6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 6-K

_______________________

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

Date: May 11, 2023

Commission File Number: 001-37946

_______________________

Algonquin Power & Utilities Corp.

(Translation of registrant’s name into English)

_______________________

354 Davis Road

Oakville, Ontario, L6J 2X1, Canada

(Address of principal executive offices)

_______________________

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F □    Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): □

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): □

Exhibits 99.1 and 99.2 to this Report on Form 6-K are hereby incorporated by reference into Algonquin Power & Utilities Corp.’s Registration Statements on Forms F-3 (File Nos. 333-220059, 333-227246 and 333-263839), Forms F-10 (File No. 333-261010) and Forms S-8 (File Nos. 333-177418, 333-213648, 333-213650, 333-218810, 333-232012 and 333-238961).

EXHIBIT INDEX

The following exhibits are filed as part of this Form 6-K:

Exhibit	Description
99.1	Unaudited Financial Statements for the quarter ended March 31, 2023
99.2	Management's Discussion & Analysis for quarter ended March 31, 2023
99.3	Certification of Chief Executive Officer
99.4	Certification of Chief Financial Officer
99.5	Earnings Press Release for the quarter ended March 31, 2023
99.6	Q2 2023 Common Share & Preferred Share Dividend Press Release

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALGONQUIN POWER & UTILITIES CORP.
	(registrant)
Date: May 11, 2023	By:  /s/ Darren Myers
	Name: Darren Myers
	Title:   Chief Financial Officer

Document

Unaudited Interim Consolidated Financial Statements of

Algonquin Power & Utilities Corp.

For the three months ended March 31, 2023 and 2022

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Statements of Operations

	Three months ended
(thousands of U.S. dollars, except per share amounts)	March 31
		2023		2022
Revenue
Regulated electricity distribution		$	315,602	$	280,694
Regulated natural gas distribution		271,138		263,434
Regulated water reclamation and distribution		87,421		78,631
Non-regulated energy sales		78,716		85,760
Other revenue		25,750		24,718
		778,627		733,237
Expenses
Operating expenses		220,287		212,002
Regulated electricity purchased		125,580		99,183
Regulated natural gas purchased		137,701		132,566
Regulated water purchased		3,869		2,823
Non-regulated energy purchased		7,806		12,939
Administrative expenses		17,833		17,452
Depreciation and amortization		121,641		119,964
Loss on foreign exchange		1,436		262
		636,153		597,191
Gain on sale of renewable assets		—		1,200
Operating income		142,474		137,246
Interest expense (note 7)		(81,918)		(57,943)
Income (loss) from long-term investments (note 6)		220,012		(10,689)
Other net losses (note 16)		(3,462)		(4,730)
Pension and other post-employment non-service costs (note 8)		(4,961)		(2,578)
Gain on derivative financial instruments (note 21(b)(iv))		2,166		744
Earnings before income taxes		274,311		62,050
Income tax expense (note 15)
Current		(6,500)		(6,304)
Deferred		(18,201)		(3,148)
		(24,701)		(9,452)
Net earnings		249,610		52,598
Net effect of non-controlling interests (note 14)
Non-controlling interests		26,579		40,942
Non-controlling interests held by related party		(6,050)		(2,575)
		$	20,529	$	38,367
Net earnings attributable to shareholders of Algonquin Power & Utilities Corp.		$	270,139	$	90,965
Preferred shares, Series A and preferred shares, Series D dividend (note 12)		2,092		2,220
Net earnings attributable to common shareholders of Algonquin Power & Utilities Corp.		$	268,047	$	88,745
Basic and diluted net earnings per share (note 17)		$	0.39	$	0.13

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Statements of Comprehensive Income

(thousands of U.S. dollars)
	2023		2022
Net earnings	$	249,610	$	52,598
Other comprehensive income (loss) (“OCI”):
Foreign currency translation adjustment, net of tax expense of 380 and recovery of 3,310, respectively (notes 21(b)(iii) and 21(b)(iv))	15,425		7,845
Change in fair value of cash flow hedges, net of tax recovery of 3,915 and 22,298, respectively (note 21(b)(ii))	17,865		(58,886)
Change in pension and other post-employment benefits, net of tax recovery of 164 and expense of 2, respectively	(480)		7
OCI, net of tax	32,810		(51,034)
Comprehensive income	282,420		1,564
Comprehensive loss attributable to the non-controlling interests	(20,714)		(37,680)
Comprehensive income attributable to shareholders of Algonquin Power & Utilities Corp.	$	303,134	$	39,244

All values are in US Dollars.

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Balance Sheets

(thousands of U.S. dollars)
	March 31,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	61,044	$	57,623
Trade and other receivables, net (note 4)	514,294		528,057
Fuel and natural gas in storage	62,856		95,350
Supplies and consumables inventory	140,416		129,571
Regulatory assets (note 5)	160,190		190,393
Prepaid expenses	71,071		58,653
Derivative instruments (note 21)	10,118		12,270
Other assets	26,916		22,564
	1,046,905		1,094,481
Property, plant and equipment, net	12,049,389		11,944,885
Intangible assets, net	99,031		96,683
Goodwill	1,331,080		1,320,579
Regulatory assets (note 5)	1,105,136		1,081,108
Long-term investments (note 6)
Investments carried at fair value	1,523,520		1,344,207
Other long-term investments	508,451		462,325
Derivative instruments (note 21)	55,035		71,630
Deferred income taxes	78,721		84,416
Other assets	129,826		127,299
	$	17,927,094	$	17,627,613

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Balance Sheets (continued)

(thousands of U.S. dollars)
	March 31,		December 31,
	2023		2022
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	144,168	$	186,080
Accrued liabilities	429,640		555,792
Dividends payable (note 12)	74,774		125,655
Regulatory liabilities (note 5)	73,402		69,865
Long-term debt (note 7)	515,595		423,274
Other long-term liabilities (note 9)	126,241		134,212
Derivative instruments (note 21)	14,278		32,491
Other liabilities	9,655		7,091
	1,387,753		1,534,460
Long-term debt (note 7)	7,333,362		7,088,743
Regulatory liabilities (note 5)	551,357		558,317
Deferred income taxes	580,786		565,639
Derivative instruments (note 21)	118,043		137,830
Pension and other post-employment benefits obligation	124,806		125,579
Other long-term liabilities (note 9)	456,113		461,230
	9,164,467		8,937,338
Redeemable non-controlling interests (note 14)
Redeemable non-controlling interest, held by related party (note 13(b))	307,909		307,856
Redeemable non-controlling interests	11,145		11,520
	319,054		319,376
Equity:
Preferred shares	184,299		184,299
Common shares (note 10(a))	6,223,301		6,183,943
Additional paid-in capital	776		9,413
Deficit	(805,515)		(997,945)
Accumulated other comprehensive loss (“AOCI”) (note 11)	(127,068)		(160,063)
Total equity attributable to shareholders of Algonquin Power & Utilities Corp.	5,475,793		5,219,647
Non-controlling interests
Non-controlling interests - tax equity partnership units	1,192,199		1,225,608
Other non-controlling interests	336,042		333,362
Non-controlling interest, held by related party (note 13(c))	51,786		57,822
	1,580,027		1,616,792
Total equity	7,055,820		6,836,439
Commitments and contingencies (note 19)
Subsequent events (notes 3, 5 and 7(a))
	$	17,927,094	$	17,627,613

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Statement of Equity

(thousands of U.S. dollars)<br><br>For the three months ended March 31, 2023
	Algonquin Power & Utilities Corp. Shareholders
	Common<br>shares		Preferred<br>shares		Additional<br>paid-in<br>capital		Deficit		AOCI		Non-<br>controlling<br>interests		Total
Balance, December 31, 2022	$	6,183,943	$	184,299	$	9,413	$	(997,945)	$	(160,063)	$	1,616,792	$	6,836,439
Net earnings	—		—		—		270,139		—		(20,529)		249,610
Effect of redeemable non-controlling interests not included in equity (note 14)	—		—		—		—		—		(5,719)		(5,719)
OCI	—		—		—		—		32,995		(185)		32,810
Dividends declared and distributions to non-controlling interests	—		—		—		(47,002)		—		(19,414)		(66,416)
Dividends and issuance of shares under dividend reinvestment plan	30,482		—		—		(30,482)		—		—		—
Contributions received from non-controlling interests, net of cost	—		—		—		—		—		9,082		9,082
Common shares issued under employee share purchase plan	1,708		—		—		—		—		—		1,708
Share-based compensation	—		—		1,093		—		—		—		1,093
Common shares issued pursuant to share-based awards	7,168		—		(9,730)		(225)		—		—		(2,787)
Balance, March 31, 2023	$	6,223,301	$	184,299	$	776	$	(805,515)	$	(127,068)	$	1,580,027	$	7,055,820

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Statement of Equity (continued)

(thousands of U.S. dollars)<br><br>For the three months ended March 31, 2022
	Algonquin Power & Utilities Corp. Shareholders
	Common<br>shares		Preferred<br>shares		Additional<br>paid-in<br>capital		Deficit		AOCI		Non-<br>controlling<br>interests		Total
Balance, December 31, 2021	$	6,032,792	$	184,299	$	2,007	$	(288,424)	$	(71,677)	$	1,523,082	$	7,382,079
Net earnings	$	—	—		—		90,965		—		(38,367)		52,598
Effect of redeemable non-controlling interests not included in equity (note 14)	—		—		—		—		—		(1,196)		(1,196)
OCI	—		—		—		—		(51,721)		687		(51,034)
Dividends declared and distributions to non-controlling interests	—		—		—		(96,254)		—		(16,558)		(112,812)
Dividends and issuance of shares under dividend reinvestment plan	21,540		—		—		(21,540)		—		—		—
Contributions received from non-controlling interests, net of cost	—		—		—		—		—		3,730		3,730
Common shares issued upon conversion of convertible debentures	6		—		—		—		—		—		6
Common shares issued under employee share purchase plan	1,306		—		—		—		—		—		1,306
Share-based compensation	—		—		1,622		—		—		—		1,622
Common shares issued<br>pursuant to share-based<br>awards	1,605		—		(2,471)		(626)		—		—		(1,492)
Balance, March 31, 2022	$	6,057,249	$	184,299	$	1,158	$	(315,879)	$	(123,398)	$	1,471,378	$	7,274,807

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.

Unaudited Interim Consolidated Statements of Cash Flows

(thousands of U.S. dollars)	Three months ended March 31,
		2023		2022
Cash provided by (used in):
Operating activities
Net earnings		$	249,610	$	52,598
Adjustments and items not affecting cash:
Depreciation and amortization		121,641		119,964
Deferred taxes		18,201		3,148
Initial value and unrealized gain on derivative financial instruments		(4,969)		(68)
Share-based compensation		696		(365)
Cost of equity funds used for construction purposes		(658)		(509)
Change in value of investments carried at fair value		(179,384)		40,507
Pension and post-employment expense lower than contributions		(2,057)		(5,613)
Distributions received from equity investments, net of income		(2,034)		2,102
Other		(2,037)		2,605
Net change in non-cash operating items (note 20)		(164,791)		(48,148)
		34,218		166,221
Financing activities
Increase in long-term debt		429,984		1,951,005
Repayments of long-term debt		(203,776)		(676,685)
Net change in commercial paper		92,800		(338,700)
Issuance of common shares, net of costs		1,708		1,306
Cash dividends on common shares		(95,893)		(93,381)
Dividends on preferred shares		(2,092)		(2,220)
Production-based cash contributions from non-controlling interest		9,082		3,730
Distributions to non-controlling interests, related party (note 14)		(12,056)		(10,006)
Distributions to non-controlling interests		(12,338)		(8,349)
Payments upon settlement of derivatives		(945)		(26,254)
Shares surrendered to fund withholding taxes on exercised share options		(568)		(626)
Increase in other long-term liabilities		4,430		5,199
Decrease in other long-term liabilities		(20,074)		(1,234)
		190,262		803,785
Investing activities
Additions to property, plant and equipment and intangible assets		(169,749)		(327,699)
Increase in long-term investments		(47,605)		(47,257)
Acquisitions of operating entities		—		(632,711)
Increase in other assets		(1,850)		(2,464)
Receipt of principal on development loans receivable		—		122
Decrease in long-term investments		—		2,403
		(219,204)		(1,007,606)
Effect of exchange rate differences on cash and restricted cash		503		562
Increase (decrease) in cash, cash equivalents and restricted cash		5,779		(37,038)
Cash, cash equivalents and restricted cash, beginning of period		101,185		161,389
Cash, cash equivalents and restricted cash, end of period		$	106,964	$	124,351
Algonquin Power & Utilities Corp.<br>Unaudited Interim Consolidated Statements of Cash Flows (continued)
(thousands of U.S. dollars)	Three months ended March 31,
		2023		2022
Supplemental disclosure of cash flow information:
Cash paid during the period for interest expense		$	102,712	$	61,606
Cash paid during the period for income taxes		$	2,041	$	1,210
Cash received during the period for distributions from equity investments		$	28,281	$	30,792
Non-cash financing and investing activities:
Property, plant and equipment acquisitions in accruals		$	99,587	$	83,319
Issuance of common shares under dividend reinvestment plan and share-based compensation plans		$	39,358	$	24,451

See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

Algonquin Power & Utilities Corp. (“AQN” or the “Company”) is an incorporated entity under the Canada Business Corporations Act. AQN's operations are organized across two primary business units consisting of the Regulated Services Group and the Renewable Energy Group. The Regulated Services Group owns and operates a portfolio of regulated electric, water distribution and wastewater collection, and natural gas utility systems and transmission operations in the United States, Canada, Bermuda and Chile; the Renewable Energy Group owns and operates, or has investments in, a diversified portfolio of non-regulated renewable and thermal energy generation assets.

1.Significant accounting policies

(a)Basis of preparation

The accompanying unaudited interim consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and follow disclosure required under Regulation S-X provided by the U.S. Securities and Exchange Commission. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments that are of a recurring nature and necessary for a fair presentation of the results of interim operations.

The significant accounting policies applied to these unaudited interim consolidated financial statements of AQN are consistent with those disclosed in the consolidated financial statements of AQN as of and for the year ended December 31, 2022.

(b)Seasonality

AQN's operating results are subject to seasonal fluctuations that could 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. Where decoupling mechanisms exist, total volumetric revenue is prescribed by the applicable regulatory authority and is not affected by usage. AQN's electrical distribution utilities can experience higher or lower demand in the summer or winter depending on the specific regional weather and industry characteristics. AQN’s water and wastewater utility assets’ revenues fluctuate depending on the demand for water, which is normally higher during drier and hotter months of the summer. During the winter period, natural gas distribution utilities generally experience higher demand than during the summer period. AQN’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. For AQN's wind energy assets, wind resources are typically stronger in spring, fall and winter, and weaker in summer. AQN's solar energy assets generally experience greater insolation in summer, weaker in winter.

(c)Foreign currency translation

AQN’s reporting currency is the U.S. dollar. Within these unaudited interim consolidated financial statements, the Company denotes any amounts denominated in Canadian dollars with “C$”, in Chilean pesos with "CLP" and in Chilean Unidad de Fomento with "CLF" immediately prior to the stated amount.

2. Recently issued accounting pronouncements

(a)Recently adopted accounting pronouncements

The FASB issued ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. See note 21(c) for details.

(b)Recently issued accounting guidance not yet adopted

The FASB issued ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method — a consensus of the Emerging Issues Task Force, which permits a reporting entity, if certain conditions are met, to elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the applicability and potential impact of the new guidance.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

3.Business acquisition

Kentucky Power Company and AEP Kentucky Transmission Company, Inc.

On October 26, 2021, Liberty Utilities Co., an indirect subsidiary of AQN, entered into an agreement (the “Kentucky Acquisition Agreement”) with American Electric Power Company, Inc. (“AEP”) and AEP Transmission Company, LLC to acquire Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the “Kentucky Power Transaction”). On April 17, 2023, Liberty Utilities Co. mutually agreed with AEP and AEP Transmission Company, LLC to terminate the Kentucky Acquisition Agreement. The Company is assessing whether costs incurred in preparation for the Kentucky Power Transaction should be written-off. The Company has not finalized the assessment.

4.Accounts receivable

Accounts receivable as of March 31, 2023 include unbilled revenue of $108,418 (December 31, 2022 - $149,015) from the Company’s regulated utilities. Accounts receivable as of March 31, 2023 are presented net of allowance for doubtful accounts of $27,954 (December 31, 2022 - $24,857).

5.Regulatory matters

The operating companies within the Regulated Services Group are subject to regulation by the respective jurisdictions in which they operate. The respective Regulators have jurisdiction with respect to rate, service, accounting policies, issuance of securities, acquisitions and other matters. Except for ESSAL, these utilities operate under cost-of-service regulation as administered by these authorities. The Company’s regulated utility operating companies are accounted for under the principles of ASC 980, Regulated Operations. Under ASC 980, regulatory assets and liabilities that would not be recorded under U.S. GAAP for non-regulated entities are recorded to the extent that they represent incurred charges or credits that are probable of being recovered from or refunded to customers through the rate setting process.

At any given time, the Company can have several regulatory proceedings underway. The financial effects of these proceedings are reflected in the unaudited interim consolidated financial statements based on regulatory approval obtained to the extent that there is a financial impact during the applicable reporting period. The following regulatory proceedings were recently completed:

Utility	State or country	Regulatory proceeding type	Details
Apple Valley Water System	California	General rate review	On February 3, 2023, the California Public Utilities Commission (“CPUC”) issued a final order authorizing an annual revenue increase of $1,412. New rates became effective in March 2023 retroactive to July 1, 2022. The retroactive impact of this final order was recorded in the first quarter of 2023.
Park Water System	California	General rate review	On February 3, 2023, the CPUC issued a final order authorizing an annual revenue increase of $1,105. New rates became effective in March 2023 retroactive to July 1, 2022. The retroactive impact of this final order was recorded in the first quarter of 2023.
CalPeco Electric System	California	General rate review	Subsequent to quarter-end, on April 27, 2023, the CPUC issued a final order approving a revenue increase of $26,979. New rates will be effective in June 2023 retroactive to January 2022. The retroactive impact of this final order is expected to be recorded in the second quarter of 2023.
Algonquin Power & Utilities Corp.
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Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

5.Regulatory matters (continued)

Regulatory assets and liabilities consist of the following:

	March 31,		December 31,
	2023		2022
Regulatory assets
Fuel and commodity cost adjustments	366,029		388,294
Retired generating plant	175,847		174,609
Rate adjustment mechanism	133,898		136,198
Income taxes	97,225		97,414
Deferred capitalized costs	95,094		90,121
Pension and post-employment benefits	83,501		80,736
Wildfire mitigation and vegetation management	69,862		66,156
Environmental remediation	69,602		70,529
Clean energy and other customer programs	29,970		28,145
Asset retirement obligation	27,390		27,172
Debt premium	23,472		24,888
Cost of removal	11,084		11,084
Rate review costs	9,063		9,481
Long-term maintenance contract	6,409		6,504
Other	66,880		60,170
Total regulatory assets	$	1,265,326	$	1,271,501
Less: current regulatory assets	(160,190)		(190,393)
Non-current regulatory assets	$	1,105,136	$	1,081,108
Regulatory liabilities
Income taxes	$	308,342	$	312,671
Cost of removal	189,427		191,173
Pension and post-employment benefits	75,169		68,085
Fuel and commodity costs adjustments	20,604		24,991
Clean energy and other customer programs	10,635		11,572
Rate adjustment mechanism	1,587		343
Other	18,995		19,347
Total regulatory liabilities	$	624,759	$	628,182
Less: current regulatory liabilities	(73,402)		(69,865)
Non-current regulatory liabilities	$	551,357	$	558,317
Algonquin Power & Utilities Corp.
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Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

6.Long-term investments

Long-term investments consist of the following:

	March 31,		December 31,
	2023		2022
Long-term investments carried at fair value
Atlantica	$	1,447,344	$	1,268,140
Atlantica Yield Energy Solutions Canada Inc.	74,386		74,083
Other	1,790		1,984
	$	1,523,520	$	1,344,207
Other long-term investments
Equity-method investees (a)	$	394,299	$	381,802
Development loans receivable from equity-method investees (a)	86,540		52,923
Other	27,612		27,600
	$	508,451	$	462,325

Income (loss) from long-term investments for the three months ended March 31 is as follows:

	Three months ended March 31,
		2023		2022
Fair value gain (loss) on investments carried at fair value
Atlantica		$	179,204	$	(33,784)
Atlantica Yield Energy Solutions Canada Inc.		196		(6,580)
Other		(16)		(143)
		$	179,384	$	(40,507)
Dividend and interest income from investments carried at fair value
Atlantica		$	21,789	$	21,544
Atlantica Yield Energy Solutions Canada Inc.		5,857		7,294
Other		10		(2)
		$	27,656	$	28,836
Other long-term investments
Equity method income (loss)		2,281		(4,531)
Interest and other income		10,691		5,513
		$	12,972	$	982
Income (loss) from long-term investments		$	220,012	$	(10,689)

(a)Equity-method investees and development loans receivable from equity investees

The Renewable Energy Group has non-controlling interests in operating renewable energy facilities and projects under construction. The Regulated Services Group has non-controlling interest in a power transmission line project under construction and other non-regulated operating entities owned by its utilities. The Liberty Development JV Inc. platform for non-regulated renewable energy, water and other sectors is reported under Corporate. In total, the Company has non-controlling interests in various corporations, partnerships and joint ventures with a total carrying value of $394,299 (December 31, 2022 - $381,802), including investments in variable interest entities ("VIEs") of $125,303 (December 31, 2022 - $122,752).

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

6.Long-term investments (continued)

(a)Equity-method investees and development loans receivable from equity investees (continued)

During the three months ended March 31, 2023, the Company made capital contributions of $10,309 to the Texas Coastal Wind Facilities (Stella, Cranell, East Raymond and West Raymond) and $5,805 to projects under construction.

Summarized combined information for AQN's investments in partnerships and joint ventures is as follows:

	March 31,		December 31,
	2023		2022
Total assets	$	2,781,053	$	2,740,132
Total liabilities	1,537,750		1,507,079
Net assets	$	1,243,303	$	1,233,053
AQN's ownership interest in the entities	342,140		332,663
Difference between investment carrying amount and underlying<br><br>equity in net assets(a)	52,159		49,139
AQN's investment carrying amount for the entities	$	394,299	$	381,802

(a) The difference between the investment carrying amount and the underlying equity in net assets relates primarily to development fees, interest capitalized while the projects are under construction, the fair value of guarantees provided by the Company in regards to the investments and transaction costs.

Summarized combined information for AQN's equity method investees (presented at 100%) is as follows:

	Three months ended March 31,
	2023		2022
Revenue	$	26,146	$	8,871
Net income (loss)	$	5,541	$	(7,774)
Other comprehensive loss (a)	$	(10,653)	$	(95,518)
Net income (loss) attributable to AQN	$	2,281	$	(4,531)
Other comprehensive loss attributable to AQN (a)	$	(4,368)	$	(48,599)

(a) Other comprehensive loss represents the Company’s proportion of the change in fair value, recorded in OCI at the investee level, on energy derivative financial instruments designated as a cash flow hedge.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

6.Long-term investments (continued)

(a)Equity-method investees and development loans receivable from equity investees (continued)

Except for Liberty Development Energy Solutions B.V. (“Liberty Development Energy Solutions”), the development projects are considered VIEs due to the level of equity at risk and the disproportionate voting and economic interests of the shareholders. The Company has committed loan and credit support facilities with some of its equity investees. During construction, the Company has agreed to provide cash advances and credit support for the continued development and construction of the equity investees' projects. As of March 31, 2023, the Company had issued letters of credit and guarantees of performance obligations under: a security of performance for a development opportunity; wind turbine and solar panel supply agreements; interconnection agreements; engineering, procurement and construction agreements; energy purchase agreements; and construction loan agreements. The fair value of the support provided to all equity-investees as of March 31, 2023 amounts to $9,835 (December 31, 2022 - $8,824).

