy  Seabrook's
assumption of all decommissioning liability on November 1,  2002.
Great  Bay  and Little Bay accreted their share of  the  Seabrook
Project's  decommissioning liability.  The accretion was  a  non-
cash charge and recognized their liability related to the closure
and  decommissioning of the nuclear plant in current year dollars
over  the  licensing period of the plant.  The non-cash accretion
charge  recorded  in the accompanied consolidated  statements  of
income was $0, $0 and $4,105,000 for the years ended December 31,
2004, 2003 and 2002, respectively.

  Stock Options

  The   Company  accounts  for  its  stock  option  plans   under
Accounting   Principles  Board  Opinion  No.   25   and   related
interpretations for options issued prior to 2003, and as such  no
compensation cost had been recognized for options granted at fair
market  value  that had not been modified.  In prior  years,  the
Company  repriced  certain options, accelerated  the  vesting  of
others,  made  limited recourse loans for certain individuals  to
exercise  options  and  issued contingent options.   The  Company
recorded  compensation  expense related  to  these  options.   On
August 14, 2002, the Company announced that it would expense  the
fair value of all stock options granted beginning January 1, 2003
in  accordance  with SFAS No. 123, "Accounting  for  Stock  Based
Compensation."   Awards  under  the  Company's  plans  vest  over
periods  ranging  from one to three years.  Therefore,  the  cost
related  to  stock-based employee compensation  included  in  the
determination of net income for 2004 and 2003 differs  from  that
which  would have been recognized if the fair value based  method
had  been applied to all awards since the original effective date
of Statement 123.

 In  October  2001,  the  Company  issued  240,000  non-qualified
options  pursuant  to the 2001 Non-Statutory Stock  Option  Plan.
These options have an exercise price of $9.05 and vested upon the
closing  of  the  sale  of  the Seabrook  Project.   The  Company
recorded  compensation expense related to contingent and repriced
options  of $0, $77,000 and $2,467,700 for 2004, 2003  and  2002,
respectively.

  In  April  2003 and July 2003, the Company issued  132,000  and
10,000  options, respectively, pursuant to the 1996 Stock  Option
Plan and the 2001 Non-Statutory Stock Option Plan.  These options
have an exercise price of $14.45.  The Company accounts for these
options  using  the  fair value method and recorded  compensation
expense  in 2004 and 2003 of $172,000 and $153,000, respectively,
for these options.

  In  December 2004, HoustonStreet issued 25,000 options  to  its
President under the 1999 plan.  The options were granted in three
tranches  with exercise prices of $6.47, $12.95 and  $25.89.  The
options vest monthly over a 3-year period.  HoustonStreet did not
record a charge with respect to these options in accordance  with
APB  No.  25,  as  the fair market value of HoustonStreet  common
stock was equal to or less than each of the exercise prices.

  Principles of Consolidation

  BayCorp's   Consolidated  Financial  Statements   include   the
accounts of the Company and all its subsidiaries.  Until November
1,  2002,  the  Company  had a 15% joint  ownership  interest  in
Seabrook.   The Company recorded in its financial statements  its
proportional   share  of  Seabrook's  assets,   liabilities   and
expenses.   In  November  2004, BayCorp formed  Nacogdoches  Gas,
which acquired an approximate 10% working interest in two natural
gas  and oil producing wells in the fourth quarter of 2004.   The
Company  recorded  in its financial statements  its  proportional
share  of  well revenues and expenses.  The Company  consolidates
all  majority-owned and controlled subsidiaries and  applies  the
equity method of accounting for investments between 20% and  50%.
All  significant intercompany transactions have been  eliminated.
All  sales  of  subsidiary  stock are accounted  for  as  capital
transactions in the consolidated financial statements.

 In  January 2003, the FASB issued Interpretation No. ("FIN") 46,
Consolidation  of Variable Interest Entities - An  Interpretation
of  ARB  No.  51,  as  amended by FIN  46R.   The  interpretation
requires  that a company consolidate the financial statements  of
an  entity  that  cannot finance its activities  without  outside
financial  support,  and  for which  that  company  provides  the
majority  of  support.  The Company deemed that  its  investment,
HoustonStreet  , was not a variable interest entity.   Therefore,
prior to May 1, 2004 and when BayCorp held a minority interest in
HoustonStreet, the Company accounted for HoustonStreet under  the
equity method.  A recapitalization of HoustonStreet was completed
effective May 1, 2004, and as

                               23

<Page>

a result, BayCorp's ownership interest in HoustonStreet increased
above  50%.  As a result of this recapitalization, BayCorp  began
consolidating HoustonStreet as of May 1, 2004.

  Energy Marketing

  Forward  contracts  (including  the  Unitil  PPA)  meeting  the
definition of a derivative and not designated and qualifying  for
the  normal  purchases and normal sales exception or as  a  hedge
under  Statement  of  Financial  Accounting  Standards  No.  133,
Accounting  for  Derivative Instruments  and  Hedging  Activities
(SFAS  No. 133) are recorded at fair value with changes  in  fair
value  recorded in earnings.  In accordance with FASB's  Emerging
Issues  Task Force Issue No. 02-03, Issues Involved in Accounting
for  Derivative Contracts Held for Trading Purposes and Contracts
Involved  in Energy Trading and Risk Management Activities  (EITF
Issue  No.  02-03),  revenues related to  derivative  instruments
classified as trading are reported net of related cost of sales.

ITEM  7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET
RISK.

Commodity Price Risk

  Great  Bay Power Marketing is a party to the Unitil PPA,  which
as  amended, provides for the sale of 9.06 MWs of power to Unitil
at  $50.34  MWh through October 31, 2010.  Unitil has an  option,
which  expires November 1, 2005, to extend the Unitil PPA for  up
to 12 years, from November 1, 2010 through October 30, 2022.  See
"Item  1. Purchased Power Agreements."  Great Bay Power Marketing
purchases  power to meet its obligation under this contract  and,
as such, is exposed to market price fluctuations for the price of
power.

  The Unitil PPA was entered into for purposes other than trading
and   is  subject  to  commodity  price  risk.   The  prices   of
electricity are subject to fluctuations resulting from changes in
supply  and  demand.  In 2004, Great Bay Power Marketing  tracked
market exposure on its forward firm energy contract in a mark-to-
market model that is updated daily with current market prices and
is  reflected  in the Company's balance sheet.  The positive,  or
negative,  value of the forward firm power commitment  represents
an  estimation  of  the  gain,  or loss,  that  Great  Bay  Power
Marketing  would  have experienced if open firm commitments  were
covered at then-current market prices.  Great Bay Power Marketing
had   unrealized  losses  in  2004  and  2003  of   approximately
$3,427,000  and  $2,180,000, respectively, on  its  forward  firm
energy contract.

  The  Company does not purchase derivative commodity instruments
to   hedge  its  exposure  to  the  commodity  price  risk.   The
generation  and  sale  of  electricity  by  Great  Bay  Hydro  of
approximately  4 megawatts functions as a physical hedge  against
the commodity risk.

  The  following  table provides information about the  Company's
forward  firm  energy  contract that is  subject  to  changes  in
commodity  prices, showing the fair value of the contract  as  of
December 31 2004, 2003 and 2002 and the unrealized gain  or  loss
for the last three fiscal years.

  <Table>
  <Caption>

                           2004       2003        2002
                           ----       ----        ----
                              (Dollars in thousands)
                               -------------------
   <S>                   <C>         <C>          <C>
   Fair Value (12/31)    ($3,424)    $    3       $2,183
   Unrealized Gain       ($3,427)   ($2,180)      $  115
   (Loss)

  </Table>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  Financial statements and supplementary data are presented in
Part IV, Item 15 of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
       ACCOUNTING AND FINANCIAL DISCLOSURES.

  Not applicable.

ITEM 9A.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

                               24

<Page>

  The  Chairman,  CEO, and President and the  Vice  President  of
Finance   of   the  Company  have  reviewed  and  evaluated   the
effectiveness of disclosure controls and procedures  (as  defined
in the Securities Exchange Act of 1934 (the "Exchange Act") Rules
240.13a-14(c) and 15d-14 (c)) within 90 days before the filing of
this Annual Report.  Based on that evaluation, the Chairman, CEO,
and  President  and the Vice President of Finance have  concluded
that their current disclosure controls and procedures are, in all
material  respects,  effective and timely,  providing  them  with
material information relating to that required to be disclosed in
the reports the Company files or submits under the Exchange Act.

  The  Company's  management, including  the  Chairman,  CEO  and
President and the Vice President of Finance, does not expect that
the  Company's disclosure controls and procedures or its internal
controls will prevent all error and all fraud.  A control system,
no  matter  how well conceived and operated, provides reasonable,
not absolute, assurance that the objectives of the control system
are  met.   The  design  of  a control system  reflects  resource
constraints; the benefits of controls must be considered relative
to  their  costs. Because there are inherent limitations  in  all
control  systems, no evaluation of controls can provide  absolute
assurance that all control issues and instances of fraud, if any,
within the Company have been or will be detected.  These inherent
limitations  include  the realities that judgments  in  decision-
making  can be faulty and that breakdowns occur because of simple
error or mistake.  Controls can be circumvented by the individual
acts  of some persons, by collusion of two or more people, or  by
management override of the control.  The design of any system  of
controls  is  based  in part upon certain assumptions  about  the
likelihood of future events.  There can be no assurance that  any
design  will  succeed  in achieving its stated  goals  under  all
future  conditions;  over time, controls  may  become  inadequate
because  of changes in conditions or deterioration in the  degree
of  compliance  with the policies or procedures. Because  of  the
inherent   limitations  in  a  cost-effective   control   system,
misstatements  due  to  error  or fraud  may  occur  and  not  be
detected.

Changes in Internal Controls

     There have not been any significant changes in the Company's
internal  controls  or, to its knowledge, in other  factors  that
have  materially affected, or are reasonably likely to materially
affect,   these  controls  subsequent  to  the  date   of   their
evaluation.    The  Company  is  not  aware  of  any  significant
deficiencies or material weaknesses and, therefore, no corrective
actions were taken.

ITEM 9B. OTHER  INFORMATION.

  Not applicable.

                            PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  (a)   Directors.   The  information with respect  to  directors
required  under  this item is incorporated by  reference  to  the
section captioned "Election of Directors" in the Company's  Proxy
Statement  with respect to the Annual Meeting of Stockholders  to
be held on May 17, 2005.

  (b)   Executive  Officers.  The  information  with  respect  to
executive  officers required under this item is  incorporated  by
reference to Part I, Item 1 of this Annual Report on Form 10-K.

  (c)  Audit Committee and Audit Committee Financial Expert.  The
information  with  respect  to the registrant's  audit  committee
required  under  this item is incorporated by  reference  to  the
section  captioned  "Report  of  the  Audit  Committee"  in   the
Company's  Proxy Statement with respect to the Annual Meeting  of
Shareholders to be held on May 17, 2005.

  (d)   Code  of  Ethics.  The information with  respect  to  the
registrant's  adoption of a Code of Ethics  required  under  this
disclosure is incorporated by reference to the section  captioned
"Code of Business Conduct" in the Company's Proxy Statement  with
respect to the Annual Meeting of Shareholders to be held  on  May
17, 2005.

ITEM 11.  EXECUTIVE COMPENSATION.

 The  information required under this item is incorporated herein
by  reference  to the section entitled "Election of  Directors  -
Compensation    of    Directors,"   "-Executive    Compensation,"
"-Employment Agreements," "-Report of the Compensation Committee"
and  "-Stock Performance Graph" in the Company's Proxy  Statement
with respect to the Annual Meeting of Stockholders to be held May
17, 2005.

                               25

<Page>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
     MANAGEMENT AND      RELATED STOCKHOLDER MATTERS.

 The  information required under this item is incorporated herein
by reference to Part II, Item 5. of this Annual Report on Form 10-
K  and  the  section  entitled " -Security Ownership  of  Certain
Beneficial   Owners  and  Management"  in  the  Company's   Proxy
Statement  with respect to the Annual Meeting to be held  on  May
17, 2005.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 The  information required under this item is incorporated herein
by  reference to the section entitled "Certain Relationships  and
Related  Transactions"  in  the Company's  Proxy  Statement  with
respect to the Annual Meeting to be held on May 17, 2005.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 The  information required under this item is incorporated herein
by  reference  to the section entitled "Matters Relating  to  the
Independent  Auditors"  in  the Company's  Proxy  Statement  with
respect to the Annual Meeting of Stockholders to be held May  17,
2005.

                             PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

  Documents filed as a part of this Form 10-K:

  1. Financial Statements.  The Consolidated Financial Statements
     listed in the Index to Consolidated Financial Statements and
     Financial  Statement Schedules are filed  as  part  of  this
     Annual Report on Form 10-K.

  2. Exhibits.    The  Exhibits  listed  in  the  Exhibit   Index
     immediately  preceding such Exhibits are filed  as  part  of
     this Annual Report on Form 10-K.

                               26


<Page>



                          INDEX TO FINANCIAL STATEMENTS

                             BAYCORP HOLDINGS, LTD.



<Table>
<Caption>

                                                                            PAGE
                                                                            ----
    <S>                                                                     <C>
    Report of Independent Registered Public Accounting Firm  . . . . .      F-1
    Consolidated Balance Sheets as of December 31, 2004 and 2003 . . .      F-2
    Consolidated Statements of Operations and Comprehensive
      Income (Loss) - Years Ended December 31, 2004,
      December 31, 2003 and December 31, 2002  . . . . . . . . . . . .      F-3
    Consolidated Statements of Changes in Stockholders' Equity
      - Years Ended December 31, 2004, December 31, 2003 and
      December 31, 2002  . . . . . . . . . . . . . . . . . . . . . . .      F-4
    Consolidated Statements of Cash Flows
      - Years Ended December 31, 2004, December 31, 2003 and
      December 31, 2002  . . . . . . . . . . . . . . . . . . . . . . .      F-5
    Notes to Consolidated Financial Statements . . . . . . . . . . . .      F-6

</Table>

                                       27


<Page>

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors & Shareholders of
BayCorp Holdings, Ltd.

