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Published: 2022-11-11

Unaudited Interim Consolidated Financial Statements ofAlgonquin Power & Utilities Corp.For the three and nine months ended September 30, 2022 and 2021

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Statements of Operations
	Three months ended	Nine months ended
(thousands of U.S. dollars, except per share amounts)	September 30	September 30
	2022		2021	2022		2021
Revenue
					Regulated electricity distribution	$ 374,900 $ 308,116 $ 951,152 $ 922,100
					Regulated gas distribution		79,636		62,584	464,981	353,909
					Regulated water reclamation and distribution		107,105		64,008	275,362	176,600
					Non-regulated energy sales		86,572		73,595	271,807	182,268
					Other revenue		18,511		20,272	63,378	55,763
		666,724		528,575 2,026,680 1,690,640
Expenses
					Operating expenses		216,647		177,204	634,979	528,343
					Regulated electricity purchased		138,024		94,435	341,332	382,726
					Regulated gas purchased		30,956		14,497	215,324	113,983
					Regulated water purchased		3,528		3,888	9,680	10,036
					Non-regulated energy purchased		15,081		11,898	41,685	25,887
					Administrative expenses		23,445		15,165	61,004	48,930
					Depreciation and amortization		108,207		96,553	340,718	292,153
					Loss (gain) on foreign exchange		(4,985)		1,267	(259)	3,412
		530,903		414,907 1,644,463 1,405,470
Gain on sale of renewable assets (note 13(d))						—	—	1,200				—
Operating income		135,821		113,668	383,417		285,170
Interest expense		(75,049)		(51,654)	(197,565) (159,416)
Loss from long-term investments (note 6)		(279,773) (114,242)	(403,842) (104,243)
Other net losses (note 16)		(5,946)		(889)	(19,328)		(11,086)
Pension and other post-employment non-service costs (note 8)	(1,518)		(3,875)	(6,354)		(11,420)
Loss on derivative financial instruments (note 21(b)(iv))		(386)		(1,817)	(6,270)		(2,082)
Loss before income taxes		(226,851)		(58,809)	(249,942)		(3,077)
Income tax recovery (expense) (note 15)
					Current		(5,433)		(3,755)	(15,146)	(10,994)
					Deferred		24,949		23,143	48,029	56,215
		19,516		19,388	32,883		45,221
Net earnings (loss)		(207,335)		(39,421)	(217,059)		42,144
Net effect of non-controlling interests (note 14)
					Non-controlling interests		16,608		14,087	89,571	54,989
					Non-controlling interests held by related party		(4,450)		(2,588)	(10,111)	(7,886)
	$	12,158 $		11,499 $	79,460 $		47,103
Net earnings (loss) attributable to shareholders of Algonquin
Power & Utilities Corp.	$ (195,177) $ (27,922) $ (137,599) $			89,247
Preferred shares, Series A and preferred shares, Series D
dividend (note 12)		2,188		2,267	6,628		6,757
Net earnings (loss) attributable to common shareholders of
Algonquin Power & Utilities Corp.	$ (197,365) $ (30,189) $ (144,227) $			82,490
Basic and diluted net earnings (loss) per share (note 17)	$	(0.29) $		(0.05) $	(0.21) $		0.13
See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Statements of Comprehensive Income

