17 Caribbean Utilities Company, Ltd.  2011  Annual Report Management’s Discussion and Analysis expenses and were included within  Accounts Receivable on the Balance  Sheet. - 10.1. The contract contains an  automatic renewal clause for the years  2010 through to 2012. The Company  has renewed the contract until May  2012. ongoing access to capital to build and  maintain the electrical system for the  community it serves.  To help ensure access to capital,  the Company targets a long- term capital structure containing  approximately 45% equity, including  preference shares, and 55% debt. The  Company’s objective is to maintain  investment-grade credit ratings. The Company sets the amount  of capital in proportion to risk. The  debt to equity ratio is managed  through various methods such as the  rights offering that occurred in 2008  and through the Company’s Share  Purchase Plans. Certain of the Company’s long- term debt obligations have covenants  The Company’s principal activity  of generation, transmission and  distribution of electricity in Grand  Cayman, requires CUC to have  The table  “Significant Changes  in Balance Sheets”  is a summary of  significant changes to the Company’s  balance sheet from December 31,  2010 to December 31, 2011. The contractual obligations of the  Company over the next five years and  periods thereafter, as at December  31, 2011, are outlined in the table  “Contractual Obligations” . The Company has a primary fuel  supply contract with Esso Cayman  Limited (“Esso”) and is committed  to purchase 80% of the Company’s  diesel fuel requirements for its  generating plant from Esso. The  approximate quantities per the  contract on an annual basis are, by  fiscal year in millions of IGs: 2012  Contractual Obligations Financial Position Capital Resources Significant Changes in Balance Sheets (from December 31, 2010 to December 31, 2011) Balance Sheet Account Increase/  Explanation (Decrease) ($ millions) Cash and cash equivalents  (1.9)  Decrease due to cash provided by operating activities of $37.2 million and offset by cash used in financing activities of $3.7 million and by cash used in investing activities of $35.4 million. Accounts receivable  4.0  Increase due to a billing adjustment in 2011 for two commercial customers and higher fuel costs. Other receivable - Insurance  (1.8)  Decrease due to funds received in regards to insurance receivable in relation to over speed failure on a 16 MW unit. Regulatory assets  4.1  In accordance with the regulatory environment the fuel tracker account is classified as a regulatory asset. This increase represents fuel costs incurred by the Company that are recoverable from the customer.  Property, plant and  17.3  Net increase is comprised of capital expenditures of (1) $40.6 million; (2) depreciation and equipment  expense of $20.6 million and (3) $2.7 of insurance and asset sale proceeds. Accounts payable and  6.7  Change mainly attributable to increase in fuel costs. accrued expenses  Short-term debt  (11.0)  Decrease is a result of repayment of $17.0 million for the RBC Capital Expenditure line of credit offset by a drawdown of $6.0 million. Long-term debt  24.2  Increase due to $40 million received in June and July 2011 offset by principal repayments made in June and December and portions allocated to current debt. Share premium  1.5  The Company issued 159,824 shares through its share purchase plans.