Summarized combined information for AQN's VIEs is as follows:

	March 31,		December 31,
	2023		2022
AQN's maximum exposure in regards to VIEs
Carrying amount	$	125,303	$	122,752
Development loans receivable	86,540		52,923
Performance guarantees and other commitments on behalf of VIEs	812,649		658,224
	$	1,024,492	$	833,899

The commitments are presented on a gross basis assuming no recoverable value in the assets of the VIEs. In addition, as of March 31, 2023, the Company had issued $114,998 in letters of credit and guarantees of performance obligations under energy purchase agreements and decommissioning obligations on behalf of operating equity-method investees which are not considered VIEs.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

7.Long-term debt

Long-term debt consists of the following:

Borrowing type			Weighted average coupon			Maturity		Par value			March 31,		December 31,
					2023				2022
Senior unsecured revolving credit facilities (a)			—			2024-2028		N/A			$	595,018	$	351,786
Senior unsecured bank credit<br>facilities and delayed draw term<br>facility			—			2023-2031		N/A			782,362		773,643
Commercial paper			—			2023		N/A			499,800		407,000
U.S. dollar borrowings
Senior unsecured notes <br>(Green Equity Units)			1.18	%		2026		$	1,150,000		1,143,335		1,142,814
Senior unsecured notes (b)			3.38	%		2023-2047		$	1,490,000		1,481,389		1,496,101
Senior unsecured utility notes			6.34	%		2023-2035		$	142,000		153,853		154,271
Senior secured utility bonds			4.71	%		2026-2044		$	556,209		553,988		554,822
Canadian dollar borrowings
Senior unsecured notes			3.68	%		2027-2050		C$	1,200,000		883,699		882,899
Senior secured project notes			10.21	%		2027		C$	19,575		14,465		15,024
Chilean Unidad de Fomento borrowings
Senior unsecured utility bonds			4.05	%		2028-2040		CLF	1,637	1637000	84,225		77,206
											$	6,192,134	$	5,855,566
Subordinated borrowings
Subordinated unsecured notes	5.25	%	2082			C$	400,000	291,493			$	291,238
Subordinated unsecured notes	5.56	%	2078-2082			$	1,387,500	1,365,330			1,365,213
											$	7,848,957	$	7,512,017
Less: current portion											(515,595)		(423,274)
											$	7,333,362	$	7,088,743

Short-term obligations of $690,386 that are expected to be refinanced using the long-term credit facilities are presented as long-term debt.

Long-term debt issued at a subsidiary level (project notes or utility bonds) relating to a specific operating facility is generally collateralized by the respective facility with no other recourse to the Company. Long-term debt issued at a subsidiary level whether or not collateralized generally has certain financial covenants, which must be maintained on a quarterly basis. Non-compliance with the covenants could restrict cash distributions/dividends to the Company from the specific facilities.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

7.Long-term debt (continued)

The following table sets out the bank credit facilities available to AQN and its operating groups:

	March 31,		December 31,
	2023		2022
Revolving and term credit facilities	$	5,097,100	$	4,513,300
Funds drawn on facilities/ commercial paper issued	(1,877,180)		(1,532,500)
Letters of credit issued	(385,800)		(465,200)
Liquidity available under the facilities	2,834,120		2,515,600
Undrawn portion of uncommitted letter of credit facilities	(381,300)		(226,900)
Cash on hand	61,044		57,623
Total liquidity and capital reserves	$	2,513,864	$	2,346,323

Recent financing activities:

(a)Senior unsecured revolving credit facilities

Corporate

On March 31, 2023, the Company's senior unsecured revolving credit facility was amended and restated to increase the borrowing capacity from $500,000 to $1,000,000 with a new maturity date of March 31, 2028.

On March 31, 2023, the Company entered into a new $75,000 uncommitted bi-lateral credit facility.

Regulated Services Group

Subsequent to the quarter-end, the Regulated Services Group elected to terminate the undrawn amount of $489,600 of its $1,100,000 senior unsecured syndicated delayed draw term facility ("the "Regulated Services Delayed Draw Term Facility"), which was intended to be used to partially fund the Kentucky Power Transaction. The Regulated Services Delayed Draw Term Facility has a maturity date of November 29, 2023.

(b)U.S. dollar senior unsecured notes

On March 13, 2023, the Company repaid a $15,000 senior unsecured note on its maturity.

As of March 31, 2023, the Company had accrued $53,155 in interest expense (December 31, 2022 - $70,274). Interest expense for the three months ended March 31, 2023 and 2022 consists of the following:

	Three months ended March 31,
	2023		2022
Long-term debt	$	64,805	$	61,674
Commercial paper, credit facility draws and related fees	22,926		3,586
Accretion of fair value adjustments	(3,349)		(4,526)
Capitalized interest and AFUDC capitalized on regulated property	(3,675)		(1,211)
Other	1,211		(1,580)
	$	81,918	$	57,943
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

8.Pension and other post-employment benefits

The following table lists the components of net benefit costs for the pension plans and other post-employment benefits (“OPEB”). Service cost is recorded as part of operating expenses and non-service costs have been recorded outside of operating income in the unaudited interim consolidated statements of operations.

	Pension benefits				OPEB
	Three months ended March 31,				Three months ended March 31,
	2023		2022		2023		2022
Service cost	$	2,927	$	3,856	$	989	$	1,555
Non-service costs
Interest cost	8,393		6,063		3,438		2,359
Expected return on plan assets	(8,316)		(10,324)		(2,746)		(2,841)
Amortization of net actuarial loss	(124)		789		(561)		(86)
Amortization of prior service credits	(373)		(403)		(213)		6
Impact of regulatory accounts	4,095		6,338		1,368		677
	$	3,675	$	2,463	$	1,286	$	115
Net benefit cost	$	6,602	$	6,319	$	2,275	$	1,670

9.Other long-term liabilities

Other long-term liabilities consist of the following:

	March 31,		December 31,
	2023		2022
Contract adjustment payments	$	95,368	$	113,876
Asset retirement obligations	116,002		116,584
Advances in aid of construction	90,850		88,546
Environmental remediation obligation	43,350		42,457
Customer deposits	35,220		34,675
Unamortized investment tax credits	17,502		17,649
Deferred credits and contingent consideration	41,138		39,498
Preferred shares, Series C	11,660		12,072
Hook-up fees	33,858		32,463
Lease liabilities	21,701		21,834
Contingent development support obligations	9,835		8,824
Note payable to related party	25,808		25,808
Other	40,062		41,156
	$	582,354	$	595,442
Less: current portion	(126,241)		(134,212)
	$	456,113	$	461,230
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

10.Shareholders’ capital

(a)Common shares

Number of common shares

	Three months ended March 31,
	2023	2022
Common shares, beginning of period	683,614,803	671,960,276
Dividend reinvestment plan	4,370,289	1,625,414
Exercise of share-based awards (b)	606,960	523,746
Conversion of convertible debentures	—	754
Common shares, end of period	688,592,052	674,110,190

On August 15, 2022, AQN re-established an at-the-market equity program (“ATM Program”) that allows the Company to issue up to $500,000 (or the equivalent in Canadian dollars) of common shares from treasury to the public from time to time, at the Company’s discretion, at the prevailing market price when issued on the Toronto Stock Exchange, the New York Stock Exchange (“NYSE”) or any other existing trading market for the common shares of the Company in Canada or the United States.

During the three months ended March 31, 2023, the Company did not issue common shares under the ATM Program. As of May 10, 2023, the Company has issued, since the inception of its initial ATM Program in 2019, a cumulative total of 36,814,536 common shares at an average price of $15.00 per share for gross proceeds of $551,086 ($544,295 net of commissions). Other related costs, primarily related to the establishment and subsequent re-establishments of the ATM Program, were $4,843.

Dividend reinvestment plan

The Company has a common shareholder dividend reinvestment plan, which, when the plan is active, provides an opportunity for holders of AQN’s common shares who reside in Canada, the United States, or, subject to AQN’s consent, other jurisdictions, to reinvest the cash dividends paid on their common shares in additional common shares which, at AQN’s election, are either purchased on the open market or newly issued from treasury. Effective March 3, 2022, common shares purchased under the plan were issued at a 3% discount (previously at 5%) to the prevailing market price (as determined in accordance with the terms of the plan). During the three months ended March 31, 2023, AQN issued 4,370,289 common shares under the dividend reinvestment plan. Effective March 16, 2023, AQN suspended the dividend reinvestment plan. Dividends will only be paid in cash while the reinvestment plan is suspended.

(b)Share-based compensation

For the three months ended March 31, 2023, AQN recorded $696 (2022 - $(365)) in total share-based compensation expense (recovery). The compensation expense is recorded with payroll expenses in the unaudited interim consolidated statements of operations. The portion of share-based compensation costs capitalized as cost of construction is insignificant.

As of March 31, 2023, total unrecognized compensation costs related to non-vested share-based awards was $40,565 and is expected to be recognized over a period of 2.47 years

Share option plan

During the three months ended March 31, 2023, the Board of Directors of the Company (the "Board") approved the grant of 1,368,744 options to executives of the Company. The options allow for the purchase of common shares at a weighted average price of C$10.76, the market price of the underlying common shares at the date of grant. One-third of the options vest on each of December 31, 2023, 2024 and 2025. The options may be exercised up to eight years following the date of grant.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

10.Shareholders’ capital (continued)

(b)Share-based compensation (continued)

Share option plan (continued)

The following assumptions were used in determining the fair value of share options granted:

	2023
Risk-free interest rate	3.4
Expected volatility	27
Expected dividend yield	8.6
Expected life	5.50 years
Weighted average grant date fair value per option	C1.04

All values are in US Dollars.

Performance and restricted share units

During the three months ended March 31, 2023, a total of 2,244,916 performance share units ("PSUs") and restricted share units ("RSUs") were granted to employees of the Company. The awards vest based on the terms of each agreement ranging from February 2023 to January 2025. During the three months ended March 31, 2023, the Company settled 655,081 PSUs and RSUs in exchange for 328,069 common shares issued from treasury, and 327,012 PSUs and RSUs were settled at their cash value as payment for tax withholding related to the settlement of the awards.

During the three months ended March 31, 2023, the Company settled 52,379 bonus deferral RSUs in exchange for 23,678 common shares issued from treasury, and 28,701 RSUs were settled at their cash value as payment for tax withholding related to the settlement of the awards. During the three months ended March 31, 2023, 4,017 bonus deferral RSUs were granted to employees of the Company. The RSUs are 100% vested.

Directors' deferred share units

During the three months ended March 31, 2023, 46,091 deferred share units ("DSUs") were issued pursuant to the election by Directors of the Company to defer a percentage of their directors' fee in the form of DSUs.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

11.Accumulated other comprehensive income (loss)

AOCI consists of the following balances, net of tax:

	Foreign currency cumulative translation		Unrealized gain (loss) on cash flow hedges		Pension and post-employment actuarial changes		Total
Balance, January 1, 2022	$	(76,615)	$	(3,514)	$	8,452	$	(71,677)
OCI	(18,013)		(128,838)		23,722		(123,129)
Amounts reclassified from AOCI to the unaudited interim consolidated statements of operations	(5,489)		34,543		4,039		33,093
Net current period OCI	$	(23,502)	$	(94,295)	$	27,761	$	(90,036)
OCI attributable to the non-controlling interests	1,650		—		—		1,650
Net current period OCI attributable to shareholders of AQN	(21,852)		(94,295)		27,761		(88,386)
Balance, December 31, 2022	$	(98,467)	$	(97,809)	$	36,213	$	(160,063)
OCI	15,857		22,486		23,722		62,065
Amounts reclassified from AOCI to the unaudited interim consolidated statements of operations	(432)		(4,621)		(24,202)		(29,255)
Net current period OCI	$	15,425	$	17,865	$	(480)	$	32,810
OCI attributable to the non-controlling interests	185		—		—		185
Net current period OCI attributable to shareholders of AQN	$	15,610	$	17,865	$	(480)	$	32,995
Balance, March 31, 2023	$	(82,857)	$	(79,944)	$	35,733	$	(127,068)

Amounts reclassified from AOCI for foreign currency cumulative translation affected derivative gain (loss); those for unrealized gain (loss) on cash flow hedges affected revenue from non-regulated energy sales, interest expense and derivative gain (loss), while those for pension and other post-employment actuarial changes affected pension and other post-employment non-service costs.

12.Dividends

All dividends of the Company are made on a discretionary basis as determined by the Board. The Company declares and pays the dividends on its common shares in U.S. dollars. Dividends declared were as follows:

	Three months ended March 31,
	2023				2022
	Dividend		Dividend per share		Dividend		Dividend per share
Common shares	$	75,386	$	0.1085	$	115,574	$	0.1706
Series A preferred shares	C$	1,549	C$	0.3226	C$	1,549	C$	0.3226
Series D preferred shares	C$	1,273	C$	0.3182	C$	1,273	C$	0.3182
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

13.Related party transactions

(a)Equity-method investments

The Company provides administrative and development services to its equity-method investees and is reimbursed for incurred costs. To that effect, during the three months ended March 31, 2023, the Company charged its equity-method investees $16,088 (2022 - $7,413). Additionally, Liberty Development JV Inc. (note 6(a)), an equity-investee of the Company, provides development services to the Company on specified projects, for which it earns a development fee upon reaching certain milestones. During the three months ended March 31, 2023, the development fees charged to the Company were $nil (2022 - $nil).

(b)Redeemable non-controlling interest held by related party

Liberty Development Energy Solutions (note 6(a)), an equity investee of the Company, has a secured credit facility in the amount of $306,500 maturing on January 26, 2024. It is collateralized through a pledge of Atlantica Sustainable Infrastructure plc (“Atlantica”) ordinary shares. A collateral shortfall would occur if the net obligation as defined in the agreement would equal or exceed 50% of the market value of such Atlantica shares, in which case the lenders would have the right to sell Atlantica shares to eliminate the collateral shortfall. The Liberty Development Energy Solutions secured credit facility is repayable on demand if Atlantica ceases to be a public company or if certain other events are announced or completed that could restrict AY Holdings’ ability to sell or transfer its Atlantica ordinary shares. Liberty Development Energy Solutions has a preference share ownership in AY Holdings which AQN reflects as redeemable non-controlling interest held by related party. Redemption is not considered probable as of March 31, 2023. During the three months ended March 31, 2023, the Company incurred non-controlling interest attributable to Liberty Development Energy Solutions of $6,050 (2022 - $2,575) and recorded distributions of $5,998 (2022 - $2,584).

(c)Non-controlling interest held by related party

Non-controlling interest held by related party represents an interest in a consolidated subsidiary of the Company, acquired by Atlantica Yield Energy Solutions Canada Inc. ("AYES Canada") in May 2019 for $96,752 (C$130,103) and an interest in Algonquin (AY Holdco) B.V., a consolidated subsidiary of the Company, acquired by Liberty Development JV Inc. in November 2021 for $39,376. During the three months ended March 31, 2023, the Company recorded distributions of $6,058 (2022 - $7,422).

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

14.Non-controlling interests and redeemable non-controlling interests

Net effect attributable to non-controlling interests consists of the following:

	Three months ended March 31,
		2023		2022
HLBV and other adjustments attributable to:
Non-controlling interests - tax equity partnership units		$	34,571	$	40,862
Non-controlling interests - redeemable tax equity partnership units		331		1,599
Other net earnings attributable to:
Non-controlling interests		(8,323)		(1,519)
		$	26,579	$	40,942
Redeemable non-controlling interest, held by related party		(6,050)		(2,575)
Net effect of non-controlling interests		$	20,529	$	38,367

The non-controlling tax equity investors (“tax equity partnership units”) in the Company's U.S. wind power and solar power generating facilities are entitled to allocations of earnings, tax attributes and cash flows in accordance with contractual agreements. The share of earnings attributable to the non-controlling interest holders in these subsidiaries is calculated using the Hypothetical Liquidation at Book Value ("HLBV") method of accounting.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

15.Income taxes

For the three months ended March 31, 2023, the income tax expense in the unaudited interim consolidated statements of operations represents an effective tax rate different than the Canadian enacted statutory rate of 26.5%. The differences are as follows:

	Three months ended March 31,
		2023		2022
Expected income tax expense at Canadian statutory rate		$	72,692	$	16,443
Increase (decrease) resulting from:
Effect of differences in tax rates on transactions in and within foreign jurisdictions and change in tax rates		(11,158)		(12,477)
Adjustments from investments carried at fair value		(29,265)		1,013
Change in valuation allowance		(1,467)		(148)
Non-controlling interests share of income		10,192		11,053
Acquisition related state deferred tax adjustments		—		7,600
Tax credits		(12,410)		(10,151)
Amortization and settlement of excess deferred income tax		(3,751)		(4,034)
Other		(132)		153
Income tax expense		$	24,701	$	9,452

The following table illustrates the movement in the deferred tax valuation allowance:

	2023		2022
Beginning balance at January 1	$	107,583	$	27,470
Charged to income tax recovery	(1,467)		(148)
Charged (reduction) to OCI	(8,720)		1,637
Ending balance at March 31	$	97,396	$	28,959

16.Other net losses

Other net losses consist of the following:

	Three months ended March 31,
		2023		2022
Acquisition and transition-related costs		$	2,752	$	2,165
Other		710		2,565
		$	3,462	$	4,730
Algonquin Power & Utilities Corp.
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Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

17.Basic and diluted net earnings per share

Basic and diluted earnings per share have been calculated on the basis of net earnings attributable to the common shareholders of the Company and the weighted average number of common shares and bonus deferral restricted share units outstanding. Diluted net earnings per share is computed using the weighted-average number of common shares, additional shares issued subsequent to quarter-end under the dividend reinvestment plan, and, if dilutive, potential incremental common shares related to the convertible debentures or resulting from the application of the treasury stock method to the Green Equity Units (note 7) and the weighted average number of outstanding share options, PSUs, RSUs and DSUs outstanding during the period.

The reconciliation of the net earnings and the weighted average shares used in the computation of basic and diluted earnings per share are as follows:

	Three months ended March 31,
		2023		2022
Net earnings attributable to shareholders of AQN		$	270,139	$	90,965
Series A preferred shares dividend		1,148		1,218
Series D preferred shares dividend		944		1,002
Net earnings attributable to common shareholders of AQN – basic and diluted		$	268,047	$	88,745
Weighted average number of shares
Basic		687,693,510		673,742,425
Effect of dilutive securities		2,454,187		3,697,479
Diluted		690,147,697		677,439,904

This calculation of diluted shares excludes the potential impact of the Green Equity Units and 3,995,526 potential incremental shares that may become issuable pursuant to outstanding securities of the Company for the three months ended March 31, 2023, as they are antidilutive. This calculation of diluted shares for the three months ended March 31, 2022 excludes the potential impact of 1,134,711 securities, as they are antidilutive.

18.Segmented information

The Company is managed under two primary business units consisting of the Regulated Services Group and the Renewable Energy Group. The two business units are the two segments of the Company.

The Regulated Services Group, the Company's regulated operating unit, owns and operates a portfolio of electric, natural gas, water distribution and wastewater collection utility systems and transmission operations in the United States, Canada, Bermuda and Chile; the Renewable Energy Group, the Company's non-regulated operating unit, owns and operates a diversified portfolio of renewable and thermal electric generation assets in North America and internationally.

For purposes of evaluating the performance of the business units, the Company allocates the realized portion of any gains or losses on financial instruments to the specific business units. Dividend income from Atlantica and AYES Canada is included in the operations of the Renewable Energy Group, while interest income from San Antonio Water System is included in the operations of the Regulated Services Group. Equity method income and losses are included in the operations of the Regulated Services Group or Renewable Energy Group based on the nature of the activities of the investees. The change in value of investments carried at fair value, unrealized portion of any gains or losses on derivative instruments not designated in a hedging relationship and foreign exchange gains and losses are not considered in management’s evaluation of divisional performance and are therefore, allocated and reported under corporate.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

18.Segmented information (continued)

	Three months ended March 31, 2023
	Regulated Services Group		Renewable Energy Group		Corporate		Total
Revenue (1)(2)	$	674,161	$	78,716	$	—	$	752,877
Other revenue	14,018		11,371		361		25,750
Fuel, power and water purchased	267,150		7,806		—		274,956
Net revenue	421,029		82,281		361		503,671
Operating expenses	187,424		32,710		153		220,287
Administrative expenses	8,325		7,430		2,078		17,833
Depreciation and amortization	85,857		35,545		239		121,641
Loss on foreign exchange	—		—		1,436		1,436
Operating income (loss)	139,423		6,596		(3,545)		142,474
Interest expense	(38,478)		(14,895)		(28,545)		(81,918)
Income from long-term investments	10,328		33,267		176,417		220,012
Other expenses	(4,249)		—		(2,008)		(6,257)
Earnings before income taxes	$	107,024	$	24,968	$	142,319	$	274,311
Property, plant and equipment	$	8,673,180	$	3,347,225	$	28,984	$	12,049,389
Investments carried at fair value	1,789		1,521,731		—		1,523,520
Equity-method investees	56,827		325,470		12,002		394,299
Total assets	12,220,865		5,458,111		248,118		17,927,094
Capital expenditures	$	147,381	$	22,368	$	—	$	169,749

(1) Renewable Energy Group revenue includes $7,199 related to net hedging gain from energy derivative contracts and availability credits for the three-months period ended March 31, 2023 that do not represent revenue recognized from contracts with customers.

(2) Regulated Services Group revenue includes $3,706 related to alternative revenue programs for the three-months period ended March 31, 2023 that do not represent revenue recognized from contracts with customers.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

18.Segmented information (continued)

	Three months ended March 31, 2022
	Regulated Services Group		Renewable Energy Group		Corporate		Total
Revenue (1)(2)	$	622,759	$	85,760	$	—	$	708,519
Other revenue	14,988		9,344		386		24,718
Fuel, power and water purchased	234,572		12,939		—		247,511
Net revenue	403,175		82,165		386		485,726
Operating expenses	184,409		27,590		3		212,002
Administrative expenses	8,070		7,545		1,837		17,452
Depreciation and amortization	80,283		39,417		264		119,964
Loss on foreign exchange	—		—		262		262
	130,413		7,613		(1,980)		136,046
Gain on sale of renewable assets			1,200		—		1,200
Operating income (loss)	130,413		8,813		(1,980)		137,246
Interest expense	(21,426)		(15,713)		(20,804)		(57,943)
Income (loss) from long-term investments	4,509		27,626		(42,824)		(10,689)
Other expenses	(4,888)		(255)		(1,421)		(6,564)
Earnings (loss) before income taxes	$	108,608	$	20,471	$	(67,029)	$	62,050
Capital expenditures	$	255,585	$	72,114	$	—	$	327,699
	December 31, 2022
Property, plant and equipment	$	8,554,938	$	3,360,687	$	29,260	$	11,944,885
Investments carried at fair value	1,984		1,342,223		—		1,344,207
Equity-method investees	56,199		310,103		15,500		381,802
Total assets	$	12,109,575	$	5,251,933	$	266,105	$	17,627,613

(1) Renewable Energy Group revenue includes $4,830 related to net hedging loss from energy derivative contracts for the three-months period ended March 31, 2022 that do not represent revenue recognized from contracts with customers.

(2) Regulated Services Group revenue includes $6,278 related to alternative revenue programs for the three-months period ended March 31, 2022 that do not represent revenue recognized from contracts with customers.

The majority of non-regulated energy sales are earned from contracts with large public utilities. The Company has sought to mitigate its credit risk by selling energy to large utilities in various North American locations. None of the utilities contribute more than 10% of total revenue.

AQN operates in the independent power and utility industries in the United States, Canada and other regions. Information on operations by geographic area is as follows:

	Three months ended March 31
		2023		2022
Revenue
United States		$	640,424	$	598,873
Canada		53,128		53,835
Other regions		85,075		80,529
		$	778,627	$	733,237

Revenue is attributed to the regions based on the location of the underlying generating and utility facilities.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

19.Commitments and contingencies

(a)Contingencies

AQN and its subsidiaries are involved in various claims and litigation arising out of the ordinary course and conduct of its business. Although such matters cannot be predicted with certainty, management does not consider AQN’s exposure to such litigation to be material to these unaudited interim consolidated financial statements. Accruals for any contingencies related to these items are recorded in the unaudited interim consolidated financial statements at the time it is concluded that their occurrence is probable and the related liability is estimable.

Mountain View fire

On November 17, 2020, a wildfire now known as the Mountain View Fire occurred in the territory of Liberty Utilities (CalPeco Electric) LLC ("Liberty CalPeco"). The cause of the fire remains under investigation, and CAL FIRE has not yet released its final report. There are currently 17 active lawsuits that name certain subsidiaries of the Company as defendants in connection with the Mountain View Fire, as well as one non-litigation claim brought by the U.S. Department of Agriculture seeking reimbursement for alleged fire suppression costs. Twelve lawsuits are brought by groups of individual plaintiffs alleging causes of action including negligence, inverse condemnation, nuisance, trespass, and violations of Cal. Pub. Util. Code 2106 and Cal. Health and Safety Code 13007 (one of these twelve lawsuits also alleges the wrongful death of an individual and various subrogation claims on behalf of insurance companies). In another lawsuit, County of Mono, Antelope Valley Fire Protection District, and Bridgeport Indian Colony allege similar causes of action and seek damages for fire suppression costs, law enforcement costs, property and infrastructure damage, and other costs. In four other lawsuits, insurance companies allege inverse condemnation and negligence and seek recovery of amounts paid and to be paid to their insureds. The likelihood of success in these lawsuits cannot be reasonably predicted. Liberty CalPeco intends to vigorously defend them. The Company has wildfire liability insurance that is expected to apply up to applicable policy limits.

(b)Commitments

In addition to the commitments related to the development projects disclosed in note 6, the following significant commitments exist as of March 31, 2023.

