Caribbean Utilities Company, Ltd.  2011  Annual Report Notes to Financial Statements 40 (Expressed in thousands of United States dollars) 6.  Regulatory Assets and Liabilities Regulatory Assets and Liabilities ($ thousands) Description  As at As at December 31, 2011 December 31, 2010 Regulatory assets  Fuel tracker account (a)  24,369 21,192 Derivative contract (b)  468  - Regulatory assets  Miscellaneous regulatory assets (c)  440 491 Regulatory assets Government and Regulatory Tracker account (d)  482  - Regulatory assets  Total  25,759 21,683 Regulatory liabilities  Government and Regulatory Tracker account (d)  -  (670) Regulatory liabilities  Miscellaneous regulatory liabilities (e)  (281)  - Regulatory liabilities  Total  (281)  (670) (a) Fuel Tracker Account - The 2008 T&D Licence established a fuel tracker mechanism to ensure the Company and the consumers neither gain nor lose from the pass through of fuel costs. The purpose of the fuel tracker account is to accumulate actual fuel costs incurred less fuel factor revenues collected. This account represents deferred accumulated fuel costs to be recovered from or reimbursed to the consumers. The receivable or payable value represents a regulatory asset or liability. The net position of the fuel tracker accounts fluctuates monthly and is affected by fuel prices and electricity consumption. In the absence of rate regulation and governmental controls the balance in the fuel tracker account would have been expensed as opposed to deferred for two months to allow for regulatory review and earnings for the year ended December 31, 2011 would have been $3.2 million lower. (b) Derivative Contract - The Company’s purpose of hedging is to reduce the impact of volatility in the Fuel Cost Charge paid by the Company’s customers in the face of price volatility for the fuel that the Company must purchase in order to provide electric service. This account represents the fair value adjustments for the call options. In the absence of rate regulation and governmental controls the unrealised loss for the derivative contract line item would have been expensed and earnings for the year ended December 31, 2011 would have been $0.5 million lower (see Note 16). (c)  Miscellaneous regulatory assets represent costs incurred by the Company, other than fuel and the specifically itemised licence and regulatory fees, to be recovered through the Company’s base rates on terms as agreed with the ERA. In the absence of rate regulation and governmental controls the balance in the miscellaneous regulatory assets would have been recognised in earnings and earnings for the year ended December 31, 2011 would have been $0.05 million higher. (d) Government and Regulatory Tracker Account - A licence fee of 1%, payable to the Government, is charged on gross revenues, then prorated and applied only to customer billings with consumption over 1,000 kWh per month as a pass-through charge. In addition to the licence fee, a regulatory fee of ½ of 1% is charged on gross revenues, then prorated and applied only to customer billings with consumption over 1,000 kWh per month. The tracker account is the actual fee incurred less the amount of funds received from consumers. The per kWh charge is then adjusted quarterly for the balance of this account. There is no impact on earnings in the absence of rate regulation. (e) Miscellaneous regulatory liabilities represent costs owed by the Company, other than licence and regulatory fees, to be recovered through the Company’s base rates on terms as agreed with the ERA. In the absence of rate regulation and governmental controls the balance in the miscellaneous regulatory liabilities would have been recognised in earnings and earnings for the year ended December 31, 2011 would have been $0.3 million higher.