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## Capital Expenditures 

Capital expenditures for Fiscal 2011 were $40.6 million, a $19.4 million, or 92% increase from $21.2 million in capital expenditures for the previous year. The capital expenditures for Fiscal 2011 primarily relate to: 

» Distribution system extension and upgrades - $10.0 million. 

» Generating Unit 33 refurbishment - $6.2 million. This cost is being funded by insurance proceeds net of the deductible. 

» Generating Unit 1 refurbishment - $1.0 million. This cost is being funded by insurance proceeds net of the deductible. 

» Generating Units 1 and 2 piston liner upgrade - $2.7 million 

» Advanced Metering Infrastructure - $1.1 million 

» Other Power Plant building upgrades - $0.9 million 

» Generation replacement cost - $7.6 million 

» Inventory that has met the criteria of Property, Plant and Equipment (“PP&E”) in accordance with Canadian Institute of Chartered Accountants (“CICA”) 3031 has been added to work in progress and is included in Capital Expenditure. For Fiscal 2011 $0.04 million was allocated to Transmission and $0.41 million was allocated to Distribution, totalling an increase of $0.45 million reallocated from inventories to capital work in progress. As at December 31, 2011, engine spares totalling $2.0 million were reclassified to PP&E from inventory on the balance sheet as they are held for the development, construction, maintenance and repair of other PP&E. 

» AFUDC of $3.7 million was capitalised in Fiscal 2011. 

## Off Balance-Sheet Arrangements 

Disclosure is required of all off-balance sheet arrangements such as transactions, agreements or contractual arrangements with unconsolidated entities, structured finance entities, special purpose entities or variable interest entities that are reasonably likely to materially effect liquidity of or the availability of, or requirements for, capital resources. The Company has no such off-balance sheet arrangements as at December 31, 2011. 

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The above amounts are inclusive of accruals 

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The above amounts are inclusive of accruals 

## Business Risks 

The following is a summary of the Company’s significant business risks: 

## Operational Risks 

Operational risks are those risks normally inherent in the operation of generating, transmission and distribution facilities. The Company’s facilities are subject to the risk of equipment failure due to deterioration of the asset from use or age, latent defects and design or operator error, among other things. These risks could lead to longer-than- forecast equipment downtimes for maintenance and repair, disruptions 