AQN has outstanding purchase commitments for power purchases, natural gas supply and service agreements, service agreements, capital project commitments and land easements. Detailed below are estimates of future commitments under these arrangements:

	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter		Total
Power purchase (1)	$	54,864	$	32,164	$	25,618	$	12,336	$	12,582	$	142,586	$	280,150
Natural gas supply and service agreements (2)	100,967		97,021		54,963		41,052		33,569		179,185		506,757
Service agreements	69,945		58,653		57,042		48,219		48,258		290,485		572,602
Capital projects	9,060		—		—		—		—		—		9,060
Land easements and others	13,292		13,364		13,545		13,711		13,882		460,256		528,050
Total	$	248,128	$	201,202	$	151,168	$	115,318	$	108,291	$	1,072,512	$	1,896,619

(1)    Power purchase: AQN’s electric distribution facilities have commitments to purchase physical quantities of power for load serving requirements. The commitment amounts included in the table above are based on market prices as at March 31, 2023. However, the effects of purchased power unit cost adjustments are mitigated through a purchased power rate-adjustment mechanism.

(2)     Natural gas supply and service agreements: AQN’s gas distribution facilities and thermal generation facilities have commitments to purchase physical quantities of natural gas under contracts for purposes of load serving requirements and of generating power.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

20.Non-cash operating items

The changes in non-cash operating items consist of the following:

	Three months ended March 31,
		2023		2022
Accounts receivable		$	13,763	$	(40,612)
Fuel and natural gas in storage		32,494		16,234
Supplies and consumables inventory		(10,776)		(7,769)
Income taxes recoverable		549		2,932
Prepaid expenses		(7,048)		(7,350)
Accounts payable		(53,220)		(21,665)
Accrued liabilities		(126,165)		53,296
Current income tax liability		3,602		2,203
Asset retirements and environmental obligations		(1,069)		(499)
Net regulatory assets and liabilities		(16,921)		(44,918)
		$	(164,791)	$	(48,148)
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments

(a)Fair value of financial instruments

March 31, 2023	Carrying<br>amount		Fair<br>value		Level 1		Level 2		Level 3
Long-term investments carried at fair value	$	1,523,520	$	1,523,520	$	1,449,147	$	—	$	74,373
Development loans and other receivables	87,308		83,837		—		83,837		—
Derivative instruments:
Energy contracts not designated as a cash flow hedge	203		203		—		—		203
Interest rate swaps designated as a hedge	52,981		52,981		—		52,981		—
Interest rate cap not designated as hedge	3,604		3,604		—		3,604		—
Congestion revenue rights not designated as hedge	7,165		7,165		—		—		7,165
Cross currency swap designated as a net investment hedge	1,200		1,200		—		1,200		—
Total derivative instruments	65,153		65,153		—		57,785		7,368
Total financial assets	$	1,675,981	$	1,672,510	$	1,449,147	$	141,622	$	81,741
Long-term debt	$	7,848,957	$	7,315,375	$	2,683,122	$	4,632,253	$	—
Notes payable to related party	25,808		15,188		—		15,188		—
Convertible debentures	244		295		295		—		—
Preferred shares, Series C	11,660		11,685		—		11,685		—
Derivative instruments:
Energy contracts designated as a cash flow hedge	84,884		84,884		—		—		84,884
Energy contracts not designated as hedge	6,682		6,682		—		—		6,682
Cross-currency swap designated as a net investment hedge	23,994		23,994		—		23,994		—
Cross currency swap designated as a cash flow hedge	15,338		15,338		—		15,338		—
Commodity contracts for regulated operations	1,423		1,423		—		1,423		—
Total derivative instruments	132,321		132,321		—		40,755		91,566
Total financial liabilities	$	8,018,990	$	7,474,864	$	2,683,417	$	4,699,881	$	91,566
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.     Financial instruments \(continued\)
    

(a)Fair value of financial instruments (continued)

December 31, 2022	Carrying<br>amount		Fair<br>value		Level 1		Level 2		Level 3
Long-term investments carried at fair value	$	1,344,207	$	1,344,207	$	1,270,138	$	—	$	74,083
Development loans and other receivables	53,680		50,300		—		50,300		—
Derivative instruments:
Energy contracts not designated as hedge	393		393		—		—		393
Interest rate swap designated as a hedge	69,188		69,188		—		69,188		—
Currency forward contract not designated as a hedge	2,659		2,659		—		2,659		—
Congestion revenue<br>rights not designated as hedge	10,110		10,110		—		—		10,110
Cross-currency swap designated as a net investment hedge	1,267		1,267		—		1,267		—
Commodity contracts for regulated operations	283		283		—		283		—
Total derivative instruments	83,900		83,900		—		73,397		10,503
Total financial assets	$	1,481,787	$	1,478,407	$	1,270,138	$	123,697	$	84,586
Long-term debt	$	7,512,017	$	6,699,031	$	2,623,628	$	4,075,403	—
Notes payable to related party	25,808		15,180		—		15,180		—
Convertible debentures	245		276		276		—		—
Preferred shares, Series C	12,072		11,675		—		11,675		—
Derivative instruments:
Energy contracts designated as a cash flow hedge	120,284		120,284		—		—		120,284
Energy contracts not designated as hedge	8,617		8,617		—		—		8,617
Cross-currency swap designated as a net investment hedge	24,371		24,371		—		24,371		—
Cross-currency swap designated as a cash flow hedge	15,435		15,435		—		15,435		—
Commodity contracts for regulated operations	1,614		1,614		—		1,614		—
Total derivative instruments	170,321		170,321		—		41,420		128,901
Total financial liabilities	$	7,720,463	$	6,896,483	$	2,623,904	$	4,143,678	$	128,901
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(a)Fair value of financial instruments (continued)

The Company has determined that the carrying value of its short-term financial assets and liabilities approximates fair value as of March 31, 2023 and December 31, 2022 due to the short-term maturity of these instruments.

The fair value of the investment in Atlantica (level 1) is measured at the closing price on the NASDAQ stock exchange.

The fair value of development loans and other receivables (level 2) is determined using a discounted cash flow method, using estimated current market rates for similar instruments adjusted for estimated credit risk as determined by management.

The Company’s level 1 fair value of long-term debt is measured at the closing price on the NYSE and the over-the-counter closing price. The Company’s level 2 fair value of long-term debt at fixed interest rates and Series C preferred shares has been determined using a discounted cash flow method and current interest rates. The Company's level 2 fair value of convertible debentures has been determined as the greater of their face value and the quoted value of AQN's common shares on a converted basis.

The Company’s level 2 fair value derivative instruments primarily consist of swaps, options, rights, subscription agreements and forward physical derivatives where market data for pricing inputs are observable. Level 2 pricing inputs are obtained from various market indices and utilize discounting based on quoted interest rate curves, which are observable in the marketplace.

The Company’s level 3 instruments consist of energy contracts for electricity sales, congestion revenue rights ("CRRs") and the Company's investment in AYES Canada. The significant unobservable inputs used in the fair value measurement of energy contracts are the internally developed forward market prices ranging from $15.73 to $90.46 with a weighted average of $39.54 as of March 31, 2023. The weighted average forward market prices are developed based on the quantity of energy expected to be sold monthly and the expected forward price during that month. The change in the fair value of the energy contracts is detailed in notes 21(b)(ii) and 21(b)(iv). The significant unobservable inputs used in the fair value measurement of CRRs are recent CRR auction prices ranging from $nil to $27.95 with a weighted average of $8.02 as of March 31, 2023. The significant unobservable inputs used in the fair value measurement of the Company's AYES Canada investment are the expected cash flows, the discount rates applied to these cash flows ranging from 7.72% to 8.22% with a weighted average of 8.04%, and the expected volatility of Atlantica's share price ranging from 26.99% to 34.89% as of March 31, 2023. Significant increases (decreases) in expected cash flows or increases (decreases) in discount rate in isolation would have resulted in a significantly lower (higher) fair value measurement.

(b)Derivative instruments

Derivative instruments are recognized on the unaudited interim consolidated balance sheets as either assets or liabilities and measured at fair value at each reporting period.

(i)Commodity derivatives – regulated accounting

The Company uses derivative financial instruments to reduce the cash flow variability associated with the purchase price for a portion of future natural gas purchases associated with its regulated natural gas and electric service territories. The Company’s strategy is to minimize fluctuations in natural gas sale prices to regulated customers. The following are commodity volumes, in dekatherms, associated with the above derivative contracts:

	March 31, 2023
Financial contracts: Swaps	1,473,050
Algonquin Power & Utilities Corp.
---
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(b)Derivative instruments (continued)

(i)Commodity derivatives – regulated accounting (continued)

The accounting for these derivative instruments is subject to guidance for rate regulated enterprises. Most of the gains or losses on the settlement of these contracts are included in the calculation of the fuel and commodity costs adjustments (note 5). As a result, the changes in fair value of these natural gas derivative contracts and their offsetting adjustment to regulatory assets and liabilities had no earnings impact.

(ii)Cash flow hedges

The Company has sought to reduce the price risk on the expected future sale of power generation at the Sandy Ridge, Senate, Minonk, and Sugar Creek Wind Facilities by entering into the following long-term energy derivative contracts.

Notional quantity<br>(MW-hrs)	Expiry	Receive average<br>prices (per MW-hr)	Pay floating price<br>(per MW-hr)
3,907,837	September 2030	$25.00	Illinois Hub
449,540	December 2028	$29.00	PJM Western HUB
1,830,351	December 2027	$22.00	NI HUB
1,554,395	December 2027	$36.00	ERCORT North HUB

The Company is party to two interest rate swap contracts as cash flow hedges to mitigate the risk that interest rates will increase over the life of certain term loan facilities. Under the terms of the interest rate swap contracts, the Company has fixed its interest rate expense on such term loan facilities. The fair value of the derivative on the designation date is amortized into earnings over the remaining life of the contract.

The Company is party to a forward-starting interest rate swap in order to reduce the interest rate risk related to the quarterly interest payments between July 1, 2024 and July 1, 2029 on the $350,000 subordinated unsecured notes. The Company designated the entire notional amount of the pay-variable and receive-fixed interest rate swaps as a hedge of the future quarterly variable-rate interest payments associated with the subordinated unsecured notes.

In January 2022, the Company entered into a cross-currency interest rate swap, coterminous with the Canadian Notes, to effectively convert the C$400,000 Canadian Offering into U.S. dollars. The change in the carrying amount of the Canadian Notes due to changes in spot exchange rates is recognized each period in the unaudited interim consolidated statements of operations as loss (gain) on foreign exchange. The Company designated the entire notional amount of the cross-currency fixed-for-fixed interest rate swap as a hedge of the foreign currency exposure related to cash flows for the interest and principal repayments on the Canadian Notes. An offsetting portion of the AOCI balance related to changes in fair value of the cross-currency fixed-for-fixed interest rate swap attributable to changes in the spot exchange rates is also immediately reclassified into the unaudited interim consolidated statements of operations as an offsetting (gain) loss on foreign exchange.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(b)Derivative instruments (continued)

(ii)Cash flow hedges (continued)

The following table summarizes OCI attributable to derivative financial instruments designated as a cash flow hedge:

	Three months ended March 31,
		2023		2022
Effective portion of cash flow hedge		$	22,486	$	(61,554)
Amortization of cash flow hedge		(3,487)		(164)
Amounts reclassified from AOCI		(1,134)		2,832
OCI attributable to shareholders of AQN		$	17,865	$	(58,886)

The Company expects $16,078 of unrealized losses currently in AOCI to be reclassified, net of taxes into non-regulated energy sales, investment loss, interest expense and derivative gains, within the next 12 months, as the underlying hedged transactions settle.

(iii)Foreign exchange hedge of net investment in foreign operation

The functional currency of most of AQN's operations is the U.S. dollar. The Company designates obligations denominated in Canadian dollars as a hedge of the foreign currency exposure of its net investment in its Canadian investments and subsidiaries. The related foreign currency transaction gain or loss designated as, and effective as, a hedge of the net investment in a foreign operation is reported in the same manner as the translation adjustment (in OCI) related to the net investment. A foreign currency loss of $9 for the three months ended March 31, 2023 (2022 - $175) was recorded in OCI.

On May 23, 2019, the Company entered into a cross-currency swap, coterminous with the subordinated unsecured notes, to effectively convert the $350,000 U.S.-dollar-denominated offering into Canadian dollars. The change in the carrying amount of the notes due to changes in spot exchange rates was recognized each period in the unaudited interim consolidated statements of operations as loss (gain) on foreign exchange. The Company designated the entire notional amount of the cross-currency fixed-for-fixed interest rate swap as a hedge of the foreign currency exposure related to cash flows for the interest and principal repayments on the notes. Upon the change in functional currency of AQN to the U.S. dollar on January 1, 2020, this hedge was dedesignated. The Company redesignated this swap as a hedge of AQN's net investment in its Canadian subsidiaries. The related foreign currency transaction gain or loss designated as a hedge of the net investment in a foreign operation is reported in the same manner as the translation adjustment (in OCI) related to the net investment. The fair value of the derivative on the redesignation date will be amortized over the remaining life of the original hedge. A foreign currency loss of $67 for the three months ended March 31, 2023, (2022 - $4,232) was recorded in OCI.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(b)Derivative instruments (continued)

(iii)     Foreign exchange hedge of net investment in foreign operation (continued)

Canadian operations

The Company is exposed to currency fluctuations from its Canadian-based operations. AQN seeks to manage this risk primarily through the use of natural hedges by using Canadian long-term debt to finance its Canadian operations and a combination of foreign exchange forward contracts and spot purchases.

The Company’s Canadian operations are determined to have the Canadian dollar as their functional currency and are exposed to currency fluctuations from their U.S. dollar transactions. The Company designates obligations denominated in U.S. dollars as a hedge of the foreign currency exposure of its net investment in its U.S. investments and subsidiaries. The related foreign currency transaction gain or loss designated as, and effective as, a hedge of the net investment in a foreign operation is reported in the same manner as the translation adjustment (in OCI) related to the net investment. A foreign currency loss of $123 for the three months ended March 31, 2023, (2022 - loss of $395) was recorded in OCI.

The Company is party to C$300,000 fixed-for-fixed cross-currency interest rate swaps to effectively convert Canadian dollar debentures into U.S. dollars. In February 2022, the Company settled the related cross-currency swap related to its C$200,000 debenture that was repaid (note 7(d)). The Company designated the entire notional amount of the cross-currency interest rate swap and related short-term U.S. dollar payables created by the monthly accruals of the swap settlement as a hedge of the foreign currency exposure of its net investment in the Company’s U.S. operations. The gain or loss related to the fair value changes of the swap and the related foreign currency gains and losses on the U.S. dollar accruals that are designated as, and are effective as, a hedge of the net investment in a foreign operation are reported in the same manner as the translation adjustment (in OCI) related to the net investment. A gain of $381 for the three months ended March 31, 2023 (2022 - $2,053) was recorded in OCI.

The Company is party to a fixed-for-fixed cross-currency interest rate swap to effectively convert the C$400,000 Canadian-dollar-denominated debentures into U.S. dollars. The Renewable Energy Group designated the entire notional amount of the cross-currency interest rate swap and related short-term U.S. dollar payables created by the monthly accruals of the swap settlement as a hedge of the foreign currency exposure of its net investment in the Company’s U.S. operations. The gain or loss related to the fair value changes of the swap and the related foreign currency gains and losses on the U.S. dollar accruals that are designated as, and are effective as, a hedge of the net investment in a foreign operation are reported in the same manner as the translation adjustment (in OCI) related to the net investment. A gain of $12 for the three months ended March 31, 2023 (2021 - loss of $5,812) was recorded in OCI.

Chilean operations

The Company is exposed to currency fluctuations from its Chilean-based operations. The Company's Chilean operations are determined to have the Chilean peso as their functional currency. Chilean long-term debt used to finance the operations is denominated in Chilean Unidad de Fomento.

(iv)Other derivatives and risk management

In the normal course of business, the Company is exposed to financial risks that potentially impact its operating results. The Company employs risk management strategies with a view to mitigating these risks to the extent possible on a cost-effective basis. Derivative financial instruments are used to manage certain exposures to fluctuations in exchange rates, interest rates and commodity prices. The Company does not enter into derivative financial agreements for speculative purposes. For derivatives that are not designated as hedges, the changes in the fair value are immediately recognized in earnings.

The Company seeks to mitigate the volatility of energy congestion charges at the ERCOT transmission grid by entering into CRRs, which as of March 31, 2023 had notional quantity of 919,014 MW-hours at prices ranging from $1.50 per MW-hr to $19.06 per MW-hr with a weighted average of $8.23 per MW-hr for April 2023 to April 2025. These CRRs are not designated as an accounting hedge.

Algonquin Power & Utilities Corp.
Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(b)Derivative instruments (continued)

(iv)Other derivatives and risk management (continued)

The Company is party to an interest rate cap agreement in the amount of $390,000 for the period between January 15, 2023 and January 15, 2024. The Company was party to an interest rate swap to mitigate the interest rate risk related to debt at its Blue Hill Wind Facility. The contract was novated upon the sale of the Blue Hill Wind Facility in 2022. The loss recognized on the derivative was recorded as a reduction of the gain on sale of renewable assets on the consolidated statements of operations.

The Company mitigates the price risk on the expected future sale of power generation of one of its solar facilities through a long-term energy derivative contract with a notional quantity of 388,170 MW-hours, a price of $25.15 per MW-hr and expiring in August 2030 as an economic hedge to the price of energy sales. The derivative contract is not designated as an accounting hedge.

The effects on the unaudited interim consolidated statements of operations of derivative financial instruments not designated as hedges consist of the following:

	Three months ended March 31,
		2023		2022
Unrealized gain (loss) on derivative financial instruments:
Energy derivative contracts		$	(22)	$	(141)
Commodity contracts		1,128		—
		$	1,106	$	(141)
Realized loss on derivative financial instruments:
Energy derivative contracts		(2,293)		189
		$	(2,293)	$	189
Loss on derivative financial instruments not accounted for as hedges		(1,187)		48
Amortization of AOCI gains frozen as a result of hedge dedesignation		997		696
		$	(190)	$	744
Unaudited interim consolidated statements of operations classification:
Gain on derivative financial instruments		$	2,166	$	251
Non-regulated energy sales		(2,356)		493
		$	(190)	$	744
Algonquin Power & Utilities Corp.
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Notes to the Unaudited Interim Consolidated Financial Statements
March 31, 2023 and 2022
(in thousands of U.S. dollars, except as noted and per share amounts)

21.Financial instruments (continued)

(c)Supplier Financing Programs

In the normal course of business, the Company enters into supplier financing programs under which the suppliers can voluntarily elect to sell their receivables. The Company agrees to pay, on the invoice maturity date, the stated amount of the invoices that the Company has confirmed through the execution of bills of exchange. The terms of the trade payable arrangement are consistent with customary industry practice and are not impacted by the supplier’s decision to sell amounts under these arrangements. As of March 31, 2023, accounts payable include confirmed invoices from designated suppliers of $45,895 (December 31, 2022 - $16,785).

22.Comparative figures

Certain of the comparative figures have been reclassified to conform to the unaudited interim consolidated financial statement presentation adopted in the current period.

Document

                            Management Discussion & Analysis

Management of Algonquin Power & Utilities Corp. (“AQN” or the “Company” or the “Corporation”) has prepared the following discussion and analysis to provide information to assist its securityholders’ understanding of the financial results for the three months ended March 31, 2023. This Management Discussion & Analysis (“MD&A”) should be read in conjunction with AQN’s unaudited interim consolidated financial statements for the three months ended March 31, 2023 and 2022. This MD&A should also be read in conjunction with AQN's annual consolidated financial statements for the years ended December 31, 2022 and 2021. This material is available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov/edgar, and on the AQN website at www.AlgonquinPowerandUtilities.com. Additional information about AQN, including the most recent Annual Information Form (“AIF”), can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

Unless otherwise indicated, financial information provided for the three months ended March 31, 2023 and 2022 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). As a result, the Company's financial information may not be comparable with financial information of other Canadian companies that provide financial information on another basis.

All monetary amounts are in U.S. dollars, except where otherwise noted. We denote any amounts denominated in Canadian dollars with "C$" immediately prior to the stated amount.

Capitalized terms used herein and not otherwise defined have the meanings assigned to them in the Company's most recent AIF.

Unless noted otherwise, this MD&A is based on information available to management as of May 11, 2023.

Contents

Caution Concerning Forward-Looking Statements and Forward-Looking Information	2
Caution Concerning Non-GAAP Measures	4
Overview and Business Strategy	6
Significant Updates	9
2023 First Quarter Results From Operations	10
2023 First Quarter Net Earnings Summary	12
2023 First Quarter Adjusted EBITDA Summary	13
Regulated Services Group	14
Renewable Energy Group	22
AQN: Corporate and Other Expenses	26
Non-GAAP Financial Measures	27
Summary of Property, Plant and Equipment Expenditures	29
Liquidity and Capital Reserves	31
Share-Based Compensation Plans	35
Related Party Transactions	36
Enterprise Risk Management	36
Quarterly Financial Information	41
Disclosure Controls and Procedures	42
Critical Accounting Estimates and Policies	42
Algonquin Power & Utilities Corp. - Management Discussion & Analysis	1
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Caution Concerning Forward-Looking Statements and Forward-Looking Information

This document may contain statements that constitute "forward-looking information" within the meaning of applicable securities laws in each of the provinces and territories of Canada and the respective policies, regulations and rules under such laws or "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking information”). The words "aims", “anticipates”, “believes”, “budget”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “schedule”, “should”, “will”, “would”, "seeks", "strives", "targets" (and grammatical variations of such terms) and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specific forward-looking information in this document includes, but is not limited to, statements relating to: expected future growth, earnings and results of operations; the strategic review of the Renewable Energy Group and the aims thereof; liquidity, capital resources and operational requirements; sources of funding, including adequacy and availability of credit facilities, cash flows from operations, capital markets financing, and asset recycling or asset sales initiatives; expectations regarding the use of proceeds from financings; ongoing and planned acquisitions, dispositions, projects, initiatives or other transactions, including expectations regarding timing, costs, proceeds, financing, results, ownership structures, regulatory matters, in-service dates and completion dates; financing plans, including the Company's expectation that it will not undertake any new common equity financing through the end of 2024; expectations regarding future macroeconomic conditions; expectations regarding the Company's corporate development activities and the results thereof, including the expected business mix between the Regulated Services Group and Renewable Energy Group; expectations regarding regulatory hearings, motions, filings, appeals and approvals, including rate reviews, and the timing, impacts and outcomes thereof; expected future generation, capacity and production of the Company’s energy facilities; expectations regarding future capital investments, including expected timing, investment plans, sources of funds and impacts; expectations regarding the outcome of legal claims and disputes; strategy and goals; dividends to shareholders, including expectations regarding the sustainability thereof and the Company's ability to achieve its targeted annual dividend payout ratio; expectations regarding future "greening the fleet" initiatives; credit ratings and equity credit from rating agencies; expectations regarding debt repayment and refinancing; the future impact on the Company of actual or proposed laws, regulations and rules; the expected impact of changes in customer usage on the Regulated Services Group’s revenue; accounting estimates; interest rates, including the anticipated effect of an increase thereof; the implementation of new technology systems and infrastructure, including the expected timing thereof; financing costs; and currency exchange rates. All forward-looking information is given pursuant to the “safe harbour” provisions of applicable securities legislation.

The forecasts and projections that make up the forward-looking information contained herein are based on certain factors or assumptions which include, but are not limited to: the receipt of applicable regulatory approvals and requested rate decisions; the absence of material adverse regulatory decisions being received and the expectation of regulatory stability; the absence of any material equipment breakdown or failure; availability of financing (including tax equity financing and self-monetization transactions for U.S. federal tax credits) on commercially reasonable terms and the stability of credit ratings of the Corporation and its subsidiaries; the absence of unexpected material liabilities or uninsured losses; the continued availability of commodity supplies and stability of commodity prices; the absence of interest rate increases or significant currency exchange rate fluctuations; the absence of significant operational, financial or supply chain disruptions or liability, including relating to import controls and tariffs; the continued ability to maintain systems and facilities to ensure their continued performance; the absence of a severe and prolonged downturn in general economic, credit, social or market conditions; the successful and timely development and construction of new projects; the closing of pending acquisitions substantially in accordance with the expected timing for such acquisitions; the absence of capital project or financing cost overruns; sufficient liquidity and capital resources; the continuation of long term weather patterns and trends; the absence of significant counterparty defaults; the continued competitiveness of electricity pricing when compared with alternative sources of energy; the realization of the anticipated benefits of the Corporation’s acquisitions and joint ventures; the absence of a change in applicable laws, political conditions, public policies and directions by governments materially negatively affecting the Corporation; the ability to obtain and maintain licenses and permits; maintenance of adequate insurance coverage; the absence of material fluctuations in market energy prices; the absence of material disputes with taxation authorities or changes to applicable tax laws; continued maintenance of information technology infrastructure and the absence of a material breach of cybersecurity; the successful implementation of new information technology systems and infrastructure; favourable relations with external stakeholders; favourable labour relations; that the Corporation will be able to successfully integrate newly acquired entities, and the absence of any material adverse changes to such entities prior to closing; the absence of undisclosed liabilities of entities being acquired; that such entities will maintain constructive regulatory relationships with applicable regulatory authorities; the ability of the Corporation to retain key personnel of acquired entities and the value of such employees; no adverse developments in the business and affairs of the sellers during the period when transitional services are provided to the Corporation in connection with any acquisition; the ability of the Corporation to satisfy its liabilities and meet its debt service obligations following completion of any acquisition; and the ability of the Corporation to successfully execute future “greening the fleet” initiatives.

