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accrued benefit liability of $0.1 million (December 31, 2010: $0.1 million). 

## Property, Plant and Equipment Depreciation 

Depreciation, by its very nature is an estimate based primarily on the estimated useful life of the asset. Estimated useful lives are based on current facts and historical information and take into consideration the anticipated physical life of the assets. As at December 31, 2011, the net book value of the Company’s PP&E was $369.4 million compared to $352.5 million as at December 31, 2010, increasing as a result of the Company’s generation and T&D capital expenditures. Depreciation expense for Fiscal 2011 was $20.6 million and $20.0 million for Fiscal 2010. Due to the value of the Company’s PP&E, changes in depreciation rates can have a significant impact on the Company’s depreciation expense. 

## Selected Annual Financial Information 

The table “Selected Annual Financial Information” shows the Annual Financial Information for the financial years ended December 31, 2011, 2010 and 2009. 

## Quarterly Results 

## 2011 Fourth Quarter Results 

Net earnings for the three months ended December 31, 2011 (“Fourth Quarter 2011”) were $5.1 million, a 9% or $0.4 million increase when compared to $4.7 million for the three months ended December 31, 2010 (“Fourth Quarter 2010”). Operating Income for the Fourth Quarter 2011 decreased when compared to Fourth Quarter 2010 due to increased G&A and Depreciation costs partially offset by increased Electricity Sales. This change in Operating Income was offset by a decrease in Finance Charges and an increase in Other Income resulting in an overall increase in earnings quarter over quarter. 

Kilowatt-hour sales for the Fourth Quarter 2011 increased 4% to 132.6 million in comparison to 127.8 million for the Fourth Quarter 2010. Sales were positively impacted by warmer weather conditions that affected customer air conditioning usage. The average temperature for the Fourth Quarter 2011 was 1.5 degrees Fahrenheit higher than the average temperature experienced for the Fourth Quarter 2010. 

Total operating expenses for the Fourth Quarter 2011 increased 25% to $51.7 million from $41.4 million for the Fourth Quarter 2010. Total 

operating expenses for Fiscal 2011 increased 25% to $193.1 million from $154.2 million for Fiscal 2010. The main contributing factor to the increase in operating expenses was higher power generation expenses which were comprised predominantly of fuel costs. 

Cash flow provided by operations, after working capital adjustments, for the Fourth Quarter 2011, was $9.8 million an increase of $1.5 million when compared to $8.3 million for the Fourth Quarter 2010. This increase was primarily due to increased earnings adjusted for increased depreciation. Cash used in investing activities totalled $11.0 million for the Fourth Quarter 2011, an increase of $5.5 million from $5.5 million for the Fourth Quarter 2010. This increase is due to increased capital related expenditures. Cash utilised in financing activities totalled $1.5 million for the Fourth Quarter 2011, a decrease of $2.9 million from $4.4 million used in financing activities for the Fourth Quarter 2010. The Company borrowed $6.0 million in short-term debt during the Fourth Quarter 2011. 

Capital expenditures for the Fourth Quarter 2011 were $10.8 million, a $5.3 million, or 96% increase from $5.5 million in capital expenditures for the Fourth Quarter 2010. 

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