Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis For the year ended December 31, 2012, the Energy-from-Waste (“EFW”) facility processed approximately  163,800 tonnes of municipal solid waste as compared to 166,800 tonnes of municipal solid waste in the same  period of 2011. The current level of production resulted in the diversion of approximately 127,200 tonnes of  waste from municipal solid waste landfill sites in the twelve months of 2012.  For the year ended December 31, 2012, the Brampton Cogeneration Inc. (“BCI”) and Windsor Locks facilities  sold 1,305.6 billion lbs of steam as compared to 1,209.4 billion lbs of steam in the comparable period of 2011. During the year ended December 31, 2012, operations at the EFW facility generated 489 billion lbs of steam for  the BCI facility as compared to 507 billion lbs of steam in the same period in 2011.  For the year ended December 31, 2012, energy / steam revenue in the Thermal Energy Division totalled $36.9  million, as compared to $46.7 million during the same period in 2011, a decrease of $9.8 million, or 21%. The  decreased revenue from energy / steam sales as compared to the same period in 2011, was primarily due to a  decrease in revenue of $7.9 million from lower production at the Windsor Locks facility as a result of a planned  shutdown in the second quarter of 2012 to install the new Solar Titan combustion gas turbine, and a decrease of  $1.9 million in lower production at the Sanger facility as a result of being offline for a planned shutdown  commencing in January 2012. As natural gas expense is a significant revenue driver and component of operating expenses, the division  compares ‘net energy sales revenue’ (energy sales revenue less natural gas expense) as an appropriate  measure of the division’s results. For the year ended December 31, 2012, net energy / steam sales revenue at  the Thermal Energy Division totalled $22.3 million, as compared to $22.1 million during the same period in 2011,  an increase of $0.2 million. The increase is primarily due to lower gas costs as a result of increased operating  efficiency and appropriate scale of the new Titan turbine installed at the Windsor Locks facility in 2012, partially  offset by the Sanger facility being offline from January to April 2012 and the Windsor Locks facility being offline  for a large part of the second quarter of 2012, and a $1.8 million reclassification from operating expenses into  cost of sales – fuel in 2011 related to the KMS and Peel facilities.  For the year ended December 31, 2012, fuel costs at Sanger and Windsor Locks totalled $14.6 million, as  compared with $24.6 million in the same period in 2011, a decrease of $10.0 million. The overall natural gas  expense at the Windsor Locks facility decreased $6.6 million or 36%, primarily due to a 37% decrease in volume  of natural gas consumed, partially offset by a 1% increase in the average landed cost of natural gas per MMBTU  as compared to the same period in 2011. The average landed cost of natural gas at the Windsor Locks facility  during the year ended December 31, 2012 was $4.91 per MMBTU. Natural gas expense at Sanger decreased  $1.9 million or 39%, primarily the result of a 22% decrease in the volume of natural gas consumed in addition to  a 22% decrease in the average landed cost of natural gas per MMBTU as compared to the same period in  2011. The average landed cost of natural gas at the Sanger facility during the year ended December 31, 2012  was U.S. $3.45 per MMBTU. A portion of the decrease in gas costs is attributable to a $1.8 million  reclassification from operating expenses into cost of sales – fuel in 2011 related to the KMS and Peel facilities. The division reported increased fuel costs of $0.3 million as a result of the stronger U.S. dollar as compared to  the same period in 2011.  Revenue from waste disposal sales for the year ended December 31, 2012 totalled $14.3 million, as compared  to $16.4 million during the same period in 2011, a decline of $2.1 million or 13%. Revenue declined as the  result of a greater level of supplemental waste processed by the facility for which lower average rates are  charged pursuant to the existing waste disposal contract and the contract with the region of Peel expiring in  October of 2012.  For the year ended December 31, 2012, operating expenses, excluding fuel costs at EFW, Windsor Locks and  Sanger, totalled $21.1 million, as compared to $19.9 million during the same period in 2011, an increase of $1.2  million. The increase in operating expenses was primarily impacted by a $1.8 million reclassification from  operating expenses into cost of sales – fuel in 2011 related to the KMS and Peel facilities offset by lower  expenses of $0.3 million at the EFW facility, primarily related to lower gas and maintenance costs, and lower  expenses of $0.2 million due to planned shutdowns of the Sanger and Windsor Locks facilities for portions of the  twelve months of 2012. For the year ended December 31, 2012, the Thermal Energy Division’s operating profit totalled $17.7 million, as  compared to $20.0 million during the same period in 2011, representing a decrease of $2.3 million or 12%. For the quarter ended December 31, 2012, the Thermal Energy Division produced 80.5 GW-hrs of energy as  compared to 126.5 GW-hrs of energy in the comparable period of 2011. The decrease in energy production  2012 Annual Report 28 2012 Fourth Quarter Operating Results