Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis For the year ended December 31, 2012, operating expenses totalled U.S. $35.7 million, as compared to U.S.  $34.8 million during the same period in 2011. The increase in operating expenses was due to increases in  customer care expenses, increases in general and administrative expenses, and increases in bad debt expense  relating to uncollectible customer accounts receivable as compared to the same period in 2011.  For the year ended December 31, 2012, Liberty Utilities (West)’s operating profit was U.S. $31.9 million as  compared to U.S. $33.4 million in the same period in 2011, a decrease of U.S. $1.5 million or 4%. Measured in Canadian dollars, for the year ended December 31, 2012, Liberty Utilities (West)’s revenue from  utility electricity sales totalled $71.7 million, as compared to $77.4 million during the same period in 2011. For  the year ended December 31, 2012, net utility electricity sales for Liberty Utilities (West) totalled $27.8 million,  as compared to $30.9 million during the same period in 2011. Measured in Canadian dollars, for the year ended December 31, 2012, electricity purchases for Liberty Utilities  (West) totalled $43.9 million, as compared to $46.5 million in the same period in 2011. Measured in Canadian dollars, for the year ended December 31, 2012, Liberty Utilities (West)’s revenue from  water treatment and wastewater distribution totalled $37.3 million, as compared to $36.1 million during the same  period in 2011. Measured in Canadian dollars, for the year ended December 31, 2012, operating expenses totalled $35.6  million, as compared to $34.5 million during the same period in 2011.  Measured in Canadian dollars, for the year ended December 31, 2012, Liberty Utilities (West)’s operating profit  totalled $31.8 million as compared to $33.0 million during the same period in 2011. For the three months ended December 31, 2012, Liberty Utilities (West) electricity usage totalled 154.0 GW-hrs,  as compared to 160.2 GW-hrs for the same period in 2011, a decrease of 6.2 GW-hrs or 4%. During the quarter ended December 31, 2012, Liberty Utilities (West) provided approximately 1.25 billion U.S.  gallons of water to its customers, treated approximately 425 million U.S. gallons of wastewater and sold  approximately 113 million U.S. gallons of treated effluent. Three months ended December 31  2012  2011  Customer Usage (GW-hrs) Residential  72.2  69.4  Commercial – Small   42.3  50.2  Commercial – Large   39.2  40.4  Public Street and Highway Lighting   0.3  0.2  Total Customer Usage (GW-hrs)   154.0  160.2  Gallons Provided  Wastewater treated (millions of gallons)   425  410   Water sold (millions of gallons)   1,255  1,225  Total Gallons Provided   1,680  1,635 2012 Annual Report 35