During the year ended December 31, 2012, the Renewable Energy Division generated electricity equal to 91% of long-term projected average resources (wind and hydrology) as compared to 107% during the same period in 2011. For the year ended December 31, 2012, the new Texas region experienced resources higher than long- term averages resources, whereas the Quebec, Western, Maritimes, Manitoba, Saskatchewan regions and the new Illinois region experienced below long-term averages resources, with energy production consistent with resources between 1%-10% below long-term average resources. The Ontario and Pennsylvania regions experienced results between 23%-29% below long-term average resources. The Ontario region’s lower production was primarily due to an unplanned shutdown at the Long Sault facility. 

For the year ended December 31, 2012, revenue from energy sales in the Renewable Energy Division totalled $84.2 million, as compared to $81.6 million during the same period in 2011. As the purchase of energy by the Energy Services Business is a significant revenue driver and component of variable operating expenses, the division compares ‘net energy sales’ (energy sales revenue less energy purchases) as a more appropriate measure of the division’s sales results. For the year ended December 31, 2012, net revenue from energy sales in the Renewable Energy Division totalled $75.3 million, as compared $77.8 million during the same period in 2011. 

Revenue generated from APCo’s hydro facilities located in the Quebec and Western regions decreased by $3.6 million primarily due to $5.1 million in lower hydrology and partially offset by $1.5 million due to an increase in weighted average energy rates, as compared to the same period in 2011. Revenue from lost production due to the unplanned shutdown in Ontario was covered by business interruption insurance claim proceeds in the amount of $1.8 million. Revenue from APCo’s hydro facility located in the Maritime region decreased by 10% primarily driven by a $1.8 million in decreased customer demand offset by a $1.5 million increase in weighted average energy rates as compared to the same period in 2011. 

Revenue from APCo’s wind facilities located in the Manitoba region increased $0.7 million primarily due to the expansion of the St. Leon facility offset by a lower than average wind resource. APCo’s wind facilities located in the new Pennsylvania, Texas, and Illinois regions, which were acquired in late 2012, produced revenue of $3.9 million. 

Revenue at the Energy Services Business increased 24% due to $6.4 million of increased customer demand, partially offset by a $3.2 million decrease in weighted average energy rates. Revenue at the Energy Services Business primarily consists of wholesale deliveries to local electric utilities, retail sales to commercial and industrial customers in Northern Maine, and merchant sales of production in excess of customer demand at the Tinker hydroelectric generating facility. 

For the year ended December 31, 2012, energy purchase costs by the Energy Services Business totalled $8.9 million as compared to $3.8 million during the same period in 2011, an increase of $5.1 million. During this period, the Energy Services Business purchased approximately 140.7 GW-hrs of energy at market and fixed rates averaging U.S. $63 per MW-hr. The Maritime region generated approximately 43% of the load required to service its customers as well as the customers of the Energy Services Business in the year ended December 31, 2012, as compared to 80% in the same period in 2011. The lower production from the Maritime region was the primary driver for the increased energy purchase costs for the year ended December 31, 2012. The division reported increased energy purchase costs of $0.1 million as a result of the stronger U.S. dollar as compared to the same period in 2011. 

The Red Lily I wind farm located in Saskatchewan produced 82.8 GW-hrs of electricity for the year ended December 31, 2012. APCo’s economic return from its investment in Red Lily currently comes in the form of interest payments, fees and other charges and is not reflected in revenues from energy sales. Under the terms of the agreements, APCo has the right to exchange these contractual and debt interests in Red Lily I for a direct 75% equity interest in 2016. For the year ended December 31, 2012, APCo earned fees and interest payments from Red Lily I in the total amount of $3.2 million. 

The Renewable Energy Division reported increased revenue of $0.2 million from U.S. operations as a result of the stronger U.S. dollar as compared to the same period in 2011. 

For the year ended December 31, 2012, operating expenses excluding energy purchases totalled $21.4 million, as compared to $21.6 million during the same period in 2011, a decrease of $0.2 million or 1%. The decrease was primarily impacted by $1.8 million in lower operating costs at the hydro facilities due to lower flows and related direct production costs, and $0.3M in lower personnel costs at the Energy Services Business. These items were partially offset by a $0.5 million accrual for costs related to the Quebec water lease proceedings and by $1.4 million in operating costs related to the U.S. Wind Project acquisitions and other business development initiatives such as the Cornwall Solar development. 

