content_image/240898.jpg
(Expressed in thousands of United States dollars) 

In the event of a natural disaster as defined in the T&D Licence, the Company may apply to the ERA to recover the loss or liability not covered under the insurance plan through a Z factor adjustment. The Z Factor is an amount, expressed in cents per kWh, approved by the ERA and estimated to recover the sum of those cost items deemed to be outside the constraints of the RCAM. The addition of the Z Factor to the customers’ base rate is subject to certain terms and conditions found in the Licences. The actual increase in base rates will be capped for the year of the natural disaster at 60% of the change in the Price Level Index. The difference between the calculated rate increase and the actual increase, expressed as a percentage, shall be carried over and applied in addition to the normal RCAM adjustment in either of the two following years if the Company’s Return on Rate Base (“RORB”) is below the target range. The Company would also write-off destroyed assets over the remaining life of the asset that existed at the time of destruction. Z Factor rate changes will be utilised for insurance deductibles and other extraordinary expenses. 

## 18. Finance Charges 

The composition of finance charges were as follows: 

## Finance Charges 

($ thousands) 

<img src='content_image/240898.jpg'>

* Refer to PP&E (Note 8) with regards to AFUDC methodology 

## 19. Foreign Exchange 

The closing rate of exchange on December 31, 2011 as reported by the Bank of Canada for the conversion of US dollars into Canadian dollars was Cdn$1.017 per US$1.00. The official exchange rate for the conversion of Cayman Islands dollars into US dollars as determined by the Cayman Islands Monetary Authority is fixed at CI$1.00 per US$1.20. Thus, the rate of exchange as of December 31, 2011 for conversion of Cayman Islands dollars into Canadian dollars was Cdn$1.22 per CI$1.00 (December 31 2010: Cdn$1.19). 

## 20. Employee Future Benefits 

All employees of the Company are members of a defined contribution Pension Plan established for the exclusive benefit of employees of the Company and which complies with the provisions of the National Pensions Law. As a term of employment, the Company contributes 7.5% of wages or salary in respect of employees who have completed 15 years of continuous service and have attained the age of 55 years and 5% of wages or salary for all other employees. All contributions, income and expenses of the plan are accrued to, and deducted from, the members’ accounts. The total expense recorded in respect of employer contributions to the plan for the year ended December 31, 2011 amounted to $0.85 million (December 31, 2010: $0.81 million). The Pension Plan is administered by an independent Trustee. 

During 2003, the Company established a defined benefit pension plan for a Director of the Company. In May 2005, the Company’s Board of Directors approved the establishment of a defined benefit pension plan for the retired President and Chief Executive Officer. The pension cost of the defined benefit plan is actuarially determined using the projected benefits method. In April 2007, the Company established an independent trust and the defined benefit plans were amalgamated at that time. An independent actuary performs a valuation of the obligations under the defined benefit pension plans at least every three years. The latest actuarial valuation of the pension plans for funding purposes was at December 31, 2011. An accrued benefit liability of $0.06 million as at December 31, 2011 (December 31, 2010: $0.1 million) is included within Accounts Payable and Accrued Expenses in the Balance Sheets. 

