HispanicBusiness

Favourable

--  Reduced operating expenses at the FortisBC Energy companies during 2012,    mainly due to the accrual of non-asset retirement obligation ("non-ARO")    removal costs in depreciation, effective January 1, 2012, and lower    customer care-related costs as a result of insourcing the customer care    function, effective January 1, 2012. Non-ARO removal costs were recorded    in operating expenses in 2011.--  The expropriation of Belize Electricity and the resulting discontinuance    of the consolidation method of accounting for the utility, effective    June 20, 2011, which decreased operating expenses year over year--  Lower operating expenses at FortisBC Electric for the quarter, due to    the timing of certain expenses during 2012                Factors Contributing to Quarterly and Annual               Depreciation and Amortization Expense Variances

--  Continued investment in energy infrastructure--  Increased depreciation at the FortisBC Energy companies, mainly due to    the accrual of non-ARO removal costs in depreciation, effective January    1, 2012, as discussed above

--  The expropriation of Belize Electricity and the resulting discontinuance    of the consolidation method of accounting for the utility, effective    June 20, 2011, which decreased depreciation year over year--  Lower depreciation rates at FortisAlberta and FortisBC Electric,    effective January 1, 2012, as a result of the 2012 revenue requirements    decisions received in April 2012 and August 2012, respectively                Factors Contributing to Quarterly and Annual                         Other Income, Net Variances

--  The $17 million (US$17.5 million) ($11 million after-tax) fee paid to    Fortis in July 2011 following the termination of a Merger Agreement    between Fortis and Central Vermont Public Service Corporation ("CVPS"),    which increased other income in 2011--  Approximately $9 million ($7.5 million after tax) of costs, incurred    largely in the first half of 2012, related to the pending acquisition of    CH Energy Group--  A foreign exchange loss of approximately $2 million recognized for the    year associated with the translation of the US dollar-denominated long-    term other asset representing the book value of the Corporation's    expropriated investment in Belize Electricity. A net foreign exchange    gain of approximately $1 million ($1.5 million after tax) was recognized    in 2011 related to the above item.--  Lower capitalized equity component of allowance for funds used during    construction ("AFUDC") for the year, mainly at the FortisBC Energy    companies--  An approximate $1 million gain on the sale of property at FortisAlberta    during the first quarter of 2011

--  A foreign exchange gain of approximately $1 million recognized in the    fourth quarter of 2012, compared to a net foreign exchange loss of $0.5    million ($1 million after tax) recognized in the fourth quarter of 2011,    associated with the translation of the US dollar-denominated long-term    other asset representing the book value of the Corporation's    expropriated investment in Belize Electricity--  An approximate $1 million ($0.5 million after-tax) gain recognized in    the fourth quarter of 2012 on the involuntary disposition of assets,    associated with damaged equipment at a generating facility in Upstate    New York and related proceeds received under an insurance claim