Nancy Southern President & Chief Executive Officer

• Canadian Utilities completed a capital program of $1.0 billion.
• Year end cash balance is $727 million.
• Our ‘A’ credit rating remains strong.
• Our equity ratio has improved over the past five years from 50 per cent to 51 per cent.
• Our earnings are a record $413.1 million.

Not only are the profits and cash flows the best in our history, but they are accompanied by a sterling balance sheet and strong ‘A’ credit rating that should bring a sense of quiet confidence to our share owners.

As I reflect upon Canadian Utilities’ present strength I am drawn to the long standing ‘principles of operation’ in our Company, which I believe, have provided a constant, enterprise-wide awareness that such adversities as those facing the world today, were always possible.

While the profundity of the change that is occurring in the economies and financial markets of the world is yet to be fully understood, your Canadian Utilities’ balance sheet remains healthy, and your executive team has preemptively prepared to husband our resources and grow internally with steady improvement in our positions.

I wish to thank the more than 6,800 women and men of Canadian Utilities who continue to demonstrate their resilience and flexibility in developing innovative solutions for our operations.

Canadian Utilities' 2008 Financial Achievements

• Canadian Utilities’ record earnings in 2008 of $413.1 million ($3.29 per share) were attributable to all three of the Company’s business groups - Utilities, Power Generation and Global Enterprises.
  
  
• Canadian Utilities’ 2008 increased revenues of $2,778.9 million, compared to 2007 of $2,404.9 million, were primarily due to increased revenue in ATCO Electric, ATCO Gas, ATCO Power and ATCO Frontec.
  
  
• Canadian Utilities’ adjusted earnings in 2008 were $401.8 million ($3.20 per share) compared to $343.8 million ($2.74 per share) in 2007.
  
  
• Canadian Utilities’ balance sheet remains strong and positions the company for future growth. Cash balances (as defined on previous page) of $726.6 million have remained relatively consistent for the last five years. In addition to this, the Company has committed and uncommitted available lines of credit of $894.7 million which can be utilized for general corporate purposes.
  
  
• Funds generated by operations increased to $804.6 million in 2008 compared to $725.9 million in 2007. This increase was primarily attributable to higher earnings and increased availability incentives in Alberta Power (2000)’s power generating stations.
  
  
• Canadian Utilities share owners’ equity at the end of 2008, including equity preferred shares, was $3.4 billion comparable to 2007 of $3.1 billion. The Company’s non-recourse debt has also been reduced over the last five years to $0.4 billion in 2008 from $0.8 billion in 2003.
  
  
• The growth in the Alberta economy has resulted in significant growth in total capital expenditures for Canadian Utilities. This growth is primarily attributable to the Utilities Business Group. The total for 2008 was $1,010.9 million compared to $700.8 million in 2007. Furthermore, capital expenditures to maintain capacity, meet planned growth, and fund future development activities are expected to be approximately $1.1 billion in 2009. The majority of these expenditures relate to the Utilities operations. Capital expenditures for the Utilities operations for 2009 to 2011 are expected to be $2.0 billion
  and, depending on infrastructure spending, could be as much as $4.0 billion.
  
  
• Return on equity for 2008 was 15.7% compared to 16.0% in 2007. This was achieved even though the regulated utilities are subject to a formula driven return on equity regime that resulted in a rate of 8.75% for 2008. Therefore, the overall Canadian Utilities rate of 15.7% was driven by results of the non-regulated entities in the Company.
  
  
• The price of Canadian Utilities Class A and Class B shares, on the Toronto Stock Exchange, decreased from the 2007 closing price. The closing prices for Class A and Class B shares at the end of 2008 were $40.50 and $40.00 respectively compared to $46.40 and $46.00 at the end of 2007, decreases of 13%. The decrease in the closing price of Class A and Class B shares compares to a 35% decrease in the S&P/TSX Composite Index from 2007 to 2008.

1. Adjusted earnings are defined as earnings attributable to Class A and Class B shares after adjustment for items that are not in the normal course of business nor a result of day to day operations. The majority of these adjustments in 2008 related to tax issues and an adjustment for other post employment benefits. This measure is not defined by Generally Accepted Accounting Principles and may not be comparable to similar measures used by other companies.
2. Cash is defined as cash and short term investments less bank indebtedness.
3. Funds generated by operations is defined as cash generated from operations before changes in non-cash working capital. This measure is not defined by Generally Accepted Accounting Principles and may not be comparable to similar measures used by other companies.