Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis 2012 Fourth Quarter Operating Results  For the three months ended December 31, 2012, Liberty Utilities (West)’s revenue totalled U.S. $28.6 million as  compared to U.S. $29.7 million during the same period in 2011, a decrease of U.S. $1.1 million. For the three months ended December 31, 2012, Liberty Utilities (West)’s revenue from utility electricity sales  totalled U.S. $19.5 million as compared to U.S. $20.8 million during the same period in 2011, a decrease of U.S.  $1.3 million or 6%. Revenue decreased U.S. $0.9 million due to decreased customer demand and decreased  U.S. $0.4 million due to decreased weighted average electricity and general rates as compared to the same  period in 2011. The purchase of electricity by Liberty Utilities (West) is a significant revenue driver and  component of operating expenses but these costs are effectively passed through to its customers. As a result,  Liberty Utilities (West) compares ‘net utility electricity sales’ (utility electricity sales revenue less electricity  purchases) as a more appropriate measure of the division’s results. For the three months ended December 31,  2012, net utility electricity sales for Liberty Utilities (West) totalled U.S. $8.0 million, as compared to U.S. $7.6  million during the same period in 2011, an increase of U.S. $0.4 million or 5%.  For the three months ended December 31, 2012, revenue from wastewater treatment and water distribution  totalled U.S. $9.1 million, as compared to U.S. $8.9 million during the same period in 2011, an increase of U.S.  $0.2 million or 2%.  For the three months ended December 31, 2012, fuel and purchased power costs for Liberty Utilities (West)  totalled U.S $11.5 million, as compared with U.S. $13.2 million in the same period in 2011. The decrease of  U.S. $1.7 million was a result of a 4% decrease in the volume of electricity used and a 9% decrease in average  cost of electricity as compared to the same period in 2011. For the three months ended December 31, 2012, operating expenses totalled U.S. $9.3 million, as compared to  U.S. $9.9 million during the same period in 2011, a decrease of U.S. $0.6 million or 6%. Operating expenses  decreased due to reduced utilities and consumable expenses as compared to the same period in 2011. For the three months ended December 31, 2012, Liberty Utilities (West)’s operating profit was U.S. $8.9 million  as compared to U.S. $6.8 million in the same period in 2011, an increase of U.S. $2.1 million or 31%. Measured in Canadian dollars, for the three months ended December 31, 2012, Liberty Utilities (West)’s  revenue from utility electricity sales totalled $19.3 million, as compared to $21.3 million during the same period  in 2011. For the three months ended December 31, 2012, net utility electricity sales for Liberty Utilities (West)  totalled $7.9 million, as compared to $7.8 million during the same period in 2011. Measured in Canadian dollars, for the three months ended December 31, 2012, electricity purchases for Liberty  Utilities (West) totalled $11.4 million, as compared to $13.5 million in the same period in 2011. Measured in Canadian dollars, for the three months ended December 31, 2012, Liberty Utilities (West)’s  revenue from water treatment and wastewater distribution totalled $9.1 million, which was consistent with the  same period in 2011.  Measured in Canadian dollars, for the three months ended December 31, 2012, operating expenses totalled  $9.4 million, as compared to $10.1 million in the same period in 2011. 2012 Annual Report 36 Three months ended December 31 Three months ended December 31  2012  2011  2012  2011  U.S. $ U.S. $ Can $ Can $ (millions) (millions) (millions) (millions) Revenue Utility electricity sales and distribution * $ 19.5 $ 20.8 $ 19.3 $ 21.3 Wastewater treatment  4.7 4.5 4.7 4.6 Water distribution  4.4 4.4 4.4 4.5 Other Revenue  - -  -  - $ 28.6 $ 29.7 $ 28.4 $ 30.4 Less: Cost of Sales – Electricity (11.5) (13.2) (11.4) (13.5) $ 17.1 $ 16.5 $ 17.0  $ 16.9 Expenses Operating expenses  (9.3) (9.9) (9.4) (10.1) Other income 1.1 0.2 1.1 0.2 Division operating profit*  $  8.9  $ 6.8 $ 8.7  $ 7.0