Commitments and contingencies (a) Contingencies APUC and its subsidiaries are involved in various claims and litigation arising out of the ordinary course and conduct of its business. Although such matters cannot be predicted with certainty, management does not consider APUCs exposure to such litigation to be material to these financial statements. Accruals for any contingencies related to these items are recorded in the consolidated financial statements at the time it is concluded that its occurrence is probable and the related liability is estimable. Claim by Gaia Power Inc. On October 30, 2018, Gaia Power Inc. (Gaia) commenced an action in the Ontario Superior Court of Justice against APUC and certain of its subsidiaries, claiming damages of not less than $345,000 and punitive damages in the sum of $25,000 . The action arises from Gaias 2010 sale, to a subsidiary of APUC, of Gaias interest in certain proposed wind farm projects in Canada. Pursuant to a 2010 royalty agreement, Gaia is entitled to royalty payments if the projects are developed and achieve certain agreed targets. APUC believes that the claims are without merit, and intends to vigorously defend the action. Condemnation Expropriation Proceedings Liberty Utilities (Apple Valley Ranchos Water) Corp. is the subject of a condemnation lawsuit filed by the town of Apple Valley. A Court will determine the necessity of the taking by Apple Valley and, if established, a jury will determine the fair market value of the assets being condemned. Resolution of the condemnation proceedings is expected to take two to three years. Any taking by government entities would legally require fair compensation to be paid, however, there is no assurance that the value received as a result of the condemnation will be sufficient to recover the Company's net book value of the utility assets taken. Mountain Water was the subject of a condemnation lawsuit filed by the city of Missoula. On August 2, 2016, the Supreme Court of Montana upheld the District Courts decision that the city of Missoula could proceed with condemnation of Mountain Waters assets. The fair market value of the condemned property as of May 6, 2014 was assessed by the Commissioners to be $88,600 . Upon taking possession of Mountain Waters assets on June 22, 2017, the city of Missoula paid $83,863 to Mountain Water, net of closing adjustments and amounts required to be paid by the City directly to various developers in satisfaction of obligations under Funded By Other contracts relating to the assets. The condemnation of the Mountain Water assets resulted in a gain on long-lived assets of $4,370 . 21. Commitments and contingencies (continued) (b) Commitments In addition to the commitments related to the proposed acquisitions and development projects disclosed in notes 3 and 8, the following significant commitments exist as of December 31, 2018 . APUC has outstanding purchase commitments for power purchases, gas delivery, service and supply, service agreements, capital project commitments and operating leases. Detailed below are estimates of future commitments under these arrangements: Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Total Power purchase (i) $ 46,536 $ 10,896 $ 11,114 $ 11,338 $ 11,566 $ 191,208 $ 282,658 Gas supply and service agreements (ii) 77,658 51,349 27,672 24,422 22,424 48,313 251,838 Service agreements 43,732 39,093 38,451 37,463 40,737 312,559 512,035 Capital projects 67,575 1,663 196 7,330   76,764 Operating leases 7,629 7,154 7,096 7,076 6,776 178,583 214,314 Total $ 243,130 $ 110,155 $ 84,529 $ 87,629 $ 81,503 $ 730,663 $ 1,337,609 (i) Power purchase: APUCs electric distribution facilities have commitments to purchase physical quantities of power for load serving requirements. The commitment amounts included in the table above are based on market prices as of December 31, 2018 . However, the effects of purchased power unit cost adjustments are mitigated through a purchased power rate-adjustment mechanism. (ii) Gas supply and service agreements: APUCs gas distribution facilities and thermal generation facilities have commitments to purchase physical quantities of natural gas under contracts for purposes of load serving requirements and of generating power.