Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis For the year ended December 31, 2012, Liberty Utilities (Central)’s revenue totalled U.S. $35.1 million as  compared to U.S. $9.0 million during the same period in 2011, an increase of U.S. $26.1 million. The revenue  increase can be primarily attributed to the addition of the natural gas distribution assets on August 1, 2012.  From the date of acquisition to December 31, 2012, Liberty Utilities (Central)’s revenue from natural gas sales  and distribution totalled U.S. $26.0 million. The purchase of natural gas by Liberty Utilities (Central) is a  significant revenue driver and component of operating expenses but these costs are effectively passed through  to its customers. As a result, the division compares ‘net utility natural gas sales and distribution revenue’ (utility  natural gas sales and distribution revenue less natural gas purchases) as a more appropriate measure of the  division’s results. From the date of acquisition to December 31, 2012, net utility natural gas sales and  distribution revenue for Liberty Utilities (West) totalled U.S. $12.2 million.  From the date of acquisition to December 31, 2012, natural gas purchases for Liberty Utilities (Central) totalled  U.S $13.8 million. For the year ended December 31, 2012, revenue from wastewater treatment and water distribution totalled U.S.  $9.1 million, as compared to U.S. $9.0 million during the same period in 2011, an increase of U.S. $0.1 million  or 1%.  For the year ended December 31, 2012, operating expenses, excluding natural gas purchases, totalled U.S.  $13.1 million, as compared to U.S. $4.3 million during the same period in 2011. The increase in operating  expenses can be mostly attributed to the addition of the natural gas distribution assets on August 1, 2012.  For the year ended December 31, 2012, Liberty Utilities (Central)’s operating profit was U.S. $8.2 million as  compared to U.S. $4.7 million in the same period in 2011, an increase of U.S. $3.5 million or 74%. Measured in Canadian dollars, from the date of acquisition to December 31, 2012, Liberty Utilities (Central)’s  revenue from natural gas sales and distribution totalled $25.8 million. From the date of acquisition to December  31, 2012, net utility natural gas sales and distribution revenue for Liberty Utilities (Central) totalled $12.2 million.  Measured in Canadian dollars, from the date of acquisition to December 31, 2012, natural gas purchases for  Liberty Utilities (Central) totalled $13.6 million. Measured in Canadian dollars, for the year ended December 31, 2012, Liberty Utilities (Central)’s revenue from  water treatment and wastewater distribution totalled $9.1 million, as compared to $8.8 million during the same  period in 2011. Liberty Utilities (Central) reported a foreign exchange impact on revenue from water treatment  and wastewater distribution of $0.2 million in the twelve months ended December 31, 2012 as a result of the  stronger U.S. dollar as compared to the same period in 2011. Measured in Canadian dollars, for the year ended December 31, 2012, operating expenses, excluding natural  gas purchases totalled $13.1 million, as compared to $4.3 million during the same period in 2011. Measured in Canadian dollars, for the year ended December 31, 2012, Liberty Utilities (Central)’s operating  profit totalled $8.2 million as compared to $4.5 million in the same period in 2011.  For the three months ended December 31, 2012, Liberty Utilities (Central) natural gas distribution sales totalled  2,001,050 MMBTU.  During the three months ended December 31, 2012, Liberty Utilities (Central) provided approximately 100  million U.S. gallons of water to its customers, and treated approximately 95 million U.S. gallons of wastewater. Three months ended December 31  2012  2011  Customer Usage (MMBTU) Residential  1,160,000 - Commercial   709,750 - Industrial  131,300  - Total Customer Usage (MMBTU)  2,001,050 - Gallons Provided  Wastewater treated (millions of gallons)   95   90   Water sold (millions of gallons)   100   75  Total Gallons Provided   195   165  2012 Annual Report 38