  We have audited the accompanying consolidated balance sheets of
BayCorp   Holdings,  Ltd.  (a  Delaware  corporation)   and   its
subsidiaries, as of December 31, 2004 and 2003, and  the  related
consolidated  statements of operations and  comprehensive  income
(loss),  changes in stockholders' equity and cash flows for  each
of  the three years in the period ended December 31, 2004.  These
financial  statements  are the responsibility  of  the  Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

  We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States.)  Those
standards  require that we plan and perform the audit  to  obtain
reasonable  assurance about whether the financial statements  are
free  of  material misstatement.  An audit includes consideration
of  internal  control over financial reporting  as  a  basis  for
designing   audit   procedures  that  are  appropriate   in   the
circumstances, but not for the purpose of expressing  an  opinion
on  the  effectiveness  of the Company's  internal  control  over
financial  reporting.  Accordingly, we express no  such  opinion.
An  audit  also  includes examining, on a  test  basis,  evidence
supporting   the  amounts  and  disclosures  in   the   financial
statements.   An  audit  also includes assessing  the  accounting
principles used and significant estimates made by management,  as
well  as evaluating the overall financial statement presentation.
We  believe  that our audits provide a reasonable basis  for  our
opinion.

  In  our opinion, the consolidated financial statements referred
to  above present fairly, in all material respects, the financial
position  of  BayCorp Holdings, Ltd. and its subsidiaries  as  of
December  31, 2004 and 2003, and the results of their  operations
and  cash  flows for each of the three years in the period  ended
December  31,  2004,  in  conformity with  accounting  principles
generally accepted in the United States.

                                  VITALE, CATURANO & COMPANY LTD.

Boston, Massachusetts
February 11, 2005,
(except for certain matters discussed in
Footnotes 1 and 8 as to which the date is March 16, 2005.)

                               F-1


<Page>

                             BAYCORP HOLDINGS, LTD.

                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

                                                        DECEMBER 31,    DECEMBER 31,
                                                            2004            2003
                                                            ----            ----
                                       ASSETS:
<S>                                                        <C>             <C>
Current Assets:
  Cash & Cash Equivalents . . . . . . . . . . . . . . .    $ 9,627         $ 7,469
  Accounts Receivable, net  . . . . . . . . . . . . . .        639             339
  Prepayments & Other Assets  . . . . . . . . . . . . .         83           1,085
                                                           -------         -------
          Total Current Assets  . . . . . . . . . . . .     10,349           8,893
Long Term Assets:
  Restricted Cash -  Escrow . . . . . . . . . . . . . .      2,500           2,500
  Unrealized Gain on Energy Contract -                           -               3
   at market  . . . . . . . . . . . . . . . . . . . . .
  Intangible Asset  . . . . . . . . . . . . . . . . . .         45               -
  Gas and Oil Properties, net . . . . . . . . . . . . .        670               -
  Other Long Term Assets  . . . . . . . . . . . . . . .        518           1,508
                                                           -------         -------
       Total Other Assets . . . . . . . . . . . . . . .      3,733           4,011
          Total Assets  . . . . . . . . . . . . . . . .    $14,082         $12,904
                                                           =======         =======

                        LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
  Accounts Payable and Accrued Expenses . . . . . . . .    $   769         $   965
  Accrued Taxes . . . . . . . . . . . . . . . . . . . .         92              95
  Other Current Liabilities . . . . . . . . . . . . . .        741           1,740
                                                           -------         -------
     Total Current Liabilities  . . . . . . . . . . . .      1,602           2,800
Long Term Liabilities & Deferred Credits
  Deferred Gain on Energy Contract  . . . . . . . . . .      1,534           1,798
  Unrealized Loss on Energy Contract -
   at market  . . . . . . . . . . . . . . . . . . . . .      3,424               -
  Long Term Liability . . . . . . . . . . . . . . . . .      2,479               -
  Minority Interest in Subsidiary . . . . . . . . . . .        219               -
Commitments & Contingencies
Stockholders' Equity:
  Preferred stock, $0.01 par value
     Authorized - $1,000,000 shares; Issued and
      Outstanding - 0 shares                                     -               -
  Common stock, $0.01 par value
     Authorized - 4,000,000 shares; Issued and
     Outstanding -       557,945 and 641,937
     shares, respectively  . . . . . . . . . . . . . . .         6               6
  Additional Paid-in Capital                               (21,475)        (20,531)
  Accumulated Earnings . . . . . . . . . . . . . . . . .    26,293          28,831
                                                           -------         -------
       Total Stockholders' Equity  . . . . . . . . . . .     4,824           8,306
        Total Liabilities and Stockholders' Equity . . .   $14,082         $12,904
                                                           =======         =======

  (The accompanying notes are an integral part of these consolidated financial
                                  statements.)

  </Table>

                                       F-2

<Page>
                             BAYCORP HOLDINGS, LTD.

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                            YEARS ENDED DECEMBER 31,
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

  <Table>
  <Caption>

                                                 2004         2003        2002
                                                 ----         ----        ----
<S>                                             <C>        <C>         <C>
Operating Revenues . . . . . . . . . . . . . .  $ 5,538    $   4,001   $  48,788
Operating Expenses:
  Production . . . . . . . . . . . . . . . . .       93            0      21,089
  Transmission . . . . . . . . . . . . . . . .       33            0         845
  Purchased Power  . . . . . . . . . . . . . .    4,058        3,901       4,706
  Unrealized (Gain) Loss on Firm Energy
     Trading Contracts . . . . . . . . . . . .    3,165        1,926        (115)
  Administrative & General . . . . . . . . . .    2,171        2,705      11,616
  Depreciation, Depletion & Amortization . . .       19            0       3,134
  Decommissioning Cost Accretion . . . . . . .        0            0       4,105
  Decommissioning Trust Fund Income  . . . . .        0            0      (1,133)
  Taxes Other than Income  . . . . . . . . . .      133          416       3,080
                                                -------    ---------    --------
     Total Operating Expenses  . . . . . . . .    9,672        8,948      47,327
Operating Income (Loss)  . . . . . . . . . . .   (4,134)      (4,947)      1,461
Other Income:
  Interest and Dividend Income . . . . . . . .     (215)        (503)       (883)
  Gain on Sale of Seabrook Asset . . . . . . .        0            0     (59,774)
  Other Deductions (Income)  . . . . . . . . .   (1,153)        (276)         45
                                                -------    ---------   ---------
     Total Other Income  . . . . . . . . . . .   (1,368)        (779)    (60,612)
Income (Loss) Before Income Taxes,
    Minority Interest and Extraordinary
    Item . . . . . . . . . . . . . . . . . . .   (2,766)      (4,168)     62,073
Provision for Income Taxes . . . . . . . . . .      (19)           0      (3,200)
Minority Interest Expense  . . . . . . . . . .      (31)           -           -
                                                -------    ---------   ---------
Net Income (Loss) before Extraordinary
  Item . . . . . . . . . . . . . . . . . . . .   (2,816)      (4,168)     58,873
Extraordinary Item - Gain on Consolidation
  of Subsidiary, net of tax  . . . . . . . . .      278            -           -
                                                -------    ---------   ---------
Net Income (Loss)  . . . . . . . . . . . . . .   (2,538)      (4,168)     58,873
Other Comprehensive Income, net of tax  . . . .       0            0         223
                                                -------    ---------   ---------
Comprehensive Income (Loss) . . . . . . . . . . $(2,538)     $(4,168)  $  59,096
                                                =======    =========   =========
Weighted Average Shares Outstanding
  - Basic . . . . . . . . . . . . . . . . . . . 585,044    2,421,123   8,387,767
Weighted Average Shares Outstanding
  - Diluted . . . . . . . . . . . . . . . . . . 585,044    2,421,123   8,671,328
Basic Net Income (Loss) per Share
  before Extraordinary Item . . . . . . . . . .  $(4.81)      $(1.72)      $7.02
Diluted Net Income (Loss) per Share
  before Extraordinary Item . . . . . . . . . .  $(4.81)      $(1.72)      $6.79
Basic and Diluted Net Income Per Share -
  Extraordinary Item  . . . . . . . . . . . . .  $ 0.47            -           -
Basic Net Income (Loss) per Share . . . . . . .  $(4.34)      $(1.72)      $7.02
Diluted Net Income (Loss) per Share . . . . . .  $(4.34)      $(1.72)      $6.79

</Table>

  (The accompanying notes are an integral part of these consolidated financial
                                  statements.)

                                       F-3

<Page>

<Table>
<Caption>
                             BAYCORP HOLDINGS, LTD.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)

                         COMMON STOCK,
                           $0.01 PAR
                             VALUE
                                                                         ACCUMU-
                       ISSUED     ISSUED                      ADDI-      LATED    RETAINED
                         AND       AND            LESS:       TIONAL     OTHER    EARNINGS  TOTAL
                      OUTSTAND   OUTSTAND       TREASURY      PAID-      COMPRE-  (ACCUMU-  STOCK
                         ING       ING            SOCK        IN         HENSIVE  LATED     HOLDERS'
                       SHARES    AMOUNT      SHARES    AMOUNT CAPITAL    INCOME   DEFICIT   EQUITY
                       ------    ------      ------    ------ ------     ------   ------    ------
<S>                 <C>          <C>         <C>           <C>  <C>        <C>      <C>        <C>

Balance at
December 31 . . . .  8,586,316   $86       185,052  $ (1,396) $100,383   $223   $(25,875)  $ 73,422
 Stock Options
  Exercised . . . .    180,934     2             -         -     1,142      -          -      1,144
 Treasury Stock . .   (311,981)   (4)     (185,052)    1,396    (2,844)     -          -     (1,452)
 Other Incentive
   Stock Option
   Transactions . .          -     -             -         -     2,212      -          -      2,212
 Net Change in
   Unrealized
   Holding Gain . .          -     -             -         -         -   (223)         -       (223)
  Net Income  . . .          -     -             -         -         -      -     58,873     58,873
                    ----------   ---    ----------  --------  --------   ----   --------   --------

Balance at
December 31, 2002 .  8,455,269   $84             -  $      -  $100,893     $0   $ 32,999   $133,976
 Stock Options
  Exercised  . . .     262,512     3             -         -     1,774      -          -      1,777
 Treasury Stock . .          -     -    (8,075,844) (119,918)        -      -          -   (119,918)
 Other Incentive
   Stock Option
   Transactions . .          -     -             -         -    (3,361)     -          -     (3,361)
Shares Purchased
And Retired  . . .  (8,075,844)  (81)    8,075,844   119,918  (119,837)     -          -          0
Net Loss . . . . .           -     -             -         -         -      -     (4,168)    (4,168)
                    ----------   ---    ---------   --------  --------   ----   --------   --------
Balance at
December 31, 2003.     641,937    $6             -  $      -  $(20,531)    $0   $ 28,831   $  8,306
 Stock Options
  Exercised  . . .       4,559     -             -         -        41      -          -         41
 Other Incentive
   Stock Option
   Transactions. .           -     -             -         -       172      -          -        172
 Shares Purchased
   and Retired . .     (88,551)     -            -         -    (1,157)     -          -     (1,157)

Net Loss . . . . .           -      -            -         -         -      -     (2,538)    (2,538)
                    ----------   ----   ----------  --------  --------   ----   --------   --------
Balance at
December 31, 2004.     557,945   $  6            -  $      -  $(21,475)  $  0    $26,293     $4,824
                    ==========   ====   ==========  ========  ========   ====   ========   ========

</Table>

  (The accompanying notes are an integral part of these consolidated financial
                                  statements.)


