Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis Measured in Canadian dollars, from the date of acquisition to December 31, 2012, Liberty Utilities (East)’s  electricity purchases totalled $24.3 million, and natural gas purchases totalled $23.8 million.  Measured in Canadian dollars, from the date of acquisition to December 31, 2012, Liberty Utilities (East)’s  operating expenses excluding electricity and natural gas purchases totalled $30.2 million.  Measured in Canadian dollars, from the date of acquisition to December 31, 2012, Liberty Utilities (East)’s  operating profit totalled $8.8 million.  Three months ended December 31, 2012  2011  Customer Usage (GW-hrs)  Residential 64.1 - Commercial and Industrial  148.0  -  Total Customer Usage (GW-hrs) 212.1 - Customer Usage (MMBTU)  Residential  1,206,900 - Commercial and Industrial   2,059,900  - Total Customer Usage (MMBTU)  3,266,800 - For the three months ended December 31, 2012, Liberty Utilities (East)’s electricity usage totalled 212.1 GW-hrs  and natural gas usage totalled 3,266,800 MMBTU.  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  $ 17.7 $ - $ 17.6 $ - Utility natural gas sales and distribution  38.1 - 37.7 - Other Revenue  - - - - 55.8 - 55.3 - Less: Cost of Sales – Electricity (12.3) - (12.2) - Cost of Sales – Natural Gas 1 (21.9) - (21.7) - $ 21.6 $ - $ 21.4 $ - Expenses Operating expenses  (16.5) - (16.3) - Other income  0.4 0.4 Division operating profit $^{1}$ $ 5.5 $ - $ 5.5 $ - $^{1}$ Natural Gas costs are shown net of U.S. $1.7 million regulatory authorized deferral related to an under recovery of actual gas costs.  2012 Fourth Quarter Operating Results  For the three months ended December 31, 2012, Liberty Utilities (East)’s revenue totalled U.S. $55.8 million. For the three months ended December 31, 2012, Liberty Utilities (East)’s revenue from utility electricity sales  totalled U.S. $17.7 million. The cost of electricity is passed through to Liberty Utilities (East)’s customers. As a  result, the division compares ‘net utility electricity sales’ (revenue from electricity sales less fuel and purchased  power costs) as a more appropriate measure of the division’s results. For the three months ended December  31, 2012, net electricity utility sales for Liberty Utilities (East) totalled U.S. $5.4 million.  For the three months ended December 31, 2012, Liberty Utilities (East)’s revenue from natural gas sales and  distribution totalled U.S. $38.1 million. The cost of natural gas by Liberty Utilities (East) is passed through to  Liberty Utilities (East)’s 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. For the three months ended December 31, 2012, net utility natural  gas sales and distribution revenue for Liberty Utilities (East) totalled U.S. $16.2 million.  For the three months ended December 31, 2012, electricity purchases for Liberty Utilities (East) totalled U.S.  $12.3 million, and natural gas purchases totalled U.S. $21.9 million.  For the three months ended December 31, 2012, operating expenses, excluding electricity and natural gas  purchases, totalled U.S. $16.5 million. 2012 Annual Report 42