Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis Cornwall Solar  In the first quarter of 2012, APCo acquired all of the issued and outstanding shares of Cornwall Solar Inc. (“Cornwall Solar”), which owns the rights to develop a 10 MWac solar project located near Cornwall, Ontario (the  “Cornwall Project”). In addition to the Cornwall Project, APCo has acquired an option to acquire ten additional  Ontario based solar projects. APCo has submitted FIT applications for an additional 100MWac.  The Cornwall Project has been granted an Ontario FIT contract by the OPA, with a 20 year term and a rate of  $443/MW-hr, resulting in expected initial annual revenues of approximately $6.2 million. The Cornwall Project  contemplates the use of a ground-mounted PV array system, installed on two parcels of leased land totalling  approximately 138 acres.  The project received its Renewable Energy Approval on January 15$^{th}$, 2013, and construction of the project is  expected to begin in the second quarter of 2013. The project’s environmental assessment has now been  deemed “administratively complete”. Commercial operation is estimated in late 2013 with expected annual  generation of approximately 13,400 MW-hrs.  Total capital cost of the project is targeted at approximately $45 million, including the consideration to be paid  for the acquisition of the project. Funding for the project will be arranged and announced when all required  permitting and all other pre-construction conditions have been satisfied.  The APCo Renewable Energy Division is expected to perform based on long-term average resource conditions  for both wind and hydrology in the first quarter of 2013. In October 2012, APCo’s hydroelectric generating  facility at Long Sault experienced an unplanned shut down. The facility is expected to return to full service in the  second quarter of 2013. New York and New England facilities are expected to perform at similar levels as the  previous year. The acquisitions of an interest in the Sandy Ridge Wind Facility (on July 1, 2012), the Minonk and Senate Wind Facilities (on December 10, 2012), and the Shady Oaks Wind Facility (on January 1, 2013)  are recently acquired wind powered generating stations that will generate additional revenue in 2013. Unlike 2012, there are no planned outages in 2013 for the Thermal Energy Division. After installation of the new  Solar Titan combustion gas turbine in the third quarter of 2012, the Windsor Locks facility is better able to match  production with demand from its industrial host under a PPA, limiting its exposure to the more volatile market  power pricing in New England. In October 2012, the EFW facility received approval from the Ontario Ministry of  Environment for an amendment to its environmental permits allowing the EFW facility to accept municipal,  industrial, commercial and institutional waste from anywhere in Ontario. APCo has now entered into several  waste supply agreements to ensure continued operation of the facility following the end of the Region of Peel  waste supply contract in 2012.  Liberty Utilities reports the performance of its utility operations by geographic region – West, Central, and East The Liberty Utilities (West) region is currently comprised of regulated electrical and water distribution and  wastewater collection utility systems. The regulated electrical distribution utility serves approximately 46,955  active electric connections in the State of California. The Liberty Utilities (West) region’s regulated water and  Liberty Utilities is a national diversified rate regulated utility providing electricity, natural gas, water distribution  and wastewater collection utility services. Liberty Utilities’ strategy is to grow its business organically and  through business development activities while using prudent acquisition criteria. The business will focus on  driving maximum results by building constructive regulatory and customer relationships, and enhancing  community connections.  Utility System Type  December 31, 2012  December 31, 2011  Assets  Connections  Assets  Connections  U.S. $ U.S. $ (millions) (millions) Electricity $ 254.3 90,205 $ 155.8 46,906 Natural Gas  394.8  169,700  -  - Water and Wastewater  205.4  78,050  203.4  76,100  $ 854.5 337,955 $ 359.2 123,006 32 2012 Annual Report APCo Outlook 