4 Caribbean Utilities Company, Ltd.  2011  Annual Report To Our Shareholders net growth in residential customer  numbers from 22,311 to 22,731 in  2011 has therefore not produced  overall growth in sales as the average  kWh consumption for this class has  decreased.  With the Government projecting  modest Gross Domestic Product  gains for 2011, we remain cautiously  optimistic about future growth in the  economy. We also see the most recent  Government reports on the slow- down in the decline of work permit  holders as a positive sign. In an effort to maintain a safe  and efficient service, the Company  continued to invest in infrastructure  and equipment during 2011. Excluding capital expenditures  related to the repair of three  generating units damaged in 2010  and early 2011 and for which the  cost was covered by insurance  proceeds net of a deductible, major  capital expenditure initiatives for  2011 totalled $33.4 million, a $12.2  million or 58% increase from $21.2  million. These initiatives included the  beginning of the Advanced Metering  Infrastructure (“AMI”) project roll- out and completion of the Eastern  Transmission Loop. By the First Quarter 2012, the  AMI project will bring efficiencies in  meter reading and services such as  disconnects and reconnects directly  from CUC’s offices, provide real-time  electricity consumption information  and a prepaid payment option  to aid consumers in monitoring  and controlling their electricity  consumption.  The Eastern Transmission Loop  project will also bring customer  benefits through an increase in the  reliability and operational flexibility  of the Transmission and Distribution  (“T&D”) system serving all areas of  the Island from South Sound, east  to the districts of East End and North  Side.  The series of generating unit  mechanical failures in the First  Quarter 2011 left the Company  without its normal generation reserve  capacity. The margin was restored  by the leasing of temporary mobile  generation until the out-of-service  generating units could be repaired.  Despite some outages related to the  loss of generation, overall reliability  of service to customers in 2011, as  measured by the Average System  Availability Index, remained high at  99.94%. We believe reliable electricity  supply is critical in supporting the  established financial services and  tourism industries as well as to  attracting new development to Grand  Cayman. In November 2011 CUC issued  a certificate of need to the ERA  for 18 megawatts (“MW”) of new  generating capacity to be installed in  2014 and for an additional 18 MW of  generating capacity to be installed  in either 2015 or 2016 contingent on  growth over the next two years. The  primary driver for the new generating  capacity in 2014 is the upcoming  retirements of several of CUC’s  generating units which are reaching  the end of their useful lives. As a  result of CUC expressing its need for  replacement capacity, the ERA will be  conducting a competitive solicitation  in 2012 in accordance with CUC’s  licences which will allow all interested  and qualified parties, including CUC,  to submit bids to fill the Company’s  firm capacity requirement.  CUC submitted its 2012 - 2016  CIP, totalling approximately $192.0  million, during the fourth quarter of  2011 for ERA approval. $131.0 million  of the submission is proposed non- generation installation expenditures.  Generation needs are subject to a  competitive bid process as described  above. The 2012 - 2016 CIP has been  prepared in-line with the Certificate  of Need that was filed with the ERA in  November 2011. ERA approval of the  2012 - 2016 CIP is expected during  the first three months of 2012. We also conducted a competitive  bidding process to fill 13 MW of  non-firm renewable energy capacity.  There are currently no viable  renewable energy sources in Grand  Cayman which meet CUC’s reliability  requirements for firm capacity;  however, CUC expects that there  are third parties that can build and  maintain renewable energy plants on  the Island and sell energy to CUC at a  more competitive price than diesel. There have been numerous  responses to the August 2011  solicitation and the Company is now  in the process of analyzing all of the  proposals in an effort to select those  offers which meet all of our criteria 