EXHIBIT 99.4

Q2 2010

ALGONQUIN POWER & UTILITIES CORP.

CONSOLIDATED FINANCIAL STATEMENTS &

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Algonquin Power & Utilities Corp.

Interim Consolidated Balance Sheets

(Unaudited)

(thousands of Canadian dollars)

	June  30, 2010			December 31, 2009
ASSETS
Current assets:
Cash	$	2,396		$	2,796
Short term investments		—			40,010
Accounts receivable		23,435			20,484
Prepaid expenses		3,113			4,674
Income tax receivable		345			1,143
Current portion of future tax asset		13,329			14,566
Current portion of notes receivable		534			521
		43,152			84,194
Long-term investments and notes receivable		29,775			24,029
Future non-current income tax asset		62,761			61,219
Property, plant and equipment (note 3)		756,766			749,350
Intangible assets (note 3)		81,425			85,929
Restricted cash		4,233			4,316
Deferred financing costs		175			200
Other assets		4,871			4,176
	$	983,158		$	1,013,413
LIABILITIES AND UNITHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	29,723		$	33,219
Dividends payable		5,655			1,857
Income taxes payable		318			5
Current portion of long-term liabilities (note 5)		106,274			3,360
Current portion of other long-term liabilities		1,095			1,025
Current portion of derivative liabilities (notes 3 and 12)		5,899			5,775
Current portion of deferred credits		10,663			10,500
Future income tax liability		641			913
		160,268			56,654
Long-term liabilities		146,154			241,412
Convertible debentures		171,075			173,257
Other long-term liabilities		26,671			25,228
Future income tax liability		80,103			79,914
Derivative liabilities (note 12)		4,623			3,920
Deferred credits		36,649			39,379
Shareholders’ equity:
Shareholders’ capital (note 6)		795,214			787,037
Deficit		(354,744	)		(344,676	)
Accumulated other comprehensive loss		(82,855	)		(48,712	)
		357,615			393,649
	$	983,158		$	1,013,413

See accompanying notes to interim consolidated financial statements

2

Algonquin Power & Utilities Corp.

Interim Consolidated Statements of Operations

(Unaudited)

(thousands of Canadian dollars, except per common share amounts)

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Revenue:
Energy sales	$	31,745		$	32,373		$	68,262		$	69,874
Waste disposal fees		90			3,178			1,007			6,861
Water reclamation and distribution		9,503			9,932			17,753			19,604
Other revenue		1,338			1,066			1,541			2,374
		42,676			46,549			88,563			98,713
Expenses
Operating		22,312			25,014			48,371			54,575
Amortization of property, plant and equipment		8,957			9,531			18,024			19,360
Amortization of intangible assets		2,634			1,822			4,896			3,660
Management costs (note 7)		—			212			—			425
Administrative expenses		2,990			2,544			5,905			4,931
(Gain) / loss on foreign exchange		404			(1,892	)		366			(1,315	)
		37,297			37,231			77,562			81,636
Earnings before undernoted		5,379			9,318			11,001			17,077
Interest expense		6,166			5,143			12,413			10,657
Interest, dividend income and other income		(1,337	)		(1,173	)		(2,360	)		(2,285	)
(Gain) / loss on derivative financial instruments (note 12)		3,052			(12,201	)		2,140			(8,703	)
		7,881			(8,231	)		12,193			(331	)
Earnings from operations before income taxes and minority interest		(2,502	)		17,549			(1,192	)		17,408
Income tax expense (recovery)
Current		269			262			436			463
Future		(681	)		389			(3,054	)		(4,804	)
		(412	)		651			(2,618	)		(4,341	)
Minority interest in earnings of subsidiaries		146			1,596			211			2,204
Net earnings	$	(2,236	)	$	15,302		$	1,215		$	19,545
Basic net (loss) / earnings per share (note 8)	$	(0.02	)	$	0.20		$	0.01		$	0.25
Diluted net (loss) / earnings per share (note 8)	$	(0.02	)	$	0.20		$	0.01		$	0.25

See accompanying notes to interim consolidated financial statements

3

Algonquin Power & Utilities Corp.

Interim Consolidated Statements of Cash Flows

(Unaudited)

( thousands of Canadian dollars )

