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1 Represents 100% of investment in the Calpeco Electric Utility 

## 2012 Annual Operating Results 

Liberty Utilities (West) has investments in water and wastewater distribution assets for regulatory purposes of U.S. $181.3 million in the state of Arizona and electricity assets for regulatory purposes of U.S. $165.9 million in the State of California as at December 31, 2012, as compared to U.S. $180.3 million and U.S. $155.8 million, respectively as at December 31, 2011. 

For the year ended December 31, 2012, Liberty Utilities (West)’s revenue totalled U.S. $109.2 million as compared to U.S. $113.5 million during the same period in 2011, a decrease of U.S. $4.3 million or 4%. 

For the year ended December 31, 2012, Liberty Utilities (West)’s revenue from utility electricity sales totalled U.S. $72.0 million as compared to U.S. $78.1 million during the same period in 2011, a decrease of U.S. $6.1 million or 8%. This decrease in revenues was primarily due to milder winter and spring weather in the first half of 2012, compared with the colder winter weather experienced in the same period a year ago. The decreased utility electricity sales were primarily a result of a U.S. $6.3 million decrease due to a decrease in customer demand and partially offset by an increase of U.S. $0.2 million due to increased 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 less fuel and purchased power costs) as a more appropriate measure of the division’s results. 

For the year ended December 31, 2012, net utility electricity sales revenues for Liberty Utilities (West) were U.S. $28.0 million, as compared to U.S. $31.2 million during the same period in 2011. Under the rate tariffs approved in November 2012, and commencing on January 1, 2013, the revenues earned by the Calpeco Electric Utility will not experience fluctuations related to variations in customer demand. 

For the year ended December 31, 2012, revenue from wastewater treatment totalled U.S. $18.7 million, as compared to U.S. $18.2 million during the same period in 2011, an increase of U.S. $0.5 million or 3%. 

Revenue from water distribution totalled U.S. $18.6 million, as compared to U.S. $18.3 million during the same period in 2011, an increase of U.S. $0.3 million or 2%. The twelve months of water distribution revenue was impacted by U.S. $0.1 million at the Litchfield Park (“LPSCo”) facility primarily due to the increased residential, commercial and industrial revenue and U.S. $0.2 million at the Sierra Vista facilities due to increase in connection counts and overall consumption, U.S. $0.1 million at all other Liberty Utilities (West) water utilities, offset by a $0.1 million decrease at the LPSCo facility primarily due to the decreased residential usage revenue. 

For the year ended December 31, 2012, fuel and purchased power costs for Liberty Utilities (West)’s electric utility totalled U.S $44.0 million, as compared with U.S. $46.9 million for the same period in 2011. The overall electricity purchase expense decrease of U.S. $2.9 million was primarily the result of a $3.8 million decrease in the volume of electricity purchased to meet customer demand, partially offset by a U.S. $0.9 million increase in weighted average electricity rates as compared to the same period in 2011. 

