Audit Committee Mandate

The purpose of this Mandate is to establish the terms of reference of the Audit Committee (the "Committee") of Canadian Utilities Limited (the “Corporation”). The Committee is appointed by the Board of Directors (the "Board") of the Corporation. The Committee is responsible for contributing to the effective stewardship of the Corporation by assisting the Board in fulfilling its oversight of:

the integrity of the Corporation’s financial statements;

the Corporation’s compliance with applicable legal and regulatory requirements;

the independence, qualifications and appointment of the Corporation's external auditor;

the performance of the Corporation’s internal auditor and external auditor;

the accounting and financial reporting processes of the Corporation; and

audits of the financial statements of the Corporation.

Composition

The Board shall elect annually from among its members an Audit Committee comprised of not less than 3 directors. Each member of the Audit Committee must be:

a director of the Corporation;
independent (within the meaning of sections 1.4 and 1.5 of National Instrument 52-110); and
financially literate (within the meaning of section 1.6 of National Instrument 52-110).

In order to be considered to be an independent director for the purposes of membership on the Committee, a director must have been determined by the Board to have no direct or indirect material relationship with the Corporation and must satisfy all other applicable legal and regulatory requirements.

The Board will appoint one member of the Committee as Chairman. Any member of the Audit Committee may be removed or replaced at any time by the Board, and a member shall cease to be a member of the Committee upon ceasing to be a director of the Corporation or upon ceasing to be independent.

Meetings

The Committee shall meet at least four times per year and whenever deemed necessary by the Chairman of the Committee or at the request of a Committee member or the Corporation's external or internal auditor. The Committee Chairman shall prepare and/or approve an agenda in advance of each meeting. Reasonable notification of meetings, which may be held in person, by telephone or other communication device, shall be sent to the members of the Committee, the external auditor and any additional attendees as determined by the Chairman of the Committee. The external auditor has the right to appear before and be heard at any meeting of the Committee. Upon the request of the external auditor, the Chairman of the Committee shall convene a meeting of the Committee to consider any matters which the auditor believes should be brought to the attention of the directors or shareholders of the Corporation. Meetings will be scheduled to permit timely review of Committee materials. A majority of the Committee will constitute a quorum. Minutes of each meeting will be prepared by the person designated by the Committee to act as secretary and will be kept by the Corporate Secretarial Department.

Reporting

The Committee shall report to the Board of the Corporation on such matters and questions relating to the financial position of the Corporation as the Board may from time to time refer to the Committee. A summary of all meetings will be provided to the Board by the Chairman of the Committee. Supporting schedules and information reviewed by the Committee will be available for examination by any director upon request. The external auditor and the Vice President Internal Audit of the Corporation shall report directly to the Committee. The Committee is expected to maintain free and open communication with the Corporation's external auditor, internal auditor and management. This communication shall include private sessions, at least annually, with each of these parties.

Responsibilities and Authority

The Committee relies on the expertise and knowledge of management and the internal and external auditors in carrying out its oversight responsibilities. Management of the Corporation is responsible for determining that the Corporation’s financial statements are complete, accurate and in accordance with generally accepted accounting principles. The external auditor is responsible for auditing the Corporation’s financial statements.

The Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. The Committee shall have the authority to engage independent counsel and other outside advisors as it determines necessary to carry out its duties, to set and pay the compensation for any advisors employed by the Committee, and to communicate directly with the internal and external auditors.

The Committee shall:

recommend to the Board of Directors:

the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attestation services for the Corporation;
the compensation of the external auditor; and
the approval of the Corporation's annual financial statements, AIF and MD&A.

be directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attestation services for the Corporation, including the resolution of disagreements between management and the external auditor regarding financial reporting.
pre-approve all non-audit services to be provided to the Corporation or its subsidiaries by the external auditor of the Corporation. The Committee may delegate to one or more of its members the authority to grant pre-approvals, and any pre-approvals so granted must be presented in writing to the Committee at the next regularly scheduled meeting. The Committee will ensure that relevant policies and procedures are in place to manage this process and comply with all applicable regulatory requirements.
review the Corporation’s annual and interim financial statements, AIF, annual and interim MD&A and annual and interim earnings press releases before this information is publicly disclosed.
if delegated by the Board, approve the interim financial statements, interim MD&A and interim earnings press releases before this information is publicly disclosed.
be satisfied that adequate procedures are in place for the review of the Corporation’s disclosure of financial information extracted or derived from the Corporation’s financial statements, and periodically assess the adequacy of such procedures. This would include an annual review of the CU Disclosure Policy.
monitor the application of the procedures established by the Committee for:

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, auditing matters; and
the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

be satisfied that the Corporation has implemented appropriate systems of internal control over financial reporting and that these systems are operating effectively;
be satisfied that the internal audit function has been effectively carried out and the internal auditor has adequate resources;
review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation;
review and reassess annually the adequacy of this Mandate and recommend any proposed changes to the Board for approval.

The members of the Committee, for the purpose of performing their duties, have the right to inspect all the books and records of the Corporation and its subsidiary entities and to discuss such books and records in any manner relating to the financial position of the Corporation and its subsidiary entities with the officers, employees and external auditors of the Corporation and its subsidiary entities.

The Committee will inquire into any other matters referred to it by the Board.