                                       F-4

<Page>

                             BAYCORP HOLDINGS, LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            YEARS ENDED DECEMBER 31,
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                         2004         2003          2002
                                                         ----         ----          ----
<S>                                                  <C>           <C>            <C>
Net cash flows from operating activities:
 Net income (loss). . . . . . . . . . . . . . . .    $   (2,538)   $   (4,168)      $58,873
 Adjustments to reconcile net income (loss)
    to net cash provided by (used in)
    operating activities:
    Minority Interest expense . . . . . . . . . .            31             -             -
    Extraordinary gain, net of income tax . . . .          (278)            -             -
    Unrealized (gain) loss on the mark-to-
     market of energy contracts . . . . . . . . .         3,427         1,926          (115)
    Amortization of deferred gain on energy
     Contract . . . . . . . . . . . . . . . . . .          (263)            -             -
    Non-cash compensation expense . . . . . . . .           172           410         2,468
    Depreciation, depletion and amortization. . .            19             -         3,134
    Amortization of nuclear fuel. . . . . . . . .             -             -         3,450
    Gain on sale of Seabrook asset. . . . . . . .             -             -       (59,774)
    Decommissioning cost accretion. . . . . . . .             -             -         4,105
    Decommissioning trust fund income . . . . . .             -             -        (1,133)
    (Increase) decrease in accounts receivable. .          (206)          (23)        5,975
    (Increase) decrease in materials & supplies .             -             -            73
    (Increase) decrease in prepayments and other
      assets. . . . . . . . . . . . . . . . . . .         2,028           818        (2,055)
    Increase (decrease) in accounts payable and
      accrued expenses. . . . . . . . . . . . . .          (221)          551        (1,195)
    Increase (decrease) in accrued taxes. . . . .            (3)       (2,246)        1,724
    Increase (decrease) in miscellaneous                  1,448        (2,051)         (386)
      and other Liabilities . . . . . . . . . . .    ----------    ----------     ---------
 Net cash provided by (used in) operating
    activities. . . . . . . . . . . . . . . . . .         3,616        (4,783)       15,144
 Net cash flows from investing activities:
    Consolidation of HoustonStreet. . . . . . . .           393             -             -
    Purchase of intangibles . . . . . . . . . . .           (45)            -             -
    Investment in oil and gas properties  . . . .          (690)            -             -
    Capital additions . . . . . . . . . . . . . .             -             -        (1,417)
    Nuclear fuel additions. . . . . . . . . . . .             -             -          (753)
    Payments to decommissioning fund. . . . . . .             -             -        (1,161)
    Increase in restricted cash . . . . . . . . .             -             -          (597)
    Seabrook sale-net cash proceeds . . . . . . .             -             -       108,276
    Purchases of short-term investments . . . . .             -             -       (16,625)
    Sales of short-term investments . . . . . . .             -             -        16,329
                                                     ----------    ----------     ---------
 Net cash provided by (used in) investing
    activities  . . . . . . . . . . . . . . . . .          (342)            -       104,052
Net cash flows from financing activities:
    Stock option exercise . . . . . . . . . . . .            41         1,777         1,142
    Reacquired capital stock  . . . . . . . . . .        (1,157)     (123,689)       (1,452)
                                                     ----------    ----------     ---------
 Net cash used in financing activities  . . . . .        (1,116)     (121,912)         (310)
Net increase (decrease) in cash and cash
  equivalents . . . . . . . . . . . . . . . . . .         2,158      (126,695)      118,886
Cash and cash equivalents, beginning of period .          7,469       134,164        15,278
                                                     ----------    ----------     ---------
Cash and cash equivalents, end of period.  . . .     $    9,627    $    7,469     $ 134,164
                                                     ==========    ==========     =========
Supplemental disclosure of cash flow information
Cash paid for income taxes.  . . . . . . . . . .     $       15    $    2,516     $   1,551

</Table>

  (The accompanying notes are an integral part of these consolidated financial
                                  statements).

                                       F-5

<Page>



                     BAYCORP HOLDINGS, LTD.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004

1.    SUMMARY   OF   OPERATIONS,  SIGNIFICANT  TRANSACTIONS   AND
 ACCOUNTING POLICIES

A. THE COMPANY

  BayCorp  Holdings,  Ltd. ("BayCorp" or  the  "Company")  is  an
unregulated holding company incorporated in Delaware in 1996.  As
of  December 31, 2004, BayCorp had five wholly owned subsidiaries
including  Great  Bay  Power Marketing,  Inc.,  Great  Bay  Hydro
Corporation,  Nacogdoches Power, LLC, Nacogdoches Gas,  LLC,  and
BayCorp Ventures, LLC.  BayCorp also held a majority interest  in
HoustonStreet Exchange, Inc. as of December 31, 2004.

  Until  January  1,  2003, BayCorp had two  principal  operating
subsidiaries  that  generated and traded  wholesale  electricity,
Great  Bay  Power Corporation ("Great Bay") and Little Bay  Power
Corporation ("Little Bay").  Their principal asset was a combined
15%  joint  ownership  interest in  the  Seabrook  Nuclear  Power
Project  in  Seabrook, New Hampshire (the "Seabrook  Project"  or
"Seabrook") until November 1, 2002, when BayCorp sold Great Bay's
and  Little Bay's interest in Seabrook.  That ownership  interest
entitled  Great Bay and Little Bay to approximately 174 megawatts
("MWs")  of  the  Seabrook Project's power output.   In  December
2002, BayCorp dissolved Great Bay and Little Bay.

  In  October  2002, BayCorp formed two subsidiaries,  Great  Bay
Power  Marketing, Inc. ("Great Bay Power Marketing") and  BayCorp
Ventures,  LLC. ("BayCorp Ventures").  Great Bay Power Marketing,
incorporated in Maine as a wholly owned subsidiary,  was  created
to  hold  the purchased power agreement that Great Bay  had  with
Unitil Power Corporation ("Unitil") and to arrange for the  power
supply  to  satisfy the agreement.  See "Note 4. Purchased  Power
Agreements."   Effective  January  1,  2003,  Great   Bay   Power
Marketing  assumed the Unitil contract and holds  the  letter  of
credit   established  to  secure  Great  Bay  Power   Marketing's
obligations  under the Unitil contract.  BayCorp  formed  BayCorp
Ventures, a Delaware limited liability company and a wholly owned
subsidiary,  to serve as a vehicle through which the Company  can
make  investments following the Seabrook sale and the  expiration
of the Company's tender offer that took place in 2003.

  In  September 2003, BayCorp formed Great Bay Hydro  Corporation
("Great  Bay  Hydro"), a New Hampshire corporation, as  a  wholly
owned  subsidiary.  Great Bay Hydro entered into a  purchase  and
sale  agreement,  dated  as of October 30,  2003,  with  Citizens
Communications  Company  ("Citizens") to acquire  the  generating
facilities  in Vermont owned by the Vermont Electric Division  of
Citizens.  Great Bay Hydro completed the acquisition and  assumed
operating responsibility of the generating facilities on April 1,
2004.    The   generating   facilities   include   an   operating
hydroelectric  facility of approximately 4 megawatts  located  in
Newport, Vermont, diesel engine generators totaling approximately
7   megawatts  located  in  Newport,  Vermont  and  non-operating
hydroelectric  facilities in Troy and West  Charleston,  Vermont.
Great  Bay  Hydro  uses  the output of the  Newport  plant  as  a
physical  hedge for a portion of BayCorp's contractual obligation
to supply 9.06 megawatts to Unitil through 2010.  Great Bay Hydro
paid  a  nominal  purchase price to Citizens for  the  generating
facilities  and  650 acres of real property associated  with  the
generating  facilities,  and  this amount  is  reflected  in  the
Company's financial statements.  In addition, Citizens agreed  to
indemnify Great Bay Hydro for the reasonably anticipated costs of
complying  with  the  requirements of the new  operating  license
issued  by  the Federal Energy Regulatory Commission ("FERC")  on
November 21, 2003.  On September 28, 2004, Great Bay Hydro agreed
to  terminate Citizens' indemnification requirements in  exchange
for  Citizens'  payment to Great Bay Hydro of approximately  $4.4
million,  since  the  receipt  of  which  Great  Bay  Hydro  paid
approximately  $1.2 million for costs incurred  through  December
31,  2004 for FERC compliance.  The balance sheet at December 31,
2004  reflects corresponding short-term and long-term liabilities
of  $719,000  and  $2,479,000, respectively,  for  the  estimated
remaining cost of FERC compliance.

  In  June  2004, Great Bay Hydro received FERC approval  of  its
designation as an exempt wholesale generator ("EWG").   In  order
to  maintain  EWG status, Great Bay Hydro must engage exclusively
in  the  business  of owning or operating one or  more  "eligible
facilities" and selling electricity only at wholesale  (i.e.  not
to  end users) and incidental activities.  An "eligible facility"
is  a  facility  used  for  the  generation  of  electric  energy
exclusively  at wholesale or used for the generation of  electric
energy  and  leased to one or more public utility companies.   In
the  case of Great Bay Hydro, its Vermont generating facility  is
an "eligible facility."

  In   October  2004,  BayCorp  formed  Nacogdoches  Power,   LLC
("Nacogdoches Power"), a New Hampshire limited liability company,
as  a  wholly owned subsidiary.  On October 19, 2004, Nacogdoches
Power acquired the development

                               F-6

<Page>

rights  to  an approximate 1000 MW natural gas-fired power  plant
project in Nacogdoches County, Texas, located in east Texas.  The
project  received  its  air  quality permit  and  its  wastewater
discharge permit and has options to acquire the land and a number
of  easements for the plant.  The proposed plant site is  located
near the Electric Reliability Council of Texas ("ERCOT") and  the
Southwest Power Pool high voltage transmission lines as well as a
source of cooling water and natural gas lines.  Nacogdoches Power
is pursuing the development of this project with an initial focus
on securing gas supply and power offtake contracts.

  In   November  2004,  BayCorp  formed  Nacogdoches   Gas,   LLC
("Nacogdoches  Gas"), a New Hampshire limited liability  company,
as  a  wholly owned subsidiary.  In the fourth quarter  of  2004,
Nacogdoches  Gas  entered into agreements with Sonerra  Resources
Corporation  ("Sonerra"), an independent oil and gas exploration,
development  and  operating company, under which Nacogdoches  Gas
acquired  an  approximate 10% working  interest  (of  a  77%  net
revenue interest) in two natural gas and oil producing wells. Oil
and  gas investments in 2004 were approximately $690,000 for  the
10%  interests  in two wells.   Nacogdoches Gas entered  into  an
agreement,  dated  January  7, 2005  with  Sonerra,  under  which
Nacogdoches  Gas will fund the development of three  natural  gas
and  oil wells.  This agreement was amended as of March 14, 2005,
increasing the number of wells from three to four.  In  addition,
Nacogdoches  Gas  has  an  option  to  participate  in  Sonerra's
continued development of up to 15 additional natural gas and  oil
wells over the next two years.  Under the agreement with Sonerra,
Nacogdoches  Gas will fund the total cost of the new wells  (with
the  provision  that  up to 25% of the working  interest  may  be
funded and acquired by other parties) and will receive a priority
return  of 90% of the working interest funded until its aggregate
investment is recovered.  Once Nacogdoches Gas has recovered  all
of its investment in the wells from the net proceeds of all wells
and  any  other  revenues  from the  assets  acquired  under  the
development agreement, Sonerra and Nacogdoches Gas will own equal
amounts  of the working interests funded.  The working  interests
include  undivided leasehold interests in the gas units  and  the
production and gathering equipment.

  BayCorp  also owns shares representing approximately  59.7%  of
the  outstanding  common shares of HoustonStreet  Exchange,  Inc.
("HoustonStreet"), which was incorporated in  Delaware  in  1999.
HoustonStreet   developed  and  operates  HoustonStreet.com,   an
Internet-based independent crude oil and refined products trading
exchange in the United States.

  As   of   December  31,  1999,  the  Company  owned   100%   of
HoustonStreet.   HoustonStreet raised additional equity  in  2000
from  outside investors and as a result, as of December 4,  2000,
the  Company's ownership fell below 50%, to 45.9%.  Subsequently,
the  Company deconsolidated HoustonStreet as of December 4, 2000,
started  accounting for this investment on the equity method  and
suspended  recognition of additional HoustonStreet losses  as  of
that date.  A recapitalization of HoustonStreet was completed  in
the  second quarter of 2004, and as a result, BayCorp's ownership
interest  in HoustonStreet increased above 50%.  As a  result  of
this  recapitalization, BayCorp began consolidating its financial
statements with HoustonStreet as of May 1, 2004.

  Prior to April 30, 2004, in addition to its equity interest  in
HoustonStreet, the Company held an $8.4 million secured  note  in
HoustonStreet.   In  March 2001, HoustonStreet raised  additional
funding  by  selling senior secured notes to  BayCorp  and  other
investors.   Collectively, these notes were referred  to  as  the
"HoustonStreet  Series C Units."  The outstanding  principal  and
interest  of  this  note  to BayCorp as of  April  30,  2004  was
approximately  $11  million.  The Company had written  this  note
down  to zero as of December 31, 2000.  The notes were originally
due  and  payable  in December 2001, and the  maturity  date  was
subsequently  extended to January 15, 2004.  The notes  were  not
paid  when due, and in February 2004, HoustonStreet was  formally
notified  of  the payment default.  BayCorp and the other  senior
secured   noteholders  reserved  their  rights  and  proposed   a
recapitalization of HoustonStreet that would potentially  provide
effective  control  of  HoustonStreet to  the  noteholders.   The
recapitalization  was  approved by  the  Board  of  Directors  of
HoustonStreet  in  March 2004 and was approved  by  HoustonStreet
shareholders in April 2004.

  The   effect   of   the   recapitalization   was   to   convert
HoustonStreet's secured debt into equity and convert  outstanding
preferred stock in HoustonStreet into either the right to receive
nominal  cash  consideration or a nominal amount of HoustonStreet
common  stock.   All  outstanding shares of HoustonStreet  common
stock prior to the restructuring were cancelled.  As a result  of
the  restructuring, as of May 1, 2004, holders of senior  secured
promissory  notes held common stock of HoustonStreet representing
approximately  ninety-nine  percent of  the  outstanding  capital
stock   of  HoustonStreet.   Holders  of  preferred  stock   held
approximately one percent of the outstanding capital stock  as  a
result of the restructuring.

B.  PRINCIPLES OF CONSOLIDATION

  BayCorp's   Consolidated  Financial  Statements   include   the
accounts of the Company and all its subsidiaries.  Until November
1,  2002,  the  Company  had a 15% joint  ownership  interest  in
Seabrook.   The Company recorded in its financial statements  its
proportional   share  of  Seabrook's  assets,   liabilities   and
expenses.   In  November  2004, BayCorp formed  Nacogdoches  Gas,
which acquired an approximate 10% working interest in two natural
gas  and oil producing wells in the fourth quarter of 2004.   The
Company  recorded  in its financial statements  its  proportional
share  of  well revenues and expenses.  The Company  consolidates
all majority owned and controlled subsidiaries and

                               F-7

<Page>

applies  the equity method of accounting for investments  between
20% and 50%.  All significant intercompany transactions have been
eliminated.  All sales of subsidiary stock are accounted  for  as
capital transactions in the consolidated financial statements.

