Caribbean Utilities Company, Ltd.  2011  Annual Report Notes to Financial Statements 50 (Expressed in thousands of United States dollars) The Company’s financial position could be adversely affected if it failed to arrange sufficient and cost-effective financing to fund, among other things, capital expenditures and the repayment of maturing debt. The ability to arrange such financing is subject to numerous factors, including the results of operations and financial position of the Company, conditions in the capital and bank credit markets, ratings assigned by ratings agencies and general economic conditions. These factors are mitigated by the legal requirement per the Licences which requires rates be set to enable the Company to achieve and maintain a sound credit rating in the financial markets of the world. Liquidity Risk: Interest Rate Risk: 17. Insurance Coverage Long-term debt is issued at fixed interest rates, thereby minimising cash flow and interest rate exposure. The Company is primarily exposed to risks associated with fluctuating interest rates on its short-term borrowings and other variable interest credit facilities. The current amount of short-term borrowings totals $6.0 million. The Company renewed its insurance policy as at July 1, 2011 for one year under similar terms and coverage as in prior years. Insurance terms and coverage include $100 million in property and machinery breakdown insurance and business interruption insurance per annum with a 24-month indemnity period and a waiting period on Non-Named Wind, Quake and Flood of 60 days. Any named Wind, Quake and Flood deductible has a 45-day waiting period. All T&D assets outside of 1,000 feet from the boundaries of the main Power plant and substations are excluded, as the cost of such coverage is not considered economical. There is a single event cap of $100 million. Each “loss occurrence” is subject to a deductible of $1.0 million, except for windstorm (including hurricane) and earth movement for which the deductible is 2% of the value of each location that suffers loss, but subject to a minimum deductible of $1.0 million and maximum deductible of $4.0 million for all interests combined. In accordance with the Licences, when an asset is impaired or disposed of, within the original estimated useful life, the cost of the asset is reduced and the net book value is charged to accumulated depreciation. This treatment is in accordance with rate regulated accounting and differs from the GAAP treatment of a loss being recognised on the statement of earnings. The amount charged to accumulated depreciation is net of any proceeds receiving in conjunction with the disposal of the asset. Insurance proceeds are included within the criteria. In addition to the coverage discussed above, the Company has also purchased an excess layer of an additional $100.0 million limit on property and business interruption (excluding windstorm, earth movement and flood). The Company’s insurance policy includes business interruption which covers losses resulting from the necessary interruption of business caused by direct physical loss or damage to CUC’s covered property and loss of revenues resulting from damage to customers’ property. ($ millions) Total  2011  2012 - 2013  2014 - 2015  2016 onward  Bank overdraft  1.1  1.1  -  -  - Accounts payable and accrued expenses  31.6  31.6  -  -  - Consumer’s deposits and advances for construction  4.4  4.4  -  -  - Short-term debt  6.0  6.0  Letter of credit  6.1  6.1  -  -  - Total debt  204.0  15.5  36.5  28.0  124.0 Long-term debt interest  85.8  11.9  20.5  16.8  36.6 Total  339.0  76.6  57.0  44.8  160.6  Liquidity Risks