Nancy Southern President & Chief Executive Officer

2009 is a year that will not easily be forgotten; the global financial crisis and a looming severe international recession shook the foundations of corporate and consumer confidence throughout the developed world.

Against this backdrop, in January 2009, Canadian Utilities (CU) implemented two key performance enhancement objectives:

• Operational savings
• Cash improvement

With a self-imposed urgency on these matters, a capital budget of close to $1 billion and commodity prices, particularly power pool prices, negatively impacted by over supply and curtailed demand, our executive teams in our principal operating subsidiaries and corporate office aggressively engaged on a line-by-line basis to find efficiency improvements in our general and administrative costs as well as applying a stern rigour to our capital projects.

The net result was improved profitability by year end of almost $467 million, a record year for CU, and close to $800 million of cash available on a consolidated basis.

These performance measures have also provided a more competitive base for CU as we enter 2010.

I want to thank my colleauges in the Office of the Chairman, the Presidents, and their Executive Teams, and the more than 5,700 men and women of CU who, amidst the rippling effects of a deep global recession, preemptively prepared to husband our resources, strengthen our internal processes and still delivered growth in our earnings. They did this with a commitment to the safe, reliable and environmentally conscious delivery of goods and services to our customers.

• Canadian Utilities' record earnings in 2009 of $466.6 million ($3.71 per share), an increase of 13% compared to 2008, were attributable to cost efficiencies throughout the organization, higher utility investment in rate base and the gain on the ATCO Structures & Logistics transaction.
• Canadian Utilities' adjusted earnings in 2009 were $427.6 million ($3.40 per share) compared to $403.2 million ($3.21 per share) in 2008.
• Due to the diverse nature of Canadian Utilities' operations and inclusion in revenues of certain costs that are flow through in nature (particularly natural gas), changes in revenues are not necessarily indicative of changes in earnings.
• Revenues in 2009 were $2,584.0 million compared to $2,778.9 million in 2008.
• The decrease is primarily due to the impact of the ATCO Structures & Logistics transaction, lower power prices in the Alberta electricity market, lower U.K. exchange rates and lower NGL prices and volumes in the Energy segment.
• Changes in accounting for rate regulated operations and lower sales of natural gas purchased for third parties by ATCO Midstream also decreased revenues but did not impact earnings.
• The decreases were partially offset by the impact of increased rate base in ATCO Electric and ATCO Gas and higher storage revenues in ATCO Midstream.

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 adjustments in 2009 related to the gain on ATCO Structures & Logistics transaction ($29.6 million), H.R. Milner tax reassessment ($16.8 million) and mark-to-market adjustment ($7.4 million). This measure is not defined by Generally Accepted Accounting Principles and may not be comparable to similar measures used by other companies. For further information please see the Reconciliation of Earnings Attributable to Class A and Class B Shares and Adjusted Earnings section of Canadian Utilities Limted's Management's Discussion and Analysis. 
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.