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Cash provided by (used in):
Operating Activities:
Net earnings	$	(2,236	)	$	15,302		$	1,215		$	19,545
Items not affecting cash:
Amortization of property, plant and equipment		8,960			9,531			18,024			19,360
Amortization of intangible assets		2,634			1,822			4,896			3,660
Other amortization		551			217			1,361			478
Distributions received in excess of equity income		(76	)		649			646			1,489
Future income taxes / (recovery)		(681	)		389			(3,054	)		(4,804	)
Unrealized (gain) / loss on derivative financial instruments		1,634			(13,592	)		(2,571	)		(11,674	)
Minority interest		146			1,596			211			2,204
Unrealized foreign exchange (gain) / loss on long-term debt		582			(1,661	)		215			(890	)
		11,514			14,253			20,943			29,368
Changes in non-cash operating working capital (note 10)		1,259			(4,871	)		978			(6,285	)
		12,773			9,382			21,921			23,083
Financing Activities:
Cash dividends / distributions (note 9)		(5,625	)		(4,677	)		(7,489	)		(9,341	)
Cash distributions to non-controlling interest (notes 7 and 9)		(146	)		(211	)		(211	)		(470	)
Trustee loans		—			—			—			6
Deferred financing costs		(91	)		(35	)		(91	)		(52	)
Increase in long-term liabilities		42,000			11,500			54,500			14,000
Decrease in long-term liabilities		(32,212	)		(7,655	)		(47,615	)		(18,575	)
Decrease (increase) in other long-term liabilities		48			620			175			625
		3,974			(458	)		(731	)		(13,807	)
Investing Activities:
Decrease / (increase) in restricted cash		33			(162	)		125			(93	)
Decrease in short-term investment		—			—			40,010			—
Increase in other assets		(792	)		(1,727	)		(1,134	)		(1,728	)
Receipt of principal on notes receivable		100			92			200			256
Proceeds from liquidation of Highground assets (note 3(c))		—			302			170			302
Increase in long term investments and notes (note 4)		(6,565	)		—			(6,565	)		—
Net additions to property, plant and equipment		(7,829	)		(1,242	)		(11,988	)		(6,896	)
Acquisitions of operating entities (note 3)		(24	)		(50	)		(42,402	)		(50	)
		(15,077	)		(2,787	)		(21,584	)		(8,209	)
Effect of exchange rate differences on cash		(29	)		(125	)		(6	)		(92	)
Increase / (decrease) in cash		1,641			6,012			(400	)		975
Cash, beginning of the period		755			865			2,796			5,902
Cash, end of the period	$	2,396		$	6,877		$	2,396		$	6,877
Supplemental disclosure of cash flow information:
Cash paid during the period for interest expense	$	5,871		$	4,163		$	9,130		$	10,073
Cash paid during the period for income taxes	$	39		$	819		$	125		$	937

See accompanying notes to interim consolidated financial statements

4

Algonquin Power & Utilities Corp.

Interim Consolidated Statement of Deficit

(Unaudited)

(thousands of Canadian dollars)

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Balance, beginning of period	$	(346,822	)	$	(359,090	)	$	(344,676	)	$	(358,669	)
Net earnings		(2,236	)		15,302			1,215			19,545
Distributions (note 9)		(5,686	)		(4,677	)		(11,283	)		(9,341	)
Balance, end of period	$	(354,744	)	$	(348,465	)	$	(354,744	)	$	(348,465	)

See accompanying notes to interim consolidated financial statements

5

Algonquin Power & Utilities Corp.

interim Consolidated Statements of Comprehensive Income / (Loss) and

Accumulated Other Comprehensive Income / (Loss)

(Unaudited)

(thousands of Canadian dollars)

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Net (loss) earnings	$	(2,236	)	$	15,302		$	1,215		$	19,545
Other comprehensive loss:
Forward exchange contracts settled in the period		—			(729	)		—			(1,413	)
Translation of self sustaining foreign operations		12,127			(13,556	)		3,462			(8,600	)
Other comprehensive income (loss)		12,127			(14,285	)		3,462			(10,013	)
Total comprehensive income (loss)	$	9,891		$	1,017		$	4,677		$	9,532
Accumulated other comprehensive loss:
Balance, beginning of the period	$	(94,982	)	$	(17,170	)	$	(48,712	)	$	(21,442	)
Translation of self sustaining foreign operations due to accounting change (note 2)		—			—			(37,605	)		—
Other comprehensive loss (income)		12,127			(14,285	)		3,462			(10,013	)
Balance, end of the period	$	(82,855	)	$	(31,455	)	$	(82,855	)	$	(31,455	)

See accompanying notes to interim consolidated financial statements

6

ALGONQUIN POWER & UTILITIES CORP.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

1. Basis of presentation:

These unaudited interim consolidated financial statements of Algonquin Power & Utilities Corp. (“APUC” or “the Company”) should be read in conjunction with the audited consolidated financial statements of APUC for the year ended December 31, 2009. The notes presented in these unaudited interim consolidated financial statements include only significant changes and transactions occurring since APUC’s last year end, and are not fully inclusive of all disclosures required by Canadian generally accepted accounting principles for annual financial statements.

APUC’s operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results and, thus, one quarter’s operating results are not necessarily indicative of a subsequent quarter’s operating results. APUC’s hydroelectric energy assets are primarily “run-of-river” and as such fluctuate with the natural water flows. During the winter and summer periods, flows are generally slower, while during the spring and fall periods flows are heavier. Algonquin’s water and wastewater utility assets revenues fluctuate depending on demand for water. During drier, hotter periods of the year, which occurs generally in the summer, demand for water is generally higher than during cooler, wetter periods of the year.

These unaudited interim consolidated financial statements follow the same accounting policies and methods of application as the 2009 annual financial statements, except as outlined below.

