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## Operating Expenses 

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oil for Fiscal 2011 increased to $14.12 from $11.01 for Fiscal 2010. 

The Fuel Tracker Account (see Note 6 of the Notes to Financial Statements) is comprised of total diesel fuel and lubricating oil costs to be recovered from consumers. 

In March 2011 the ERA approved the Fuel Price Volatility Management Programme. The objective of this hedging programme is to reduce the impact of volatility in the Fuel Cost Charge paid by the Company’s customers for the fuel that the Company must purchase in order to provide electric service. The programme utilises call options creating a ceiling price for fuel costs at pre-determined contract premiums. The programme as it is currently structured covers 40% of expected 

## Power Generation Expenses 

fuel consumption. The call options were purchased in an effort to assist consumers and promote certainty in pricing, as such the monthly hedging costs and returns are also included within the Fuel Tracker Account. The current options expire in March 2012. 

Other generation expenses for Fiscal 2011 totalled $3.2 million, a $0.6 million increase when compared to $2.6 million for Fiscal 2010. This difference is primarily due to an increase in waste oil disposal costs. 

Diesel fuel and lubricating oil costs are recovered from consumers within the line items of fuel factor revenues. The Fuel Tracker Account (see Note 6 of the Notes to Financial Statements) is comprised of total diesel fuel and lubricating oil costs to be recovered from consumers. 

## General and Administration (“G&A”) 

G&A expenses for Fiscal 2011 totalled $9.3 million, an increase of $0.9 million, or 10%, from $8.4 million for Fiscal 2010. This increase is the result of higher legal, administrative payroll and insurance expenses. The increased legal and payroll costs are expected to be temporary in nature. Fortis Inc. owns a controlling interest in CUC. The increase in insurance costs in 2011 was tempered as the Company purchases insurance collectively with the Fortis group of companies, which leads to efficiencies and more competitive rates. 

These increases were partially offset by an increase in General Expenses 

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