 In  January 2003, the FASB issued Interpretation No. ("FIN") 46,
Consolidation  of Variable Interest Entities - An  Interpretation
of  ARB  No.  51,  as  amended by FIN  46R.   The  interpretation
requires  that a company consolidate the financial statements  of
an  entity  that  cannot finance its activities  without  outside
financial  support,  and  for which  that  company  provides  the
majority  of  support.  The Company deemed that  its  investment,
HoustonStreet,  was  not a variable interest entity.   Therefore,
prior to May 1, 2004 and when BayCorp held a minority interest in
HoustonStreet, the Company accounted for HoustonStreet under  the
equity method.  A recapitalization of HoustonStreet was completed
effective  May  1,  2004,  and as a result,  BayCorp's  ownership
interest  in HoustonStreet increased above 50%.   As a result  of
this  recapitalization, BayCorp began consolidating HoustonStreet
as of May 1, 2004.

  The  fair  value  of  current  assets  exceeded  BayCorp's  net
investment  in HoustonStreet by $278,000, resulting  in  negative
goodwill upon application of step acquisition accounting.   As  a
result,  the Company recognized an extraordinary gain of $278,000
in  the  second quarter of 2004 in accordance with SFAS  No.  141
"Business Combinations."

 The  Company has an agreement with HoustonStreet under which  it
is  providing certain accounting and administrative  services  to
HoustonStreet  for  the  periods April  1999  to  December  2004.
Income  related to such services was $30,000 for the  year  ended
December  31, 2004, $30,000 for the year ended December 31,  2003
and $60,000 for the year ended December 31, 2002.  See Note 7 for
further discussion.

C. SALE OF SEABROOK OWNERSHIP

  In   April   2002,  FPL  Energy  Seabrook,  LLC  ("FPL   Energy
Seabrook"),  a subsidiary of FPL Group, Inc., agreed to  purchase
88.2%  of  the  1,161  MW  Unit  1 and  88.2%  of  the  partially
constructed  Unit  2  of  Seabrook,  for  $836.6  million,  which
included  Great  Bay's and Little Bay's aggregate  15%  ownership
share,  subject to certain adjustments, with payment  deliverable
fully in cash at closing.  FPL Energy Seabrook assumed nearly all
of    the   Company's   Seabrook   liabilities   including    the
decommissioning liability for the acquired portion  of  Seabrook.
On November 1, 2002, the Company closed the sale of its interests
in  Seabrook and received approximately $113 million in cash  for
its  interests in the Seabrook Project (the "Seabrook  Closing").
The   Company  funded  certain  escrows  for  potential   closing
adjustments  and paid other costs of approximately $4.3  million.
The remaining escrow amounts were included in prepayments and the
potential  closing  adjustments were included  in  other  current
liabilities.   The amount escrowed was based on  an  estimate  of
those   expenses.   The  Company  received  a  one-time   payment
following the final reconciliation of and termination of all such
escrow  accounts  in 2004 in accordance with  the  terms  of  the
Escrow  Agreements among the selling owners.  As a result of  the
post-closing adjustments being settled for less than the  Company
had  previously  estimated and accrued for, the Company  recorded
other  income of approximately $572,000 in 2004.  Also  in  2004,
the  Company  negotiated  a  final settlement  of  the  remaining
accrued  liability  related  to the sale  of  Seabrook  and  paid
approximately  $168,000 in settlement of this  liability.   As  a
result  of this liability being settled for less than the Company
had  previously  estimated and accrued for, the Company  recorded
other income of approximately $634,000 in 2004.

  The  following unaudited pro forma income statement assumes the
disposition  of the Seabrook investment occurred on December  31,
2001.  The unaudited pro forma financial information is presented
for  comparative  purposes  only  and  is  not  intended  to   be
indicative of actual results of continuing operations that  would
have  been achieved had the sale been consummated as of  December
31,  2001, nor do they purport to indicate results which  may  be
attained in the future.



<Table>
<Caption>



                                                          Year Ended December 31, 2002
                                                          ----------------------------

                                                                  Seabrook
                                                                Investment(1)
                                                     BayCorp     Pro-Forma
                                                     Historical  Adjustments   Pro-Forma
                                                     ----------  -----------   ---------
                                                             (Dollars in Thousands)
                                                                  (Unaudited)
     <S>                                             <C>         <C>           <C>
     Operating Revenues                              $  48,788   ($  42,815)   $   5,973
     Operating Expenses                                 47,327      (34,689)      12,638
     Operating Income (Loss)                             1,461        8,126       (6,665)
     Other (Income) Deductions                         (60,612)      59,729         (883)
     Net Income (Loss)                                  58,873      (64,655)      (5,782)
     Weighted Average Shares Outstanding - Basic     8,387,767                 8,387,767
     Weighted Average Shares Outstanding - Diluted   8,671,328                 8,387,767
     Basic Net Income (Loss) per share                   $7.02                    ($0.69)
     Diluted Net Income (Loss) per share                 $6.79                    ($0.69)

</Table>

                                       F-8


<Page>

(1)     Pro  forma income statement amounts represent short  term
  sales  and  sales under the Unitil contract along with  related
  purchased   power.   The  Administrative  &  General   expenses
  include  the costs incurred by BayCorp to manage its investment
  in  Seabrook.   Pro  forma results do  not  consider  the  cost
  reductions  which  would be required if the Company  no  longer
  held  its Seabrook investment.  Pro forma results also  do  not
  include  assumed  earnings on the proceeds  from  the  sale  of
  Seabrook.

D.  REGULATION

  Great  Bay  and  Little  Bay  were subject  to  the  regulatory
authority of the FERC, the Nuclear Regulatory Commission ("NRC"),
the New Hampshire Public Utilities Commission ("NHPUC") and other
federal  and  state  agencies as to rates, operations  and  other
matters.   Great Bay Power Marketing, Great Bay Hydro and  Benton
Falls are subject to the regulatory authority of the FERC.  Great
Bay's  and  Little  Bay's  cost  of  service,  however,  was  not
regulated.   Great Bay Power Marketing's, Great Bay  Hydro's  and
Benton  Falls' cost of service is not regulated.  As such,  these
companies'  accounting policies were and are not subject  to  the
provisions   of  Statement  of  Financial  Accounting   Standards
("SFAS") No. 71, "Accounting for the Effects of Certain Types  of
Regulation."

E.  USE OF ESTIMATES

  The  preparation  of  financial statements in  conformity  with
generally  accepted accounting principles requires management  to
make  estimates and assumptions that affect the reported  amounts
of assets and liabilities and disclosure of contingent assets and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts of revenues and expenses during  the  reporting
period.   Actual results could differ from those estimates.   The
Company's  significant estimates relate to the  estimate  of  the
mark-to-market  value of the Unitil PPA and the estimate  of  the
cost of FERC compliance to be performed by Great Bay Hydro.

F.  DEPRECIATION

  Utility  plant was depreciated on the straight-line  method  at
rates  designed  to  fully depreciate all depreciable  properties
over  the  lesser  of  estimated useful  lives  or  the  Seabrook
Project's remaining NRC license life, which expires in 2026.

  Capital projects constituting retirement units were charged  to
electric  plant.   Minor  repairs  were  charged  to  maintenance
expense.  When properties were retired, the original costs,  plus
costs  of  removal, less salvage, were charged to the accumulated
provision for depreciation.

  The Company follows the successful efforts method of accounting
for  its  natural gas and oil activities.  Under  the  successful
efforts method, lease acquisition costs and all development costs
are  capitalized.  Unproved properties are reviewed quarterly  to
determine if there has been an impairment of the carrying  value,
and  any  such  impairment is charged to expense in that  period.
Exploratory drilling costs are capitalized until the results  are
determined.    If   proved  reserves  are  not  discovered,   the
exploratory  drilling  costs  are  expensed.   Other  exploratory
costs,  such  as  seismic  costs and geological  and  geophysical
expenses,   are   expensed  as  incurred.   The   provision   for
depreciation, depletion and amortization is based upon the  units
of production method.

G.  AMORTIZATION OF NUCLEAR FUEL

  The  cost of nuclear fuel was amortized to expense based on the
rate of burn-up of the individual assemblies comprising the total
core.   Great  Bay and Little Bay also provided for the  cost  of
disposing of spent nuclear fuel at rates specified by the  United
States Department of Energy ("DOE") under a contract for disposal
between  Great  Bay and Little Bay, through their managing  agent
North  Atlantic  Energy Service Corporation ("NAESCO"),  and  the
DOE.

H.  AMORTIZATION OF MATERIALS AND SUPPLIES

  Great  Bay and Little Bay recorded an expense designed to fully
amortize the cost of the material and supplies inventory that was
expected  to  be  on  hand  at  the expiration  of  the  Seabrook
Project's NRC operating license.

                               F-9

<Page>

I.  DECOMMISSIONING

  Great  Bay and Little Bay recognized a liability based  on  the
present  value of the estimated future cash outflows required  to
satisfy their obligations using a risk free rate.  As of December
31, 2004 and December 31, 2003, the decommissioning liability was
$0  as a result of the sale of Seabrook and FPL Energy Seabrook's
assumption of all decommissioning liability on November 1, 2002.

  Great  Bay and Little Bay accreted their share of the  Seabrook
Project's  decommissioning liability.  The accretion was  a  non-
cash charge and recognized their liability related to the closure
and  decommissioning  of  their nuclear  plant  in  current  year
dollars  over  the  licensing period of the plant.  The  non-cash
accretion   charge  recorded  in  the  accompanied   consolidated
statements  of  income was $0, $0, and $4,105,000 for  the  years
ended December 31, 2004, 2003 and 2002, respectively.

J.  OPERATING REVENUES

  The Company's revenues are recorded on an accrual basis.  Great
Bay Power Marketing and Great Bay Hydro revenues from the sale of
electricity are recorded in the period during which the  delivery
of  electricity  is made based on billing rates provided  for  in
contracts  and  approved by FERC on a gross  basis.   During  the
years ended December 31, 2004 and 2003, Great Bay Power Marketing
had  one long-term sales contract with Unitil that accounted  for
72.3% of the Company's total 2004 operating revenues and 100%  of
the  Company's  total 2003 operating revenues.  During  the  year
ended December 31, 2002, two customers accounted for 46% and  37%
of total operating revenues.  See Note 4 for further discussion.

  Great  Bay  Power  Marketing's revenues from  energy  commodity
trading  activity  are  recorded net on an  accrual  basis.    In
accordance with FASB's Emerging Issues Task Force Issue  No.  02-
03,  Issues Involved in Accounting for Derivative Contracts  Held
for Trading Purposes and Contracts Involved in Energy Trading and
Risk  Management  Activities  (EITF Issue  No.  02-03),  revenues
related  to  derivative  instruments classified  as  trading  are
reported  net  of related cost of sales.  The gross retail  sales
volume  of  such  activity was approximately $1,999,600  and  the
related costs of sales was approximately $1,917,600.

  Great  Bay  Hydro's  revenues  from  the  sale  of  NEPOOL  GIS
certificates  are  recorded  in  the  month  during   which   the
certificates are generated, and accounted for approximately  2.4%
of  the  Company's total 2004 operating revenues.  For  each  MWh
generated at Great Bay Hydro's Newport facility, Great Bay  Hydro
receives a corresponding credit in the NEPOOL GIS.  These credits
are  available for sale.  Great Bay Hydro's Newport  certificates
qualify  for Connecticut Class I renewable status during  certain
operating periods and in 2004 were sold in the Connecticut energy
market.

  Nacogdoches Gas operating revenues are recorded in the month of
production and are based on million cubic feet (MCF) produced and
sold.   All  gas  production is sold in the month of  production.
Nacogdoches Gas revenues accounted for approximately  1%  of  the
Company's total 2004 operating revenues.

  HoustonStreet  operating revenue consists  of  commissions  for
thousands of barrels (BBLS) traded on HoustonStreet.com  and  are
recorded  in the period during which the terms of the trade  have
been  accepted by both parties and the transaction  is  executed.
HoustonStreet revenues accounted for approximately 11.4%  of  the
Company's total 2004 operating revenues.

K.  TAXES ON INCOME

  The  Company  accounts for taxes on income under the  liability
method  required by SFAS No. 109, "Accounting for Income  Taxes."
Under  this  method,  deferred tax  assets  and  liabilities  are
determined  based on differences between the financial  reporting
and  tax  basis of assets and liabilities and are measured  using
enacted  tax rates.  A valuation allowance is established against
deferred tax assets unless the Company believes it is more likely
than not that the benefit will be realized.

L.  CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

  For  purposes  of  the Statements of Cash  Flows,  the  Company
considers  all  highly  liquid  short-term  investments  with  an
original maturity of three months or less to be cash equivalents.
The carrying amounts approximate fair value because of the short-
term maturity of the investments.

  All  other  short-term investments with a maturity  of  greater
than  three  months  were  classified as  available-for-sale  and
reflected  as  a current asset at market value.  Changes  in  the
market value of such securities were reflected in equity.   There
were  no  short-term investments, and accordingly  no  unrealized
gains  or  losses on short-term investments, for the years  ended
December  31,  2004,  2003  and 2002.   The  cost  of  short-term
investments  that were sold was based on specific  identification
in determining realized gains

                              F-10

<Page>

and  losses recorded in the accompanying statement of operations.
The  net realized gain is recorded as a component of interest and
dividend income.  The net realized loss on the sale of available-
for-sale  investments  of $296,200 in 2002  resulted  from  gross
realized gains of $50,000 and gross realized losses of $346,200.

