There are two types of leases—operating and capital. Capital leases qualify as sales or purchases of property and are reported in our Consolidated Balance Sheets. Our capital leases are not material in amount. All other leases are operating leases and are reported in our Consolidated Statements of Income (Loss). We expense all lease payments associated with our regulated business. Lease expense and future minimum payments for long-term, noncancelable, operating leases are not material to BGE's financial results. We present information about our operating leases below.

We, as lessee, lease certain facilities and equipment. The lease agreements expire on various dates and have various renewal options. We also enter into certain power purchase agreements which are accounted for as operating leases. We classify power purchase agreements as leases if the agreement in substance provides us the ability to control the use of the underlying power generating facilities.

Under these agreements, we are required to make fixed capacity payments, as well as variable payments based on actual output of the plants. We record these payments as "Fuel and purchased energy expenses" in our Consolidated Statements of Income (Loss). We exclude from our future minimum lease payments table the variable payments related to the output of the plant due to the contingency associated with these payments.

Through March 2009, we managed a global coal and logistics services operation. We entered into time charter purchase agreements which entitled us to the use of dry bulk freight vessels in connection with this operation. We continue to manage a residual position, which was not divested in 2009 with the remainder of the operation. Certain of these contracts must be accounted for as leases. These arrangements do not include provisions for material rent increases and do not have provisions for rent holidays, contingent rentals or other incentives. In 2011, 2010, and 2009, we recognized aggregate lease expense of approximately $7 million, $11 million and $145 million, respectively, related to 3, 12 and 31 dry bulk freight vessels, respectively, hired under time charter arrangements. We record the payments as "Fuel and purchased energy expenses" in our Consolidated Statements of Income (Loss).

	Fuel and purchased energy expenses		Operating expenses		Total


	(In millions)
2011	$	291.1	$	31.7	$	322.8
2010		227.9		30.2		258.1
2009		385.6		37.2		422.8

At December 31, 2011, we owed future minimum payments for long-term, noncancelable, operating leases as follows:

Year	Power Purchase Agreements		Other		Total


	(In millions)
2012	$	198.2	$	32.0	$	230.2
2013		190.9		29.6		220.5
2014		193.8		33.8		227.6
2015		193.3		19.8		213.1
2016		108.2		12.9		121.1
Thereafter		51.9		17.1		69.0

Total future minimum lease payments	$	936.3	$	145.2	$	1,081.5

In managing the residual position from our former coal and logistics services operation, we provide time charters of dry bulk freight vessels to global customers that qualify as sub-leases of our time charter purchase contracts. In 2011, 2010, and 2009, we recorded sub-lease income of approximately $2 million, $25 million and $114 million, respectively, related to our time charter sub-leases. We record sub-lease income as part of "Nonregulated revenues" in our Consolidated Statements of Income (Loss).