The forward-looking information contained herein is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Factors which

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	2

could cause results or events to differ materially from current expectations include, but are not limited to: changes in general economic, credit, social or market conditions; changes in customer energy usage patterns and energy demand; reductions in the liquidity of energy markets; global climate change; the incurrence of environmental liabilities; natural disasters, diseases, pandemics, public health emergencies and other force majeure events; critical equipment breakdown or failure; supply chain disruptions; the imposition of import controls or tariffs; the failure of information technology infrastructure and other cybersecurity measures to protect against data, privacy and cybersecurity breaches; failure to successfully implement, and cost overruns and delays in connection with, new information technology systems and infrastructure; physical security breach; the loss of key personnel and/or labour disruptions; seasonal fluctuations and variability in weather conditions and natural resource availability; reductions in demand for electricity, natural gas and water due to developments in technology; reliance on transmission systems owned and operated by third parties; issues arising with respect to land use rights and access to the Corporation’s facilities; terrorist attacks; fluctuations in commodity and energy prices; capital expenditures; reliance on subsidiaries; the incurrence of an uninsured loss; a credit rating downgrade; an increase in financing costs or limits on access to credit and capital markets; inflation; increases and fluctuations in interest rates and failure to manage exposure to credit and financial instrument risk; currency exchange rate fluctuations; restricted financial flexibility due to covenants in existing credit agreements; an inability to refinance maturing debt on favourable terms; disputes with taxation authorities or changes to applicable tax laws; failure to identify, acquire, develop or timely place in service projects to maximize the value of tax credits; requirement for greater than expected contributions to post-employment benefit plans; default by a counterparty; inaccurate assumptions, judgments and/or estimates with respect to asset retirement obligations; failure to maintain required regulatory authorizations; changes in, or failure to comply with, applicable laws and regulations; failure of compliance programs; failure to identify attractive acquisition or development candidates necessary to pursue the Corporation’s growth strategy; failure to dispose of assets (at all or at a competitive price) to fund the Company’s operations and growth plans; delays and cost overruns in the design and construction of projects; loss of key customers; failure to complete or realize the anticipated benefits of acquisitions or joint ventures; Atlantica (as defined herein) or a third party joint venture partner acting in a manner contrary to the Corporation’s interests; a drop in the market value of Atlantica's ordinary shares; facilities being condemned or otherwise taken by governmental entities; increased external stakeholder activism adverse to the Corporation’s interests; fluctuations in the price and liquidity of the Corporation’s common shares and the Corporation's other securities; the severity and duration of the COVID-19 pandemic, including the potential resurgence of COVID-19 and/or new strains of COVID-19, and collateral consequences thereof, including the disruption of economic activity, volatility in capital and credit markets and legislative and regulatory responses; impact of significant demands placed on the Corporation as a result of pending acquisitions or growth strategies; potential undisclosed liabilities of any entities being acquired by the Corporation; uncertainty regarding the length of time required to complete pending acquisitions; the failure to implement the Corporation’s strategic objectives or achieve expected benefits relating to acquisitions; indebtedness of any entity being acquired by the Corporation; unanticipated expenses and/or cash payments as a result of change of control and/or termination for convenience provisions in purchase or sale agreements; and the reliance on third parties for certain transitional services following the completion of an acquisition. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Some of these and other factors are discussed in more detail under the heading Enterprise Risk Management in this MD&A and in the Corporation’s MD&A for the three and twelve months ended December 31, 2022 (the “Annual MD&A”), and under the heading Enterprise Risk Factors in the Corporation's most recent AIF.

Forward-looking information contained herein (including any financial outlook) is provided for the purposes of assisting the reader in understanding the Corporation and its business, operations, risks, financial performance, financial position and cash flows as at and for the periods indicated and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that such information may not be appropriate for other purposes. Forward-looking information contained herein is made as of the date of this document and based on the plans, beliefs, estimates, projections, expectations, opinions and assumptions of management on the date hereof. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. While subsequent events and developments may cause the Corporation’s views to change, the Corporation disclaims any obligation to update any forward-looking information or to explain any material difference between subsequent actual events and such forward-looking information, except to the extent required by applicable law. All forward-looking information contained herein is qualified by these cautionary statements.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

Caution Concerning Non-GAAP Measures

AQN uses a number of financial measures to assess the performance of its business lines. Some measures are calculated in accordance with U.S. GAAP, while other measures do not have a standardized meaning under U.S. GAAP. These non-GAAP measures include non-GAAP financial measures and non-GAAP ratios, each as defined in Canadian National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. AQN’s method of calculating these measures may differ from methods used by other companies and therefore may not be comparable to similar measures presented by other companies.

The terms “Adjusted Net Earnings”, “Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization” (“Adjusted EBITDA”), “Adjusted Funds from Operations”, "Net Energy Sales", "Net Utility Sales" and "Divisional Operating Profit", which are used throughout this MD&A, are non-GAAP financial measures. An explanation of each of these non-GAAP financial measures is set out below and a reconciliation to the most directly comparable U.S. GAAP measure, in each case, can be found in this MD&A. In addition, “Adjusted Net Earnings” is presented throughout this MD&A on a per common share basis. Adjusted Net Earnings per common share is a non-GAAP ratio and is calculated by dividing Adjusted Net Earnings by the weighted average number of common shares outstanding during the applicable period.

AQN does not provide reconciliations for forward-looking non-GAAP financial measures as AQN is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various events that have not yet occurred, are out of AQN’s control and/or cannot be reasonably predicted, and that would impact the most directly comparable forward-looking U.S. GAAP financial measure. For these same reasons, AQN is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.

The compositions of Adjusted EBITDA, Adjusted Net Earnings, Adjusted Funds from Operations, and Divisional Operating Profit have been changed from those previously disclosed in the Annual MD&A to exclude gains and losses on disposition of assets. This change was made as gains and losses on disposition of assets are no longer used by management to evaluate the operating performance of the Company. Comparative figures for these metrics have been adjusted for the new compositions.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure used by many investors to compare companies on the basis of ability to generate cash from operations. AQN uses these calculations to monitor the amount of cash generated by AQN. AQN uses Adjusted EBITDA to assess the operating performance of AQN without the effects of (as applicable): depreciation and amortization expense, income tax expense or recoveries, acquisition and transition costs, certain litigation expenses, interest expense, gain or loss on derivative financial instruments, write down of intangibles and property, plant and equipment, earnings attributable to non-controlling interests exclusive of Hypothetical Liquidation at Book Value ("HLBV") income (which represents the value of net tax attributes earned in the period from electricity generated by certain of its U.S. wind power and U.S. solar generation facilities), non-service pension and post-employment costs, cost related to tax equity financing, costs related to management succession and executive retirement, costs related to prior period adjustments due to changes in tax law, costs related to condemnation proceedings, gain or loss on foreign exchange, earnings or loss from discontinued operations, changes in value of investments carried at fair value, gains and losses on disposition of assets, and other typically non-recurring or unusual items. AQN adjusts for these factors as they may be non-cash, unusual in nature and are not factors used by management for evaluating the operating performance of the Company. AQN believes that presentation of this measure will enhance an investor’s understanding of AQN’s operating performance. Adjusted EBITDA is not intended to be representative of cash provided by operating activities or results of operations determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items. For a reconciliation of Adjusted EBITDA to net earnings, see Non-GAAP Financial Measures starting on page 27 of this MD&A.

Adjusted Net Earnings

Adjusted Net Earnings is a non-GAAP financial measure used by many investors to compare net earnings from operations without the effects of certain volatile primarily non-cash items that generally have no current economic impact or items such as acquisition expenses or certain litigation expenses that are viewed as not directly related to a company’s operating performance. AQN uses Adjusted Net Earnings to assess its performance without the effects of (as applicable): gains or losses on foreign exchange, foreign exchange forward contracts, interest rate swaps, acquisition and transition costs, one-time costs of arranging tax equity financing, certain litigation expenses and write down of intangibles and property, plant and equipment, earnings or loss from discontinued operations, unrealized mark-to-market revaluation impacts, costs related to management succession and executive retirement, costs related to prior period adjustments due to changes in tax law, costs related to condemnation proceedings, changes in value of investments carried at fair value, gains and losses on disposition of assets, and other typically non-recurring or unusual items as these are not reflective of the performance of the underlying business of AQN. AQN believes that analysis and presentation of net earnings or loss on this basis will enhance an investor’s understanding of the operating performance of its businesses. Adjusted Net Earnings is not intended

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	4

to be representative of net earnings or loss determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items. For a reconciliation of Adjusted Net Earnings to net earnings, see Non-GAAP Financial Measures starting on page 28 of this MD&A.

Adjusted Funds from Operations

Adjusted Funds from Operations is a non-GAAP financial measure used by investors to compare cash provided by operating activities without the effects of certain volatile items that generally have no current economic impact or items such as acquisition expenses that are viewed as not directly related to a company’s operating performance. AQN uses Adjusted Funds from Operations to assess its performance without the effects of (as applicable): changes in working capital balances, acquisition and transition costs, certain litigation expenses, cash provided by or used in discontinued operations, cash provided by disposition of assets and other typically non-recurring items affecting cash from operations as these are not reflective of the long-term performance of the underlying businesses of AQN. AQN believes that analysis and presentation of funds from operations on this basis will enhance an investor’s understanding of the operating performance of its businesses. Adjusted Funds from Operations is not intended to be representative of cash provided by operating activities as determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items. For a reconciliation of Adjusted Funds from Operations to cash provided by operating activities, see Non-GAAP Financial Measures starting on page 29 of this MD&A.

Net Energy Sales

Net Energy Sales is a non-GAAP financial measure used by investors to identify revenue after commodity costs used to generate revenue where such revenue generally increases or decreases in response to increases or decreases in the cost of the commodity used to produce that revenue. AQN uses Net Energy Sales to assess its revenues without the effects of fluctuating commodity costs as such costs are predominantly passed through either directly or indirectly in the rates that are charged to customers. AQN believes that analysis and presentation of Net Energy Sales on this basis will enhance an investor’s understanding of the revenue generation of the Renewable Energy Group. It is not intended to be representative of revenue as determined in accordance with U.S. GAAP. For a reconciliation of Net Energy Sales to revenue, see Renewable Energy Group - 2023 First Quarter Renewable Energy Group Operating Results on page 24 of this MD&A.

Net Utility Sales

Net Utility Sales is a non-GAAP financial measure used by investors to identify utility revenue after commodity costs, either water, natural gas or electricity, where these commodity costs are generally included as a pass through in rates to its utility customers. AQN uses Net Utility Sales to assess its utility revenues without the effects of fluctuating commodity costs as such costs are predominantly passed through and paid for by utility customers. AQN believes that analysis and presentation of Net Utility Sales on this basis will enhance an investor’s understanding of the revenue generation of the Regulated Services Group. It is not intended to be representative of revenue as determined in accordance with U.S. GAAP. For a reconciliation of Net Utility Sales to revenue, see Regulated Services Group - 2023 First Quarter Regulated Services Group Operating Results on page 17 of this MD&A.

Divisional Operating Profit

Divisional Operating Profit is a non-GAAP financial measure. AQN uses Divisional Operating Profit to assess the operating performance of its business groups without the effects of (as applicable): depreciation and amortization expense, corporate administrative expenses, income tax expense or recoveries, acquisition costs, certain litigation expenses, interest expense, gain or loss on derivative financial instruments, write down of intangibles and property, plant and equipment, gain or loss on foreign exchange, earnings or loss from discontinued operations (excluding the sale of assets in the course of normal operations), non-service pension and post-employment costs, gains and losses on disposition of assets, and other typically non-recurring or unusual items. AQN adjusts for these factors as they may be non-cash, unusual in nature and are not factors used by management for evaluating the operating performance of the divisional units. Divisional Operating Profit is calculated inclusive of interest, dividend and equity income earned from indirect investments, and HLBV income. AQN believes that presentation of this measure will enhance an investor’s understanding of AQN’s divisional operating performance. Divisional Operating Profit is not intended to be representative of cash provided by operating activities or results of operations determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items. For a reconciliation of Divisional Operating Profit to revenue for AQN's main business units, see Regulated Services Group - 2023 First Quarter Regulated Services Group Operating Results on page 17 and Renewable Energy Group - 2023 First Quarter Renewable Energy Group Operating Results on page 24 of this MD&A.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

Overview and Business Strategy

AQN is incorporated under the Canada Business Corporations Act. AQN owns and operates a diversified portfolio of regulated and non-regulated generation, distribution, and transmission assets which are expected to deliver predictable earnings and cash flows. Through its activities, the Company aims to drive growth in earnings and cash flows to support a sustainable dividend and share price appreciation. AQN strives to achieve these results while also seeking to maintain a business risk profile consistent with its BBB flat investment grade credit ratings and a strong focus on Environmental, Social and Governance factors.

AQN's current quarterly dividend to shareholders is $0.1085 per common share, or $0.4340 per common share on an annualized basis. AQN believes that, on a long-term basis, its targeted annual dividend payout will allow for both a return on investment for shareholders and retention of cash within AQN to partially fund growth opportunities. Changes in the level of dividends paid by AQN are at the discretion of AQN’s Board of Directors (the “Board”), with dividend levels being reviewed periodically by the Board in the context of AQN’s financial performance and growth prospects.

AQN’s operations are organized across two primary business units consisting of: the Regulated Services Group, which primarily owns and operates a portfolio of regulated assets in the United States, Canada, Bermuda and Chile; and the Renewable Energy Group, which primarily operates a diversified portfolio of owned renewable generation assets.

AQN pursues investment opportunities with an objective of maintaining the current business mix between its Regulated Services Group and Renewable Energy Group and with leverage consistent with its current credit ratings.1 The business mix target may from time to time require AQN to grow its Regulated Services Group or implement other strategies in order to pursue investment opportunities within its Renewable Energy Group.

The Company also undertakes business development activities for both business units, primarily in North America, working to identify, develop, acquire, invest in, or divest of renewable energy facilities, regulated utilities and other complementary infrastructure projects.

Summary Structure of the Business

The following chart depicts, in summary form, AQN’s key businesses. A more detailed description of AQN’s organizational structure can be found in the most recent AIF.

1 See Treasury Risk Management -Downgrade in the Company's Credit Rating Risk in the Annual MD&A.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	6

Regulated Services Group

The Regulated Services Group operates a diversified portfolio of regulated utility systems located in the United States, Canada, Bermuda and Chile serving approximately 1,256,000 customer connections as at March 31, 2023 (using an average of 2.5 customers per connection, this translates into approximately 3,140,000 customers). The Regulated Services Group seeks to provide safe, high quality, and reliable services to its customers and to deliver stable and predictable earnings to AQN. In addition to encouraging and supporting organic growth within its service territories, the Regulated Services Group may seek to deliver long-term growth through accretive acquisitions of additional utility systems and pursuing "greening the fleet" opportunities.

The Regulated Services Group's regulated electrical distribution utility systems and related generation assets are located in the U.S. States of California, New Hampshire, Missouri, Kansas, Oklahoma, and Arkansas, as well as in Bermuda, which together served approximately 308,000 electric customer connections as at March 31, 2023. The group also owns and operates generating assets with a gross capacity of approximately 2.0 GW and has investments in generating assets with approximately 0.3 GW of net generation capacity.

The Regulated Services Group's regulated water distribution and wastewater collection utility systems are located in the U.S. States of Arizona, Arkansas, California, Illinois, Missouri, New York, and Texas as well as in Chile which together served approximately 573,000 customer connections as at March 31, 2023.

The Regulated Services Group's regulated natural gas distribution utility systems are located in the U.S. States of Georgia, Illinois, Iowa, Massachusetts, New Hampshire, Missouri, and New York, and in the Canadian Province of New Brunswick, which together served approximately 375,000 natural gas customer connections as at March 31, 2023.

Below is a breakdown of the Regulated Services Group’s Revenue by geographic area for the three months ended March 31, 2023.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

Renewable Energy Group

The Renewable Energy Group generates and sells electrical energy produced by its diverse portfolio of renewable power generation and clean power generation facilities primarily located across the United States and Canada. The Renewable Energy Group seeks to deliver growth through new power generation projects and complementary projects, such as energy storage.

The Renewable Energy Group operates, and directly owns interests in hydroelectric, wind, solar, renewable natural gas ("RNG") and thermal facilities with a combined gross generating capacity of approximately 2.7 GW and a net generating capacity (attributable to the Renewable Energy Group) of approximately 2.4 GW. Approximately 82% of the electrical output is sold pursuant to long term contractual arrangements which as of March 31, 2023 had a production-weighted average remaining contract life of approximately 10 years.

In addition to the assets that the Renewable Energy Group operates, the Renewable Energy Group has investments in generating assets with approximately 1.4 GW of net generating capacity, which includes the Company’s 51% interest in the Texas Coastal Wind Facilities (as defined herein) and approximately 42% interest in Atlantica Sustainable Infrastructure plc (“Atlantica”). Atlantica owns and operates a portfolio of international clean energy and water infrastructure assets under long term contracts with a Cash Available for Distribution weighted average remaining contract life of approximately 14 years as of March 31, 2023.

Below is a breakdown of the Renewable Energy Group’s generating capacity by geographic area as of March 31, 2023, which was comprised of net generating capacity of facilities owned and operated and net generating capacity of investments, including the Company’s 51% interest in the Texas Coastal Wind Facilities and approximately 42% interest in Atlantica.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

Significant Updates

Operating Results

AQN operating results relative to the same period last year are as follows:

(all dollar amounts in millions except per share information)	Three months ended March 31
Net earnings attributable to shareholders	270.1	91.0	197%
Adjusted Net Earnings1	119.9	141.2	(15)%
Adjusted EBITDA1	341.0	330.5	3%
Net earnings per common share	0.39	0.13	200%
Adjusted Net Earnings per common share1	0.17	0.21	(19)%

All values are in US Dollars.

1	See Caution Concerning Non-GAAP Measures.

Strategic Review of Renewable Energy Group

On May 11, 2023, the Company announced that the Board has initiated a strategic review of the Renewable Energy Group with the aim of enhancing shareholder value. To oversee the strategic review process, the Board has formed a Strategic Review Committee, comprised of directors Chris Huskilson (Chair), Amee Chande and Dan Goldberg.

Termination of Acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc.

On April 17, 2023, Liberty Utilities Co. ("Liberty Utilities"), an indirect subsidiary of AQN, mutually agreed with American Electric Power Company, Inc. and AEP Transmission Company, LLC to terminate the stock purchase agreement regarding the acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the "Kentucky Power Transaction Termination").

Completion of the Deerfield II Wind Project

On March 23, 2023, the Renewable Energy Group achieved full commercial operations (“COD”) at the 112 MW Deerfield II Wind Facility, located in Huron County, Michigan. The Deerfield II Wind Facility has agreed to sell all of its output to Siculus, Inc., a subsidiary of Meta, pursuant to a renewable energy purchase agreement.

California Rate Cases

During March and April 2023, the Regulated Services Group received final rate case orders at its Apple Valley Water, Park Water and CalPeco Electric systems, with aggregate annual revenue increases of $29.6 million including approximately $9.7 million due to increases in rate base. A one-time net earnings benefit of approximately $3.7 million from the retroactive impact of the orders was recorded in the first quarter of 2023, with a further $11.4 million expected in the second quarter of 2023.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	9

2023 First Quarter Results From Operations

Key Financial Information	Three months ended March 31
(all dollar amounts in $ millions except per share information)	2023		2022
Revenue	$	778.6	$	733.2
Net earnings attributable to shareholders	270.1		91.0
Cash provided by operating activities	34.2		166.2
Adjusted Net Earnings1	119.9		141.2
Adjusted EBITDA1	341.0		330.5
Adjusted Funds from Operations1	210.9		220.2
Dividends declared to common shareholders	75.4		115.6
Weighted average number of common shares outstanding	687,693,510		673,742,425
Per share
Basic net earnings	$	0.39	$	0.13
Diluted net earnings	$	0.39	$	0.13
Adjusted Net Earnings1	$	0.17	$	0.21
Dividends declared to common shareholders	$	0.11	$	0.17		1	See Caution Concerning Non-GAAP Measures.
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For the three months ended March 31, 2023, AQN reported basic net earnings per common share of $0.39 as compared to basic net earnings per common share of $0.13 during the same period in 2022, an increase of $0.26. This gain was primarily driven by the change in value of investments carried at fair value of $219.9 million primarily related to the Company's investment in Atlantica.

For the three months ended March 31, 2023, AQN reported Adjusted Net Earnings per common share of $0.17 as compared to $0.21 per common share during the same period in 2022, a decrease of $0.04 (see Caution Concerning Non-GAAP Measures). Adjusted Net Earnings decreased by $21.3 million year over year. The Company grew year over year Adjusted EBITDA by $10.5 million (see Caution Concerning Non-GAAP Measures), driven by growth in the Regulated Services Group's operating profit as a result of new rates at a number of the Company's utilities. This growth was partially offset by lower HLBV income in the Renewable Energy Group primarily as a result of the end of the production tax credit ("PTC") eligibility on projects commissioned in 2012, and increased interest of $24.0 million, driven by higher interest rates as well as increased borrowings to support growth initiatives.

For the three months ended March 31, 2023, AQN experienced an average exchange rate of Canadian to U.S. dollars of approximately 0.7398 as compared to 0.7897 in the same period in 2022, and an average exchange rate of Chilean pesos to U.S. dollars of approximately 0.0012 for the three months ended March 31, 2023 as compared to 0.0012 for the same period in 2022. As such, any year over year variance in revenue or expenses, in local currency, at any of AQN’s Canadian and Chilean entities is affected by a change in the average exchange rate upon conversion to AQN’s reporting currency.

For the three months ended March 31, 2023, AQN reported total revenue of $778.6 million as compared to $733.2 million during the same period in 2022, an increase of $45.4 million or 6.2%. The major factors impacting AQN’s revenue in the three months ended March 31, 2023 as compared to the same period in 2022 are as follows:

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	10
(all dollar amounts in $ millions)	Three months ended March 31
---	---	---
Comparative Prior Period Revenue	$	733.2
REGULATED SERVICES GROUP
Existing Facilities
Electricity: Increase is primarily due to higher pass through commodity costs.	21.6
Natural Gas: Increase is primarily due to higher pass through commodity costs.	4.7
Water: Increase is primarily due to the inflationary rate increase mechanism at the ESSAL Water System and organic growth at the Litchfield Park Water System.	4.7
Other:	0.2
	31.2
Rate Reviews
Electricity: Increase is due to implementation of new rates at the Empire, Bermuda and Granite State Electric Systems.	12.4
Natural Gas: Increase is primarily due to implementation of new rates at the EnergyNorth, Peach State, Empire and New Brunswick Gas Systems.	2.4
Water: Increase is due to the implementation of new rates at the Park Water System with one-time revenues from a recoupment to the third quarter of 2022.	4.6
	19.4
RENEWABLE ENERGY GROUP
Existing Facilities
Hydro: Decrease is primarily driven by lower retail sales in the Maritimes Region partially offset by higher production across all Canadian hydro facilities.	(1.0)
Wind CA: Decrease is primarily due to lower production across all Canadian wind facilities.	(2.3)
Wind U.S.: Increase is primarily due to higher energy capture prices at the Maverick Creek and Senate Wind Facilities.	4.2
Solar: Decrease is primarily driven by lower renewable energy certificate ("REC") revenue at the Great Bay Solar I and Great Bay Solar II Solar Facilities.	(1.3)
Thermal: Decrease is primarily driven by unfavourable energy market pricing and REC revenue at the Windsor Locks Thermal Facility along with lower production at the Sanger Thermal Facility.	(3.5)
Other: Decrease is due to lower portfolio optimization revenue at the Texas Coastal Wind Facilities.	(0.9)
	(4.8)
New Facilities
Other: Increase is primarily driven by the Blue Hill Wind Facility (achieved COD in April 2022).	1.4
	1.4
Foreign Exchange	(1.8)
Current Period Revenue	$	778.6		Algonquin Power & Utilities Corp. - Management Discussion & Analysis
---

2023 First Quarter Net Earnings Summary

Net earnings attributable to shareholders for the three months ended March 31, 2023 totaled $270.1 million as compared to net earnings of $91.0 million during the same period in 2022, an increase of $179.1 million or 196.8%. The following table outlines the changes to net earnings attributable to shareholders for the three months ended March 31, 2023 as compared to the same period in 2022. A more detailed analysis of these factors can be found under AQN: Corporate and Other Expenses.

