SF340 FLT CREW WITH DEFERRED AC GENERATOR HAS MOMENTARY LOSS OF NUMBER 1 ENGINE POWER INFLIGHT; SUBSEQUENT INSPECTION REVEALS BURN MARKS. EMERGENCY IS DECLARED AND UNEVENTFUL LANDING ENSUES.

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APPROX MIDWAY THROUGH THE FLT WE EXPERIENCED A MOMENTARY LOSS OF PWR IN L ENG; WITH A SLIGHT YAW. THEN THE L OIL BYPASS LIGHT CAME ON. UPON COMPLETION OF THE OIL BYPASS LIGHT PROCS; CALLED DISPATCH TO TALK TO MAINT CTL. DURING TALKING TO MAINT CTL; MY FLT ATTENDANT CALLED AND NOTIFIED ME THAT A PAX WHO IDENTED HIMSELF AS A MIL PLT; HAD NOTICED A HOLE AND SKIN COMING OFF THE L ENG. LOOKING BACK FROM MY SEAT; I NOTICED A HOLE WHERE THE AC EXHAUST HOLE IS AND THE SCREEN THAT NORMALLY GOES OVER IT WAS MOSTLY GONE. I ALSO NOTICED THAT WE HAD LOST SOME SKIN BEHIND THE AC EXHAUST. WE SLOWED THE ACFT TO MANEUVERING SPD OF 190 KTS. I DISCUSSED THE OPTION OF DECLARING AN EMER WITH DISPATCH. AFTER RECEIVING ADDITIONAL INFO FROM THE FLT ATTENDANT; I DECLARED AN EMER. I NOTIFIED DISPATCH; FLT ATTENDANT; AND ATC THAT WE WERE DECLARING AN EMER. I NOTIFIED THE FLT ATTENDANT TO PREPARE THE CABIN. WE WENT OVER SEATING ARRANGEMENTS; AND IF WE NEEDED TO DO AN EMER EXIT; THAT I WOULD CALL HER. THE REST OF THE FLT WENT WITHOUT ANY PROBS. GOT DIRECT; AND A SHORT APCH. I SHUT DOWN THE L ENG AFTER CLRING THE RWY; AND PROCEEDED TO THE RAMP. THE ACFT GENERATOR HAD BEEN DEFERRED BY MAINT.