19 Caribbean Utilities Company, Ltd.  2011  Annual Report Management’s Discussion and Analysis Business Risks Off Balance-Sheet Arrangements Capital Expenditures Operational Risks 44.6 28.0 42.2 Capital Expenditures ($ millions) 2010 2011 2009 TP 2008 2008 21.2 40.6 Capital Expenditures ($ millions) Twelve Twelve  Change  Change % months ended months ended December 31, 2011 December 31, 2010 Transmission  1.4 1.5  (0.1)  (7%) Distribution  14.1 10.6  3.5  33% Generation  24.2 8.4  15.8  188% Other  0.9  0.7  0.2  29% Total  40.6 21.2  19.4  92%  The following is a summary of the  Company’s significant business risks: Operational risks are those risks  normally inherent in the operation  of generating, transmission and  distribution facilities. The Company’s  facilities are subject to the risk of  equipment failure due to deterioration  of the asset from use or age, latent  defects and design or operator  error, among other things. These  risks could lead to longer-than- forecast equipment downtimes for  maintenance and repair, disruptions  Disclosure is required of all  off-balance sheet arrangements  such as transactions, agreements  or contractual arrangements with  unconsolidated entities, structured  finance entities, special purpose  entities or variable interest entities  that are reasonably likely to materially  effect liquidity of or the availability of,  or requirements for, capital resources.  The Company has no such off-balance  sheet arrangements as at December  31, 2011. Capital expenditures for Fiscal 2011  were $40.6 million, a $19.4 million,  or 92% increase from $21.2 million in  capital expenditures for the previous  year. The capital expenditures for  Fiscal 2011 primarily relate to: The above amounts are inclusive of accruals The above amounts are inclusive of accruals » AFUDC of $3.7 million was capitalised in Fiscal 2011. » Inventory that has met the criteria of Property, Plant and Equipment (“PP&E”) in accordance with Canadian Institute of Chartered Accountants (“CICA”) 3031 has been added to work in  progress and is included in Capital Expenditure. For Fiscal 2011 $0.04 million was allocated to Transmission and $0.41 million was allocated to Distribution, totalling an increase of $0.45 million reallocated from inventories to capital work in progress. As at December 31, 2011, engine spares totalling $2.0 million were  reclassified to PP&E from inventory  on the balance sheet as they are held for the development, construction, maintenance and repair of other PP&E. » Generation replacement cost - $7.6 million » Other Power Plant building upgrades - $0.9 million » Advanced Metering Infrastructure - $1.1 million  » Generating Units 1 and 2 piston liner upgrade - $2.7 million » Generating Unit 1 refurbishment - $1.0 million. This cost is being funded by insurance proceeds net of the deductible. » Generating Unit 33 refurbishment - $6.2 million. This cost is being funded by insurance proceeds net of the deductible. » Distribution system extension and upgrades - $10.0 million.