Change in Net Earnings attributable to shareholders	Three months ended
	March 31
(all dollar amounts in $ millions)	2023
Net earnings attributable to shareholders - Prior Period Balance	$	91.0
Adjusted EBITDA1	10.5
Net earnings attributable to the non-controlling interest, exclusive of HLBV	(10.3)
Income tax expense	(15.2)
Interest expense	(24.0)
Other net losses	1.2
Unrealized loss on energy derivatives included in revenue	0.6
Pension and post-employment non-service costs	(2.4)
Change in value of investments carried at fair value	219.9
Gain on derivative financial instruments	1.5
Foreign exchange	(1.1)
Depreciation and amortization	(1.6)
Net earnings attributable to shareholders - Current Period Balance	$	270.1
Change in Net Earnings ($)	$	179.1
Change in Net Earnings (%)	196.8		%		1	See Caution Concerning Non-GAAP Measures.
---	---

During the three months ended March 31, 2023, cash provided by operating activities totaled $34.2 million as compared to $166.2 million during the same period in 2022, a decrease of $132.0 million primarily as a result of changes in working capital items. During the three months ended March 31, 2023, Adjusted Funds from Operations totaled $210.9 million as compared to Adjusted Funds from Operations of $220.2 million during the same period in 2022, a decrease of $9.3 million (see Caution Concerning Non-GAAP Measures).

During the three months ended March 31, 2023, Adjusted EBITDA totaled $341.0 million as compared to $330.5 million during the same period in 2022, an increase of $10.5 million or 3.2% (see Caution Concerning Non-GAAP Measures). A more detailed analysis of this variance is presented within the reconciliation of Adjusted EBITDA to net earnings set out below under Non-GAAP Financial Measures.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	12

2023 First Quarter Adjusted EBITDA Summary

Adjusted EBITDA (see Caution Concerning Non-GAAP Measures) for the three months ended March 31, 2023 totaled $341.0 million as compared to $330.5 million during the same period in 2022, an increase of $10.5 million or 3.2%. The breakdown of Adjusted EBITDA by the Company's main operating segments and a summary of changes are shown below.

Adjusted EBITDA1 by segment	Three months ended March 31
(all dollar amounts in $ millions)	2023			2022
Divisional Operating Profit for Regulated Services Group1	$	255.3		$	231.2
Divisional Operating Profit for Renewable Energy Group1	106.5			117.9
Administration Expenses	(17.8)			(17.5)
Other Income & Expenses	(3.0)			(1.1)
Total AQN Adjusted EBITDA1	$	341.0		$	330.5
Change in Adjusted EBITDA1 ($)	$	10.5
Change in Adjusted EBITDA1 (%)	3.2		%				1	See Caution Concerning Non-GAAP Measures.
---	---
Change in Adjusted EBITDA1 Breakdown	Three months ended March 31, 2023
---	---	---	---	---	---	---	---	---
(all dollar amounts in $ millions)	Regulated Services		Renewable Energy		Corporate		Total
Prior period balances	$	231.2	$	117.9	$	(18.6)	$	330.5
Existing Facilities and Investments	5.0		(9.1)		(1.9)		(6.0)
New Facilities and Investments	—		(0.8)		—		(0.8)
Rate Reviews	19.4		—		—		19.4
Foreign Exchange Impact	(0.3)		(1.5)		—		(1.8)
Administration Expenses	—		—		(0.3)		(0.3)
Total change during the period	$	24.1	$	(11.4)	$	(2.2)	$	10.5
Current Period Balances	$	255.3	$	106.5	$	(20.8)	$	341.0
1	See Caution Concerning Non-GAAP Measures.
---	---		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	13
---	---

REGULATED SERVICES GROUP

The Regulated Services Group operates rate-regulated utilities that as of March 31, 2023 provided distribution services to approximately 1,256,000 customer connections in the electric, natural gas, and water and wastewater sectors which is an increase of approximately 14,000 customer connections as compared to March 31, 2022.

The Regulated Services Group seeks to grow its business organically and through business development activities while using prudent acquisition criteria. The Regulated Services Group believes that its business results are maximized by building constructive regulatory and customer relationships, and enhancing customer connections in the communities in which it operates.

Utility System Type	As at March 31
						2022
(all dollar amounts in millions)	Assets		Net Utility Sales1		Total Customer Connections2		Assets		Net Utility Sales1		Total Customer Connections2
Electricity	4,832.6		190.1		308,000		4,774.6		181.5		307,000
Natural Gas	1,725.8		133.4		375,000		1,590.4		130.9		374,000
Water and Wastewater	1,760.9		83.6		573,000		1,405.7		75.8		561,000
Other	353.9		14.0				322.8		15.0
Total	$	8,673.2	$	421.1	1,256,000		$	8,093.5	$	403.2	1,242,000
Accumulated Deferred Income Taxes Liability	$	715.9					$	627.5

All values are in US Dollars.

1	Net Utility Sales for the three months ended March 31, 2023 and 2022. See Caution Concerning Non-GAAP Measures.
2	Total Customer Connections represents the sum of all active and vacant customer connections.

The Regulated Services Group aggregates the performance of its utility operations by utility system type – electricity, natural gas, and water and wastewater systems.

The electric distribution systems are comprised of regulated electrical distribution utility systems and served approximately 308,000 customer connections in the U.S. States of California, New Hampshire, Missouri, Kansas, Oklahoma and Arkansas and in Bermuda as at March 31, 2023.

The natural gas distribution systems are comprised of regulated natural gas distribution utility systems and served approximately 375,000 customer connections located in the U.S. States of New Hampshire, Illinois, Iowa, Missouri, Georgia, Massachusetts and New York and in the Canadian Province of New Brunswick as at March 31, 2023.

The water and wastewater distribution systems are comprised of regulated water distribution and wastewater collection utility systems and served approximately 573,000 customer connections located in the U.S. States of Arkansas, Arizona, California, Illinois, Missouri, New York, and Texas, and in Chile as at March 31, 2023.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	14

2023 First Quarter Usage Results

Electric Distribution Systems	Three months ended March 31
	2023	2022
Average Active Electric Customer Connections For The Period
Residential	262,400	261,500
Commercial and industrial	42,500	42,300
Total Average Active Electric Customer Connections For The Period	304,900	303,800
Customer Usage (GW-hrs)
Residential	755.1	844.9
Commercial and industrial	923.4	915.9
Total Customer Usage (GW-hrs)	1,678.5	1,760.8

For the three months ended March 31, 2023, the electric distribution systems' usage totaled 1,678.5 GW-hrs as compared to 1,760.8 GW-hrs for the same period in 2022, a decrease of 82.3 GW-hrs or 4.7%. The decrease in electricity consumption is primarily due to warmer weather at the Empire Electric System.

Approximately 47% of the Regulated Services Group's electric distribution systems' revenues are not expected to be impacted by changes in customer usage, as they are subject to volumetric decoupling or represent fixed fee billings.

Natural Gas Distribution Systems	Three months ended March 31
	2023	2022
Average Active Natural Gas Customer Connections For The Period
Residential	330,700	322,300
Commercial and industrial	41,100	39,100
Total Average Active Natural Gas Customer Connections For The Period	371,800	361,400
Customer Usage (MMBTU)
Residential	10,031,000	11,143,000
Commercial and industrial	8,714,000	8,879,000
Total Customer Usage (MMBTU)	18,745,000	20,022,000

For the three months ended March 31, 2023, usage at the natural gas distribution systems totaled 18,745,000 MMBTU as compared to 20,022,000 MMBTU during the same period in 2022, a decrease of 1,277,000 MMBTU, or 6.4%. The decrease in customer usage was primarily due to warmer weather at the Mid-States Gas System and EnergyNorth Gas System.

Approximately 86% of the Regulated Services Group's gas distribution systems' revenues are not expected to be impacted by changes in customer usage, as they are subject to volumetric decoupling or represent fixed fee billings.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	15
Water and Wastewater Distribution Systems	Three months ended March 31
---	---	---
	2023	2022
Average Active Customer Connections For The Period
Wastewater customer connections	51,000	47,600
Water distribution customer connections	508,800	495,500
Total Average Active Customer Connections For The Period	559,800	543,100
Gallons Provided (millions of gallons)
Wastewater treated	795	779
Water provided	8,507	8,618
Total Gallons Provided (millions of gallons)	9,302	9,397

For the three months ended March 31, 2023, the water and wastewater distribution systems provided approximately 8,507 million gallons of water to customers and treated approximately 795 million gallons of wastewater. This is compared to 8,618 million gallons of water provided and 779 million gallons of wastewater treated during the same period in 2022, a decrease in total gallons provided of 111 million or 1.3% and an increase in total gallons treated of 17 million or 2.2% This decrease in water provided and the increase in water treated is primarily due to higher precipitation at the Park Water System.

Approximately 50% of the Regulated Services Group's water and wastewater distribution systems' revenues are not expected to be impacted by changes in customer usage, as they are subject to volumetric decoupling or represent fixed fee billings.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

2023 First Quarter Regulated Services Group Operating Results

	Three months ended March 31
(all dollar amounts in $ millions)	2023		2022
Revenue
Regulated electricity distribution	$	315.6	$	280.7
Less: Regulated electricity purchased	(125.5)		(99.2)
Net Utility Sales - electricity1	190.1		181.5
Regulated gas distribution	271.1		263.4
Less: Regulated gas purchased	(137.7)		(132.5)
Net Utility Sales - natural gas1	133.4		130.9
Regulated water reclamation and distribution	87.4		78.6
Less: Regulated water purchased	(3.8)		(2.8)
Net Utility Sales - water reclamation and distribution1	83.6		75.8
Other revenue2	14.0		15.0
Net Utility Sales1,3	421.1		403.2
Operating expenses	(187.4)		(184.4)
Other income	10.3		4.5
HLBV4	11.3		7.9
Divisional Operating Profit1,5	$	255.3	$	231.2		1	See Caution Concerning Non-GAAP Measures.
---	---
2	See Note 18 in the unaudited interim consolidated financial statements.
3	This table contains a reconciliation of Net Utility Sales to revenue. The relevant sections of the table are derived from and should be read in conjunction with the unaudited consolidated statement of operations and Note 18 in the unaudited interim consolidated financial statements, “Segmented Information”. This supplementary disclosure is intended to more fully explain disclosures related to Net Utility Sales and provides additional information related to the operating performance of the Regulated Services Group. Investors are cautioned that Net Utility Sales should not be construed as an alternative to revenue.
4	HLBV income represents the value of net tax attributes monetized by the Regulated Services Group in the period at the Luning and Turquoise Solar Facilities and the Neosho Ridge, Kings Point and North Fork Ridge Wind Facilities (collectively the "Empire Wind Facilities").
5	This table contains a reconciliation of Divisional Operating Profit to revenue for the Regulated Services Group. The relevant sections of the table are derived from and should be read in conjunction with the unaudited consolidated statement of operations and Note 18 in the unaudited interim consolidated financial statements, “Segmented Information”. This supplementary disclosure is intended to more fully explain disclosures related to Divisional Operating Profit and provides additional information related to the operating performance of the Regulated Services Group. Investors are cautioned that Divisional Operating Profit should not be construed as an alternative to revenue.		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	17
---	---

2023 First Quarter Operating Results

For the three months ended March 31, 2023, the Regulated Services Group reported revenue of $674.2 million (i.e., $315.6 million of regulated electricity distribution, $271.1 million of regulated gas distribution and $87.4 million of regulated water reclamation and distribution) as compared to revenue of $622.8 million in the comparable period in the prior year (i.e., $280.7 million of regulated electricity distribution, $263.4 million of regulated gas distribution and $78.6 million of regulated water reclamation and distribution).

For the three months ended March 31, 2023, the Regulated Services Group reported a Divisional Operating Profit (excluding corporate administration expenses) of $255.3 million as compared to $231.2 million for the comparable period in the prior year (see Caution Concerning Non-GAAP Measures).

Highlights of the changes are summarized in the following table:

(all dollar amounts in $ millions)	Three months ended March 31
Prior Period Divisional Operating Profit1	$	231.2
Existing Facilities
Electricity: Decrease is driven by lower wind revenues at the Empire Electric System.	(2.1)
Gas: Decrease is driven by higher operating costs across the majority of gas systems.	(1.1)
Water: Increase is primarily due to lower operating costs at the Park Water System.	2.3
Other: Increase is driven by higher interest income on regulatory asset accounts primarily at the Empire Electric System.	5.9
	5.0
Rate Reviews
Electricity: Increase is due to implementation of new rates at the Empire, Bermuda and Granite State Electric Systems.	12.4
Gas: Increase is primarily due to the implementation of new rates at the EnergyNorth, Peach State, Empire and New Brunswick Gas Systems.	2.4
Water: Increase is due to the implementation of new rates at the Park Water System with one-time revenues from a recoupment to the third quarter of 2022.	4.6
	19.4
Foreign Exchange	(0.3)
Current Period Divisional Operating Profit1	$	255.3		1	See Caution Concerning Non-GAAP Measures.
---	---		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	18
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Regulatory Proceedings

The following table summarizes the major regulatory proceedings currently underway or completed or effective in 2023 within the Regulated Services Group.

Utility	Jurisdiction	Regulatory Proceeding Type	Rate Request <br>(millions)	Current Status
Completed Rate Reviews
BELCO	Bermuda	General Rate Case ("GRC")	$34.8	On September 30, 2021, BELCO filed its revenue allowance application in which it requested a $34.8 million increase for 2022 and a $6.1 million increase for 2023. On March 18, 2022, the Regulatory Authority (“RA”) approved an annual increase of $22.8 million, for a revenue allowance of $224.1 million for 2022 and $226.2 million for 2023. The RA authorized a 7.16% rate of return, comprised of a 62% equity and an 8.92% return on equity (“ROE”). In April 2022, BELCO filed an appeal in the Supreme Court of Bermuda challenging the decisions made by the RA through the recent Retail Tariff Review. A hearing on the appeal occurred in May 2023 and a judgment is expected mid-2023.
New Brunswick Gas	Canada	GRC	-$3.9	On November 22, 2021, filed its 2022 general rate application for a revenue decrease based on the Energy & Utilities Board's decision authorizing a capital structure of 45% equity and an ROE of 8.5%. In January 2022, New Brunswick Gas appealed the Energy & Utilities Board's cost of capital decision. In May 2022, the Energy & Utilities Board issued a partial decision approving a decrease in annual revenues of $1.0 million to become effective in July 2022. In June 2022, the Court of Appeal found in favour of New Brunswick Gas and remanded the cost of capital case back to the Energy & Utilities Board. On December 22, 2022 the Energy & Utilities Board issued a Final Order and approved an annual revenue increase of $1.3 million based on an ROE of 9.8%. New rates became effective January 1, 2023.
Apple Valley Water System	California	GRC	$2.9	On July 2, 2021, filed an application requesting revenue increases of $2.9 million for 2022, $2.1 million for 2023, and $2.3 million for 2024 based on an ROE of 9.4% and on a 57% equity capital structure. The California Public Utilities Commission ("CPUC") Public Advocates Office issued its report in January 2022. Rebuttal testimony was filed in February 2022 and a hearing was held in March 2022. On February 3, 2023, the Commission issued a Final Order authorizing an annual revenue increase of $1.5 million. New rates became effective in March 2023 retroactive to July 1, 2022.
Park Water System	California	GRC	$5.5	On July 2, 2021, filed an application requesting revenue increases of $5.5 million for 2022, $1.8 million for 2023, and $1.8 million for 2024 based on an ROE of 9.4% and on a 57% equity capital structure. CPUC Public Advocates Office issued its report in January 2022. Rebuttal testimony was filed in February 2022 and a hearing was held in March 2022. On February 3, 2023, the CPUC issued a Final Order authorizing an annual revenue increase of $1.1 million. New rates became effective in March 2023 retroactive to July 1, 2022.		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	19
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Utility	Jurisdiction	Regulatory Proceeding Type	Rate Request <br>(millions)	Current Status
---	---	---	---	---
CalPeco Electric System	California	GRC	$35.7	On May 28, 2021, filed an application requesting a revenue increase of $35.7 million for 2022 based on an ROE of 10.5% and on a 54% equity capital structure. CPUC Public Advocates Office issued its report on February 23, 2022 and CalPeco filed its rebuttal testimony in March 2022. In May 2022, a settlement was reached resolving all issues except ROE. The CPUC issued a Final Order on April 27, 2023 authorizing an annual revenue increase of $27.0 million. New rates will be effective in June 2023 retroactive to January 2022.
Various	Various	Various	$0.1	On February 22, 2023, the Arizona Corporation Commission issued an Order approving the proposed consolidation of rates and tariffs for two wastewater utilities and new rates to be effective March 1, 2023.
Pending Rate Reviews
St. Lawrence Gas	New York	GRC	$4.1	On November 24, 2021, filed an application requesting a revenue increase of $3.4 million based on an ROE of 10.5% and a capital structure of 50% equity. On January 31, 2022, filed a supplemental filing to update the requested revenue increase to $4.1 million. New York State Department of Public Service staff filed testimony on June 3, 2022 recommending an increase of $1.2 million in annual distribution revenues. St. Lawrence Gas filed rebuttal testimony on June 24, 2022 and updated request for an increase in distribution base revenues of $3.6 million. Settlement discussions began in July 2022 and a decision is expected in the second quarter of 2023.
Pine Bluff Water	Arkansas	GRC	$5.9	On September 30, 2022, filed an application seeking an increase in revenues of $5.9 million based on an ROE of 10.5% and an equity ratio of 52% to be phased in over three years.
Empire Electric	Arkansas	GRC	$7.3	On February 14, 2023, filed an application seeking an increase in revenues of $7.3 million based on an ROE of 10.25% and an equity ratio of 56% to be phased in over three years.
New Brunswick Gas	Canada	GRC	-$0.6	On March 3, 2023, filed a general rate application for a revenue decrease of $0.6 based on the Energy & Utilities Board's recent decisions authorizing a capital structure of 45% equity and an ROE of 9.8%.
Granite State Electric	New Hampshire	GRC	$15.5	On May 5, 2023, filed an application seeking a permanent increase in revenues of $15.5 million and a temporary increase of $6.7 million based on an ROE of 10.35% and an equity ratio of 55%.
New York Water	New York	GRC	$39.7	On May 4, 2023, filed an application seeking an increase in revenues of $39.7 million based on an ROE of 10% and an equity ratio of 50%.
Algonquin Power & Utilities Corp. - Management Discussion & Analysis
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Proceedings related to the Midwest Extreme Weather Event and the Retirement of Asbury

The February 2021 extreme winter storm conditions experienced in Texas and parts of the central U.S. (the "Midwest Extreme Weather Event") resulted in an extraordinary increase in costs incurred by Empire Electric for the purchase of fuel and power on behalf of its customers.

When Empire Electric filed its most recent Missouri rate case (the "Empire Rate Case") in May 2021, a request to recover the costs related to the Midwest Extreme Weather Event was included. In July 2021, Missouri House Bill 734 was signed into law, creating an option for utilities to finance the recovery of extraordinary weather event costs through securitization (the "Securitization Statute"). When it filed its surrebuttal testimony in January 2022, Empire Electric removed all costs related to the Midwest Extreme Weather Event from its rate request. Pursuant to the Securitization Statute, Empire Electric sought authorization for the issuance of approximately $222 million in securitized utility tariff bonds associated with the Midwest Extreme Weather Event.

In addition, as part of its 2017 and 2019 Integrated Resource Plans (“IRPs”), Empire Electric analyzed the effects of retiring Asbury, a coal-fired generation unit that was constructed in 1970, and determined that doing so would generate significant savings to customers. Asbury was retired on March 1, 2020. On July 23, 2020, the Missouri Public Service Commission ("MPSC") issued an Administrative Accounting Order ("AAO") that directed Empire Electric to establish regulatory asset and liability accounts, beginning January 1, 2020, to reflect the impact of the closure of Asbury on operating and capital expenses in Missouri.

Empire Electric initially sought to recover its Asbury related revenues and expenses, along with the balance of the AAO, in the Empire Rate Case. Following the passage of the Securitization Statute, all Asbury related balances were removed from the Empire Rate Case and, on March 21, 2022, Empire Electric filed a petition to securitize the Asbury related balances pursuant to the Securitization Statute. Empire Electric sought authority to issue approximately $141 million, in securitized utility tariff bonds for its Asbury costs, which include approximately $21 million in Asset Retirement Obligations, which are estimates of costs that Empire Electric will recover from the Asbury retirement but which have not yet been incurred.

On April 27, 2022, the MPSC issued an order consolidating, for purposes of hearing, the cases regarding the quantum financeable through securitization for Asbury and the Midwest Extreme Weather Event, which hearing was held the week of June 13, 2022. On August 18, 2022, and September 22, 2022, the MPSC issued and amended, respectively, a Report and Order authorizing Empire Electric to securitize approximately $290.4 million in qualified extraordinary costs (Midwest Extreme Weather Event), energy transition costs (Asbury) and upfront financing costs associated with the proposed securitization. The amounts authorized by the securitization order are generally consistent with the costs deferred by the Company in relation to these matters. Empire Electric filed a request for rehearing seeking reconsideration of the MPSC’s denial of recovery of five percent of the Midwest Extreme Weather Event costs, its calculation of accumulated deferred income taxes, and the exclusion of certain carrying charges associated with the Asbury plant, among other issues. On October 12, 2022, the MPSC denied all rehearing motions. Empire Electric appealed to the Missouri Court of Appeals – Western District on November 10, 2022. The Office of Public Counsel also filed an appeal, but withdrew that appeal on February 28, 2023. Briefing of the case was completed in April 2023.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

RENEWABLE ENERGY GROUP

2023 First Quarter Electricity Generation Performance
	Long Term Average Resource		Three months ended March 31
(Performance in GW-hrs sold)		2023		2022
Hydro Facilities:
Maritime Region	27.5		31.0		25.6
Quebec Region	56.0		63.6		56.9
Ontario Region	38.3		32.9		25.2
Western Region	9.6		8.0		9.0
	131.4		135.5		116.7
Canadian Wind Facilities:
St. Damase	20.9		16.6		23.0
St. Leon	121.4		96.6		118.6
Red Lily1	23.2		21.4		26.7
Morse	30.5		26.2		32.1
Amherst	65.3		60.3		68.5
Blue Hill2	188.2		152.2		62.5
EBR3	19.8		17.2		18.9
	469.3		390.5		350.3
U.S. Wind Facilities:
Sandy Ridge	47.1		36.2		42.7
Minonk	187.4		201.6		215.8
Senate	151.3		146.4		136.4
Shady Oaks	108.2		100.1		110.5
Odell	230.5		224.9		249.8
Deerfield4	160.4		160.1		169.0
Sugar Creek4	202.6		203.2		208.9
Maverick Creek4	503.3		459.5		446.4
Deerfield II5	9.0		7.2		—
	1,599.8		1,539.2		1,579.5
Solar Facilities:
Cornwall	2.6		2.0		2.2
Bakersfield	12.9		9.9		12.3
Great Bay	46.7		44.0		40.3
Altavista	36.8		34.1		34.3
Croton	1.1		1.0		1.0
Dalewood6	0.2		0.2		—
	100.3		91.2		90.1
Renewable Energy Performance	2,300.8		2,156.4		2,136.6
Thermal Facilities:
Windsor Locks	N/A7		31.0		35.4
Sanger	N/A7		9.4		33.3
			40.4		68.7
Total Performance			2,196.8		2,205.3
Algonquin Power & Utilities Corp. - Management Discussion & Analysis	22
---	---
1	AQN owns a 75% equity interest but accounts for the facility using the equity method. Figures show full energy produced by the facility.
---	---
2	The Blue Hill Wind Facility achieved COD on April 14, 2022. AQN owns a 20% equity interest but accounts for the facility using the equity method. Figures show expected long-term average resources ("LTAR") and full energy produced by the facility during the quarter.
3	AQN owns a 50% equity interest but accounts for the facility using the equity method. Figures show full energy produced by the facility during the quarter.		4	AQN owns a 51% equity interest in the Sugar Creek, Odell and Deerfield Wind Facilities but consolidates the facilities for accounting purposes. Figures show full energy produced by the facilities during the quarter.
---	---
5	The Deerfield II Wind Facility achieved COD on March 23, 2023. AQN owns a 50% equity interest but accounts for the facility using the equity method. Figures show full energy produced by the facility during the quarter.
6	The Dalewood Solar Facility achieved COD on December 21, 2022.
7	Natural gas fired co-generation facility.

2023 First Quarter Renewable Energy Group Performance

For the three months ended March 31, 2023, the Renewable Energy Group generated 2,196.8 GW-hrs of electricity as compared to 2,205.3 GW-hrs during the same period in 2022.

For the three months ended March 31, 2023, the hydro facilities generated 135.5 GW-hrs of electricity as compared to 116.7 GW-hrs produced in the same period in 2022, an increase of 16.1%. Electricity generated represented 103.1% of LTAR as compared to 88.8% during the same period in 2022.

For the three months ended March 31, 2023, the wind facilities produced 1,929.7 GW-hrs of electricity as compared to 1,929.8 GW-hrs produced in the same period in 2022, a decrease of 0.01%. Excluding the Blue Hill Wind Facility, which achieved COD on April 14, 2022, and the Deerfield II Wind Facility, which achieved COD on March 23, 2023, production was 5.2% below the same period last year. The wind facilities, including new facilities, generated electricity equal to 93.3% of LTAR as compared to 99.7% during the same period in 2022.

For the three months ended March 31, 2023, the solar facilities generated 91.2 GW-hrs of electricity as compared to 90.1 GW-hrs of electricity in the same period in 2022, an increase of 1.2%. The increase in production is partially due to the Dalewood Solar Facility achieving COD on December 21, 2022. Excluding the new facilities, production was 1.0% above the same period last year. The solar facilities, including new facilities, generated electricity equal to 90.9% of LTAR as compared to 90.0% in the same period in 2022.

