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LIQUIDITY AND CAPITAL RESOURCES
The table below outlines the Corporation's consolidated sources and uses of cash for the fourth quarter and year ended December 31, 2012, as compared to the same periods in 2011, followed by a discussion of the nature of the variances in cash flows.
----------------------------------------------------------------------------Summary of Consolidated Cash Flows (Unaudited)Periods Ended December 31 Quarter Annual($ millions) 2012 2011 Variance 2012 2011 Variance--------------------------------------------------------------------------------------------------------------------------------------------------------Cash, Beginning of Period 147 106 41 87 107 (20)Cash Provided by (Used in): Operating Activities 172 230 (58) 976 915 61 Investing Activities (319) (367) 48 (1,080) (1,115) 35 Financing Activities 154 118 36 171 180 (9)----------------------------------------------------------------------------Cash, End of Period 154 87 67 154 87 67--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Activities: Cash flow from operating activities was $58 million lower quarter over quarter. The decrease was mainly due to unfavourable changes in working capital at the FortisBC Energy companies and FortisAlberta. The unfavourable changes in working capital were associated with current regulatory deferral accounts and inventories. The above decrease was partially offset by favourable changes in long-term regulatory deferral accounts, higher earnings and the collection from customers of regulator-approved increased depreciation and amortization expense.
Cash flow from operating activities was $61 million higher year over year. The increase was primarily due to higher earnings and the collection from customers of regulator-approved increased depreciation and amortization expense, partially offset by unfavourable changes in working capital. The unfavourable changes in working capital were associated with inventories, accounts payable and other current liabilities, and current regulatory deferral accounts, partially offset by favourable changes in accounts receivable.
Investing Activities: Cash used in investing activities was $48 million lower for the quarter and $35 million lower for the year. The decreases were mainly due to: (i) a $49 million deferred payment made in December 2011 in accordance with an agreement, associated with FHI's acquisition of FEVI in 2002, which increased cash used in investing activities in 2011; (ii) a decrease in capital spending; and (iii) a decrease in cash used for business acquisitions. The decrease in capital spending for the quarter was mainly due to the timing of AESO transmission-related capital projects at FortisAlberta. The decrease in capital spending for the year was mainly due to the completion of the Customer Care Enhancement Project at FEVI in early 2012, a delay in capital spending in 2012 at FortisBC Electric, due to the timing of receipt of approval for its 2012/2013 revenue requirements, and the expropriation of Belize Electricity and the resulting discontinuance of the consolidation method of accounting for the utility, effective June 20, 2011. The above decreases for the year were partially offset by higher capital spending at FortisAlberta, due to the connection of new customers driven by strong economic growth in Alberta, and increased capital spending related to the Waneta Expansion. The decrease in cash used in business acquisitions was the result of the acquisition of the Hilton Suites Hotel in October 2011 for $25 million, compared to: (i) the acquisition of the StationPark Hotel in October 2012 for $7 million, net of debt assumed; (ii) the acquisition of TCU in August 2012 for $8 million (US$8 million), net of debt assumed; and (iii) the acquisition of the electricity distribution assets from the City of Port Colborne in April 2012 for $7 million. The above decreases in cash used in investing activities were partially offset by lower proceeds from the sale of utility capital assets. In October 2011 Newfoundland Power sold joint-use poles and related infrastructure to Bell Aliant for $45 million, net of costs.