M.  SEGMENT INFORMATION

  The  Company  has  adopted  SFAS No.  131,  "Disclosures  about
Segments of an Enterprise and Related Information."  SFAS No. 131
establishes  standards  for the reporting  of  information  about
operating  segments  in annual and interim financial  statements.
Operating segments are defined as components of an enterprise for
which  separate  financial  information  is  available  that   is
evaluated  regularly by the chief operating decision maker(s)  in
deciding  how to allocate resources and in assessing performance.
SFAS  No.  131  also  requires  disclosures  about  products  and
services, geographic areas and major customers.

  BayCorp  is  a  holding company for Great Bay Power  Marketing,
Great Bay Hydro, BayCorp Ventures, Nacogdoches Power, Nacogdoches
Gas  and  HoustonStreet.  The Company operates primarily  in  two
segments,  each  of  which  is managed  separately  because  each
segment  sells distinct products and services.  Great  Bay  Power
Marketing   and  Great  Bay  Hydro  constitute  the   electricity
generation  and trading business segment, whose principal  assets
are  the Unitil PPA and hydroelectric facilities of approximately
4 megawatts located in Newport, Vermont, diesel engine generators
totaling  approximately 7 megawatts located in  Newport,  Vermont
and  non-operating  hydroelectric facilities  in  Troy  and  West
Charleston,   Vermont.   HoustonStreet  developed  and   operates
HoustonStreet.com, an Internet-based independent  crude  oil  and
refined products trading exchange in the United States.

  Management  utilizes  more  than one measurement  and  multiple
views  of  data  to measure segment performance and  to  allocate
resources  to  the segments.  However, the dominant  measurements
are   consistent   with  the  company's  consolidated   financial
statements  and,  accordingly, are reported  on  the  same  basis
herein.  Management evaluates the performance of its segments and
allocates  resources to them primarily based on  cash  flows  and
overall economic returns.

  <Table>
  <Caption>

                            Great Bay
                              Power
                            Marketing,
                            Great Bay
                              Hydro,
  BayCorp Holdings, Ltd     Great Bay
    As of and for the       Power and
   Twelve months ended      Little Bay    Houston      Other      Intercompany
  December 31 ($000's)      Power (1)    Street (2)     (3)       Eliminations    Total
  --------------------     ------------  ----------    -----      ------------    -----
<S>                        <C>           <C>         <C>         <C>             <C>
2004
----
Revenues                       $4,847      $629           $62              $0     $5,538
Operating Expenses              8,041       557         1,432            (358)     9,672
Segment Net Income (Loss)      (3,077)       46           539             (46)    (2,538)
Total Assets                    8,769       586        20,191         (15,464)    14,082

2003
----
Revenues                       $4,001        $0            $0              $0     $4,001
Operating Expenses              6,279         0         3,239            (570)     8,948
Segment Net Loss               (2,237)        0        (1,931)              0     (4,168)
Total Assets                    4,602         0        23,088         (14,786)    12,904

2002
----
Revenues                      $48,788        $0            $0              $0    $48,788
Operating Expenses             43,823         0         7,104          (3,600)    47,327
Segment Net Income (Loss)      65,253         0        (6,380)              0     58,873
Total Assets                  214,178         0       203,581        (275,168)   142,591


</Table>

(1)  Great Bay Power Marketing was formed October 2002; Great Bay
Hydro  was formed September 2003; Great Bay Power and Little  Bay
Power  were dissolved as of December 31, 2002.  See "Note A.  The
Company."
(2)  BayCorp began consolidating HoustonStreet as of May 1, 2004.
See "Note A. The Company."
(3)  Includes BayCorp Ventures, formed October 2002,  Nacogdoches
Power,  formed October 2004 and Nacogdoches Gas, formed  November
2004.  See "Note A. The Company."

                              F-11

<Page>

N.  EARNINGS PER SHARE

  Basic  earnings  (loss) per share is computed by  dividing  net
earnings by the weighted number of common shares outstanding  for
all   periods  presented.   Diluted  earnings  (loss)  per  share
reflects  the  dilutive  effect of  shares  under  option  plans.
Potentially dilutive shares outstanding during 2004 and 2003 were
excluded  from  dilutive earnings (loss) per share because  their
effect would be antidilutive.

  Based on an average market price of common stock of $12.71  per
share for the year ended December 31, 2004, $13.06 per share  for
the  year  ended December 31, 2003 and $14.74 per share  for  the
year ended December 31, 2002, the following table reconciles  the
weighted average common shares outstanding to the shares used  in
the  computation  of  the basic and diluted  earnings  per  share
outstanding.

  <Table>
  <Caption>

                                                 December 31,   December 31,  December 31,
                                                     2004           2003          2002
                                                 ------------   ------------  ------------
 <S>                                                   <C>             <C>           <C>
 Weighted average number of common shares
   outstanding and used in basic EPS
   calculation                                     585,044       2,421,123     8,387,767
 Weighted average number of common shares
   outstanding and used in diluted EPS
   calculation                                     585,044       2,421,123     8,671,328
 Shares under option plans, excluded in
   computation of diluted EPS due to
   antidilutive effects                             70,538          36,380             -

</Table>


O.  ACCUMULATED OTHER COMPREHENSIVE INCOME

  In  accordance  with  SFAS  No. 130,  "Reporting  Comprehensive
Income" the Company reports changes in stockholders' equity  from
all  sources  during the period other than those  resulting  from
investments  by  stockholders (i.e., issuance  or  repurchase  of
common   shares  and  dividends.)   The  composition   of   other
comprehensive income is as follows:

  <Table>
  <Caption>


                                           Unrealized       Accumulated Other
                                         Gains (Losses)       Conprehensive
                                         on Securities           Income
                                         -------------       --------------
<S>                                         <C>                  <C>
December 31, 2001 Beginning Balance         $222,692             $ 222,692
  2002 Change                               (222,692)             (222,692)
                                            --------             ---------
December 31, 2002                           $      0             $       0
  2003 Change                                      0                     0
                                            --------             ---------
December 31, 2003                           $      0             $       0
  2004 Change                                      0                     0
                                            --------             ---------
December 31, 2004                           $      0             $       0
                                            ========             =========

</Table>


P.  RECLASSIFICATIONS

  Certain  reclassifications  have  been  made  in  prior  years'
financial  statements to conform to classifications used  in  the
current year.

Q.  FAIR VALUE OF FINANCIAL INSTRUMENTS

  The estimated fair value of the Company's financial instruments
as of December 31, 2004 and 2003 are as follows:

  <Table>
  <Caption>

                                            2004                           2003
                                            ----                           ----
                                Carrying Amount  Fair Value    Carrying Amount   Fair Value
                                ---------------  ----------    ---------------   ----------
                                                   (Dollars in Thousands)
                                                   ---------------------
<S>                                <C>            <C>            <C>            <C>
Cash & Cash Equivalents . . . .    $9,627         $9,627         $7,469         $7,469
Restricted Cash - Escrow  . . .     2,500          2,500          2,500          2,500
Accounts Receivable . . . . . .       639            639            339            339
Energy Trading Contracts  . . .    (3,424)        (3,424)             3              3

 </Table>


 The  carrying  amounts for all assets other than energy  trading
contracts approximate fair value because of the short maturity of
these instruments.  The fair value of the energy trading contract
is  based on current projections of power prices over the life of
the contract.

                              F-12

 <Page>

R.  DETAIL OF OTHER CURRENT LIABILITIES

  Other  current  liabilities consisted of the  following  as  of
December 31, 2004 and 2003:

<Table>
<Caption>
                                                           2004               2003
                                                           ----               ----
                                                            (Dollars in Thousands)
<S>                                                         <C>               <C>
Accrued Seabrook Costs  . . . . . . . . . . . . . . . . .   $  0              $1,740
Accrued Great Bay Hydro FERC Compliance Costs . . . . . .    719                   0
Accrued Other . . . . . . . . . . . . . . . . . . . . . .     22                   0
                                                            ----             -------
                                                            $741              $1,740
                                                            ====             =======

</Table>


  Accrued  Seabrook costs represented management's best  estimate
of  final  Seabrook closing costs.  Accrued Great Bay Hydro  FERC
compliance costs represent management's best estimate of the cost
of compliance with the requirements of the FERC operating license
issued to Great Bay Hydro on November 1, 2003, and is net of  the
long term portion of approximately $2.5 million.

S. ENRON CLAIM

  In  January  2002,  BayCorp reported that  Great  Bay  received
notice  on  December  21, 2001 from Enron Power  Marketing,  Inc.
("Enron")  that  Enron was terminating its contracts  with  Great
Bay.   Enron owed Great Bay $1,075,200 for power delivered  prior
to  Enron's  Chapter 11 bankruptcy filing on  December  2,  2001.
Great  Bay  also  had  an unliquidated claim  against  Enron  for
damages resulting from the termination of the contracts.   During
the  fourth  quarter  of  2001, BayCorp recorded  an  expense  of
$1,100,000  to establish a reserve for doubtful accounts  due  to
the uncertainty of collecting remaining amounts owed by Enron  to
Great  Bay  for  power  delivered prior  to  Enron's  Chapter  11
bankruptcy filing.  Enron filed a plan of reorganization on  July
11,  2003, which was approved by the bankruptcy court on July 15,
2004.  In December 2003, BayCorp sold a $1,041,600 portion of its
power  delivery claim to an institutional investor for  $343,700.
In  September  2004, BayCorp sold the remaining $175,400  of  the
power  delivery claim, as well as the claim for damages,  to  the
same  institutional investor for $77,200.  The  Company  recorded
each  of  these transactions as a recovery of bad debt,  reducing
total administrative and general expenses.

T. ISSUER TENDER OFFER

  On  January 31, 2003, BayCorp commenced an issuer tender  offer
to purchase up to 8,500,000 shares of its common stock at a price
of  $14.85  per  share (the "Tender Offer" or "Offer").   At  the
extended  Tender  Offer  expiration  date  of  March  18,   2003,
9,207,508  shares  had been properly tendered and  not  withdrawn
(including  options surrendered for repurchase and cancellation.)
The  Company  exercised  its discretion  to  purchase  up  to  an
additional  2%  of  outstanding shares,  purchasing  a  total  of
8,673,887 shares (and surrendered options) at a purchase price of
$14.85,  representing  approximately 94.3%  of  the  shares  (and
options)  tendered,  excluding odd  lots,  which  were  purchased
without  proration.  Payment for all such shares and options  was
completed   by   March   24,  2003.   The   Company   distributed
approximately $123,622,000 to tendering stockholders  and  option
holders.  As of December 31, 2003 the Company had 641,937  shares
outstanding and cash and cash equivalents and restricted cash  of
approximately  $9,969,000.  As of December 31, 2004  the  Company
had  557,945 shares outstanding and cash and cash equivalents and
restricted cash of approximately $12,127,000.

U. ENERGY MARKETING

  Forward  contracts  (including  the  Unitil  PPA)  meeting  the
definition of a derivative and not designated and qualifying  for
the  normal  purchases and normal sales exception or as  a  hedge
under  Statement  of  Financial  Accounting  Standards  No.  133,
Accounting  for  Derivative Instruments  and  Hedging  Activities
(SFAS  No. 133) are recorded at fair value with changes  in  fair
value  recorded in earnings.  In accordance with FASB's  Emerging
Issues  Task Force Issue No. 02-03, Issues Involved in Accounting
for  Derivative Contracts Held for Trading Purposes and Contracts
Involved  in Energy Trading and Risk Management Activities  (EITF
Issue  No.  02-03),  revenues related to  derivative  instruments
classified as trading are reported net of related cost of sales.

V. ACCOUNTING FOR STOCK OPTIONS

  The   Company  accounts  for  its  stock  option  plans   under
Accounting   Principles  Board  Opinion  No.   25   and   related
interpretations for options issued prior to 2003, and as such  no
compensation cost had been recognized for options granted at fair
market  value  that had not been modified.  In prior  years,  the
Company  repriced  certain options, accelerated  the  vesting  of
others,  made  limited recourse loans for certain individuals  to
exercise  options  and  issued contingent options.   The  Company
recorded  compensation  expense related  to  these  options.   On
August  14, 2002 the Company announced that it would expense  the
fair value of all stock options granted beginning January 1, 2003

                              F-13

<Page>

in  accordance  with SFAS No. 123, "Accounting  for  Stock  Based
Compensation."   Awards  under  the  Company's  plans  vest  over
periods  ranging  from one to three years.  Therefore,  the  cost
related  to  stock-based employee compensation  included  in  the
determination of net income for 2004, 2003 and 2002 differs  from
that  which  would have been recognized if the fair  value  based
method  had  been  applied  to  all  awards  since  the  original
effective date of Statement 123.

 In  October  2001,  the  Company  issued  240,000  non-qualified
options  pursuant  to the 2001 Non-Statutory Stock  Option  Plan.
These options have an exercise price of $9.05 and vested upon the
closing  of  the  sale  of  the Seabrook  Project.   The  Company
recorded  compensation expense related to contingent and repriced
options  of $0, $77,000 and $2,467,700 for 2004, 2003  and  2002,
respectively.

  In  April  2003 and July 2003, the Company issued  132,000  and
10,000  options, respectively, pursuant to the 1996 Stock  Option
Plan and the 2001 Non-Statutory Stock Option Plan.  These options
have an exercise price of $14.45.  The Company accounts for these
options  using  the  fair value method and recorded  compensation
expense  in 2004 and 2003 of $172,000 and $153,000, respectively,
for these options.

