Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis Acquisition of Shady Oaks Wind Facility APCo $150 million Senior Unsecured Debentures APCo Credit Facility  Completion of Windsor Locks Repowering 2012 Annual Report 19 APCo has completed the repowering of the Windsor Locks electrical and steam energy generating  station. The installation of a new 14 MW Solar Titan combustion gas turbine was completed in July  On November 16, 2012, APCo amended its existing $155 million senior secured credit facility (“APCo  Facility”) to increase the commitments available under the Facility to $200 million. In addition, the bank  syndicate has agreed to release its security previously held over certain APCo entities, such that the  amended APCo Facility is now fully unsecured. The APCo Facility now has a maturity date of November  16, 2015.  Net proceeds from the APCo Debentures were used primarily to fund the 400MW investment in the  Gamesa Wind Facilities discussed above.  On December 3, 2012, APCo issued $150 million 4.82% senior unsecured debentures with a maturity  date of February 15, 2021 (the "APCo Debentures") pursuant to a private placement in Canada and the  United States. The APCo Debentures were sold at a price of $99.94 per $100.00 principal amount,  resulting in an effective yield to maturity of 4.83% per annum. Concurrent with the offering, APCo  entered into a fixed for fixed cross currency swap, coterminous with the APCo Debentures, to  economically convert the Canadian dollar denominated debentures into U.S. dollars, resulting in an  effective interest rate throughout the term of 4.4%. Total annual energy production is expected to be 364 GW-hrs per year. The Shady Oaks Wind Facility  has entered into a 20 year inflation indexed power purchase agreement with the largest electric utility in  the state of Illinois, Commonwealth Edison (BBB flat stable: Moody’s, S&P) for 310 GW-hrs of energy  per year. All energy produced in excess of that sold under the power purchase agreement will be sold  into the energy market in which the facility is located. The facility is comprised of 68 Goldwind GW82 1.5MW and 3 Goldwind GW100 2.5MW permanent magnet direct-drive wind turbines; these turbines are well suited for the wind regime, and offer  significant technological advantages providing proven reliability, enhanced energy production efficiency  and lower long term maintenance costs. Through its affiliate, Goldwind has assumed all operations,  maintenance, and capital repair responsibilities for the Shady Oaks Wind Facility pursuant to a 20 year  fixed price agreement for the turbines and balance of plant facilities. Effective January 1, 2013, APCo acquired a 109.5 MW contracted wind powered generating station  (“Shady Oaks Wind Facility") from Goldwind International SO Limited (“Goldwind”) for total consideration of approximately US$148.9 million.  The Shady Oaks Wind Facility is located in Northern Illinois, approximately 80 km west of Chicago,  Illinois and reached commercial operation in June 2012. Total annual energy production is expected to be 1,352 GW-hrs per year. The Gamesa Wind Facilities  have long term, fixed price power sales contracts (the “Power Sales Contracts”) with a weighted  average life of 11.8 years (Minonk and Sandy Ridge Wind Facilities 10 years each, Senate Wind Facility  15 years). Approximately 73% of energy revenues would be earned under the Power Sales Contracts. All energy produced in excess of that sold under the Power Sales Contracts, together with ancillary  services including capacity and renewable energy credits, will be sold into the energy markets in which  the facilities are located. The Gamesa Wind Facilities utilize Gamesa G9X-2.0 MW wind turbines. Gamesa USA has assumed all  operations, maintenance, and capital repair responsibilities for the facilities pursuant to a 20 year  agreement for the turbines and balance of plant facilities. The Gamesa Wind Facilities were acquired through a newly formed partnership whose members  include Class B members consisting of APCo (60% interest in Class B membership units) and Gamesa  Energy USA, LLC (“Gamesa USA”), a subsidiary of Gamesa Corporación Tecnológica, S.A., the original  developer of the projects, (holding a 40% interest in Class B membership units) and certain Class A  equity investors who are primarily entitled to the tax attributes associated with the projects. Total cost of  the three wind farms was approximately $747 million. 