2. Change in accounting

As a result of the change in its corporate structure relating to conversion of the Company from an income trust to a corporation, the Company re-evaluated its exposure to currency exchange rate changes as determined by the underlying facts and circumstances of the economy in which the US divisions operate. The Company concluded that the US operations of the Renewable Energy and Thermal Energy divisions no longer should be classified as integrated foreign operations but rather as self-sustaining operations. Consequently, these divisions have been prospectively translated into Canadian dollars using the current rate method, effective January 1, 2010. The net exchange adjustment of $37,605 resulting from the current rate translation of non-monetary items, principally property, plant and equipment and intangible assets, as of the date of the change is included as a separate component of other comprehensive income with a corresponding reduction to the carrying amount of the non-monetary items.

3. Acquisitions

a) Acquisition of Hydroelectric Generation Assets (“Tinker Acquisition”)

On January 12, 2010, APUC acquired certain electrical generating facility assets including 36.8MW of hydroelectric generating capacity located in New Brunswick and Maine. The acquisition consists of three hydroelectric generating stations, most notably the 34.5MW Tinker Hydroelectric station located on the Aroostook River near the Town of Perth-Andover, New Brunswick. The acquisition also includes five thermal generating stations and certain regulated New Brunswick Independent System Operator transmission lines located in proximity to the generating facilities. In connection with the Tinker Acquisition, on February 4, 2010, APUC also acquired a related energy services business (“Energy Services Business”).

7

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

3. Acquisitions (continued)

a) Acquisition of Hydroelectric Generation Assets (“Tinker Acquisition”) (continued)

The Energy Services Business retails the electricity generated by the Tinker facilities to commercial and industrial customers in northern Maine.

The total purchase price, including acquisition costs, was $40,671. Acquisition costs of $390 were paid in 2009 which were recorded as deferred transaction costs and included in other assets on the consolidated balance sheet at December 31, 2009.

The acquisition has been accounted for using the purchase method, with earnings from operations included since the date of acquisition.

The consideration paid by APUC has been llocated to net assets acquired as follows:

Working capital (net of cash received of $1)	$	69
Property, plant and equipment		39,555
Intangible asset – energy sales contracts		4,421
Derivative liability – energy forward purchase contracts (note 11)		(3,374	)
Total cash consideration	$	40,671

The allocation of the purchase price has been based upon management’s preliminary estimates and certain assumptions with respect to the fair value increment associated with the assets acquired and liabilities assumed. The Company will continue to review information and perform further analysis prior to finalizing the allocation of the purchase price. The actual fair values of the assets and liabilities will be determined as of the date of acquisition and may differ from the amounts noted above in the preliminary purchase price allocation.

b) Acquisition of Water Utility System (“the Galveston Utility”)

On March 17, 2010 Liberty Water, a wholly owned subsidiary of APUC, acquired a water distribution and wastewater collection system located near Galveston, Texas for a total purchase price of $2,038. The Galveston Utility provides water distribution and wastewater collection services to approximately 260 equivalent residential connections.

The acquisition has been accounted for using the purchase method, with earnings from operations included since the date of acquisition.

The consideration paid by APUC has been preliminarily allocated to net assets acquired as follows:

Property, plant and equipment	$	2,023
Intangible asset		15
Total cash consideration	$	2,038

8

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

3. Acquisitions (continued)

c) Highground Capital Corporation

In 2008, the Company entered into an agreement with Highground Capital Corporation (“Highground”), CJIG Management Inc. (“CJIG”), which is the manager of Highground and a related party of the Company controlled by the shareholders of Algonquin Power Management Inc (“APMI”). Under the agreement, CJIG acquired all of the issued and outstanding common shares of Highground and the Company issued trust units to the Highground shareholders and CJIG.

The Company initially recorded the trust units issued at their fair value of $7.69 per unit which, net of transaction costs of $767, resulted in proceeds of the trust units being initially recorded at a value of $26,203. By June 30, 2010, the Company has received consideration and issued equity as follows:

Consideration received:
Cash and assets received prior to December 31 2008	$	26,203
Cash received in 2009		983
Cash received in 2010		170
	$	27,356

In 2009, APUC’s consideration received from the acquisition exceeded $26,970, the minimum contemplated under the agreements, and, as a result is entitled to 50% of any additional proceeds from the assets formerly owned by Highground. CJIG is entitled to the remaining 50% of any proceeds in excess of the minimum amount. During the three and six months ended June 30, 2010, APUC received $nil (2009 - $nil) and $170 (2009 - $nil) respectively from CJIG as APUC’s share of the 50% of additional proceeds from the further liquidation of the assets held by Highground. This has been recorded as an increased amount assigned to the equity originally issued.

The remaining investments, formerly held by Highground, currently consist of two non-liquid debt assets having an approximate principal amount of $2,350. APUC’s 50% share of any additional proceeds from liquidation of the remaining Highground assets will be recorded as additional proceeds when received from CJIG.