  Had   compensation  cost  for  these  plans   been   determined
consistent  with  SFAS  No.  123,  Accounting  for  Stock   Based
Compensation,  the  Company's net income and earnings  per  share
would  have  been  reduced  to the following  pro  forma  amounts
(dollars are in thousands, except per share amounts.)

  <Table>
  <Caption>

                                                       2004          2003         2002
                                                      ----          ----         ----
<S>                                                   <C>           <C>          <C>
Net Income (Loss): as reported  . . . . . . . . .     $(2,538)      $(4,168)     $58,873
 Stock compensation expense included in net
  income/(loss) . . . . . . . . . . . . . . . . .         172           410        2,468
 Stock compensation expense determined using
  fair value method for all awards  . . . . . . .        (172)         (369)      (3,121)
     Pro Forma  . . . . . . . . . . . . . . . . .      (2,538)       (4,127)      58,220
Earnings (Loss) Per Share (Basic): as reported        $ (4.34)      $ (1.72)     $  7.02
     Pro Forma  . . . . . . . . . . . . . . . . .       (4.34)        (1.70)        6.94
Earnings (Loss) Per Share (Diluted): as reported      $ (4.34)      $ (1.72)     $  6.79
     Pro Forma  . . . . . . . . . . . . . . . . .       (4.34)        (1.70)        6.71

</Table>


  The fair value of each option grant is estimated on the date of
grant  using  the  Black-Scholes option pricing  model  with  the
following   assumptions  used  for  grants  in  2003   and   2002
respectively: weighted average risk-free interest  rates  of  3.4
and  4.9  percent, expected dividend yields of 0 %  and  expected
lives  of  7 and 5 years and expected volatility of 47% and  47%,
respectively.  There were no option grants in 2004.

W. NEW ACCOUNTING PRONOUNCEMENT

  FASB  Statement  No.  123 (Revised 2004),  Share-Based  Payment
(SFAS 123R) was issued in December 2004.  SFAS 123R replaces SFAS
No.  123, Accounting for Stock-Based Compensation (SFAS 123), and
supersedes  APB  Opinion No. 25, Accounting for Stock  Issued  to
Employees.   SFAS  123R requires companies to  recognize  in  the
financial statements the compensation cost related to share-based
payment  transactions with employees.  The compensation  cost  is
measured  based  upon  the fair value of the  instrument  issued.
Share-based  compensation  transactions  with  employees  covered
within  SFAS 123R include share options, restricted share  plans,
performance-based awards, share appreciation rights, and employee
share purchase plans.

  SFAS  123R will be effective as of the first interim or  annual
reporting period that begins after June 15, 2005.  Since  January
2003, the Company used the fair value based method recognition of
compensation  expense  and  is required  to  apply  the  modified
prospective application transition method under SFAS  123R.   The
modified  prospective application transition method requires  the
application of this standard to all new awards issued  after  the
effective  date, all modifications, repurchased or  cancellations
of  existing awards after the effective date, and unvested awards
at the effective date.

  For  unvested  awards, the compensation  cost  related  to  the
remaining  service  period  that has not  been  rendered  at  the
effective  date  will  be  determined by  the  compensation  cost
calculated  currently  under  SFAS  123.   The  Company  will  be
adopting  the  modified  prospective application  of  SFAS  123R.
Based on the current options outstanding, the Company anticipates
the  adoption of this statement to not result in the  recognition
of any incremental compensation cost to be recognized in the year
of adoption.

2.  TAXES ON INCOME

  The following is a summary of the provision (benefit) for
income taxes for the years ended December 31, 2004 and 2003:

                              F-14

<Page>


  <Table>
  <Caption>
                        December 31,         December 31,
                            2004                 2003
                            ----                 ----
 <S>                 <C>                 <C>
 Federal
   Current                  $ 2,000            $    -
   Deferred                       -                 -
                            -------            ------
                            $ 2,000            $    -
                            -------            ------
 State
   Current                  $17,000            $    -
   Deferred                       -                 -
                            -------            ------
                            $17,000            $    -
                            =======            ======

</Table>

  Accumulated  deferred income taxes consisted of the following at December  31,
2004 and 2003:


  <Table>
  <Caption>

                                                       2004           2003
                                                       ----           ----
 <S>                                              <C>            <C>
 Assets
   Net operating loss carryforwards . . . . . .   $10,732,000    $3,700,000
   Financial reserves . . . . . . . . . . . . .        29,000        14,000
   Unrealized gain/loss . . . . . . . . . . . .     2,136,000       820,000
   Other, net . . . . . . . . . . . . . . . . .       228,000       484,000
                                                  -----------    ----------
 Accumulated deferred income tax asset  . . . .    13,125,000     5,018,000
 Valuation allowance  . . . . . . . . . . . . .   (13,125,000)   (5,018,000)
                                                  -----------    ----------
 Accumulated deferred income tax asset, net . .   $         -    $        -
                                                  ===========    ==========

</Table>
  The following table reconciles the statutory federal income tax rate to those
  reflected in the federal income tax provision set forth above.

  <Table>
  <Caption>

                                                  December 31,       December 31,
                                                      2004               2003
                                                      ----               ----
<S>                                                  <C>              <C>
Loss before taxes  . . . . . . . . . . . . . . . . . ($2,538,000)     ($4,167,504)
Federal statutory rate . . . . . . . . . . . . . . .          34%              34%
Federal income tax liability (benefit) at
  statutory levels . . . . . . . . . . . . . . . . .    (863,000)      (1,416,951)
Decrease (increase) from statutory levels State
  tax net of federal tax benefit . . . . . . . . . .           -                -
  State tax net of federal tax benefit . . . . . . .      20,000                -
  Valuation allowance  . . . . . . . . . . . . . . .     906,000        1,416,951
  Other  . . . . . . . . . . . . . . . . . . . . . .      30,000                -
                                                     -----------      -----------
Total Provision  . . . . . . . . . . . . . . . . . . $    33,000      $         -
                                                     ===========      ===========

</Table>


  Valuation  allowances have been provided against  any  deferred
tax  assets  (net),  due  to  the  limitations  on  the  use   of
carryforwards,  discussed below, and the  uncertainty  associated
with future taxable income.

  At  December  31, 2003 and 2004, the Company had net  operating
loss  carryforwards ("NOLs") for federal income tax  purposes  of
approximately $167 million and $188 million, respectively, before
limitations discussed in the following paragraph.  The  Company's
NOL before limitations at December 31, 2004 includes $167 million
attributable   to   BayCorp  and  $21  million  attributable   to
HoustonStreet.  The Company's federal NOLs will expire during the
years ending December 31, 2005 through 2023 if not used to offset
future taxable income.

  An  ownership  change  occurs within the  meaning  of  Internal
Revenue Code ("IRC") Section 382 when the ownership percentage of
5%  or  greater shareholders in a company increases by more  than
50%  over  a  three-year period.  The Company believes  that  the
Tender Offer in March 2003 and related transactions resulted in a
change  in ownership of BayCorp within the meaning of IRC Section
382.   As  such,  BayCorp  may be precluded  from  utilizing  its
federal and state NOLs originating prior to the ownership change.
BayCorp  estimates  that approximately $165 million  its  NOL  is
subject  to an annual limitation for purposes of IRC Section  382
of  approximately  $390,000  per  year.   As  a  result  of  this
limitation, all or a portion of BayCorp's federal and state  NOLs
may  expire  unused.   Additional NOLs and other  tax  attributes
generated  subsequent to the Tender Offer may be limited  in  the
event  of  certain  future  changes of ownership  by  significant
shareholders.  The Company also believes that all or a portion of
HoustonStreet's  NOLs  may  be subject  to  an  IRC  Section  382
limitation.   Accordingly,  all or a portion  of  HoustonStreet's
federal and state NOLs may expire unused.

                              F-15

<Page>

  The  Company  has  recorded a valuation allowance  against  its
deferred  tax assets.  In assessing whether deferred  tax  assets
will  be  realized, management considers all available  evidence,
historical  and  prospective,  with  greater  weight   given   to
historical  evidence, in determining whether it  is  more  likely
than not that some portion or all of its deferred tax assets will
not  be  realized.   Realization of the  Company's  deferred  tax
assets  is dependent upon resolution of the matters described  in
the preceding paragraph and generation of future taxable income.

  Deferred  tax  assets and related valuation allowance  of  $2.5
million  related  to the net operating loss carryforward  results
from  the exercise of employee stock options, the tax benefit  of
which,  when  recognized, will be accounted for as  a  credit  to
additional paid-in capital rather than a reduction of income  tax
expense.

  The  Company  filed its 2002 tax return in September  2003  and
requested  a refund of approximately $941,000 from the  State  of
New  Hampshire for overpayment of 2002 state income  taxes.   The
State  of  New  Hampshire  Department of  Revenue  Administration
("NHDRA")  began an examination of the Company's 2000,  2001  and
2002  tax returns in December 2003.  Given the uncertainty as  to
the  outcome  of  the  audit,  the Company  did  not  record  the
requested  refund  as  of  December  31,  2003.   The  audit  was
concluded in January 2005.  A settlement was reached between  the
Company  and the NHDRA in February 2005, and the Company received
a  refund  of $225,000 in Feburary 2005, which it will record  as
income during 2005.

3.  ENERGY MARKETING

  Until  November  1, 2002, the Company utilized unit  contingent
and firm forward sales contracts to maximize the value of its 174
MW power supply from the Seabrook Project.  It currently utilizes
firm  forward  and spot purchases to maximize the  value  of  the
Unitil  PPA  and  currently sells its generation from  Great  Bay
Hydro  in  the spot market.  The net unrealized loss  on  trading
activities  was $3,165,000 for the year ended December  31,  2004
and  $1,926,000  for  the year ended December  31,  2003  and  is
included in the accompanying consolidated statement of operations
for 2004 and 2003.  The net unrealized gain on trading activities
for the year ended December 31, 2002 was $115,300 and is included
in  the  accompanying consolidated statement  of  operations  for
2002.

  The  Company purchases a portion of its power needed for resale
from  ISO  New  England  ("ISO NE".)  ISO NE  requires  financial
assurance  to  protect  the  New England  Power  Pool  ("NEPOOL")
against  a  payment  default of one  of  its  participants.   The
Company has provided this assurance in the form of a cash deposit
at ISO NE.  The amount of this deposit was approximately $518,000
as  of  December 31, 2004 and $1,508,000 as of December 31, 2003.
The amount of collateral needed is calculated based upon formulas
developed by ISO NE and NEPOOL.  This deposit is reflected as  an
Other Long Term Asset in the Company's financial statements.

4.  PURCHASED POWER AGREEMENTS

  Great Bay was party to a purchased power contract, dated as  of
April  1,  1993,  (the "Unitil PPA" or "PPA"), with  Unitil  that
provided  for Great Bay to sell to Unitil 0.8696% of  the  energy
and  capacity of Seabrook, or approximately 10 MWs.   The  Unitil
PPA  commenced on May 1, 1993 and continues through  October  31,
2010.   On  November  first of each year the  purchase  price  is
subject to increase at the rate of inflation less four percent.

  In  anticipation  of  the Seabrook sale,  the  Unitil  PPA  was
amended as of November 1, 2002.  The amendment primarily modified
the  existing Unitil PPA to reduce the amount of power  delivered
to  9.06  MWs and the price that Unitil pays for power to  $50.34
per  MW  hour,  subject  to an annual increase  at  the  rate  of
inflation  less four percent, and provided that Great  Bay  would
supply the power regardless of whether Seabrook is providing  the
power.

  The  amendment also provided alternative security for  Unitil's
benefit,  to replace and discharge the mortgage on Seabrook  that
secured Great Bay's performance of the Unitil PPA.  In connection
with  the amended Unitil PPA, the Company was required to deposit
$2.5  million into a restricted account for the benefit of Unitil
should  Great Bay default.  The amount is reflected as restricted
cash  in  the accompanying balance sheet.  The amendment received
FERC  approval.  Great Bay assigned the Unitil PPA to  Great  Bay
Power Marketing as of January 1, 2003.

  Unitil has an option, expiring November 1, 2005, to extend  the
Unitil  PPA for up to 12 years, until 2022.  If Unitil  exercises
its  option to extend the PPA, the purchase price for  power  for
the  first year of the extended term, beginning November 1, 2010,
will  be  $65.00  per MW hour (in 1992 dollars) multiplied  by  a
factor  that  equals the cumulative inflation from  October  1992
through  October 2010.  For the remaining term of the  extension,
the  purchase  price will be increased annually by  the  rate  of
inflation over the previous year.

                              F-16

<Page>

  Forward  contracts  (including  the  Unitil  PPA)  meeting  the
definition of a derivative and not designated and qualifying  for
the  normal purchases and normal sales exception under  Statement
of   Financial  Accounting  Standards  No.  133,  Accounting  for
Derivative Instruments and Hedging Activities (SFAS No. 133)  are
recorded at fair value.  In accordance with the FASB's EITF issue
no.  02-03 the inception gain (initial value of $2.1 million)  on
the  Unitil PPA has been deferred and will be recognized over the
life  of  the  contract.  The fair value of the  contract  was  a
negative  $3.4 million as of December 31, 2004 and was $3,400  as
of December 31, 2003.  The deferred gain on the contract was $1.5
million  as of December 31, 2004 and $1.8 million as of  December
31,  2003.  These amounts are reflected in the Company's  balance
sheet.

