Bangor Hydro-Electric Company



						     January 28, 2003

Dear Preferred Shareholder:

       Please find enclosed important information pertaining to our offer to
purchase for cash any and all outstanding shares Bangor Hydro-Electric
Company's 7% series of cumulative preferred stock at a cash purchase price
of $115.00 per share.

       We would greatly appreciate your giving prompt attention to the
following enclosed materials which you are encouraged to read in their
entirety:

      (i) Offer to Purchase, dated January 28, 2003; and

      (ii) The  Letter of Transmittal for the 7% Series of cumulative
preferred stock; and

      (iii) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9; and

      (iv)      Notice of Guaranteed Delivery procedures.
.

       If you have questions about the offer or require assistance, please
call Georgeson Shareholder Communications Inc., as information agent, at
(866) 328-5445 (toll free) or Georgeson Shareholder Securities Corporation,
as dealer manager, also at (866) 328-5445 (toll free). Requests for
additional copies of the Offer to Purchase, Letter of Transmittal or other
tender offer materials may be directed to the information agent and such
copies will be furnished promptly at our expense. Preferred Shareholders may
also contact their local broker, dealer, bank, or trust company for
assistance concerning this offer.



				   Sincerely yours,


				   /s/ David R. Black
				   ------------------
				   David R. Black, Treasurer
				   Bangor Hydro-Electric Company