9

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

4 Investments

On April 19, 2010, the Company entered into agreements to provide development, construction, operation and supervision services related to the construction, commissioning and operation of a 26.4 megawatt wind energy facility (“Red Lily I”) in south-eastern Saskatchewan.

The equity in Red Lily I (‘the Partnership”) is owned by an independent investor. The Company’s investment in Red Lily I is in the form of a participation in a senior debt facility to the Partnership and providing a subordinated debt facility. APUC’s commitment under the senior debt facility is to advance up to $13,000 of the Tranche 2 senior debt. The advance will be made to fund project costs required to develop and construct Red Lily I and is expected to be invested within the next twelve months. The senior debt will earn an interest rate of 6.31% and will mature five years following commissioning of the project. The senior debt is secured by substantially all the assets of the partnership. On April 19, 2010, APUC advanced $6,565 in subordinated debt to the Partnership. A second tranche of subordinated debt for an amount equal to the amounts outstanding on Tranche 2 of the senior debt but no greater than $17,000 will be advanced five years following commissioning of the project. The proceeds from this additional subordinated debt are required to be used to repay Tranche 2 of the Partnership’s senior debt, including APUC’s portion. The subordinated debt earns an interest rate of 12.5%, the principal matures 25 years following commissioning of the project but is repayable in whole or in part at any time after five years, without a pre-payment premium. The subordinated debt is secured by substantially all the assets of the Partnership but is subordinated to the senior lenders.

In connection with the subordinated debt facility, the Company has been granted an option to subscribe for a 75% equity interest in the Partnership in exchange for the outstanding amount on its subordinated debt of up to $19,500, exercisable for a period of 90 days period commencing five years following commissioning of the project.

5. Long-term liabilities

APUC’s senior secured revolving operating and acquisition credit facilities (the “Facilities”) mature on January 14, 2011. As of June 30, 2010, the outstanding amount due on the Facilities of $102,792 has been recorded within the current portion of long-term liabilities on the consolidated balance sheet. This amount drawn at June 30, 2010 includes U.S. $20,000 in U.S. funds.

10

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

6. Shareholders’ capital

Shareholders’ capital consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2010		2009			2010		2009
Balance of shares/units, beginning of period	$	784,021	$	725,106		$	781,274	$	721,953
Issued on conversion of
Algonquin (AirSource) Power LP exchangeable units		—		719			—		3,872
Conversion of convertible debentures, net of costs		712		—			3,290		—
Amounts received in connection with the Highground transaction		—		302			170		302
Issuance pursuant to management internalization		4,763		—			4,763		—
Balance of shares/units, end of period		789,496	$	726,127		$	788,977	$	726,127
Trustee Loans		—		(211	)		—		(211	)
Equity component of convertible debentures		5,718		479			6,237		479
Shareholders’ capital		795,214	$	726,395			795,214	$	726,395

During the six month period, $3,491 principal amount of New Series 1 Debentures were converted at the option of holders at a price of $4.08 for each share into 855,689 shares of APUC. The carrying amount of these debentures net of unamortized issuance costs and the bifurcated equity component totaling $3,290 has been recorded as share capital. On June 30, 2010, there were 63,451 New Series 1 Debentures outstanding with a face value of $63,451.

On June 29, 2010, the Company issued 1,180,180 shares valued at $4,763 pursuant to the Management Internalization Agreement signed on December 21, 2009. The issuance of shares and final settlement was approved by the Company’s shareholders at its annual general meeting held on June 23, 2010.

11

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

6. Shareholders’ capital (continued)

Number of common shares/units

	Three months ended June 30,		Six months ended June 30,
	2010	2009	2010	2009
Common shares/units, beginning of period	93,745,244	77,906,109	93,064,120	77,574,372
Issued on conversion of
Algonquin (AirSource) Power LP exchangeable units	—	75,853	—	407,590
Conversion of convertible debentures	174,565	—	855,689	—
Issued pursuant to management internalization	1,180,180	—	1,180,180	—
Common shares/units, end of period	95 099,989	77,981,962	95,099,989	77,981,962

Stock Option Plan

On June 23, 2010, the Company’s shareholders voted in favor of establishing a stock option plan (the ‘Plan’) to encourage ownership of the Company’s common shares by its key officers, directors, employees and selected service providers. The aggregate number of shares that may be reserved for issuance under the Plan must not exceed 10% of the number of Shares outstanding at the time the options are granted. The number of shares subject to each option, the option price, the expiration date, the vesting and other terms and conditions relating to each option shall be determined by the Board from time to time. As of June 30, 2010, the Company has not granted any options under the Plan.

Shareholders’ Rights Plan

On June 23, 2010, the Company’s shareholders adopted a shareholders’ rights plan (the “Rights Plan”). The Rights Plan has an initial term of three years. Under the Rights Plan, one right is issued with each issued share of the Company. The rights remain attached to the shares and are not exercisable or separable unless one or more certain specified events occur. If a person or group acting in concert acquires 20 percent or more of the outstanding shares (subject to certain exceptions) of the Company, the rights will entitle the holders thereof (other than the acquiring person or group) to purchase shares at a 50 percent discount from the then current market price. The rights provided under the Rights Plan are not triggered by any person making a “Permitted Bid”, as defined in the Rights Plan.

