Caribbean Utilities Company, Ltd.  2011  Annual Report Management’s Discussion and Analysis 8 Management’s Discussion and Analysis The following management’s discussion and analysis  (“MD&A”) should be read in conjunction with the Caribbean  Utilities Company, Ltd. (“CUC” or the “Company”) financial  statements for the twelve months ended December 31, 2011  (“Fiscal 2011”). The material has been prepared in accordance  with National Instrument 51-102 - Continuous Disclosure  Obligations (“NI 51-102”) relating to Management’s  Discussion and Analysis. Additional information in this MD&A has been prepared  in accordance with Canadian generally accepted accounting  principles (“Canadian GAAP”), including certain accounting  practices unique to rate-regulated entities. These accounting  practices, and their impact, which are disclosed in the notes  to the 2011 financial statements, result in regulatory assets  and liabilities which would not occur in the absence of rate  regulation. In the absence of rate regulation the amount  and timing of the recovery or refund would not be subject to  regulatory approval. Certain statements in this MD&A, other than statements  of historical fact, are forward-looking statements concerning  anticipated future events, results, circumstances, performance  or expectations with respect to the Company and its  operations, including its strategy and financial performance  and condition. Forward-looking statements include statements  that are predictive in nature, depend upon future events or  conditions, or include words such as “expects”, “anticipates”,  “plan”, “believes”, “estimates”, “intends”, “targets”,  “projects”, “forecasts”, “schedule”, or negative versions  thereof and other similar expressions, or future or conditional  verbs such as “may”, “will”, “should”, “would” and “could”.  Forward-looking statements are based on underlying  assumptions and management’s beliefs, estimates and  opinions, and are subject to inherent risks and uncertainties  surrounding future expectations generally that may cause  actual results to vary from plans, targets and estimates. Some  of the important risks and uncertainties that could affect  forward-looking statements are described in the MD&A in  the section labelled “Business Risks” and include but are not  limited to operational, general economic, market and business  conditions, regulatory developments and weather. CUC  cautions readers that actual results may vary significantly from  those expected should certain risks or uncertainties materialize,  or should underlying assumptions prove incorrect. Forward- looking statements are provided for the purpose of providing  information about management’s current expectations and  plans relating to the future. Readers are cautioned that such  information may not be appropriate for other purposes. The  Company disclaims any intention or obligation to update or  revise any forward-looking statements, whether as a result of  new information, future events or otherwise except as required  by law. Financial information is presented in United States dollars  unless otherwise specified. The financial statements and MD&A  in this report were approved by the Audit Committee. Letitia Lawrence Vice President Finance & Chief Financial Officer