Income tax recovery Non-controlling interests Other Comprehensive Income Income tax recovery increased $4 million for 2012 compared with the prior year primarily due to the impact of higher tax rates on certain 2012 losses of U.S. operations and the impairment of North East U.S. plants, and lower pre-tax income compared with 2011. For 2012, approximately 32% (2011 – 49%) of CPLP’s net income was attributable to EPCOR which is reported as net income attributable to non-controlling interests by the Company. Net income attributable to non-controlling interests also included the Genesee coal mine partner’s share of the consolidated coal costs. EPCOR’s April 5, 2012 exchange of exchangeable common limited partnership units for common shares of Capital Power reduced its interest in CPLP to 29% from 39% which will reduce the proportion of net income attributable to non-controlling interests reported by the Company in future periods. See Significant Events. For 2011, approximately 29% of CPILP’s net income was included in CPLP’s income with the remaining 71% attributable to non-controlling interests. Therefore, the net income attributable to non-controlling interests in CPLP included approximately 14% (49% of 29%) of CPILP net income for 2011. There are no comparable figures for 2012 because the Company disposed of its interest in CPILP in November 2011. ($ millions) Year ended December 31 2012 2011 Other comprehensive income Before tax After tax Before tax After tax Net unrealized gains (losses) on derivatives designated as cash flow hedges 66 54 (118) (100) Net realized (gains )losses and ineffective portion of unrealized (gains) losses on cash flow hedges reclassified to revenues and/or energy purchases and fuel (14) (12) 55 47 52 42 (63) (53) Unrealized gains (losses) on available-for-sale financial assets - - (2) (1) Unrealized actuarial gains (losses) related to Company/s defined benefit pension plans (8) (6) (7) (5) Unrealized foreign exchange gains (losses) on the translation of foreign operations (10) (10) 39 39 Losses realized in net income on disposal of CPILP - - 31 21 34 26 (2) 1 Income taxes on above items (8) n/a 3 n/a 26 26 1 1 Other comprehensive income includes fair value adjustments on financial instruments held by the Company to hedge market risks and which meet the requirements of hedges for accounting purposes. To the extent that such hedges are ineffective, any related gains or losses are recognized in net income. Capital Power Corporation Management’s Discussion and Analysis 2012 37