12

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

7. Related party transactions

Up to December 21, 2009, Algonquin Power Management Inc. (“APMI”) provided management services to the Fund including advice and consultation concerning business planning, support, guidance and policy making and general management services. On December 21, 2009, the Board of Directors (the “Board”) reached an agreement (“Management Internalization Agreement”) with APMI to internalize all management functions of the Fund which were provided by APMI. Therefore, for the three and six months ended June 30, 2010, APMI was not paid a management fee. For the three and six months ended June 30, 2009, APMI was paid on a cost recovery basis for all costs incurred and charged $212 and $425 respectively.

APUC has leased its head office facilities since 2001 from an entity owned by the shareholders of APMI on a net basis. Base lease costs for the three and six months ended June 30, 2010 were $81 (2009 - $86) and $163 (2009 - $168) respectively.

APUC utilizes chartered aircraft, including the use of an aircraft owned by an affiliate of APMI. During the three and six months ended June 30, 2010, APUC incurred costs in connection with the use of the aircraft of $60 (2009 - $60) and $208 (2009 - $140) respectively and amortization expense related to the advance against expense reimbursements of $6 (2009 - $17) and $63 (2009 - $73) respectively.

Affiliates of APMI hold 60% of the outstanding Class B limited partnership units issued by the St. Leon Wind Energy LP (“St. Leon LP”), an indirect subsidiary of APUC and the legal owner of the St. Leon facility. The holders of the Class B Units are entitled to 2.5% of the income allocations and cash distributions from St. Leon LP for a 5 year period commencing June 17, 2008 growing to a maximum of 10% by year 15. In any particular period, cash distributions to the holders of the Class B Units are only to be made after distributions have been made to the other partners, in an aggregate amount, equal to the debt service on the outstanding debt in respect of such period. The related party holders of the Class B units are entitled to cash distributions of $87 (2009 - $103) and $126 (2009 - $157) for the three and six months ended June 30, 2010 respectively.

APMI is entitled to 50% of the cash flow above 15% return on investment for the BCI project pursuant to its project management contract. During the three and six months ended June 30, 2010 and 2009, no amounts were paid under this agreement. In 2008, APMI earned a construction supervision fee of $100 in relation to the development of this project. As of June 30, 2010 this amount is accrued and included in accounts payable on the consolidated balance sheet.

A member of the Board of Directors of APUC is an executive at Emera Inc (“Emera”). A contract with a subsidiary of Emera to purchase energy on Independent System Operator New England (“ISO NE”) and provide scheduling services on ISO NE was included as part of the acquisition of the Energy Services Business associated with the Tinker Acquisition. The contract expired in the three months ended March 31, 2010 and was not renewed. As a result of this contract, during the three months ended March 31, 2010 a subsidiary of Emera provided services to and purchased energy on ISO NE on behalf of the Energy Services Business. In this capacity, APUC paid a subsidiary of Emera an amount of $1,368 (2009 - $nil) which was included as an operating expense on the interim consolidated statement of operations.

13

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

7. Related party transactions (continued)

During the period ended June 30, 2010, APUC entered into a one year contract with a subsidiary of Emera to provide lead market participant services for fuel capacity and forward reserve markets in ISO NE for the Windsor Locks facility. No expenses were incurred in the three and six months ended June 30, 2010 in relation to this contract. In the same period, APUC issued a letter of credit to a subsidiary of Emera in an amount of U.S. $500 in conjunction with this contract.

The above related party transactions have been recorded at the exchange amounts agreed to by the parties to the transactions.

8. Basic and diluted net earnings per share/unit

Basic and diluted earnings per share/unit have been calculated on the basis of the weighted average number of shares outstanding during the period. The weighted average number of shares/units outstanding during the period are as follows:

	Three months ended June 30,		Six months ended June 30,
	2010	2009	2010	2009
Weighted average common shares/units – basic	93,901,732	77,931,448	93,535,959	77,815,293
Trust units issuable on conversion of exchangeable units	—	1,677,880	—	1,796,315
Weighted average shares/units – diluted	93,901,732	79,609,328	93,535,959	79,611,608

Units issuable on conversion of exchangeable units are calculated at the end of the period based on the weighted average exchangeable units outstanding during the period and applying the rate of exchange.

Shares/units potentially issuable on the conversion of the convertible debentures are anti-dilutive and are not included in the calculation of diluted weighted average shares/units for the three and six months ended June 30, 2010 and 2009. At June 30, 2010, the Company had 15,551,838 shares potentially issuable upon conversion of the convertible debentures.

9. Cash dividends

All cash distributions and dividends of APUC are made on a discretionary basis as determined by the Board. Dividends are declared to shareholders of record on the last day of each quarter and are paid 15 days after declaration.

