Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis Overview and Business Strategy  Algonquin Power Co.  Liberty Utilities Co.  2012 Annual Report 15 The Liberty Utilities (Central) region is comprised of regulated natural gas and water distribution and wastewater  collection utility systems. The regulated natural gas utilities serve approximately 82,050 active natural gas  connections located in the States of Missouri, Illinois, and Iowa and the regulated water distribution and  The Liberty Utilities (West) region is comprised of regulated electrical and water distribution and wastewater  collection utility systems. The regulated electrical distribution utility and related generation assets (the “Calpeco  Electric Utility”) serve approximately 46,955 active electric connections in the State of California. Liberty Utilities  (West) region’s regulated water and wastewater utility systems serve approximately 66,550 water and  wastewater connections located in the State of Arizona. The utility systems owned by Liberty Utilities operate under rate regulation, generally overseen by the public  utility commissions of the states in which they operate. Liberty Utilities reports the performance of its utility  operations through three regions – West, Central, and East. Liberty Utilities is a diversified rate regulated utility providing electricity, natural gas, water distribution and  wastewater collection utility services. Liberty Utilities provides safe, high quality and reliable services to its  ratepayers through its nationwide portfolio of utility systems and delivers stable and predictable earnings to  APUC. In addition to encouraging and supporting organic growth within its service territories, Liberty Utilities  delivers continued growth in earnings through accretive acquisition of additional utility systems. APCo owns or has interests in thermal energy facilities with approximately 341 MW of installed generating  capacity. Approximately 95% of the electrical output from the owned thermal facilities is sold pursuant to long  term Power purchase agreements (“PPA”) with major utilities and which have a weighted average remaining  contract life of 7 years. APCo owns or has interests in hydroelectric facilities with a combined generating capacity of approximately 170  MW. APCo also owns or has interests in wind powered generating stations with a combined generating  capacity of 650 MW. Approximately 84% of the electrical output from the hydroelectric and wind generating  facilities is sold pursuant to long term contractual arrangements which have a weighted average remaining  contract life of 15 years. APCo generates and sells electrical energy produced by its diverse portfolio of non-regulated renewable power  generation and clean energy power generation facilities located across North America. APCo seeks to deliver  continuing growth through development of new greenfield power generation projects and accretive acquisitions  of additional electrical energy generation facilities. APUC conducts its business primarily through two autonomous subsidiaries: Algonquin Power Co. (“APCo”)  which owns and operates a diversified portfolio of non-regulated renewable and thermal electric generation  utility assets; and Liberty Utilities Co. (“Liberty Utilities”), a diversified rate regulated utility which owns and  operates a portfolio of North American electric, natural gas and water distribution utility systems. APUC’s current quarterly dividend to shareholders is $0.0775 per share or $0.31 per share per annum. APUC  believes its annual dividend payout allows for both an immediate return on investment for shareholders and  retention of sufficient cash within APUC to fund growth opportunities and mitigate the impact of fluctuations in  foreign exchange rates. Further increases in the level of dividends paid by APUC are at the discretion of the  APUC Board of Directors (the “Board”) with dividend levels being reviewed periodically by the Board in the  context of cash available for distribution and earnings together with an assessment of the growth prospects  available to APUC. APUC strives to achieve its results in the context of a moderate risk profile consistent with  top-quartile North American power and utility operations.  APUC is incorporated under the  Canada Business Corporations Act . APUC owns and operates a diversified  portfolio of regulated and non-regulated generation, distribution and transmission utility assets which deliver  predictable earnings and cash flows. APUC seeks to maximize total shareholder value through a quarterly  dividend augmented by share price appreciation arising from dividend growth supported by increasing per share  cash flows and earnings. APUC targets to deliver annualized per share earnings and cash flow growth of more  than 5%. 