Capitalised (“GEC”) (see Note 1 of the Notes to Financial Statements). GEC totalled $2.9 million for Fiscal 2011, $0.7 million higher than $2.2 million for Fiscal 2010. The Company capitalises certain overhead costs not directly attributable to specific capital assets but which do relate to the overall capital expenditure programme. 

## Consumer Services (“CS”) 

CS expenses for Fiscal 2011 totalled $1.6 million a decrease of $0.1 million, or 6%, from CS expenses of $1.7 million for Fiscal 2010. The decrease was the result of lower customer claims in 2011. 

## Transmission and Distribution (“T&D”) 

T&D expenses for Fiscal 2011 totalled $2.0 million a decrease of $0.2 million, or 9%, when compared to $2.2 million for Fiscal 2010. This decrease was partially due to increased capitalised labour as the T&D Division focused on capital projects and partially due to efforts to control discretionary costs. 

## Depreciation of Property, Plant and Equipment (“Depreciation”) 

Depreciation expenses for Fiscal 2011 were $20.6 million, an increase of $0.6 million, or 3%, from $20.0 million for Fiscal 2010. Depreciation expenses increased as a result of growth-related additions to fixed assets in prior periods. 

In October 2010 the temporary cessation of depreciation on a 16 MW unit began and the temporary cessation of depreciation on a 7.59 MW unit began in March 2011. The 16 MW unit was taken out of service due to an overspeed failure and placed back in service in July 2011. The 7.59 

MW unit was taken out of service due to a major mechanical failure and has not been placed back in service. This unit was near the end of its estimated useful life and as at December 31, 2011 an economic analysis was in progress to determine if the unit should be repaired or retired. The cost of the repairs for both units is covered by the Company’s insurance policy subject to the deductible (see “Insurance - Terms & Coverage”  in the “Business Risks”  section for greater detail). 

In accordance with the Licences, when an asset is impaired or disposed of before the original estimated useful life, the cost of the asset is reduced and the net book value is charged to accumulated depreciation.This treatment is in accordance with rate regulated accounting and differs from the GAAP treatment of a loss being recognised on the statement of earnings. The amount charged to accumulated depreciation is net of any proceeds received in conjunction with the disposal of the asset. This amount within accumulated depreciation is to be depreciated as per the remaining life of the asset when the unit is placed into service. In the case of the 16 MW unit, which was taken out of service in October 2010, insurance proceeds will be applied to accumulated depreciation and as the asset is refurbished the costs incurred will be capitalised. 

## Maintenance 

Maintenance expenses for Fiscal 2011 totalled $7.6 million, a decrease of $0.7 million from $8.3 million for Fiscal 2010. Maintenance expenses for Fiscal 2011 were expected to be lower than those seen in Fiscal 2010 due to the cyclical nature of the maintenance schedule resulting in various capital projects being scheduled in Fiscal 

2011. Certain upgrades to generating units are considered capital in nature as the upgrades extend the life or increase the output of the unit. 

The Company currently has an installed generating capacity of 151.23 MW and in addition to this had installed 15 MW of leased temporary generation capacity for the summer to facilitate on-going planned generator maintenance and repairs. Of this leased capacity 12 MW have been returned and 3 MW remains in service. The rental cost for the temporary generation totalled $1.6 million in 2011. This cost has been covered by the Company’s property and machinery breakdown insurance. The temporary generation costs are not included within maintenance or any operating expenditure line item (see “Generator Failures and Insurance Claim”  table on page 18). 

## Amortization 

Amortization of intangible assets for Fiscal 2011 totalled $0.3 million, comparable to $0.3 million for Fiscal 2010. 

Amortization represents the monthly recognition of the expense associated with software purchases as well as other intangible assets such as the costs associated with the licence negotiations. The licence negotiations ceased in 2008 and the costs associated with the negotiations are being amortized over 20 years on a straight-line basis. 

## Other Expenses and Income 

Finance charges for Fiscal 2011 totalled $8.7 million, a decrease of $0.4 million from $9.1 million for Fiscal 2010 largely due to an increase in the amount of finance costs capitalised as Allowance for Funds Used during Construction (“AFUDC”). 