14

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

9. Cash dividends (continued)

For the three and six month periods ended June 30, 2010, APUC declared cash dividends to shareholders totaling $5,686 (2009 - $4,677) and $11,283 (2009 - $9,341) respectively or $0.06 per share (2009 - $0.06 per unit) and $0.12 per share (2009 - $0.12 per unit) respectively.

At December 31, 2009 all the outstanding Algonquin (AirSource) Power LP exchangeable units were exchanged for APUC shares and no longer exist. Total distributions to the Unitholders of the Algonquin (Airsource) Power LP exchangeable units for the three and six months ended June 30, 2010 were $nil. Total distributions to the Unitholders of the Algonquin (Airsource) Power LP exchangeable units for the three and six months ended June 30, 2009 were $98 and $208 respectively and were recorded as a reduction in non-controlling interest on the unaudited consolidated balance sheet.

10. Non cash operating working capital

The change in non cash operating working capital is compromised of the following:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Accounts receivable	$	2,385		$	1,689		$	(2,959	)	$	(244	)
Income tax receivable		5			178			797			156
Prepaid expenses		840			(1,212	)		1,560			(802	)
Accounts payable and accrued		(2,288	)		(5,025	)		1,268			(4,982	)
liabilities
Current income tax liability		317			(501	)		312			(413	)
Change in non cash working capital	$	1,259		$	(4,871	)	$	978		$	(6,285	)

15

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information

APUC has two broad operating segments: Algonquin Power which owns and operates 45 renewable energy facilities and 14 high efficiency thermal energy facilities representing more than 450 MW of installed electrical generation capacity and Liberty Water which owns and operates 19 utilities in the United States of America providing water or wastewater services in the states of Arizona, Texas, Missouri and Illinois.

Within Algonquin Power there are three divisions: Renewable Energy, Thermal Energy and Development. The Renewable Energy division operates the Company’s hydro-electric and wind power facilities. Thermal Energy division operates co-generation, energy from waste, steam production and other thermal facilities. The Development division develops the Company’s greenfield power generation projects as well as any expansion of the Company’s existing portfolio of renewable energy and thermal energy facilities.

Liberty Water provides transportation and delivery of water and wastewater in its service areas.

The operations and assets for these segments are as follows:

Geographic Segments

Algonquin and its subsidiaries operate in the independent power and utility industries in both Canada and the United States. Information on operations by geographic area is as follows:

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
Revenue
Canada	$	16,408	$	20,165	$	33,951	$	42,017
United States	$	26,268		26,384	$	54,612		56,696
	$	42,676	$	46,549	$	88,563	$	98,713
					June 30, 2010		June 30, 2009
Property, plant and equipment
Canada					$	473,530	$	453,482
United States					$	283,236		329,765
					$	756,766	$	783,247
Intangible assets
Canada					$	45,896	$	50,232
United States					$	35,529	$	42,021
					$	81,425	$	92,253
Other assets
Canada					$	860	$	1,767
United States					$	4,010	$	1,702
					$	4,871	$	3,469

16

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information (continued)

Revenues are attributable to the two countries based on the location of the underlying generating and utility facilities.

Reporting segments

APUC’s reportable segments are Algonquin Power - Renewable Energy, Algonquin Power - Thermal Energy and Liberty Water. The development activities are reported under Renewable Energy or Thermal Energy as appropriate. For purposes of evaluating divisional performance, the Company allocates the realized portion of the gain on financial instruments to specific divisions. This allocation is determined when the initial foreign exchange forward contract is entered into. The unrealized portion of any gains or losses on derivatives instruments is not considered in management’s evaluation of divisional performance and is therefore allocated and reported in the corporate segment. Interest expense is allocated to the divisions based on the project level debt related to the facilities in each division. Interest expense on the revolving credit facility is allocated between the reporting segments based on a percentage of the reporting segments share of the total property, plant and equipment and intangible assets. The interest rate swaps relate to specific debt facilities and gains and losses are allocated in the same manner as interest expense. Amounts relating to the convertible debentures are reported in the corporate segment.

17

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information (continued)

The operations and assets for these segments are as follows:

	Three months ended June 30, 2010
	Power Generation & Development						Liberty Water		Corporate		Total
	Renewable Energy		Thermal Energy		Total
Revenue
Energy sales	19,974		11,771		31,745		—		—		31,745
Waste disposal fees	—		90		90		—		—		90
Water reclamation and distribution	—		—		—		9,503		—		9,503
Other revenue	997		341		1,338		—		—		1,338
Total revenue	20,971		12,202		33,173		9,503		—		42,676
Operating expenses	6,049		10,783		16,832		5,480		—		22,312
	14,922		1,419		16,341		4,023		—		20,364
Other administration costs	(685	)	(306	)	(991	)	(899	)	(1,100	)	(2,990	)
Foreign exchange gain	—		—		—		—		(404	)	(404	)
Interest expense	(1,676	)	(235	)	(1,911	)	(452	)	(3,803	)	(6,166	)
Interest, dividend and other income	264		131		395		—		942		1,337
Gain / (loss) on derivative financial instruments	(2,038	)	—		(2,038	)	—		(1,014	)	(3,052	)
Amortization of property, plant and equipment	(5,871	)	(1,341	)	(7,212	)	(1,745	)	—		(8,957	)
Amortization of intangible assets	(1,770	)	(693	)	(2,463	)	(171	)	—		(2,634	)
Net earnings / (loss) before income taxes and minority interest	3,146		(1,025	)	2,121		756		(5,379	)	(2,502	)
Property, plant and equipment	404,114		179,150		583,264		173,139		363		756,766
Intangible assets	31,852		25,112		56,964		24,461		—		81,425
Total assets	459,636		221,915		681,551		208,921		92,686		983,158
Capital expenditures	679		6,097		6,776		991		62		7,829
Acquisition of operating entities	—		—		—		—		—		—