For the three months ended March 31, 2023, the thermal facilities generated 40.4 GW-hrs of electricity as compared to 68.7 GW-hrs of electricity during the same period in 2022. During the same period, the Windsor Locks Thermal Facility generated 168.4 billion lbs of steam as compared to 168.7 billion lbs of steam during the same period in 2022.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	23
2023 First Quarter Renewable Energy Group Operating Results
---	---	---	---	---
	Three months ended March 31
(all dollar amounts in $ millions)	2023		2022
Revenue1
Hydro	$	8.2	$	10.6
Wind	56.1		57.7
Solar	5.3		5.4
Thermal	9.1		12.1
Total Non-Regulated Energy Sales	$	78.7	$	85.8
Less:
Cost of Sales - Energy2	(1.1)		(3.5)
Cost of Sales - Thermal	(6.7)		(9.4)
Net Energy Sales 3,4	$	70.9	$	72.9
Renewable Energy Credits5	9.9		9.2
Other Revenue	1.5		0.1
Total Net Revenue	$	82.3	$	82.2
Expenses & Other Income
Operating expenses	(32.7)		(27.6)
Gain on sale of renewable assets	—		1.2
Dividend, interest, equity and other income6	33.3		27.6
HLBV income7	23.6		34.5
Divisional Operating Profit3,8,9	$	106.5	$	117.9		1	Many of the Renewable Energy Group’s PPAs include annual rate increases. However, a change to the weighted average production levels resulting from higher average production from facilities that earn lower energy rates can result in a lower weighted average energy rate earned by the division as compared to the same period in the prior year.
---	---
2	Cost of Sales - Energy consists of energy purchases in the Maritime Region to manage the energy sales from the Tinker Hydro Facility which is sold to retail and industrial customers under multi-year contracts.
3	See Caution Concerning Non-GAAP Measures.
4	This table contains a reconciliation of Net Energy Sales to revenue. The relevant sections of the table are derived from and should be read in conjunction with the unaudited consolidated statement of operations and Note 18 in the unaudited interim consolidated financial statements, “Segmented information”. This supplementary disclosure is intended to more fully explain disclosures related to Net Energy Sales and provides additional information related to the operating performance of AQN. Investors are cautioned that Net Energy Sales should not be construed as an alternative to revenue.
5	Qualifying renewable energy projects receive RECs for the generation and delivery of renewable energy to the power grid. The RECs represent proof that 1 MW-hr of electricity was generated from an eligible energy source.
6	Includes dividends received from Atlantica and related parties (see Notes 6 and 13 in the unaudited interim consolidated financial statements) as well as the equity investment in the Stella, Cranell, East Raymond and West Raymond Wind Facilities (collectively, the "Texas Coastal Wind Facilities").
7	HLBV income represents the value of net tax attributes earned by the Renewable Energy Group in the period primarily from electricity generated by certain of its U.S. wind and U.S. solar generation facilities.<br><br>PTCs are earned as wind energy is generated based on a dollar per kW-hr rate prescribed in applicable federal and state statutes. For the three months ended March 31, 2023, the Renewable Energy Group's eligible facilities generated 1,047.7 GW-hrs representing approximately $29.3 million in PTCs earned as compared to 1,469.0 GW-hrs representing $38.2 million in PTCs earned during the same period in 2022. The majority of the PTCs have been allocated to tax equity investors to monetize the value to AQN of the PTCs and other tax attributes which are the primary drivers of HLBV income offset by the return earned by the investor. Some PTCs have been utilized directly by the Company to lower its overall effective tax rate.
8	Certain prior year items have been reclassified to conform to current year presentation.
9	This table contains a reconciliation of Divisional Operating Profit to revenue for the Renewable Energy Group. The relevant sections of the table are derived from and should be read in conjunction with the unaudited consolidated statement of operations and Note 18 in the unaudited interim consolidated financial statements, “Segmented Information”. This supplementary disclosure is intended to more fully explain disclosures related to Divisional Operating Profit and provides additional information related to the operating performance of the Renewable Energy Group. Investors are cautioned that Divisional Operating Profit should not be construed as an alternative to revenue.		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	24
---	---

2023 First Quarter Operating Results

For the three months ended March 31, 2023, the Renewable Energy Group’s facilities generated operating revenue of $78.7 million (i.e., non-regulated energy sales) as compared to $85.8 million in the comparable period in the prior year.

For the three months ended March 31, 2023, the Renewable Energy Group's facilities generated $106.5 million of Divisional Operating Profit as compared to $117.9 million during the same period in 2022, which represents a decrease of $11.4 million or 9.7% (see Caution Concerning Non-GAAP Measures).

Highlights of the changes are summarized in the following table:

(all dollar amounts in $ millions)	Three months ended March 31
Prior Period Divisional Operating Profit1	$	117.9
Existing Facilities and Investments
Hydro: Increase is primarily driven by higher production across all Canadian hydro facilities.	1.9
Wind CA: Decrease is primarily due to lower production across all Canadian wind facilities and higher operating expenses at the St. Damase and Amherst Wind Facilities.	(2.7)
Wind U.S.: Decrease is primarily driven by lower HLBV income as a result of tax attribute eligibility on projects commissioned in 2012 ending and higher operating expenses across the U.S. wind facilities. This is partially offset by higher energy capture prices at the Maverick Creek and Senate Wind Facilities.	(9.1)
Solar: Decrease is primarily driven by lower REC revenue at the Great Bay I and Great Bay II Solar Facilities, lower HLBV income for the Great Bay Solar I Facility along with higher operating expenses across the U.S. solar facilities.	(3.4)
Thermal: Decrease is primarily driven by unfavourable energy market pricing and REC revenue at the Windsor Locks Thermal Facility.	(0.7)
Other: Increase is due to higher equity income from the Texas Coastal Wind Facilities.	4.9
	(9.1)
New Facilities and Investments
Other: Decrease is primarily due to start-up costs at the RNG facilities.	(0.8)
	(0.8)
Foreign Exchange	(1.5)
Current Period Divisional Operating Profit1	$	106.5		1	See Caution Concerning Non-GAAP Measures.
---	---
2	See Notes 6 and 13 in the unaudited interim consolidated financial statements.		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	25
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AQN: CORPORATE AND OTHER EXPENSES

	Three months ended March 31
(all dollar amounts in $ millions)	2023		2022
Corporate and other expenses:
Administrative expenses	$	17.8	$	17.5
Loss on foreign exchange	1.4		0.3
Interest expense	81.9		57.9
Depreciation and amortization	121.6		120.0
Change in value of investments carried at fair value	(179.4)		40.5
Interest, dividend, equity, and other loss1	3.0		2.3
Pension and other post-employment non-service costs	5.0		2.6
Other net losses	3.5		4.7
Gain on derivative financial instruments	(2.2)		(0.7)
Income tax expense	24.7		9.5			1	Excludes income directly pertaining to the Regulated Services and Renewable Energy Groups (disclosed in the relevant sections).
---	---

2023 First Quarter Corporate and Other Expenses

For the three months ended March 31, 2023, administrative expenses totaled $17.8 million as compared to $17.5 million in the same period in 2022.

For the three months ended March 31, 2023, interest expense totaled $81.9 million as compared to $57.9 million in the same period in 2022. The increase was approximately one-third due to the funding of capital deployed in the second half of 2022 and two-thirds due to the increase in interest rates on variable rate borrowings.

For the three months ended March 31, 2023, depreciation expense totaled $121.6 million as compared to $120.0 million in the same period in 2022.

For the three months ended March 31, 2023, change in investments carried at fair value totaled a gain of $179.4 million as compared to a loss of $40.5 million in the same period in 2022. The Company records certain of its investments, including Atlantica, using the fair value method and accordingly any change in the fair value of the investment is recorded in the consolidated statement of operations (see Note 6 in the unaudited interim consolidated financial statements).

For the three months ended March 31, 2023, pension and post-employment non-service costs totaled $5.0 million as compared to $2.6 million in the same period in 2022. The increase was primarily due to higher interest costs and lower expected return on assets.

For the three months ended March 31, 2023, other net losses were $3.5 million as compared to $4.7 million in the same period in 2022. The decrease was primarily due to the timing of acquisition and transition-related costs. See Note 16 in the unaudited interim consolidated financial statements.

For the three months ended March 31, 2023, the gain on derivative financial instruments totaled $2.2 million as compared to a gain of $0.7 million in the same period in 2022. AQN uses derivative instruments to manage exposure to changes in commodity prices, foreign exchange rates, and interest rates. The gain in the first quarter of both 2023 and 2022 was primarily related to mark-to-markets on interest rate derivatives.

For the three months ended March 31, 2023, an income tax expense of $24.7 million was recorded as compared to an income tax expense of $9.5 million during the same period in 2022. The increase in income tax expense was primarily due to the tax impact associated with the change in fair value of the investment in Atlantica. This was partially offset by the impact of state deferred tax adjustments related to the acquisition of Liberty NY Water in 2022 and additional tax credits accrued. For the three months ended March 31, 2023, the Company accrued $12.4 million of investment tax credits and PTCs primarily associated with renewable energy projects that have either been placed in service or are expected to be placed in service by the end of 2023 as compared to $10.1 million recorded in the same period in 2022.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	26

NON-GAAP FINANCIAL MEASURES

Reconciliation of Adjusted EBITDA to Net Earnings

The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted EBITDA and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to U.S. GAAP consolidated net earnings.

(all dollar amounts in millions)	2023		2022
Net earnings attributable to shareholders	$	270.1	$	91.0
Add (deduct):
Net earnings attributable to the non-controlling interest, exclusive of HLBV	14.4		4.1
Income tax expense	24.7		9.5
Interest expense	81.9		57.9
Other net losses1	3.5		4.7
Unrealized loss on energy derivatives included in revenue	—		0.6
Pension and post-employment non-service costs	5.0		2.6
Change in value of investments carried at fair value2	(179.4)		40.5
Gain on derivative financial instruments	(2.2)		(0.7)
Loss on foreign exchange	1.4		0.3
Depreciation and amortization	121.6		120.0
Adjusted EBITDA	$	341.0	$	330.5

All values are in US Dollars.

1	See Note 16 in the unaudited interim consolidated financial statements.
2	See Note 6 in the unaudited interim consolidated financial statements.		Algonquin Power & Utilities Corp. - Management Discussion & Analysis	27
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Reconciliation of Adjusted Net Earnings to Net Earnings

The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Earnings and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to consolidated net earnings in accordance with U.S. GAAP.

The following table shows the reconciliation of net earnings to Adjusted Net Earnings exclusive of these items:

(all dollar amounts in millions except per share information)	2023		2022
Net earnings attributable to shareholders	$	270.1	$	91.0
Add (deduct):
Gain on derivative financial instruments	(2.2)		(0.7)
Other net losses1	3.5		4.7
Loss on foreign exchange	1.4		0.3
Unrealized loss on energy derivatives included in revenue	—		0.6
Change in value of investments carried at fair value2	(179.4)		40.5
Adjustment for taxes related to above	26.5		4.8
Adjusted Net Earnings	$	119.9	$	141.2
Adjusted Net Earnings per common share	$	0.17	$	0.21

All values are in US Dollars.

1	See Note 16 in the unaudited interim consolidated financial statements.
2	See Note 6 in the unaudited interim consolidated financial statements.

For the three months ended March 31, 2023, Adjusted Net Earnings totaled $119.9 million as compared to Adjusted Net Earnings of $141.2 million for the same period in 2022, a decrease of $21.3 million.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	28

Reconciliation of Adjusted Funds from Operations to Cash Provided by Operating Activities

The following table is derived from and should be read in conjunction with the consolidated statement of operations and consolidated statement of cash flows. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Funds from Operations and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to cash provided by operating activities in accordance with U.S GAAP.

The following table shows the reconciliation of cash provided by operating activities to Adjusted Funds from Operations exclusive of these items:

(all dollar amounts in millions)	2023		2022
Cash provided by operating activities	$	34.2	$	166.2
Add (deduct):
Changes in non-cash operating items	164.8		48.1
Production based cash contributions from non-controlling interests	9.1		3.7
Acquisition-related costs	2.8		2.2
Adjusted Funds from Operations	$	210.9	$	220.2

All values are in US Dollars.

For the three months ended March 31, 2023, Adjusted Funds from Operations totaled $210.9 million as compared to Adjusted Funds from Operations of $220.2 million for the same period in 2022, a decrease of $9.3 million.

SUMMARY OF PROPERTY, PLANT AND EQUIPMENT EXPENDITURES

	Three months ended March 31
(all dollar amounts in $ millions)	2023		2022
Regulated Services Group
Rate Base Maintenance1	85.7		$	80.1
Rate Base Growth	91.7		145.5
Property, Plant & Equipment Acquired2	—		609.0
	$	177.4	$	834.6
Renewable Energy Group
Maintenance1	$	7.4	$	7.3
Investment in Capital Projects2	28.0		19.9
	$	35.4	$	27.2
Total Capital Expenditures	$	212.8	$	861.8		1	Maintenance expenditures are calculated based on the depreciation expense for the period.
---	---
2	Includes expenditures on Property, Plant & Equipment, equity-method investees, and acquisitions of operating entities that may have been jointly developed by the Company with another third party developer. Excludes temporary advances to joint venture partners in connection with capital projects under development or construction.

2023 First Quarter Property, Plant and Equipment Expenditures

During the three months ended March 31, 2023, the Regulated Services Group invested $177.4 million in capital expenditures as compared to $834.6 million during the same period in 2022. The Regulated Services Group's investments during the first quarter of 2023 were primarily related to the construction of transmission and distribution main replacements, work on new and existing substation assets, and initiatives relating to the safety and reliability of water, electric and natural gas systems.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	29

During the three months ended March 31, 2023, the Renewable Energy Group incurred capital expenditures of $35.4 million as compared to $27.2 million during the same period in 2022. The Renewable Energy Group's investments during the first quarter of 2023 were primarily related to the development and/or construction of various projects and ongoing maintenance capital at existing operating sites.

2023 Capital Investments

The following discussion should be read in conjunction with the Caution Concerning Forward-Looking Statements and Forward-Looking Information section of this MD&A.

The Company expects to spend approximately $1.0 billion on capital investment opportunities in the 2023 fiscal year, which represents a reduction of approximately $2.6 billion compared to the Company's 2023 capital investment expectations set out in the Annual MD&A. This decrease is due to the Kentucky Power Transaction Termination. Actual expenditures in 2023 may vary due to, among other things, the timing of project investments and acquisitions, the availability of financing on acceptable terms, and realized foreign exchange rates.

The Regulated Services Group expects to spend approximately $700 million over the course of 2023 on continued efforts to expand operations, improve the reliability of the utility systems and broaden the technologies used to better serve its service areas. Project spending includes capital for structural improvements, specifically in relation to refurbishing substations, replacing poles and wires, drilling and equipping wells, main replacements, and reservoir pumping stations.

The Renewable Energy Group expects to spend approximately $300 million over the course of 2023 to (i) develop or further invest in development and construction (as applicable) of the Renewable Energy Group's wind, solar, and renewable natural gas projects, and (ii) with respect to various operational solar, thermal, hydro and wind assets to comply with safety regulations and drive operational efficiencies.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	30

LIQUIDITY AND CAPITAL RESERVES

AQN has revolving credit and letter of credit facilities as well as separate credit facilities for the Regulated Services Group and the Renewable Energy Group to manage the liquidity and working capital requirements of each division (collectively the “Bank Credit Facilities”).

Bank Credit Facilities

The following table sets out the Bank Credit Facilities available to AQN and its operating groups as at March 31, 2023:

											As at December 31, 2022
(all dollar amounts in millions)			Regulated Services Group			Renewable Energy Group			Total		Total
Revolving and term credit facilities	1,125.0	1	$	2,872.1	2	$	1,100.0	3	$	5,097.1	$	4,513.3
Funds drawn on facilities/ commercial paper issued			(1,402.2)			(123.8)			(1,877.2)		(1,532.5)
Letters of credit issued			(37.0)			(309.0)			(385.8)		(465.2)
Liquidity available under the facilities			1,432.9			667.2			2,834.1		2,515.6
Undrawn portion of uncommitted letter of credit facilities			—			(292.6)			(381.3)		(226.9)
Cash on hand									61.0		57.6
Total Liquidity and Capital Reserves	645.3		$	1,432.9		$	374.6		$	2,513.8	$	2,346.3
1 Includes a 50 million and 75 million uncommitted standalone letter of credit facility.
2 Includes 172.1 million fully drawn term facilities of ESSAL and Bermuda as at March 31, 2023 (163.3 million as at December 31, 2022).
3 Includes 600 million of uncommitted standalone letter of credit facilities.

All values are in US Dollars.

Corporate

On March 31, 2023, the Company's senior unsecured revolving credit facility was amended and restated to increase the borrowing capacity from $500.0 million to $1.0 billion with a new maturity date of March 31, 2028. As at March 31, 2023, the Company's $1.0 billion senior unsecured revolving credit facility (the "Corporate Credit Facility") had $351.2 million drawn and had $3.5 million of outstanding letters of credit.

As at March 31, 2023, the Company had also issued $36.3 million of letters of credit from its $50.0 million uncommitted letter of credit facility. On March 31, 2023, the Company entered into a new $75.0 million uncommitted bi-lateral credit facility.

Regulated Services Group

As at March 31, 2023, the Regulated Services Group's $1.0 billion senior unsecured revolving credit facility (the "Long Term Regulated Services Credit Facility") had $30.8 million drawn and had $37.0 million of outstanding letters of credit. The Long Term Regulated Services Credit Facility matures on April 29, 2027. As at March 31, 2023, the Regulated Services Group had $499.8 million of commercial paper issued and outstanding. As at March 31, 2023, the Regulated Services Group's $500.0 million senior unsecured revolving credit facility (the "Short Term Regulated Services Credit Facility") had no amounts drawn and no outstanding letters of credit. The Short Term Regulated Services Credit Facility matures on February 28, 2024.

As at March 31, 2023, the Regulated Services Group's $75.0 million senior unsecured revolving credit facility (the "Bermuda Credit Facility") had $74.3 million drawn. As at March 31, 2023, the Regulated Services Group's $25.0 million senior unsecured bilateral revolving credit facility (the "Bermuda Working Capital Facility") had $15.0 million drawn.

On November 30, 2022, the Regulated Services Group amended and restated its $1.1 billion senior unsecured syndicated delayed draw term facility ("the "Regulated Services Delayed Draw Term Facility") with a new maturity date of November 29, 2023. As at March 31, 2023, the Regulated Services Delayed Draw Term Facility had $610.4 million drawn in connection with the acquisition of Liberty NY Water. Subsequent to quarter end, the Company elected to terminate the remaining undrawn amount of $489.6 million. The Regulated Services Delayed Draw Term Facility matures on November 29, 2023.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	31

Renewable Energy Group

As at March 31, 2023, the Renewable Energy Group's $500.0 million senior unsecured syndicated revolving credit facility (the "Renewable Energy Credit Facility") had $123.8 million drawn and had $1.6 million in outstanding letters of credit. The Renewable Energy Credit Facility matures on July 22, 2027.

As at March 31, 2023, the Renewable Energy Group's bank lines consisted of $600.0 million letter of credit facilities (the "Renewable Energy LC Facilities"), including a $250.0 million uncommitted bilateral letter of credit facility and a $350.0 million uncommitted letter of credit facility. As at March 31, 2023, the Renewable Energy LC Facilities had $307.4 million in outstanding letters of credit.

Long Term Debt

On March 13, 2023, the Company repaid a $15.0 million senior unsecured note on its maturity.

Issuance of approximately $1.1 Billion of Subordinated Notes

On January 18, 2022, the Company closed (i) an underwritten public offering in the United States of $750 million aggregate principal amount of 4.75% fixed-to-fixed reset rate junior subordinated notes series 2022-B due January 18, 2082 (the "U.S. Notes"); and (ii) an underwritten public offering in Canada of C$400 million aggregate principal amount of 5.25% fixed-to-fixed reset rate junior subordinated notes series 2022-A due January 18, 2082 ("the Canadian Notes" and, together with the U.S. Notes, the "Notes"). The following table summarizes the expected use of the net proceeds from the offerings of the Notes compared to the actual use of such net proceeds:

Expected Use of Net Proceeds

Actual Use of Net Proceeds

As disclosed in the Company’s prospectus supplements dated January 12, 2022 relating to the offerings of the Notes, the Company previously expected that the net proceeds of the offerings of the Notes would be used to partially finance the proposed acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the “Kentucky Power Acquisition”); provided that, in the “short-term”, prior to the closing of the Kentucky Power Acquisition, the Company expected to use the net proceeds to reduce indebtedness as follows: (i) approximately $385.0 million to the Corporate Credit Facility; (ii) approximately $40.0 million to the Renewable Energy Credit Facility; (iii) approximately $415.0 million of commercial paper issued by Liberty Utilities; and (iv) approximately $219.9 million to the Long Term Regulated Services Credit Facility.

As a result of the Kentucky Power Transaction Termination, the Company’s actual use of the net proceeds from the offerings of the Notes is the reduction of indebtedness in such amounts as previously disclosed as the "short-term" use of the proceeds.

Credit Ratings

AQN has a long term consolidated corporate credit rating of BBB from Standard & Poor’s Financial Services LLC, (“S&P”), a BBB rating from DBRS Limited (“DBRS”) and a BBB issuer rating from Fitch Ratings Inc. (“Fitch”). Liberty Utilities has a corporate credit rating of BBB from S&P, a BBB issuer rating from Fitch and a Baa2 issuer rating from Moody’s Investor Service, Inc. (“Moody's”). Debt issued by Liberty Utilities Finance GP1 (“Liberty GP”) has a rating of BBB (high) from DBRS, BBB+ from Fitch, BBB from S&P and Baa2 from Moody's. Empire has an issuer rating of BBB from S&P and a Baa1 rating from Moody's. Liberty Utilities (Canada) LP, the parent company for the Canadian regulated utilities under the Regulated Services Group, has an issuer rating of BBB from DBRS. Algonquin Power Co. has a BBB issuer rating from S&P, a BBB issuer rating from DBRS and a BBB issuer rating from Fitch.

In April 2023, following the announcement of the Kentucky Power Transaction Termination, each of DBRS, Fitch, S&P and Moody’s made announcements regarding the credit ratings of the Corporation and its subsidiaries. DBRS and Fitch both affirmed their ratings and stable outlook on the Corporation and its subsidiaries, S&P affirmed its ratings and revised its outlooks to stable from negative on the Corporation and its subsidiaries and Moody’s affirmed its ratings and stable outlooks on Liberty Utilities and Liberty GP.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	32

Contractual Obligations

Information concerning contractual obligations as of March 31, 2023 is shown below:

(all dollar amounts in $ millions)	Total		Due in less<br>than 1 year		Due in 1<br>to 3 years		Due in 4<br>to 5 years		Due after<br>5 years
Principal repayments on debt obligations1,2	$	7,874.3	$	1,493.6	$	220.7	$	2,072.0	$	4,088.0
Advances in aid of construction	90.8		1.7		—		—		89.1
Interest on long-term debt obligations2	5,163.2		327.1		508.3		425.8		3,902.0
Purchase obligations	573.8		573.8		—		—		—
Environmental obligations	47.7		4.6		22.4		1.8		18.9
Derivative financial instruments:
Cross currency interest rate swaps	39.4		1.9		5.6		6.9		25.0
Interest rate swaps	0.1		—		—		0.1		—
Energy derivative and commodity contracts	93.0		12.4		37.8		29.0		13.8
Purchased power	280.1		54.9		57.8		24.9		142.5
Gas delivery, service and supply agreements	506.8		101.0		152.0		74.6		179.2
Service agreements	572.6		69.9		115.7		96.5		290.5
Capital projects	9.1		9.1		—		—		—
Land easements	528.0		13.3		26.9		27.6		460.2
Contract adjustment payments on equity units	95.4		75.6		19.8		—		—
Other obligations	321.2		36.0		6.4		5.1		273.7
Total Obligations	$	16,195.5	$	2,774.9	$	1,173.4	$	2,764.3	$	9,482.9		1	Exclusive of deferred financing costs, bond premium/discount, and fair value adjustments at the time of issuance or acquisition.
---	---
2	The Company's subordinated unsecured notes have a maturity in 2078, 2079, and 2082, respectively. However, the Company currently anticipates repaying such notes in 2023, 2029, and 2032, respectively, upon exercising its redemption right.

Equity

The common shares of AQN are publicly traded on the Toronto Stock Exchange ("TSX") and the New York Stock Exchange ("NYSE") under the trading symbol "AQN". As at May 9, 2023, AQN had 688,664,543 issued and outstanding common shares.

AQN may issue an unlimited number of common shares. The holders of common shares are entitled to dividends, if and when declared; to one vote for each share at meetings of the holders of common shares; and to receive a pro rata share of any remaining property and assets of AQN upon liquidation, dissolution or winding up of AQN. All shares are of the same class and with equal rights and privileges and are not subject to future calls or assessments.

