11 Caribbean Utilities Company, Ltd.  2011  Annual Report Management’s Discussion and Analysis Operating Expenses  Power Generation Sales Sales and Customer Highlights Operating Revenues  Twelve Twelve  months ended months ended December 31, 2011 December 31, 2010 Customers (number) Residential  22,731 22,311 Commercial  3,905 3,840 Total Customers  26,636 26,151 Sales (in thousands kWh) Residential  258,765 262,545 Commercial  289,043 284,966 Other  6,174 6,240  Total sales  553,982 553,751 Revenues (in thousands of $) Residential  33,592 34,088 Commercial  35,596 35,077 Other (street light, etc.)  442 352 Fuel factor  148,469 110,579 Total operating revenues  218,099 180,096 Operating revenues increased 21%,  or $38.0 million, to $218.1 million  for Fiscal 2011 from $180.1 million  for Fiscal 2010. Operating revenues  are higher due to higher fuel factor  revenues in 2011 driven by higher fuel  costs. According to Government reports,  the number of work permit holders on  the Island has declined significantly  since 2009 (see  “The Economy” section for further details). This  has caused some rental properties  to remain vacant with an active  electricity account. Vacant residences  with active electricity accounts are  included within customer numbers,  however, these accounts result in  lower average electricity sales. Total customers as at December  31, 2011 were 26,636, an increase of  2% compared to 26,151 customers  as at December 31, 2010. An average  of 40 customers were connected per  month for Fiscal 2011 as compared  to an average of 58 customers per  month for Fiscal 2010. The Company  continues to see an increase in  customer numbers but also continues  to see a decline in the average  customer kWh consumption. Kilowatt-hour sales for Fiscal 2011  were 554.0 million, comparable  to 553.8 million for Fiscal 2010.  The average temperature for 2011  was 82.3 degrees Fahrenheit (“°F”)  compared to 81.9 °F for 2010. Fuel factor revenues for Fiscal  2011 totalled $148.5 million, a 34%  increase from the $110.6 million in  fuel factor revenues for Fiscal 2010. Fuel factor revenues increased due to  an increase in the cost of fuel (see the  “Power Generation”  section for further  details). The average Fuel Cost Charge  rate per kWh charged to consumers  for the twelve months ended  December 31, 2011 was $0.27, a 35%  increase from $0.20 per kWh for the  twelve months ended December 31,  2010. CUC passes through 100% of  fuel costs to consumers on a two- month lag basis without mark-up. The Company’s average price  per imperial gallon (“IG”) of fuel for  Fiscal 2011 increased to $4.63 from  $3.45 for Fiscal 2010. The Company’s  average price per IG of lubricating  Power generation costs for Fiscal  2011 increased $38.5 million, or 34%,  to $151.7 million when compared to  $113.2 million for Fiscal 2010. The  increase is mainly due to higher fuel  costs. Electricity sales revenue increased  by $0.1 million to $69.6 million in  Fiscal 2011 from $69.5 million for  Fiscal 2010. Electricity sales revenues  are higher mainly due to an increase  in kWh sales in the Commercial  category. Total operating expenses for Fiscal  2011 increased 25% to $193.1 million  from $154.2 million for Fiscal 2010. The major contributing factor to the  increase in operating expenses is  higher power generation expenses  which are comprised predominantly  of fuel costs. After the adjustment for dividends  on the Class B Preference Shares of  the Company, earnings on Class A  Ordinary Shares for Fiscal 2011 were  $19.5 million, or $0.68 per Class  A Ordinary Share, a $0.6 million  increase when compared to $18.9  million, or $0.67 per Class A Ordinary  Share, for Fiscal 2010. 