Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis For the year ended December 31, 2012, adjusted funds from operations totalled $76.9 million as compared to  adjusted funds from operations of $72.7 million, an increase of $4.2 million as compared to the same period in  2011. For the three months ended December 31, 2012, adjusted funds from operations totalled $26.9 million as  compared to adjusted funds from operations of $12.7 million, an increase of $14.2 million as compared to the  same period in 2011. Summary of Property, Plant and Equipment Expenditures APUC’s consolidated capital expenditures in the year ended December 31, 2012 increased as compared to the  same period in 2011 primarily due to APCo’s acquisition of the Gamesa Wind Facilities and Liberty Utilities’  acquisitions of EnergyNorth Gas Utility, Granite State Electric Utility and the Midwest Gas Utilities. Property, plant and equipment expenditures for the 2013 fiscal year are anticipated to be between $130 million  and $145 million. Capital expenditures for Liberty Utilities include: approximately $34 million at Liberty Utilities  2012 Annual Report 48 Three months ended December 31  Year ended December 31  2012  2011  2012  2011  (millions)  (millions)  (millions) (millions)  Cash flows from operating activities  $ 16.1 $ 1.4 $ 63.0 $ 69.7 Add (deduct):  Changes in non-cash operating items  7.2 11.6 3.9 1.5 Cash provided/(used) in discontinued operation  0.4 (1.5) 0.4 (1.5) Quebec water lease litigation accrual  1.9 - 1.9 - Acquisition costs  1.3 1.2 7.7 3.0 Adjusted funds from operations  $ 26.9  $  12.7  $  76.9  $  72.7  Adjusted funds from operations per share $ 0.16 $ 0.10 $ 0.52 $ 0.62 Three months ended December 31  Year ended December 31  2012  2011  2012  2011  APCo (millions) (millions) (millions) (millions) Renewable Energy Division  Capital expenditures  $ 7.5 $ 6.7 $ 21.1  $ 25.6 Acquisition or development of new operating  facilities  217.0 - 245.7 -  Total $  224.5  $  6.7  $  266.8  $  25.6  Thermal Energy Division  Capital expenditures, net  $ (2.0) $ 4.5 $ 10.3 $ 13.6 Total $ ( 2.0) $  4.5  $  10.3  $  13.6  LIBERTY UTILITIES  West  Capital Investment in regulatory assets $ 9.6 $ 9.3 $ 23.2 $ 20.4 Acquisition of new operating utilities - 2.9 - 100.1 Total  $  9.6  $  12.2  $  23.2  $  120.5  Central Capital Investment in regulatory assets $ 8.8 $ 0.2 $ 10.8 $ 0.8 Acquisition of new operating utilities - - 128.9 - Total  $  8.8  $  0.2  $  139.7  $  0.8  East Capital Investment in regulatory assets $ 8.9 $ - $ 12.5 $ - Acquisition of new operating utilities - - 295.3 - Total  $  8.9  $  -  $  307.8  $  -  CONSOLIDATED  Total APCo  Capital expenditures $  5.5  $  11.2  $  31.4  $  39.2  Acquisition or development of new operating  facilities  217.0  - 245.7  - Total Liberty Utilities  Capital investment in regulatory assets  27.3  9.5  46.5  21.2  Acquisition of operating entities  -  2.9  424.2  100.1  Corporate  - -  -  0.4  Total $  249.8  $  23.6  $  747.8  $  160.9 