  On  March 17, 2003, Unitil announced the approval of a contract
with  Mirant  Americas  Energy Marketing,  LP  ("Mirant"),  which
provided   for  the  sale  of  Unitil's  existing  power   supply
entitlements,  including the PPA with Great Bay Power  Marketing,
effective on May 1, 2003.  Great Bay Power Marketing's  PPA  with
Unitil  has  not  been assigned to Mirant.   Rather,  Unitil  has
appointed Mirant as their agent for purposes of administering the
PPA  with  Great  Bay  Power Marketing and Mirant  is  purchasing
Unitil's entitlement under the PPA.

5.  STOCK BASED COMPENSATION

  In   April  1995,  the  Board  of  Directors  of  the   Company
established the 1995 Stock Option Plan (the "1996 Plan").  In May
2001, the Board of Directors of the Company established the  2001
Non-Statutory  Stock  Option  Plan  (the  "2001  Plan").  Options
granted  pursuant to the 1996 Plan may be either incentive  stock
options  meeting the requirements of Section 422 of the  Internal
Revenue  Code or nonstatutory options, which are not intended  to
meet  the  requirements of Section 422.  Options granted pursuant
to  the  2001  plan will be non-statutory options  that  are  not
intended  to meet the requirements of Section 422 of the Internal
Revenue  Code.  The 1996 Plan and the 2001 Plan are  administered
by  the Board of Directors of the Company and may be modified  or
amended  by  the  Board  in any respect, subject  to  stockholder
approval in certain instances in the case of the 1996 Plan.

  FASB Interpretation No. 44, Accounting for Certain Transactions
involving Stock Compensation ("FIN 44"), effective July  1,  2000
and  applied prospectively (except for direct or indirect  option
repricings  and the definition of an employee in which  case  the
effective  date  is  December 15, 1998),  addresses  compensation
issues regarding the definition of an employee, modifications  to
plan awards, changes in grantee status, business combinations and
share  repurchase  features.   For transactions  subject  to  the
December  15,  1998  effective date, no compensation  expense  is
recognized for the period between December 15, 1998 and  July  1,
2000.   FIN  44  requires  variable  accounting  when  direct  or
indirect  reductions of the exercise price occur.  The  following
events occurred which were deemed to be modifications and created
variable accounting for options impacted by those events.

  On  December  3,  1998, the Board of Directors of  the  Company
voted  to  reprice all of the outstanding options of the Company,
at  that date, as the then outstanding options were "out  of  the
money."   The  Board  of  Directors  determined  that  the   then
outstanding options no longer had the desired motivational effect
or  compensatory benefit for the employees.  The repricing of the
options was based on the current market value of the stock as  of
December  18,  1998.  Simultaneously with the repricing,  139,583
existing  options  were forfeited.  During  2000,  the  Board  of
Directors  of the Company accelerated the vesting period  of  the
options held by certain employees of the Company.

  In  October  2001,  the  Company issued  240,000  non-qualified
options  pursuant  to the 2001 Non-Statutory Stock  Option  Plan.
These options had an exercise price of $9.05 and vested upon  the
closing of the sale of the Seabrook Project.  In March 2002,  the
Company  issued loans of $756,029 to its President, Frank Getman,
and  a  director, John Tillinghast, in order for them to exercise
150,384  options  for  common stock.   These  loans  had  limited
recourse and were repaid in November 2002.

  In January 2003, the Board of Directors voted to allow cashless
exercise of all outstanding options.  All options previously  not
accounted for as a variable plan as of January 2003 were  subject
to variable plan accounting through the date of exercise.

  In  accordance  with  APB 25 and FIN 44, the  Company  recorded
compensation  expense  related  to contingent  options,  repriced
options  and  options  accounted for as a variable  plan  of  $0,
$77,000 and $2,467,700 for 2004, 2003 and 2002, respectively.  As
of  December  31,  2004 and 2003,  70,538 and  79,713  options  ,
respectively, continue to be subject to variable plan accounting.

  Effective  January  1,  2003,  the  Company  adopted  SFAS  123
pursuant to the prospective method as described in SFAS 148.   In
2003,  the  Company issued 142,000 options pursuant to  the  1996
Stock  Option Plan and the 2001 Non-Statutory Stock Option  Plan.
These  options  have  an exercise price of $14.45.   The  Company
accounts  for  these  options using the  fair  value  method  and
recorded  compensation expense in 2004 and 2003 of  $172,000  and
$153,000, respectively, for these options.

                              F-17

<Page>


<Table>
<Caption>
                                      2004                   2003                   2002
                                   -----------           -----------             ----------
                                          Weighted               Weighted                Weighted
                                          Average                 Average                Average
                                          Exercise               Exercise                Exercise
                                Shares     Price       Shares      Price       Shares    Price
                                ------     -----       ------      -----       ------    ------
<S>                             <C>         <C>        <C>          <C>       <C>          <C>
Outstanding at beginning
  of  year . . . . . . . . . .  221,713     $13.05      945,767     $ 8.33    1,046,701    $ 7.39
Granted  . . . . . . . . . . .        0          -      142,000     $14.45       80,000    $12.22
Exercised  . . . . . . . . . .   (4,559)    $ 9.05     (865,554)    $ 8.06     (180,934)   $ 4.91
Forfeited  . . . . . . . . . .        0          -            0          -            0         -
Expired  . . . . . . . . . . .   (4,616)    $12.23         (500)    $10.25            0         -
Outstanding at end of year . .  212,538     $13.16      221,713     $13.05      945,767    $ 8.33
Exercisable at end of year . .  170,038     $12.83      120,047     $12.45      902,434    $ 8.20
Weighted average fair value
 of options granted  . . . . .                   -                  $14.45                 $12.22

</Table>

  The following table summarizes information concerning outstanding and
exercisable
  options at December 31, 2004, 2003 and 2002

  <Table>
  <Caption>

                                        Weighted
                                        Exercise
                                       Remaining     Weighted                Weighted
                         Number of    Contractual    Average       Number    Average
  Range of Exercise       Shares          Life       Exercise    of Shares   Exercise
        Prices          Outstanding     in Years     Price      Exercisable   Price
        -----          ------------    ---------     -------    -----------  --------
<S>                    <C>              <C>        <C>          <C>           <C>
2004
$8.88 - $9.05           12,669          2.6        $ 8.91        12,669       $ 8.91
$9.06 - $12.69          57,869          3.6        $10.91        57,869       $10.91
$12.70 - $14.45        142,000          5.3        $14.45        99,500       $14.45
Total                  212,538          4.7        $13.16       170,038       $12.83
2003
$8.88 - $9.05           17,228          4.1        $ 8.95        17,228       $ 8.95
$9.06 - $12.69          62,485          4.3        $11.00        45,819       $11.28
$12.70 - $14.45        142,000          6.3        $14.45        57,000       $14.45
Total                  221,713          5.2        $13.05       120,047       $12.45
2002
$2.88 - $4.32           40,000          3.3        $ 2.88        40,000       $ 2.88
$4.33 - $6.50          120,167          2.8        $ 4.74       120,167       $ 4.74
$6.51 - $9.74          545,100          4.8        $ 8.25       535,100       $ 8.32
$9.75 - $12.69         240,500          5.1        $ 4.62       207,167       $11.13
Total                  945,767          4.4        $ 8.33       902,434       $ 8.20

</Table>

  The  Company's majority owned subsidary, HoustonStreet, adopted
the  HoustonStreet 1999 Stock Option Plan in June 1999 ("HS  1999
Plan").   Options  granted pursuant to the HS 1999  Plan  may  be
either  incentive  stock  options  meeting  the  requirements  of
Section 422 of the Internal Revenue Code or nonstatutory options,
which  are not intended to meet the requirements of Section  422.
The  HS  1999  Plan is administered by the Board of Directors  of
HoustonStreet and may be modified or amended by the Board in  any
respect.   Pursant to the recapitalization of HoustonStreet  (see
Note  7),  all options outstanding under the plan were  exchanged
for common stock.

  In  December 2004, HoustonStreet issued 25,000 options  to  its
President  under the HS 1999 Plan.  The options were  granted  in
three  tranches with exercise prices of $6.47, $12.95 and $25.89.
The options vest monthly over a 3-year period.  HoustonStreet did
not  record  a charge with respect to these options in accordance
with APB No. 25, as the fair market value of HoustonStreet common
stock was equal to or less than each of the exercise prices.

  In  April  2004,  the Company issued 32,000  shares  of  common
stock  to  two  of  its  customers in connection  with  marketing
agreements.   The  common stock was granted  subject  to  certain
performance  criteria.   HoustonStreet  recorded  an  expense  of
$43,500 in connection with this common stock grant

6.  COMMITMENTS AND CONTINGENCIES

                              F-18

<Page>

  BayCorp  and  its wholly owned subsidiaries lease office  space
under   a  short-term  noncancelable  operating  lease  that   is
renewable every six months.  Rental expense under operating lease
agreements for the years ended December 31, 2004, 2003  and  2002
was $52,800, $52,800 and $81,144, respectively.

  Future  minimum commitments for operating leases as of December
31, 2004 are as follows:

                     Year Ending            Operating Lease
                     -----------            ---------------
                  December 31, 2004             $8,800

7.  INVESTMENT IN HOUSTONSTREET

  BayCorp  owns  shares representing approximately 59.7%  of  the
voting  power  of all outstanding common shares of HoustonStreet.
HoustonStreet   developed  and  operates  HoustonStreet.com,   an
Internet-based,  independent  crude  oil  and  refined   products
trading exchange in the United States.

  Prior to April 30, 2004, in addition to its equity interest  in
HoustonStreet, the Company held an $8.4 million secured  note  in
HoustonStreet.   In  March 2001, HoustonStreet raised  additional
funding  by  selling senior secured notes to  BayCorp  and  other
investors.   Collectively, these notes were referred  to  as  the
"HoustonStreet  Series C Units."  The outstanding  principal  and
interest  of  the  note  to BayCorp as  of  April  30,  2004  was
approximately  $11  million.  The Company had written  this  note
down  to zero as of December 31, 2000.  The notes were originally
due  and  payable  in December 2001, and the  maturity  date  was
subsequently  extended to January 15, 2004.  The notes  were  not
paid  when due, and in February 2004, HoustonStreet was  formally
notified  of  the payment default.  BayCorp and the other  senior
secured   noteholders  reserved  their  rights  and  proposed   a
recapitalization of HoustonStreet that would potentially  provide
effective  control  of  HoustonStreet to  the  noteholders.   The
recapitalization  was  approved by  the  Board  of  Directors  of
HoustonStreet  in  March 2004 and was approved  by  HoustonStreet
shareholders in April 2004.

  The   effect   of   the   recapitalization   was   to   convert
HoustonStreet's secured debt into equity and convert  outstanding
preferred stock in HoustonStreet into either the right to receive
nominal  cash  consideration or a nominal amount of HoustonStreet
common  stock.   All  outstanding shares of HoustonStreet  common
stock prior to the restructuring were cancelled.  As a result  of
the  restructuring, as of May 1, 2004, holders of senior  secured
promissory  notes held common stock of HoustonStreet representing
approximately  ninety-nine  percent of  the  outstanding  capital
stock   of  HoustonStreet.   Holders  of  preferred  stock   held
approximately one percent of the outstanding capital stock  as  a
result of the restructuring.

  This  recapitalization at HoustonStreet was  completed  in  the
second  quarter  of  2004 and as a result,  BayCorp  owns  shares
representing approximately 59.7% of the outstanding common shares
of  HoustonStreet    In  accordance with  EITF  Topic  D-84,  the
Company  followed  step  acquisition  accounting  to  consolidate
HoustonStreet.   The  fair  value  of  current  assets   exceeded
BayCorp's  net investment in HoustonStreet by $278,000  resulting
in   negative  goodwill  upon  application  of  step  acquisition
accounting.  As a result, the Company recognized an extraordinary
gain of $278,000 in the second quarter of 2004 in accordance with
SFAS No. 141 "Business Combinations."

  Prior   to   the  recapitalization,  BayCorp  held  a  minority
ownership   interest   in   HoustonStreet   and   accounted   for
HoustonStreet under the equity method.

 Summarized  financial  information for HoustonStreet,  prior  to
consolidation, is as follows:

  <Table>
  <Caption>

     HoustonStreet:                 2004              2003              2002
     --------------                 ----              ----              ----
                                            (Dollars in Thousands)
     <S>                           <C>               <C>               <C>
     Total Assets                  $   523           $   606           $   585
     Total Liabilities                  57            13,525            12,558
     Net Sales                         224               860             1,689
     Net Income (Loss)              13,318              (956)            1,383
     Company's equity in
       Net Income (Loss)             6,619              (449)              641

  </Table>

8. SUBSEQUENT EVENTS

                              F-19

<Page>

  Nacogdoches Gas entered into an agreement dated January 7, 2005
with   Sonerra,  under  which  Nacogdoches  Gas  will  fund   the
development  of three natural gas and oil wells.  This  agreement
was  amended as of March 14, 2005, increasing the number of wells
from  three to four.  In addition, Nacogdoches Gas has an  option
to  participate in Sonerra's continued development of  up  to  15
additional  natural gas and oil wells over the  next  two  years.
Under  the agreement with Sonerra, Nacogdoches Gas will fund  the
total cost of the new wells (with the provision that up to 25% of
the working interest may be funded and acquired by other parties)
and will receive a priority return of 90% of the working interest
funded  until  its  aggregate  investment  is  recovered.    Once
Nacogdoches Gas has recovered all of its investment in the  wells
from  the  net proceeds of all wells and any other revenues  from
the  assets acquired under the development agreement, Sonerra and
Nacogdoches  Gas will own equal amounts of the working  interests
funded.    The  working  interests  include  undivided  leasehold
interests  in  the  gas  units and the production  and  gathering
equipment.

