Algonquin Power & Utilities Corp. – Consolidated Financial Statements ALGONQUIN POWER & UTILITIES CORP.  Notes to the Consolidated Financial Statements  December 31, 2012 and 2011   (in thousands of Canadian dollars except as noted and amounts per share)  11.  Pension and other post-retirement benefits  In conjunction with recent utilities acquisitions, the Company assumed defined benefit pension  and OPEB plans for qualifying employees in the related acquired businesses. The electricity and  gas utilities, other than Calpeco, each have noncontributory defined pension plans covering  substantially all employees. Benefits are based on each employee's years of service and  compensation. Calpeco has a defined benefit cash balance pension plan covering substantially  all its employees, under which employees are credited with a percentage of base pay plus a  prescribed interest rate credit. The Company's policy is to make pension contributions within the  range determined by generally accepted actuarial principles. The OPEB plans provide health care  and life insurance coverage to eligible retired employees. Eligibility is based on age and length of  service requirements and, in most cases, retirees must cover a portion of the cost of their  coverage.  The Company acquired EnergyNorth, Granite State and the Midwest Utilities in the third quarter  of 2012; therefore, they are not included in the December 31, 2011 comparative information. The  determination of the fair value of pension and OPEB assets and liabilities acquired has been  based upon management’s preliminary estimates and certain assumptions. Namely, plan assets  acquired had not been transferred to the Company as at December 31, 2012. An estimate of the  assets to be transferred adjusted for estimated return, contributions and benefits was used to  estimate the funded status at the acquisition date and December 31, 2012. The Company will  continue to review information and perform further analysis prior to finalizing the fair value of the  pension and OPEB assets acquired and liabilities assumed. The actual fair values of the assets  acquired and liabilities assumed may differ from the amounts recorded.  (a) Net pension and OPEB obligation  The following table sets forth the projected benefit obligations, fair value of plan assets, and  funded status of the Company’s plans at December 31:  2012 Annual Report 108 Pension benefits  OPEB  2012 2011 2012 2011 Change in projected benefit obligation  Projected benefit obligation, at beginning of year  $ 239  $ - $ -  $ - Assumed projected obligation from business  combination 101,840 - 30,637 - Service cost  1,288 180 803  - Interest cost  1,906 - 606  - Actuarial loss  2,736 52 857  - Benefits paid  (1,507) - (601)  - Foreign exchange  (2,211) 7 (628)  - Projected benefit obligation, at end of year $ 104,291 $ 239 $ 31,674  $ - Change in plan asset  Fair value of plan assets, at beginning of year 203 - -  - Acquired assets in business combination 68,045 - 10,786 - Actual return on plan assets  1,223 - -  - Employer contributions  - 233 231  - Benefits paid  (1,507) - (601)  - (Gain)/Loss on foreign exchange  (1,440) 6 (221)  - Fair value of plan assets, at end of year $ 66,524 $ 239 $ 10,195  $ - Unfunded status $ (37,767) $ - $ (21,479)  $ - Amounts recognized in the Consolidated  Balance Sheet consists of:  Current liabilities  - - - Noncurrent liabilities  (37,767) - (21,479)  - Net amount recognized $ (37,767) $ - $ (21,479)  $ -