AQN is also authorized to issue an unlimited number of preferred shares, issuable in one or more series, containing terms and conditions as approved by the Board. As at March 31, 2023, AQN had outstanding:

•4,800,000 cumulative rate reset Series A preferred shares, yielding 5.162% annually for the five-year period ending on December 31, 2023;

•100 Series C preferred shares that were issued in exchange for 100 Class B limited partnership units by St. Leon Wind Energy LP; and

•4,000,000 cumulative rate reset Series D preferred shares, yielding 5.091% annually for the five year period ending on March 31, 2024.

In addition, AQN’s outstanding equity units (the "Green Equity Units") (that are in the form of "corporate units") are listed on the NYSE under the ticker symbol "AQNU". As at May 9, 2023, there were 23,000,000 Green Equity Units outstanding. Pursuant to the purchase contract forming part of each outstanding Green Equity Unit, holders are required to purchase AQN common shares by no later than June 15, 2024. The minimum settlement rate under each purchase contract is 2.7778 common shares and the maximum settlement rate is 3.3333 common shares, resulting in a minimum of 63,889,400 common shares and a maximum of 76,665,900 common shares issuable on settlement of the purchase contracts.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	33

Declaration of 2023 Second Quarter Dividend of $0.1085 (C$0.1453) per Common Share

AQN currently targets annual growth in dividends payable to shareholders underpinned by increases in earnings and cash flow.

The Board has declared a second quarter 2023 dividend of $0.1085 per common share payable on July 14, 2023 to shareholders of record on June 30, 2023.

The Canadian dollar equivalent for the second quarter 2023 dividend is C$0.1453 per common share.

The previous four quarter U.S. and Canadian dollar equivalent dividends per common share have been as follows:

	Q3 2022		Q4 2022		Q1 2023		Q2 2023		Total
U.S. dollar dividend	$	0.1808	$	0.1808	$	0.1085	$	0.1085	$0.5786
Canadian dollar equivalent	$	0.2312	$	0.2438	$	0.1495	$	0.1453	$0.7698

C$800 million Bought Deal Common Equity Offering

On November 8, 2021, AQN closed a bought deal common share offering for gross proceeds of approximately C$800 million (the "Bought Deal Offering"). The following table summarizes the expected use of the net proceeds from the Bought Deal Offering compared to the actual use of such net proceeds:

Expected Use of Net Proceeds

Actual Use of Net Proceeds

As disclosed in the Company’s final short form prospectus dated November 3, 2021 relating to the Bought Deal Offering, the Company expected that the net proceeds of the Bought Deal Offering would be used to partially finance the Kentucky Power Acquisition; provided that, in the “short-term”, prior to the closing of the Kentucky Power Acquisition, the Company expected to use the net proceeds to reduce indebtedness as follows: (i) approximately $267.0 million to the Corporate Credit Facility; (ii) approximately $490.0 million to the Long Term Regulated Services Credit Facility; and (iii) approximately $11.0 million to Liberty Utilities’ commercial paper program.

As a result of the Kentucky Power Transaction Termination, the Company’s actual use of the net proceeds from the Bought Deal Offering is the reduction of indebtedness in such amounts as previously disclosed as the "short-term" use of the proceeds.

At-The-Market Equity Program

On August 15, 2022, AQN re-established an at-the-market equity program (“ATM Program”) that allows the Company to issue up to $500 million of common shares from treasury to the public from time to time, at the Company’s discretion, at the prevailing market price when issued on the TSX, the NYSE or any other existing trading market for the common shares of the Company in Canada or the United States.

During the three months ended March 31, 2023, the Company did not issue any common shares under its ATM Program. On January 12, 2023, AQN announced that no new common equity financings were expected through the end of 2024.

As at May 11, 2023, the Company has issued, since the inception of its initial ATM Program in 2019, a cumulative total of 36,814,536 common shares at an average price of $15.00 per share for gross proceeds of approximately $551.1 million (approximately $544.3 million net of commissions). Other related costs, primarily related to the establishment and subsequent re-establishments of the ATM Program, were approximately $4.8 million.

Dividend Reinvestment Plan

Effective March 16, 2023, AQN suspended its shareholder dividend reinvestment plan ("the Reinvestment Plan") for registered holders of common shares of AQN. Effective for the first quarter 2023 dividend (paid on April 14, 2023 to shareholders of record on March 31, 2023), shareholders participating in the Reinvestment Plan began receiving cash dividends. If the Company elects to reinstate the Reinvestment Plan in the future, shareholders who were enrolled in the Reinvestment Plan at its suspension and remain enrolled at reinstatement will automatically resume participation in the Reinvestment Plan.

As at March 31, 2023, 168,595,101 common shares representing approximately 21% of total common shares outstanding had been registered with the Reinvestment Plan. On January 13, 2023, 4,370,289 common shares were issued under the Reinvestment Plan.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	34

SHARE-BASED COMPENSATION PLANS

For the three months ended March 31, 2023, AQN recorded $0.7 million in total share-based compensation expense as compared to a recovery of $0.4 million for the same period in 2022. The compensation expense is recorded as part of operating expenses in the consolidated statement of operations. The portion of share-based compensation costs capitalized as cost of construction is insignificant.

As at March 31, 2023, total unrecognized compensation costs related to non-vested share-based awards was $40.6 million and is expected to be recognized over a period of 2.47 years.

Stock Option Plan

AQN has a stock option plan that permits the grant of share options to officers, directors, employees and selected service providers. Except in certain circumstances, the term of an option shall not exceed ten (10) years from the date of the grant of the option.

AQN determines the fair value of options granted using the Black-Scholes option-pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as an expense on a straight-line basis over the options’ vesting periods while ensuring that the cumulative amount of compensation cost recognized at least equals the value of the vested portion of the award at that date. During the three months ended March 31, 2023, the Company granted 1,368,744 options to executives of the Company. The options allow for the purchase of common shares at a weighted average price of C$10.76, the market price of the underlying common share at the date of grant. No stock options were exercised during the three months ended March 31, 2023.

As at March 31, 2023, a total of 3,995,524 options were issued and outstanding under the stock option plan.

Performance and Restricted Share Units

AQN issues performance share units (“PSUs”) and restricted share units ("RSUs") to certain employees as part of AQN’s long-term incentive program. During the three months ended March 31, 2023, the Company granted (including dividends) a combined total of 2,244,916 PSUs and RSUs to employees of the Company. During the three months ended March 31, 2023, the Company settled 655,081 PSUs, of which 328,069 PSUs were exchanged for common shares issued from treasury and 327,012 PSUs were settled at their cash value as payment for tax withholdings related to the settlement of the PSUs.

As at March 31, 2023, a combined total of 3,634,099 PSUs and RSUs were granted and outstanding under the performance and restricted share unit plan.

Directors' Deferred Share Units

AQN has a Directors' Deferred Share Unit Plan. Under the plan, non-employee directors of AQN receive all or any portion of their annual compensation in deferred share units (“DSUs”) and may elect to receive any portion of their remaining compensation in DSUs. During the three months ended March 31, 2023, the Company issued 46,091 DSUs (including DSUs in lieu of dividends) to the non-employee directors of the Company. No DSUs were settled during the three months ended March 31, 2023.

As at March 31, 2023, a total of 691,805 DSUs were outstanding under the Directors’ Deferred Share Unit Plan.

Bonus Deferral Restricted Share Units

The Company has a bonus deferral RSU program that is available to certain employees. The eligible employees have the option to receive a portion or all of their annual bonus payment in RSUs in lieu of cash. The RSUs provide for settlement in common shares, and therefore these RSUs are accounted for as equity awards. During the three months ended March 31, 2023, the Company settled 52,379 bonus RSUs, of which 23,678 were exchanged for common shares issued from treasury and 28,701 RSUs were settled at their cash value as payment for tax withholdings related to the settlement of the RSUs. In addition, during the three months ended March 31, 2023, 4,017 bonus deferral RSUs were granted (including RSUs in lieu of dividends) to employees of the Company pursuant to the bonus deferral RSU program. The RSUs are 100% vested.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	35

Employee Share Purchase Plan

AQN has an Employee Share Purchase Plan (the “ESPP”) which allows eligible employees to use a portion of their earnings to purchase common shares of AQN. The aggregate number of common shares reserved for issuance from treasury by AQN under this plan shall not exceed 4,000,000 shares. During the three months ended March 31, 2023, the Company issued 255,213 common shares to employees under the ESPP.

As at March 31, 2023, a total of 2,613,163 common shares had been issued under the ESPP.

RELATED PARTY TRANSACTIONS

Equity-method investments

The Company entered into a number of transactions with equity-method investees in 2023 and 2022 (see Note 13 in the unaudited interim consolidated financial statements).

The Company provides administrative and development services to its equity-method investees and is reimbursed for incurred costs. To that effect, the Company charged its equity-method investees1 $16.1 million in 2023, as compared to $7.4 million in 2022. Additionally, one of the equity-method investees (Liberty Development JV Inc.) provides development services to the Company on specified projects, for which it earns a development fee upon reaching certain milestones. However, during the three months ended March 31, 2023 and the three months ended March 31, 2022, no such development fees were charged to the Company. See Note 13 in the unaudited interim consolidated financial statements.

Redeemable non-controlling interest held by related party

Redeemable non-controlling interest held by related party represents a preference share in a consolidated subsidiary of the Company acquired by Liberty Development Energy Solutions B.V. (see Note 13 in the unaudited interim consolidated financial statements). Redemption is not considered probable as at March 31, 2023. The preference share was used to finance a portion of the Company's investment in Atlantica. During the three months ended March 31, 2023, the Company incurred non-controlling interest attributable to Liberty Development Energy Solutions B.V. of $6.1 million, as compared to $2.6 million during the same period in 2022, and recorded distributions of $6.0 million, for the three months ended March 31, 2023 as compared to $2.6 million during the same period in 2022 (see Note 13 in the unaudited interim consolidated financial statements).

Non-controlling interest held by related party

Non-controlling interest held by related party represents interest in a consolidated subsidiary of the Company acquired by a subsidiary of Atlantica in May 2019 for $96.8 million and an interest in Algonquin (AY Holdco) B.V., a consolidated subsidiary of the Company, acquired by Liberty Development JV Inc. in November 2021 for $39.4 million. The interest was used to finance a portion of the Company's investment in the Amherst Island Wind Facility. During the three months ended March 31, 2023, the Company recorded distributions of $6.1 million, as compared to $7.4 million during the same period in 2022.

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

ENTERPRISE RISK MANAGEMENT

The Corporation is subject to a number of risks and uncertainties, certain of which are described below. A risk is the possibility that an event might happen in the future that could have a negative effect on the financial condition, financial performance or business of the Corporation. The actual effect of any event on the Corporation’s business could be materially different from what is anticipated or described below. The description of risks below does not include all possible risks.

Led by the Chief Compliance and Risk Officer, the Corporation has an established enterprise risk management ("ERM") framework. The Corporation’s ERM framework follows the guidance of ISO 31000 and the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") Enterprise Risk Management - Integrated Framework (2013). The Corporation’s ERM Policy details the Corporation’s risk management processes and risk governance structure.

As part of the risk management process, risk registers have been developed across the organization through ongoing risk identification and risk assessment exercises facilitated by the Corporation’s internal ERM team. Key risks and associated mitigation strategies are reviewed by the executive-level Enterprise Risk Management Council and are presented to the Risk Committee of the Board periodically.

1 Primarily Liberty Development JV Inc. and its subsidiaries, Blue Hill Wind Energy Project Partnership, and Red Lily Wind Energy Partnership.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis

Identified risks are evaluated using a standardized risk scoring matrix to assess impact and likelihood. However, there can be no assurance that the Corporation's risk management activities will be successful in identifying, assessing, or mitigating the risks to which the Corporation is subject.

The risks discussed below are not intended as a complete list of all risks that AQN, its subsidiaries and affiliates are encountering or may encounter. Please see the Company's most recent AIF and Annual MD&A available on SEDAR and EDGAR for a further discussion of risk factors to which the Company is subject. To the extent of any inconsistency, the risks discussed below are intended to provide an update on those that were previously disclosed.

Treasury Risk Management

Capital Markets and Liquidity Risk

As at March 31, 2023, the Company had approximately $7,849.2 million of long-term consolidated indebtedness. Management of the Company believes, based on its current expectations as to the Company's future performance, that the cash flow from operations, the funds available under its credit facilities and from future asset recycling initiatives, and its ability to access capital markets will be adequate to enable the Company to finance its operations, execute its business strategy and maintain an adequate level of liquidity. However, the Company's expected revenue and capital expenditures are only estimates. Moreover, actual cash flows from operations will depend on regulatory, market and other conditions that are beyond the Company's control and which may be impacted by the risk factors herein. As a result, there can be no assurance that management’s expectations as to future performance will be realized.

The Company's ability to obtain additional debt or equity or issue other securities, on favourable terms or at all, may be adversely affected by negative perceptions of the Company, any adverse financial or operational performance, financial market disruptions, the failure or collapse of any financial institution, prevailing market views or perceptions, or other factors outside the Company's control. In addition, the Company may at times incur indebtedness in excess of its long-term leverage targets, in advance of raising the additional equity or similar securities or executing on asset recycling strategies necessary to repay such indebtedness and maintain its long-term leverage target. Any increase in the Company’s leverage or degradation of key credit metrics below threshold levels could, among other things: limit the Company’s ability to obtain additional financing for working capital, investment in subsidiaries, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; restrict the Company’s flexibility and discretion to operate its business; limit the Company’s ability to declare dividends; require the Company to dedicate a portion of cash flows from operations to the payment of interest on its existing indebtedness, in which case such cash flows would not be available for other purposes; cause rating agencies to re-evaluate or downgrade the Company’s existing credit ratings; require the Company to post additional collateral security under some of its contracts and hedging arrangements; expose the Company to increased interest expense on borrowings at variable rates; limit the Company’s ability to adjust to changing market conditions; place the Company at a competitive disadvantage compared to its competitors; make the Company vulnerable to any downturn in general economic conditions; render the Company unable to make expenditures that are important to its future growth strategies and require the Company to pursue alternative funding strategies, which may include accelerated asset recycling initiatives.

The Company will need to refinance or reimburse amounts outstanding under the Company’s existing consolidated indebtedness over time. There can be no assurance the Company will be successful in refinancing its indebtedness when necessary or that additional financing will be obtained when needed, on commercially reasonable terms or at all. In the event that the Company cannot refinance its indebtedness or raise additional indebtedness on terms that are not less favourable than the current terms, the Company's cash flows, ability to declare dividends or repay its indebtedness may be adversely affected.

The Company's ability to meet its debt service requirements will depend on its ability to generate cash in the future, which depends on many factors, including the Company's financial performance, debt service obligations, the realization of the anticipated benefits of acquisition and investment activities, and working capital and capital expenditure requirements. In addition, the Company's ability to borrow funds in the future to make payments on outstanding debt will depend on the satisfaction of covenants in existing credit agreements and other agreements. A failure to comply with any covenants or obligations under the Company’s consolidated indebtedness could result in a default under one or more such instruments, which, if not cured or waived, could result in the termination of dividends by the Company and permit acceleration of the relevant indebtedness. There can be no assurance that, if such indebtedness were to be accelerated, the Company's assets would be sufficient to repay such indebtedness in full. There can also be no assurance that the Company will generate cash flow in amounts sufficient to pay its outstanding indebtedness or to fund the Company's liquidity needs.

Interest Rate Risk

The Company is exposed to interest rate risk due to the impact of increasing benchmark interest rates and credit spreads on certain outstanding variable interest indebtedness, as well as any new borrowings on existing and new credit facilities and other debt issuances. Fluctuations in interest rates may also impact the costs to obtain other forms of capital and the feasibility of planned growth initiatives.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	37

In addition, for the Regulated Services Group, costs resulting from interest rate increases may not be recoverable in whole or in part, and “regulatory lag” may cause a time delay in the payment to the Regulated Services Group of any such costs that are recoverable. Rising interest rates may also negatively impact the economics of development projects, acquisitions and energy facilities, especially where project financing is being renewed or arranged.

As a result, fluctuations in interest rates, including the rate increases experienced in 2022, could materially increase the Corporation’s financing costs, limit the Corporation’s options for financing, and adversely affect its results of operations, cash flows, key credit metrics, borrowing capacity and ability to implement its business strategy.

As at March 31, 2023, approximately 90% of debt outstanding in AQN and its subsidiaries was subject to a fixed rate of interest and as a result, such debt is not subject to significant interest rate risk in the short term time horizon.

Borrowings subject to variable interest rates can fluctuate significantly from month to month, quarter to quarter and year to year. AQN's target is to maintain a minimum of 85% fixed rate debt. As a result, the Company hedges the interest rate risk on its variable interest rate borrowings from time to time. On December 17, 2022, the Company entered into an interest rate cap agreement in the amount of $390 million for the period between January 15, 2023 and January 15, 2024.

Based on amounts outstanding as at March 31, 2023, the impact to interest expense on variable rate loans from changes in interest rates are as follows:

•the Corporate Credit Facility is subject to a variable interest rate and had $351.2 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $3.5 million annually;

•the Long Term Regulated Services Credit Facility is subject to a variable interest rate and had $30.8 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $0.3 million annually;

•the Short Term Regulated Services Credit Facility is subject to a variable interest rate and had no amounts outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would not impact interest expense;

•the Regulated Services Delayed Draw Term Facility is subject to a variable interest rate and had $610.4 million outstanding as at March 31, 2023. The Regulated Services Group has locked in the variable rate until May 31, 2023 through an interest election request. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $3.1 million until the maturity date of November 29, 2023;

•the Bermuda Credit Facility is subject to a variable interest rate and had $74.3 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $0.7 million annually;

•the Bermuda Working Capital Facility is subject to a variable interest rate and had $15.0 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $0.2 million annually;

•the Regulated Services Group's commercial paper program is subject to a variable interest rate and had $499.8 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $5.0 million annually;

•the Renewable Energy Credit Facility is subject to a variable interest rate and had $123.8 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $1.2 million annually;

•term facilities at ESSAL that are subject to variable interest rates had $102.8 million outstanding as at March 31, 2023. As a result, a 100 basis point change in the variable rate charged would impact interest expense by $1.0 million annually; and

Term facilities at BELCO are not subject to variable interest rates as the Company entered into the above noted interest swap agreements to hedge the risk associated with interest rate fluctuation. In addition, on January 13, 2022, the Company entered into a forward starting swap to fix the interest rate for the second five-year term of the U.S. Notes.

Tax Risk and Uncertainty

The Corporation is subject to income and other taxes primarily in the United States and Canada; however, it is also subject to income and other taxes in international jurisdictions, such as Chile and Bermuda. Changes in tax laws or interpretations thereof in the jurisdictions in which the Corporation does business could adversely affect the Company's results from

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	38

operations, returns to shareholders, and cash flows. One or more taxing jurisdictions could seek to impose incremental or new taxes on the Company pursuant to one of the following or otherwise:

•The Inflation Reduction Act was signed into law in the United States on August 16, 2022. The legislation is inclusive of an extension and expansion of clean energy tax credits and a minimum tax. The minimum tax is not expected to be applicable to the Company in the near term; however, the Company cannot provide any assurance that it will not apply in the longer term.

•On April 19, 2021, the Canadian federal government delivered its 2021 budget which contained proposed measures related to limitations on interest deductibility and changes in relation to international taxation. Draft legislative proposals pertaining to interest deductibility were initially released for public comment on February 4, 2022, with revised legislative proposals subsequently released on November 3, 2022. The proposed rules on interest deductibility are expected to be effective no earlier than January 1, 2024. The proposed rules and their application are complex and could have a material adverse impact on the Corporation's effective tax rate and financial results in future years if enacted as drafted.

•As a consequence of the Organization for Economic Co-operation and Development’s (“OECD”) various initiatives on “Base Erosion and Profit Shifting”, there has been increased focus by taxing authorities across the globe to pursue common international principles for the entitlement to taxation of global corporate profits and eliminate perceived tax advantages enjoyed by multinational enterprises. Certain components of the relevant legislation in the jurisdictions in which the Corporation operates or has domiciled subsidiaries are expected to apply with application expected January 1, 2024. As the local legislation in the various jurisdictions is enacted and comes into effect, there is a risk that the Company's tax expense and/or cash taxes could materially increase or that the Company's interpretation of the new legislation may not align with that of the relevant tax authority’s interpretation. This could have a material adverse effect on the Corporation’s financial condition, results of operations, and cash flows in future periods.

The Corporation cannot provide assurance that the Canada Revenue Agency, the Internal Revenue Service or any other applicable taxation authority will agree with the tax positions taken by the Corporation, including with respect to claimed expenses and the cost amount of the Corporation’s depreciable properties. A successful challenge by an applicable taxation authority regarding such tax positions could adversely affect the results of operations and financial position of the Corporation.

Development by the Corporation of renewable power generation facilities in the United States depends in part on federal tax credits and other tax incentives. The Inflation Reduction Act has extended and expanded certain energy credits, providing greater certainty regarding the availability of these credits on a going forward basis. However, the rules governing these tax credits still include technical requirements for credit eligibility. If the Corporation is unable to complete construction on current or planned projects within certain deadlines or satisfy certain new requirements relating to prevailing wage and apprenticeship requirements, the reduced incentives may be insufficient to support continued development or may result in substantially reduced financial benefits from facilities or long-term investment in facilities that the Corporation is committed to complete. In addition, the Corporation has entered into certain tax equity financing transactions with financial partners for certain of its renewable power facilities in the United States, under which allocations of future cash flows to the Corporation from the applicable facility could be adversely affected in the event that there are changes in U.S. tax laws that apply to facilities previously placed in service.

OPERATIONAL RISK MANAGEMENT

Inflation Risk

AQN's profitability could be impacted by inflation increases above long-term averages. The Regulated Services Group’s facilities are subject to rate setting by its regulatory agencies. The time between the incurrence of costs and the granting of the rates to recover those costs by regulatory agencies is known as regulatory lag. As a result of regulatory lag, inflationary effects and timing delays may impact the ability to recover expenses and/or capital costs, and profitability could be impacted. In the event of significant inflation, the impact of regulatory lag on the Company would be increased. In order to mitigate this exposure, the Regulated Services Group seeks to obtain approval for regulatory constructs in the states in which it operates to allow for timely recovery of operating expenses and capital costs.

The Renewable Energy Group's assets are subject to long term PPAs, most of which are not indexed to inflation and could experience declines in profitability if operating costs increase at a rate greater than the offtake price.

Development and construction projects could experience a decrease in expected returns as a result of increased costs. To mitigate the risk of inflation the Company attempts to enter into fixed price construction agreements and fixed price offtake agreements.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	39

Tariff Risk

Changes in tariffs or duties, such as antidumping and countervailing duty rates that could be put in place as a result of the U.S. Department of Commerce's investigation into an antidumping and countervailing duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand and Cambodia, may adversely affect the capital expenditures required to develop or construct the Corporation’s projects, as well as the timing for completion, or viability, of such projects. In the U.S., tariffs have been imposed in recent years on imports of solar panels, aluminum and steel, among other goods and raw materials. These occurrences may have adverse impacts to the Corporation, as the buyer of goods, which could adversely affect the Corporation’s expected returns, results of operations and cash flows.

Litigation Risks and Other Contingencies

AQN and certain of its subsidiaries are involved in various litigation, claims and other legal and regulatory proceedings that arise from time to time in the ordinary course of business. Any accruals for contingencies related to these items are recorded in the financial statements at the time it is concluded that a material financial loss is likely and the related liability is estimable. Anticipated recoveries under existing insurance policies are recorded when reasonably assured of recovery.

Mountain View Fire

On November 17, 2020, a wildfire now known as the Mountain View Fire occurred in the territory of Liberty Utilities (CalPeco Electric) LLC ("Liberty CalPeco"). The cause of the fire remains under investigation, and CAL FIRE has not yet released its final report. There are currently 17 active lawsuits that name certain subsidiaries of the Company as defendants in connection with the Mountain View Fire, as well as one non-litigation claim brought by the U.S. Department of Agriculture seeking reimbursement for alleged fire suppression costs. Twelve lawsuits are brought by groups of individual plaintiffs alleging causes of action including negligence, inverse condemnation, nuisance, trespass, and violations of Cal. Pub. Util. Code 2106 and Cal. Health and Safety Code 13007 (one of these twelve lawsuits also alleges the wrongful death of an individual and various subrogation claims on behalf of insurance companies). In another lawsuit, County of Mono, Antelope Valley Fire Protection District, and Bridgeport Indian Colony allege similar causes of action and seek damages for fire suppression costs, law enforcement costs, property and infrastructure damage, and other costs. In four other lawsuits, insurance companies allege inverse condemnation and negligence and seek recovery of amounts paid and to be paid to their insureds. The likelihood of success in these lawsuits cannot be reasonably predicted. Liberty CalPeco intends to vigorously defend them. The Company has wildfire liability insurance that is expected to apply up to applicable policy limits.