  Since  entering  the  January 7, 2005 agreement  with  Sonerra,
Nacogdoches Gas has funded the development of three wells  for  a
total of approximately $8.6 million.  The net revenue interest in
each  of the wells being funded by Nacogdoches Gas is 77%,  which
means that the working interests bear 100% of the operating costs
of  the wells but receive 77% of the net revenues from the  wells
with the remaining 23% of the net revenues paid to the lessor and
other  royalty  interests.   The  first  of  those  wells,  Round
Mountain,  a  James  Lime  horizontal  natural  gas  well,  began
production  in January 2005 and through the end of February  2005
has  produced 95 million cubic feet of natural gas.   The  second
well,  Wicked  Wolf, a James Lime horizontal  natural  gas  well,
began  production in early March 2005.  The third  well,  Painted
Horse, a Rodessa vertical natural gas well, is being developed.

  Under  the  terms of the January 7, 2005 agreement as  amended,
Sonerra  will sequentially present five additional sets of  three
well  prospects to Nacogdoches Gas.  Upon the presentation  of  a
set  of three well prospects, Nacogdoches Gas at its option,  may
proceed  with  the  development of those  three  well  prospects.
Should Nacogdoches Gas decide not to proceed with the development
of   any  given  set  of  three  well  prospects,  its  right  to
participate in future well sets terminates.

  The total cost of an individual well typically ranges from $2.0
million  to $3.5 million and includes the acquisition  of  leases
for  the  land, the drilling and completion of the wells and  the
construction  of  extensions of the gas  gathering  system.   The
total  cost  depends  on the type of well,  the  amount  of  land
required  for  the production unit, the length of  gas  gathering
pipeline and the completion technique.

  In  March 2005, BayCorp formed Great Bay Hydro Maine, LLC ("GBH
Maine"),  a  Maine limited liability company, as a  wholly  owned
subsidiary,  and  formed  Great  Bay  Hydro  Benton,  LLC   ("GBH
Benton"),  also a Maine limited liability company,  as  a  wholly
owned subsidiary of GBH Maine.  On March 16, 2005, GBH Maine  and
GBH   Benton   acquired  Benton  Falls  Associates,   a   limited
partnership  that  owns  a 4.3 megawatt hydroelectric  generation
plant   in  Benton,  Maine  ("Benton  Falls")  from  The  Arcadia
Companies  for approximately $2.2 million.   The Company  assumed
operating responsibility for Benton Falls, the output of which is
sold  to  Central Maine Power Corporation ("CMP") under  a  power
purchase  agreement ("CMP PPA") that expires  in  December  2007.
The  rates under the CMP PPA are indexed to CMP's standard  rates
for  energy  and capacity purchases established annually  by  the
Maine Public Utilities Commission.

  On  March  15,  2005, the Company and all of its  wholly  owned
subsidiaries  entered  into a $10,250,000 Convertible  Note  (the
"Note")  and  a  Pledge Agreement (the "Pledge  Agreement")  with
Sloan Group Ltd., a Bahamas corporation (the "Sloan Group").  The
debt,  which  accrues interest at 8% per annum  and  is  due  and
payable in full on December 15, 2005, is convertible by the Sloan
Group at any time between November 15, 2005 and December 15, 2005
(or any time after the occurrence and during the continuance of a
material  event  of  default  under  the  Note)  into  shares  of
BayCorp's  common stock, $.01 par value at a price of $14.04  per
share.   The Note does not allow BayCorp to prepay the  debt  and
provides for a 2% premium on the interest rate in the event of  a
default.  Payment of the Note may be accelerated in the event  of
a  material event of default, which is customary for this type of
financing.

  In  addition  to BayCorp, the borrowers under the Note  include
the  following  subsidiaries of BayCorp: GBH Maine,  GBH  Benton,
Great  Bay  Power  Marketing, Great Bay Hydro, BayCorp  Ventures,
Nacogdoches Power and Nacogdoches Gas.  As security for the Note,
the  borrowers entered into the Pledge Agreement with  the  Sloan
Group.   Under the Pledge Agreement, BayCorp pledged  its  equity
interests  in  GBH Maine and Nacogdoches Gas to the Sloan  Group,
GBH  Maine pledged its equity interests in GBH Benton and  Benton
Falls to the Sloan Group, GBH Benton pledged its equity interests
in  Benton  Falls  to the Sloan Group, and Nacogdoches  Gas,  GBH
Maine  and  GBH  Benton  pledged to the Sloan  Group  any  equity
interest that they may obtain in other entities while the debt is
outstanding.

                              F-20

<Page>

                           SIGNATURES

  Pursuant  to  the requirements of Section 13 or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                              BAYCORP HOLDINGS, LTD.

March 31, 2005                By: /s / Frank W. Getman Jr.
                                 ------------------------------
                                 Frank W. Getman Jr.
                                 President

  Pursuant to the requirements of the Securities Exchange Act  of
1934,  this report has been signed below by the following persons
on  behalf  of the registrant and in the capacities  and  on  the
dates indicated.



<Table>
<Caption>

          SIGNATURE                         TITLE                       DATE
<S>                           <C>                               <C>
/s/ Frank W. Getman Jr.       President, Director and Chief         March 31, 2005
---------------------------   Executive Officer (principal
Frank W. Getman Jr.           executive officer, principal
                              financial officer and principal
                              accounting officer)


/s/ Anthony M. Callendrello   Director                              March 31, 2005
---------------------------
Anthony M. Callendrello


/s/ Alexander Ellis III       Director                              March 31, 2005
---------------------------
Alexander Ellis III


/s/ Stanley I. Garnett II     Director                              March 31, 2005
---------------------------
Stanley I. Garnett II


/s/ James S. Gordon           Director                              March 31, 2005
---------------------------
James S. Gordon


/s/ Thomas C. Leonard         Director                              March 31, 2005
---------------------------
Thomas C. Leonard



</Table>

                                      F-21

<Page>


EXHIBIT INDEX

<Table>
<Caption>

EXHIBIT
NUMBER     DESCRIPTION OF EXHIBIT

<S>        <C>
2.1        Purchase  and Sale Agreement for the Seabrook Nuclear Power  Station
           by   and   among  North  Atlantic  Energy  Corporation,  The  United
           Illuminating Company, Great Bay Power Corporation, New England Power
           Company,  The  Connecticut Light and Power Company,  Canal  Electric
           Company,  Little  Bay Power Corporation and New  Hampshire  Electric
           Cooperative,  Inc.  as  Sellers and North  Atlantic  Energy  Service
           Corporation  and FPL Energy Seabrook, LLC as Buyer dated  April  13,
           2002,  filed  as Exhibit 10.1 to the Company's Quarterly  Report  on
           Form 10-Q (File No. 1-12527) on May 15, 2002 and incorporated herein
           by reference.

2.2        Purchase and Sale Agreement between Citizens Communications  Company
           and  Great Bay Hydro Corporation dated as of October 30, 2003, filed
           as  Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q (File
           No.  1-12527)  on  November  6,  2003  and  incorporated  herein  by
           reference.

2.3        Agreement  and  Plan of Merger of HSEMergerCo, Inc.  with  and  into
           HoustonStreet  Exchange, Inc. dated as of April 22, 2004,  filed  as
           Exhibit 2 to the Company's Quarterly Report on Form 10-Q (File No. 1-
           12527) on August 6, 2004 and incorporated herein by reference.

2.4        Project  Development Agreement between Sonerra Resources Corporation
           and Nacogdoches Gas, LLC dated January 7, 2005. (1)

2.5        Purchase and Sale Agreement among Arcadia Energy II, LLC and Arcadia
           Energy  III,  LLC, as sellers, and Great Bay Hydro  Maine,  LLC  and
           Great  Bay Hydro Benton, LLC, as Buyers, relating to the acquisition
           of all of the Partnership Interests of Benton Falls Associates, L.P.
           dated  as  of  March 16, 2005, filed as Exhibit 2 to  the  Company's
           Current Report on Form 8-K on March 18, 2005 and incorporated herein
           by reference.

3.1        Certificate of Incorporation of BayCorp Holdings, Ltd., as amended.

3.2        By-laws  of  BayCorp  Holdings, Ltd., filed as Exhibit  3.2  to  the
           Registration  Statement  on  Form  S-4  of  BayCorp  Holdings,  Ltd.
           (Registration  Statement  333-3362) filed  on  April  11,  1996  and
           incorporated herein by reference.

10.1       Amended  and Restated Purchase Power Agreement between Unitil  Power
           Corp. and Great Bay Power Corporation, dated as of November 1, 2002,
           filed  as  Exhibit 10.4 to the Company's Annual Report on Form  10-K
           (File  No.  1-12527)  for  the  year ended  December  31,  2003  and
           incorporated herein by reference.

10.2       Third  Amended  and  Restated Rights of First  Refusal  and  Co-Sale
           Agreement dated as of March 30, 2001, by and among BayCorp Holdings,
           Ltd.,  HoustonStreet  Exchange, Inc. and  the  other  parties  named
           therein,  filed as Exhibit 10.46 to the Company's Annual  Report  on
           Form  10-K (File No. 1-12527) for the year ended December  31,  2001
           and incorporated herein by reference.

10. 3*     1996  Stock Option Plan of BayCorp Holdings, Ltd., as amended, filed
           as Annex III to the Prospectus in the Registration Statement on Form
           S-8  of  BayCorp  Holdings, Ltd. (Registration  Statement  333-3362)
           filed on June 12, 1996 and incorporated herein by reference.

10. 4*     2001  Non-Statutory  Stock Option Plan of  BayCorp  Holdings,  Ltd.,
           filed  as  Exhibit 99 to the Registration Statement on Form  S-8  of
           BayCorp  Holdings, Ltd. (Registration Statement 333-71976) filed  on
           October 22, 2001 and incorporated herein by reference.

10.5*      Stock  Option Agreement, dated May 25, 2000, by and between  Anthony
           M.  Callendrello and BayCorp Holdings, Ltd., filed as Exhibit  10.26
           to  the Company's Annual Report on Form 10-K (File No. 1-12527)  for
           the  year  ended  December  31,  2001  and  incorporated  herein  by
           reference.

10.6*      Non-Statutory  Stock  Option Agreement and related  Incentive  Stock
           Option Agreement, each dated May 2, 2001, by and between Anthony  M.
           Callendrello and BayCorp Holdings, Ltd., filed as Exhibit  10.27  to
           the  Company's Annual Report on Form 10-K (File No. 1-12527) for the
           year ended December 31, 2001 and incorporated herein by reference.

                                     F-22

<Page>

10.7*      Retention and Incentive Agreement, dated November 30, 2001,  by  and
           between Anthony M. Callendrello and BayCorp Holdings, Ltd., filed as
           Exhibit 10.26 to the Company's Annual Report on Form 10-K (File  No.
           1-12527)  for  the  year  ended December 31, 2002  and  incorporated
           herein by reference.

10.8*      Retention  and Incentive Agreement dated December 3,  2001,  by  and
           between  Frank  W. Getman Jr. and BayCorp Holdings, Ltd.,  filed  as
           Exhibit 10.27 to the Company's Annual Report on Form 10-K (File  No.
           1-12527)  for  the  year  ended December 31, 2002  and  incorporated
           herein by reference.

10.9*      1999 Stock Incentive Plan of HoustonStreet Exchange, Inc., filed  as
           Exhibit 10.24 to the Company's Annual Report on Form 10-K (File  No.
           1-12527)  for  the  year  ended December 31, 1999  and  incorporated
           herein by reference.

10.10      $10,250,000  Convertible Note from BayCorp Holdings,  Ltd.  and  its
           wholly owned subsidiaries to Sloan Group Ltd. dated March 15, 2005.

10.11      Pledge  Agreement  among BayCorp Holdings, Ltd.,  its  wholly  owned
           subsidiaries and Sloan Group Ltd. dated March 15, 2005.

10.12*     Incentive  Stock  Option Agreement dated December 10,  2004  by  and
           between Frank W. Getman Jr. and HoustonStreet Exchange, Inc.

14         Code of Business Conduct filed as Exhibit 14 to the Company's Annual
           Report  on Form 10-K (File No. 1-12527) for the year ended  December
           31, 2003 and incorporated herein by reference.

21         List of Subsidiaries of BayCorp Holdings, Ltd.

23.1       Consent of Vitale, Caturano & Company P.C.

31.1       Certification  of  President and Chief Executive Officer  (principal
           executive officer) pursuant to Exchange Act Rules 13a-14 and 15d-14.

31.2       Certification  of  President and Chief Executive Officer  (principal
           financial officer) pursuant to Exchange Act Rules 13a-14 and 15d-14.

31.3       Certification  of  Vice President of Finance  and  Treasurer  (chief
           accounting officer) pursuant to Exchange Act Rules 13a-14  and  15d-
           14.

32.1       Certification of Chief Executive Officer and Chief Financial Officer
           pursuant  to 18 U.S.C. Section 1350, as adopted pursuant to  Section
           906 of the Sarbanes-Oxley Act of 2002.

32.2       Certification of Vice President of Finance and Treasurer pursuant to
           18  U.S.C. Section 1350, as adopted pursuant to Section 906  of  the
           Sarbanes-Oxley Act of 2002.


</Table>

  * Management contract or compensatory plan or arrangement.

     (1)   All  disclosure schedules and exhibits have been omitted pursuant
	to Item 601(b)(2) of Regulation S-K.  The Registrant will furnish
	supplementally a copy of any omitted schedule or exhibit to the
	Secuities and Exchange Commission upon request.


                                      F-23