18

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information (continued)

	Six months ended June 30, 2010
	Power Generation & Development						Liberty Water		Corporate		Total
	Renewable Energy		Thermal Energy		Total
Revenue
Energy sales	42,192		26,070		68,262		—		—		68,262
Waste disposal fees	—		1,007		1,007		—		—		1,007
Water reclamation and distribution	—		—		—		17,753		—		17,753
Other revenue	997		544		1,541		—		—		1,541
Total revenue	43,189		27,621		70,810		17,753		—		88,563
Operating expenses	14,174		23,289		37,463		10,908		—		48,371
	29,015		4,332		33,347		6,845		—		40,192
Other administration costs	(1,830	)	(851	)	(2,681	)	(1,264	)	(1,960	)	(5,905	)
Foreign exchange gain	—		—		—		—		(366	)	(366	)
Interest expense	(3,509	)	(452	)	(3,961	)	(882	)	(7,570	)	(12,413	)
Interest, dividend and other income	402		270		672		11		1,677		2,360
Gain / (loss) on derivative financial instruments	(2,268	)	—		(2,268	)	—		128		(2,140	)
Amortization of property, plant and equipment	(10,253	)	(4,244	)	(14,497	)	(3,527	)	—		(18,024	)
Amortization of intangible assets	(3,171	)	(1,389	)	(4,560	)	(336	)	—		(4,896	)
Net earnings / (loss) before income taxes and minority interest	8,386		(2,334	)	6,052		847		(8,091	)	(1,192	)
Property, plant and equipment	404,114		179,150		583,264		173,139		363		756,766
Intangible assets	31,852		25,112		56,964		24,461		—		81,425
Total assets	459,636		221,915		681,551		208,921		92,686		983,158
Capital expenditures	943		9,932		10,875		1,036		77		11,988
Acquisition of operating entities	40,363		—		40,363		2,039		—		42,402

19

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information (continued)

	Three months ended June 30, 2009
	Power Generation & Development									Liberty Water			Corporate			Total
	Renewable Energy			Thermal Energy			Total
Revenue
Energy sales	$	17,462		$	14,911		$	32,373		$	—		$	—		$	32,373
Waste disposal fees		—			3,178			3,178			—			—			3,178
Water reclamation and distribution		—			—			—			9,932			—			9,932
Other revenue		—			1,066			1,066			—			—			1,066
Total revenue		17,462			19,155			36,617			9,932			—			46,549
Operating expenses		5,416			13,707			19,123			5,891			—			25,014
		12,046			5,448			17,494			4,041			—			21,535
Other administration costs		(1,177	)		(662	)		(1,839	)		(441	)		(476	)		(2,756	)
Foreign exchange gain		—			—			—			—			1,892			1,892
Interest expense		(1,756	)		(270	)		(2,026	)		(482	)		(2,635	)		(5,143	)
Interest, dividend and other income		308			124			432			(38	)		779			1,173
Gain / (loss) on derivative financial instruments		3,257			(285	)		2,972			286			8,943			12,201
Amortization of property, plant and equipment		(4,180	)		(3,294	)		(7,474	)		(2,057	)		—			(9,531	)
Amortization of intangible assets		(659	)		(979	)		(1,638	)		(184	)		—			(1,822	)
Net earnings / (loss) before income taxes and minority interest		7,839			82			7,921			1,125			8,503			17,549
Property, plant and equipment	$	404,928		$	185,971		$	590,899		$	192,348		$	—		$	783,247
Intangible assets		31,939			32,402			64,341			27,912			—			92,253
Total assets		553,801			162,514			716,315			228,375			7,667			952,357
Capital expenditures		207			920			1,127			16			99			1,242
Acquisition of operating entities		—			—			—			50			—			50