Apple Valley Condemnation Proceedings

On January 7, 2016, the Town of Apple Valley filed a lawsuit seeking to condemn the utility assets of Liberty Utilities (Apple Valley Ranchos Water) Corp. (“Liberty Apple Valley”). On May 7, 2021, the Court issued a Tentative Statement of Decision denying the Town of Apple Valley’s attempt to take the Apple Valley water system by eminent domain. The ruling confirmed that Liberty Apple Valley’s continued ownership and operation of the water system is in the best interest of the community. On October 14, 2021, the Court issued the Final Statement of Decision. The Court signed and entered an Order of Dismissal and Judgment on November 12, 2021. On January 7, 2022, the Town filed a notice of appeal of the judgment entered by the Court. On August 2, 2022, the Court issued a ruling awarding Liberty Apple Valley approximately $13.2 million in attorney’s fees and litigation costs. The Town filed a notice of appeal of the fee award on August 22, 2022. The Town’s appeal of the condemnation judgment and fee award have been consolidated into one appellate docket, which is proceeding before the Court of Appeals.

Technology Infrastructure Implementation Risk

The Company relies upon various information and operational technology infrastructure systems to carry out its business processes and operations. This subjects the Company to inherent costs and risks associated with maintaining, upgrading, replacing and changing information and operational technology systems. This includes impairment of its technology systems, potential disruption of operations, business process and internal control systems, substantial capital expenditures, demands on management time and other risks of delays, and difficulties in upgrading, transitioning and integrating technology systems.

AQN and certain of its subsidiaries are in the process of updating their technology infrastructure systems through the implementation of an integrated customer solution platform, which is expected to include customer billing, enterprise resource planning systems and asset management systems. The implementation of these systems is being managed by a dedicated team. Following successful pilot implementations, deployment began in 2022 and is expected to occur in a phased approach across the enterprise through 2024. The implementation of such technology systems will require the investment of significant financial and human resources. Disruptions, delays or deficiencies in the design, implementation, or operation of these technology systems or integration of these systems with other existing information technology or operations technology could: adversely affect the Company’s operations, including its ability to monitor its business, pay its suppliers, bill its customers, and report financial information accurately and on a timely basis; lead to higher than expected

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	40

costs; lead to increased regulatory scrutiny or adverse regulatory consequences; or result in the failure to achieve the expected benefits. As a result, the Company’s operations, financial condition, cash flows and results of operations could be adversely affected.

QUARTERLY FINANCIAL INFORMATION

The following is a summary of unaudited quarterly financial information for the eight quarters ended March 31, 2023:

(all dollar amounts in $ millions except per share information)	2nd Quarter 2022		3rd Quarter 2022		4th Quarter 2022		1st Quarter 2023
Revenue	$	619.4	$	664.6	$	748.0	$	778.6
Net earnings (loss) attributable to shareholders	(33.4)		(195.2)		(74.4)		270.1
Net earnings (loss) per share	(0.05)		(0.29)		(0.11)		0.39
Diluted net earnings (loss) per share	(0.05)		(0.29)		(0.11)		0.39
Adjusted Net Earnings1	109.7		72.8		151.0		119.9
Adjusted Net Earnings per common share1	0.16		0.11		0.22		0.17
Adjusted EBITDA1	289.3		278.5		358.3		341.0
Total assets	17,737.9		17,653.3		17,627.6		17,927.1
Long term debt2	7,455.4		7,705.1		7,512.3		7,849.2
Dividend declared per common share	$	0.18	$	0.18	$	0.18	$	0.11
	2nd Quarter 2021		3rd Quarter 2021		4th Quarter 2021		1st Quarter 2022
Revenue	$	524.1	$	524.4	$	592.0	$	733.2
Net earnings (loss) attributable to shareholders	103.2		(27.9)		175.6		91.0
Net earnings (loss) per share	0.16		(0.05)		0.27		0.13
Diluted net earnings (loss) per share	0.16		(0.05)		0.26		0.13
Adjusted Net Earnings1	91.7		96.0		137.0		141.2
Adjusted Net Earnings per common share1	0.15		0.15		0.21		0.21
Adjusted EBITDA1	244.8		250.3		298.3		330.5
Total assets	16,453.7		16,699.0		16,797.5		17,669.9
Long term debt2	6,622.6		6,870.3		6,211.7		7,191.6
Dividend declared per common share	$	0.17	$	0.17	$	0.17	$	0.17		1	See Caution Concerning Non-GAAP Measures.
---	---
2	Includes current portion of long-term debt, long-term debt and convertible debentures.

The quarterly results are impacted by various factors including seasonal fluctuations and acquisitions of facilities as noted in this MD&A.

Quarterly revenues have fluctuated between $524.1 million and $778.6 million over the prior two year period. A number of factors impact quarterly results including acquisitions, seasonal fluctuations, and winter and summer rates built into the PPAs. In addition, a factor impacting revenues year over year is the fluctuation in the strength of the Canadian dollar relative to the U.S. dollar which can result in significant changes in reported revenue from Canadian operations.

Quarterly net earnings attributable to shareholders have fluctuated between a loss of $195.2 million and earnings of $270.1 million over the prior two year period. Earnings have been significantly impacted by non-cash factors such as deferred tax recovery and expense, impairment of intangibles, property, plant and equipment and mark-to-market gains and losses on financial instruments.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	41

DISCLOSURE CONTROLS AND PROCEDURES

AQN's management carried out an evaluation as of March 31, 2023, under the supervision of and with the participation of AQN’s Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operations of AQN’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15 (e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the CEO and the CFO have concluded that as of March 31, 2023, AQN’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by AQN in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms of the U.S. Securities and Exchange Commission, and is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management Report on Internal Controls over Financial Reporting

Management, including the CEO and the CFO, is responsible for establishing and maintaining internal control over financial reporting. Management, as at the end of the period covered by this interim filing, designed internal controls over financial reporting to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. The control framework management used to design the Company's internal control over financial reporting is that established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Changes in Internal Controls over Financial Reporting

For the three months ended March 31, 2023, there has been no change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

Due to its inherent limitations, disclosure controls and procedures or internal control over financial reporting may not prevent or detect all misstatements based on error or fraud. Further, the effectiveness of internal control is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

AQN prepared its unaudited interim consolidated financial statements in accordance with U.S. GAAP. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, and disclosure of contingent assets and liabilities. Significant areas requiring the use of management judgment relate to the scope of consolidated entities, useful lives and recoverability of depreciable assets, the measurement of deferred taxes and the recoverability of deferred tax assets, rate-regulation, unbilled revenue, pension and post-employment benefits, fair value of derivatives and fair value of assets and liabilities acquired in a business combination. Actual results may differ from these estimates.

AQN’s significant accounting policies and new accounting standards are discussed in Notes 1 and 2, respectively, in the Company's unaudited interim consolidated financial statements.

Algonquin Power & Utilities Corp. - Management Discussion & Analysis	42

Document

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Arun Banskota, President and Chief Executive Officer of Algonquin Power & Utilities Corp., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Algonquin Power & Utilities Corp. (the “issuer”) for the interim period ended March 31, 2023.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 11, 2023

/s/ Arun Banskota

_______________________

Arun Banskota

President and Chief Executive Officer

Document

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Darren Myers, Chief Financial Officer of Algonquin Power & Utilities Corp., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Algonquin Power & Utilities Corp. (the “issuer”) for the interim period ended March 31, 2023.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 11, 2023

/s/ Darren Myers

_______________________

Darren Myers

Chief Financial Officer

Document

Algonquin Power & Utilities Corp. Announces 2023 First Quarter Financial Results

OAKVILLE, Ontario - May 11, 2023 - Algonquin Power & Utilities Corp. (TSX/NYSE: AQN) (“AQN” or the “Company”) today announced financial results for the first quarter ended March 31, 2023. All amounts are shown in United States dollars (“U.S. $” or “$”), unless otherwise noted.

“In the first quarter of 2023, we achieved operational milestones in line with our targets,” said Arun Banskota, President and Chief Executive Officer of AQN. “In our regulated business, we achieved an increased operating profit reflecting planned execution and constructive rate case outcomes. In our renewables business, we advanced our project pipeline and achieved overall financial performance consistent with our expectations.”

First Quarter Financial Highlights

•Adjusted EBITDA1 of $341.0 million, an increase of 3%;

•Adjusted Net Earnings1 of $119.9 million, a decrease of 15%; and

•Adjusted Net Earnings1 per common share of $0.17, a decrease of 19%, in each case on a year-over-year basis.

All amounts in U.S. millions except per share information	Three months ended March 31
		2022		Change
Revenue	$	778.6	$	733.2	6%
Net earnings attributable to shareholders	270.1		91.0		197%
Per common share	0.39		0.13		200%
Cash provided by operating activities	34.2		166.2		(79)%
Adjusted Net Earnings1	119.9		141.2		(15)%
Per common share	0.17		0.21		(19)%
Adjusted EBITDA1	341.0		330.5		3%
Adjusted Funds from Operations1	210.9		220.2		(4)%
Dividends per common share	0.1085		0.1706		(36)%

All values are in US Dollars.

1 Please refer to "Non-GAAP Measures" below for further details.

Quarterly Results

•Solid Regulated Growth from New Rate Implementations – Operating profit for the Regulated Services Group increased to $255.3 million from $231.2 million, up $24.1 million from the prior year. The year-over-year increase in operating profit was primarily driven by new rates at a number of the Company's utilities, most notably at the Empire Electric and Park Water systems.

•Stable Year-Over-Year Renewable Operating Performance Reduced by HLBV Roll Offs – Operating profit, excluding Hypothetical Liquidation at Book Value (“HLBV”) income, for the Renewable Energy Group during the three months ended March 31, 2023 was effectively flat year-over-year. Total operating profit for the Renewable Energy Group was $106.5 million, down $11.4 million from the prior year. The decline was driven by lower HLBV income primarily as a result of the end of production tax credit eligibility on 2012 vintage facilities, as previously experienced in the latter half of 2022. Additionally, modestly lower production from the Company’s renewable assets was offset by improved results at its Texas Coastal Wind Facilities.

•Higher Interest Expenses Reflect Growth Financing and Macro Environment – Interest expense increased by $24.0 million year-over-year, with approximately two-thirds of this increase attributable to higher short-term borrowing costs and approximately one-third attributable to financings to support growth initiatives.

Other Recent Highlights

•Termination of Acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. – On April 17, 2023, the Company announced it had mutually agreed with American Electric Power Company, Inc. and AEP Transmission Company, LLC to terminate the stock purchase agreement regarding the acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the “Kentucky Power Transaction Termination”).

•Key California Rate Case Resolved; Settlement Approved – On April 27, 2023, the Company received a final order in its CalPeco Electric system rate case, with an annual revenue increase of $27.0 million, including approximately $7.1 million due to increases in rate base. The order approved an authorized return on equity (“ROE”) of 10% and an equity ratio of 52.5%. A one-time net earnings benefit of approximately $11.4 million is expected in the second quarter of 2023.

•New Rate Cases Filed by New York Water and Empire Electric Arkansas – On May 4, 2023, the Company filed a New York Water rate application seeking a revenue increase of $39.7 million, based on an ROE of 10% and an equity ratio of 50%. Similarly, on February 14, 2023, the Company filed an Empire Electric (Arkansas) rate application seeking a revenue increase of $7.3 million based on an ROE of 10.25% and an equity ratio of 56% to be phased in over three years.

•Completion of the Deerfield II Wind Facility – On March 23, 2023, the Company achieved full commercial operations at its 112 MW Deerfield II Wind Facility, located in Huron County, Michigan. The Deerfield II Wind Facility has agreed to sell all of its output to Siculus, Inc., a subsidiary of Meta, pursuant to a renewable energy purchase agreement.

•Sustainable Financing Activity & Ratings Improvements Reflect Algonquin’s ESG Commitment – On March 31, 2023, the Company completed an amendment and restatement of its senior unsecured revolving credit facility, which increased from $500 million to $1 billion and now includes sustainability-linked performance targets. Separately, on March 10, 2023, MSCI upgraded AQN to a “AAA” ESG rating, placing AQN among the top 13% of companies reviewed.

•Credit Rating Affirmed at BBB with Outlook Improved to Stable – In April 2023, each of DBRS, Fitch, S&P and Moody’s made announcements regarding the credit ratings of the Company and its subsidiaries. DBRS and Fitch both affirmed their ratings and stable outlook, S&P revised its outlooks from negative to stable, and Moody’s affirmed its Baa2 ratings and stable outlooks of Liberty Utilities Co. and Liberty Utilities Finance GP1. These actions follow a similar improvement in outlook to stable from DBRS in February 2023.

•Atlantica Strategic Review – On February 21, 2023, Atlantica Sustainable Infrastructure plc ("Atlantica") announced that its board of directors had commenced a strategic review process. AQN, which owns approximately 42% of Atlantica, supports the commencement of that process.

Outlook

•Reiterate Estimated 2023 Adjusted Net Earnings Per Common Share – The Company reiterates its previously-disclosed estimate of Adjusted Net Earnings per common share for the 2023 fiscal year within a range of $0.55-$0.61 (see “Non-GAAP Measures” below).

•Organic Capital Investment Expectations Maintained – With the Kentucky Power Transaction Termination, the Company expects to spend approximately $1 billion on capital investment opportunities in the 2023 fiscal year. Of this amount, approximately $700 million is expected to be spent by the Regulated Services Group and approximately $300 million is expected to be spent by the Renewable Energy Group.

•Remain Focused on Optimizing Balance Sheet – The Company remains committed to a BBB credit rating and does not expect any new equity financings through 2024.

AQN's Management Discussion & Analysis for the three months ended March 31, 2023 (the “Interim MD&A”) and unaudited interim consolidated financial statements for the three months ended March 31, 2023 will be available on its web site at www.AlgonquinPowerandUtilities.com and in its corporate filings on SEDAR at www.sedar.com (for Canadian filings) and EDGAR at www.sec.gov/edgar (for U.S. filings).

Earnings Conference Call

AQN will hold an earnings conference call at 8:30 a.m. eastern time on Thursday, May 11, 2023, hosted by President and Chief Executive Officer, Arun Banskota, and Chief Financial Officer, Darren Myers.

Date:	Thursday, May 11, 2023
Time:	8:30 a.m. ET
Conference Call:	Toll Free Dial-In Number	1-800-806-5484
	Toll Dial-In Number	(416) 340-2217
	Event Passcode	8220700#
Webcast:	https://bell.media-server.com/mmc/p/hm4w86az
	Presentation also available at: www.algonquinpowerandutilities.com

About Algonquin Power & Utilities Corp. and Liberty

Algonquin Power & Utilities Corp., parent company of Liberty, is a diversified international generation, transmission, and distribution utility with over $17 billion of total assets. Through its two business groups, the Regulated Services Group and the Renewable Energy Group, AQN is committed to providing safe, secure, reliable, cost-effective, and sustainable energy and water solutions through its portfolio of electric generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada. AQN is a global leader in renewable energy through its portfolio of long-term contracted wind, solar, and hydroelectric generating facilities, together with its pipeline of renewable energy development projects. AQN owns, operates, and/or has net interests in over 4 GW of installed renewable energy capacity. AQN's common shares, preferred shares, Series A, and preferred shares, Series D are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. AQN's common shares, Series 2018-A subordinated notes, Series 2019-A subordinated notes and equity units are listed on the New York Stock Exchange under the symbols AQN, AQNA, AQNB, and AQNU, respectively.

Visit AQN at www.algonquinpowerandutilities.com and follow us on Twitter @AQN_Utilities.

Investor Inquiries:

Brian Chin

Vice President, Investor Relations

Algonquin Power & Utilities Corp.

E-mail: InvestorRelations@APUCorp.com

Telephone: (905) 465-4500

Media Inquiries:

Stephanie Bose

Director, Corporate Communications

Liberty

E-mail: Corporate.Communications@libertyutilities.com

Telephone: (905) 465-4500

Caution Regarding Forward-Looking Information

Certain statements included in this news release constitute ‘‘forward-looking information’’ within the meaning of applicable securities laws in each of the provinces and territories of Canada and the respective policies, regulations and rules under such laws and ‘‘forward-looking statements’’ within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, ‘‘forward-looking statements”). The words “will”, “expects”, “estimates”, “targets”, “outlook” (and grammatical variations of such terms) and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specific forward-looking statements in this news release include, but are not limited to, statements regarding: AQN’s estimated Adjusted Net Earnings per common share for the 2023 fiscal year; the Company’s net-zero by 2050 target; credit ratings; expected 2023 capital investments; and the Company’s expectation of no new equity financings through 2024. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. AQN cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Forward-looking statements contained herein (including any financial outlook) are provided for the purposes of assisting in understanding the Company and its business, operations, risks, financial performance, financial position and cash flows as at and for the periods indicated and to present information about management’s current expectations and plans relating to the future and such information may not be appropriate for other purposes. Material risk factors and assumptions include those set out in AQN's Annual Information Form and Management Discussion & Analysis for the year ended December 31, 2022 (the “Annual MD&A”), and in the Interim MD&A, each of which is or will be available on SEDAR and EDGAR. In addition, AQN's estimate for 2023 Adjusted Net Earnings per common share set out above is based on, and should be read in conjunction with, the assumptions set out under "Outlook – Estimated 2023 Adjusted Net Earnings Per Common Share" and "Caution Concerning Forward-Looking Statements and Forward-Looking Information" in the Annual MD&A.

Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, AQN undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.

Non-GAAP Measures

AQN uses a number of financial measures to assess the performance of its business lines. Some measures are calculated in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), while other measures do not have a standardized meaning under U.S. GAAP. These non-GAAP measures include non-GAAP financial measures and non-GAAP ratios, each as defined in Canadian National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure. AQN’s method of calculating these measures may differ from methods used by other companies and therefore may not be comparable to similar measures presented by other companies.

The terms “Adjusted Net Earnings”, “Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization” (or “Adjusted EBITDA”), and “Adjusted Funds from Operations”, which are used in this news release, are non-GAAP

financial measures. An explanation of each of these non-GAAP financial measures can be found in the section entitled "Caution Concerning Non-GAAP Measures" in the Interim MD&A, which section is incorporated by reference into this news release, and a reconciliation to the most directly comparable U.S. GAAP measure, in each case, can be found below. In addition, “Adjusted Net Earnings” is presented in this news release on a per common share basis. Adjusted Net Earnings per common share is a non-GAAP ratio and is calculated by dividing Adjusted Net Earnings by the weighted average number of common shares outstanding during the applicable period.

AQN does not provide reconciliations for forward-looking non-GAAP financial measures as AQN is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various events that have not yet occurred, are out of AQN’s control and/or cannot be reasonably predicted, and that would impact the most directly comparable forward-looking U.S. GAAP financial measure. For these same reasons, AQN is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.

Reconciliation of Adjusted EBITDA to Net Earnings

The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted EBITDA and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to U.S. GAAP consolidated net earnings.

(all dollar amounts in millions)	2023		2022
Net earnings attributable to shareholders	$	270.1	$	91.0
Add (deduct):
Net earnings attributable to the non-controlling interest, exclusive of HLBV	14.4		4.1
Income tax expense	24.7		9.5
Interest expense	81.9		57.9
Other net losses1	3.5		4.7
Unrealized loss on energy derivatives included in revenue	—		0.6
Pension and post-employment non-service costs	5.0		2.6
Change in value of investments carried at fair value2	(179.4)		40.5
Gain on derivative financial instruments	(2.2)		(0.7)
Loss on foreign exchange	1.4		0.3
Depreciation and amortization	121.6		120.0
Adjusted EBITDA	$	341.0	$	330.5

All values are in US Dollars.

1	See Note 16 in the unaudited interim consolidated financial statements.
2	See Note 6 in the unaudited interim consolidated financial statements.

Reconciliation of Adjusted Net Earnings to Net Earnings

The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Earnings and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to consolidated net earnings in accordance with U.S. GAAP.

The following table shows the reconciliation of net earnings to Adjusted Net Earnings exclusive of these items:

(all dollar amounts in millions except per share information)	2023		2022
Net earnings attributable to shareholders	$	270.1	$	91.0
Add (deduct):
Gain on derivative financial instruments	(2.2)		(0.7)
Other net losses1	3.5		4.7
Loss on foreign exchange	1.4		0.3
Unrealized loss on energy derivatives included in revenue	—		0.6
Change in value of investments carried at fair value2	(179.4)		40.5
Adjustment for taxes related to above	26.5		4.8
Adjusted Net Earnings	$	119.9	$	141.2
Adjusted Net Earnings per common share	$	0.17	$	0.21

All values are in US Dollars.

1	See Note 16 in the unaudited interim consolidated financial statements.
2	See Note 6 in the unaudited interim consolidated financial statements.

Reconciliation of Adjusted Funds from Operations to Cash Provided by Operating Activities

The following table is derived from and should be read in conjunction with the consolidated statement of operations and consolidated statement of cash flows. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Funds from Operations and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to cash provided by operating activities in accordance with U.S GAAP.

The following table shows the reconciliation of cash provided by operating activities to Adjusted Funds from Operations exclusive of these items:

(all dollar amounts in millions)	2023		2022
Cash provided by operating activities	$	34.2	$	166.2
Add (deduct):
Changes in non-cash operating items	164.8		48.1
Production based cash contributions from non-controlling interests	9.1		3.7
Acquisition-related costs	2.8		2.2
Adjusted Funds from Operations	$	210.9	$	220.2

All values are in US Dollars.

Document

Algonquin Power & Utilities Corp. Declares Second Quarter 2023 Common Share Dividend of U.S.$0.1085 (C$0.1453), and Declares Second Quarter 2023 Preferred Share Dividends

Oakville, Ontario – May 11, 2023 - Algonquin Power & Utilities Corp. (“AQN”) (TSX: AQN, AQN.PR.A, AQN.PR.D, NYSE: AQN) announced today that its board of directors has approved and declared the following common and preferred share dividends:

1.US$0.1085 per common share, payable on July 14, 2023, to the shareholders of record on June 30, 2023, for the period from April 1, 2023 to June 30, 2023. Registered shareholders can elect to receive the dividend in Canadian dollars in the amount of C$0.1453.

2.C$0.32263 per preferred share, Series A, payable in cash on June 30, 2023 to preferred share, Series A holders of record on June 15, 2023, for the period from March 31, 2023 to, but excluding, June 30, 2023.

3.C$0.31819 per preferred share, Series D, payable in cash on June 30, 2023 to preferred share, Series D holders of record on June 15, 2023, for the period from March 31, 2023 to, but excluding, June 30, 2023.

Each of the foregoing dividends will be paid in cash. Effective March 16, 2023, AQN suspended the dividend reinvestment plan (“DRIP”) for its common shares. If AQN elects to reinstate the DRIP in the future, shareholders who were enrolled in the DRIP at its suspension and remain enrolled at reinstatement will automatically resume participation in the DRIP.

The quarterly dividends payable on common shares are declared in U.S. dollars. Beneficial shareholders (those who hold common shares through a financial intermediary) who are resident in Canada or the United States may request to receive their dividends in either U.S. dollars or the Canadian dollar equivalent by contacting the financial intermediary with whom the common shares are held. Unless the Canadian dollar equivalent is requested, holders of common shares will receive dividends in U.S. dollars, which, as is often the case, the financial intermediary may convert to Canadian dollars. Registered holders of common shares receive dividend payments in the currency of residency. Registered holders of common shares may opt to change the payment currency by contacting TSX Trust Company at 1-800-387-0825 prior to the record date of the dividend.

The Canadian dollar equivalent of the quarterly common share dividend is based on the Bank of Canada daily average exchange rate on the day before the declaration date.

Pursuant to the Income Tax Act (Canada) and corresponding provincial legislation, AQN hereby notifies holders of common shares, preferred shares, Series A, and preferred shares, Series D that such dividends declared qualify as eligible dividends.

About Algonquin Power & Utilities Corp. and Liberty

Algonquin Power & Utilities Corp., parent company of Liberty, is a diversified international generation, transmission, and distribution utility with over $17 billion of total assets. Through its two business groups, the Regulated Services Group and the Renewable Energy Group, AQN is committed to providing safe, secure, reliable, cost-effective, and sustainable energy and water solutions through its portfolio of electric generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada. AQN is a global leader in renewable energy through its portfolio of long-term contracted wind, solar, and hydroelectric generating facilities, together with its pipeline of renewable energy development projects.

AQN owns, operates, and/or has net interests in over 4 GW of installed renewable energy capacity. AQN's common shares, preferred shares, Series A, and preferred shares, Series D are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. AQN's common shares, Series 2018-A subordinated notes, Series 2019-A subordinated notes and equity units are listed on the New York Stock Exchange under the symbols AQN, AQNA, AQNB, and AQNU, respectively.

Visit AQN at www.algonquinpowerandutilities.com and follow us on Twitter @AQN_Utilities.

Investor Inquiries:

Brian Chin

Vice President, Investor Relations

Algonquin Power & Utilities Corp.

354 Davis Road, Oakville, Ontario, L6J 2X1

E-mail: InvestorRelations@APUCorp.com

Telephone: (905) 465-4500

Media Inquiries:

Stephanie Bose

Director, Corporate Communications

Liberty

354 Davis Road, Oakville, Ontario, L6J 2X1

E-mail: Corprorate.Communications@libertyutilities.com

Telephone: (905) 465-4500