20

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

11. Segmented Information (continued)

	Six months ended June 30, 2009
	Power Generation & Development									Liberty Water			Corporate			Total
	Renewable Energy			Thermal Energy			Total
Revenue
Energy sales	$	36,425		$	33,449		$	69,874		$	—		$	—		$	69,874
Waste disposal fees		—			6,861			6,861			—			—			6,861
Water reclamation and distribution		—			—			—			19,604			—			19,604
Other revenue		—			2,374			2,374			—			—			2,374
Total revenue		36,425			42,684			79,109			19,604			—			98,713
Operating expenses		10,728			31,850			42,578			11,997			—			54,575
		25,697			10,834			36,531			7,607			—			44,138
Other administration costs		(2,905	)		(1,534	)		(4,439	)		(917	)		—			(5,356	)
Foreign exchange gain		—			—			—			—			1,315			1,315
Interest expense		(3,768	)		(611	)		(4,379	)		(1,121	)		(5,157	)		(10,657	)
Interest, dividend and other income		552			256			808			(37	)		1,514			2,285
Gain / (loss) on derivative financial instruments		3,047			(664	)		2,383			155			6,165			8,703
Amortization of property, plant and equipment		(8,375	)		(6,598	)		(14,973	)		(4,387	)		—			(19,360	)
Amortization of intangible assets		(1,317	)		(1,951	)		(3,268	)		(392	)		—			(3,660	)
Net earnings / (loss) before income taxes and minority interest		12,931			(268	)		12,663			908			3,837			17,408
Property, plant and equipment	$	404,928		$	185,971		$	590,899		$	192,348		—  $			$	783,247
Intangible assets		31,939			32,402			64,341			27,912			—			92,253
Total assets		553,801			162,514			716,315			228,375			7,667			952,357
Capital expenditures		505			1,974			2,479			4,318			99			6,896
Acquisition of operating entities		—			—			—			50			—			50

21

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

12. Derivative instruments

As of June 30, 2010, the fair value of derivatives liabilities is as follows:

	June 30, 2010			December 31, 2009
Derivative liabilities:
Interest Rate SWAP – St Leon	$	5,819		$	4,966
Interest Rate SWAP – revolving credit facility		1,607			3,260
Foreign exchange forward contracts		1,612			1,469
Energy forward purchase contracts		1,484			—
	$	10,522		$	9,695
Less: current portion		(5,899	)		(5,775	)
Long term derivative liabilities	$	4,623		$	3,920

Gain and loss on derivative financial instruments consist of the following:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Unrealized loss / (gain) on derivative financial instruments:
Foreign exchange contracts	$	1,226		$	(9,042	)	$	143		$	(6,726	)
Interest rate swaps		488			(4,550	)		(799	)		(4,948	)
Energy forward purchase contracts		(80	)		—			(1,914	)		—
Total unrealized loss / (gain) on derivative financial instruments	$	1,634		$	(13,592	)	$	(2,570	)	$	(11,674	)
Realized loss/(gain) on derivative financial instruments:
Foreign exchange contracts	$	(293	)	$	(2	)	$	(425	)	$	509
Interest rate swaps		1,586			1,393			3,182			2,462
Energy forward purchase contracts		125			—			1,953			—
Total realized loss/(gain) on derivative financial instruments	$	1,418		$	1,391		$	4,710		$	2,971
Loss / (gain) on derivative financial instruments	$	3,052		$	(12,201	)	$	2,140		$	(8,703	)

22

Algonquin Power & Utilities Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Six months ended June 30, 2010 and 2009

(in thousands of Canadian dollars except as noted and per share)

12. Derivative instruments (continued):

a) Foreign Currency Risk

The Company uses a combination of foreign exchange forward contracts and spot purchases to manage its foreign exchange exposure on cash flows generated from operations. Algonquin only enters into foreign exchange forward contracts with major Canadian financial institutions, thus reducing credit risk on these forward contracts. As at June 30, 2010, Algonquin had U.S. $28,030 in outstanding foreign exchange forward contracts carrying an average rate of $1.016. At June 30, 2010, the fair value of the foreign exchange forward contracts was a $1,612 liability.

b) Interest Rate Risk

The Company is exposed to interest rate fluctuations related to certain of its debt obligations, including certain project specific debt and its revolving credit facility.

APUC’s project debt at the St. Leon facility has a balance of $69,612 as at June 30, 2010. The Company has entered into a fixed for floating interest rate swap related to this debt covering the period to September 2015. At June 30, 2010, the fair value of the interest rate swap was a $5,819 liability.

APUC senior revolving credit facility has a balance of $102,792 as at June 30, 2010. The Company has entered into a fixed for floating interest rate swap related to $100,000 of this debt covering the period to December 2010. At June 30, 2010, the fair value of this interest rate swap was a $1,607 liability.

c) Energy Price Risk

APUC provides the short-term energy requirements to various customers at fixed rates. The energy requirements of these customers are estimated at approximately 150,000 MW-hrs on an annualized basis. While the Tinker Assets are expected to provide the majority of the energy required to service these customers, APUC anticipates having to purchase a portion of its energy requirements at the ISO NE spot rates to supplement self-generated energy.

This risk is mitigated though the use of short term forward energy hedge contracts. APUC has committed to acquire approximately 25,000 MW-hrs of energy over the next 8 months at an average rate of approximately $75 per MW-hr. The mark to market value of these forward energy hedge contracts at June 30, 2010 was a net liability of $1,484.

13. Comparative figures

Certain of the comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year.

23