	Three months ended	Nine months ended
(thousands of U.S. dollars)	September 30	September 30
	2022		2021	2022		2021
Net earnings (loss)					$	(207,335) $	(39,421) $	(217,059) $		42,144
Other comprehensive income (loss) (“OCI”):
						Foreign currency translation adjustment, net of
						tax expense of $7,391 and $5,118 (2021 - tax
						expense of $291 and recovery of $1,068),
						respectively (notes 21(b)(iii) and 21(b)(iv))	(14,777)		(28,904)	(55,372)	(32,172)
						Change in fair value of cash flow hedges, net of
						tax expense of $5,048 and recovery of $24,846
						of (2021 - tax recovery of $12,062 and
						$22,346), respectively (note 21(b)(ii))	1,451		(31,599)	(70,314)	(55,746)
						Change in pension and other post-employment
						benefits, net of tax recovery of $40 and $70
						(2021 - tax expense of $97 and $432),
						respectively (note 8)	(117)					321	(203)	2,486
OCI, net of tax						(13,443)	(60,182)	(125,889)		(85,432)
Comprehensive loss						(220,778)	(99,603)	(342,948)		(43,288)
Comprehensive loss attributable to the non-
controlling interests						(13,862)	(12,801)	(81,917)		(46,476)
Comprehensive income (loss) attributable to
shareholders of Algonquin Power & Utilities Corp.					$	(206,916) $	(86,802) $	(261,031) $		3,188
See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Balance Sheets
(thousands of U.S. dollars)
	September 30,	December 31,
	2022	2021
ASSETS
Current assets:
			Cash and cash equivalents	$			114,313 $	125,157
			Trade and other receivables, net (note 4)				432,572	403,426
			Fuel and natural gas in storage				115,698	74,209
			Supplies and consumables inventory				122,606	103,552
			Regulatory assets (note 5)				166,931	158,212
			Prepaid expenses				74,783	54,548
			Derivative instruments (note 21)				11,192	3,486
			Other assets				28,052	16,153
		1,066,147	938,743
Property, plant and equipment, net	11,904,140 11,042,446
Intangible assets, net				98,666	105,116
Goodwill		1,291,433	1,201,244
Regulatory assets (note 5)		1,110,502	1,009,413
Long-term investments (note 6)
			Investments carried at fair value		1,358,111	1,848,456
			Other long-term investments				568,355	495,826
Derivative instruments (note 21)				74,115	17,136
Deferred income taxes				65,027	31,595
Other assets				116,833	95,861
	$ 17,653,329 $ 16,785,836
See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Balance Sheets (continued)
(thousands of U.S. dollars)
	September 30,	December 31,
	2022	2021
LIABILITIES AND EQUITY
Current liabilities:
			Accounts payable	$		134,094 $	185,291
			Accrued liabilities			471,660	428,733
			Dividends payable (note 12)			114,851	114,544
			Regulatory liabilities (note 5)			71,204	65,809
			Long-term debt (note 7)			461,862	356,397
			Other long-term liabilities (note 9)			168,511	167,908
			Derivative instruments (note 21)			56,302	38,569
			Other liabilities			9,691	7,461
		1,488,175 1,364,712
Long-term debt (note 7)		7,243,042 5,854,978
Regulatory liabilities (note 5)				559,754	510,380
Deferred income taxes				501,682	530,187
Derivative instruments (note 21)				148,341	81,676
Pension and other post-employment benefits obligation				218,029	226,387
Other long-term liabilities (note 9)				431,999	515,911
		10,591,022 9,084,231
Redeemable non-controlling interests (note 14)
			Redeemable non-controlling interest, held by related party (note 13(b))			307,668	306,537
			Redeemable non-controlling interests			8,648	12,989
				316,316	319,526
Equity:
			Preferred shares			184,299	184,299
			Common shares (note 10(a))		6,149,794 6,032,792
			Additional paid-in capital			4,002	2,007
			Deficit			(796,439)	(288,424)
			Accumulated other comprehensive loss (“AOCI”) (note 11)			(195,109)	(71,677)
			Total equity attributable to shareholders of Algonquin Power & Utilities Corp.		5,346,547 5,858,997
			Non-controlling interests
			Non-controlling interests		1,336,495 1,441,924
			Non-controlling interest, held by related party (note 13(c))			62,949	81,158
		1,399,444 1,523,082
			Total equity		6,745,991 7,382,079
Commitments and contingencies (note 19)Subsequent events (notes 3(c) and 7(a))
	$ 17,653,329 $ 16,785,836
See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Statement of Equity
(thousands of U.S. dollars)
For the three months ended September 30, 2022
			Algonquin Power & Utilities Corp. Shareholders
	Additional	Non-
				Common	Preferred	paid-in			controlling
				shares	shares	capital	Deficit	AOCI	interests	Total
Balance, June 30, 2022				$ 6,082,511 $ 184,299 $	261 $ (475,356) $ (183,370) $ 1,422,722 $ 7,031,067
Net loss					—	—	—	(195,177)		—			(12,158)	(207,335)
Effect of redeemable non-
controlling interests not
included in equity
(note 14)					—	—	—	—	—			(3,172)	(3,172)
OCI					—	—	—	—						(11,739)	(1,704)	(13,443)
Dividends declared and
distributions to non-
controlling interests					—	—	—								(98,282)	—			(6,244)	(104,526)
Dividends and issuance of
shares under dividend
reinvestment plan					27,624	—	—								(27,624)	—	—			—
Common shares issued
upon public offering,
net of tax effected cost					38,163	—	—	—	—	—			38,163
Common shares issued
under employee share
purchase plan					1,496	—	—	—	—	—			1,496
Share-based
compensation					—	—					3,713	—	—	—				3,713
Common shares issued
pursuant to share-based
awards					—	—					28	—	—	—				28
Balance, September 30,
2022				$ 6,149,794 $ 184,299 $	4,002 $ (796,439) $ (195,109) $ 1,399,444 $ 6,745,991
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)
For the three months ended September 30, 2021
			Algonquin Power & Utilities Corp. Shareholders
	Additional	Non-
				Common	Preferred	paid-in			controlling
				shares	shares	capital	Deficit	AOCI	interests	Total
Balance, June 30, 2021
				$ 5,251,808 $ 184,299 $	— $ (205,764) $ (56,057) $ 1,474,761 $ 6,649,047
Net loss					—	—	—	(27,922)		—	(11,499)	(39,421)
Redeemable non-
controlling interests not
included in equity
(note 14)					—	—	—	—	—				(874)	(874)
OCI					—	—	—	—	(58,880)					(1,302)	(60,182)
Dividends declared and
distributions to non-
controlling interests					—	—	—	(86,208)		—				(6,246)	(92,454)
Dividends and issuance of
shares under dividend
reinvestment plan					23,288	—	—	(23,288)		—	—				—
Common shares issued
upon public offering,
net of tax effected cost					104,326	—	—	—	—	—	104,326
Issuance of common
shares under employee
share purchase plan					1,267	—	—	—	—	—				1,267
Common shares issued
pursuant to share-based
awards					1,629	—									(1,716)	(792)	—	—	(879)
Share-based
compensation					—	—									3,675	—	—	—	3,675
Balance, September 30,
2021				$ 5,382,318 $ 184,299 $			1,959 $ (343,974) $ (114,937) $ 1,454,840 $ 6,564,505
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)
For the nine months ended September 30, 2022
			Algonquin Power & Utilities Corp. Shareholders
	Additional	Non-
				Common	Preferred	paid-in			controlling
				shares	shares	capital	Deficit	AOCI	interests	Total
Balance, December 31,
2021				$ 6,032,792 $ 184,299 $	2,007 $ (288,424) $	(71,677) $ 1,523,082 $ 7,382,079
Net loss					—	—	—	(137,599)		—				(79,460)	(217,059)
Effect of redeemable non-
controlling interests not
included in equity
(note 14)					—	—	—	—	—				(5,897)	(5,897)
OCI					—	—	—	—	(123,432)					(2,457)	(125,889)
Dividends declared and
distributions to non-
controlling interests					—	—	—	(298,152)		—				(42,032)	(340,184)
Dividends and issuance of
shares under dividend
reinvestment plan					70,403	—	—								(70,403)	—	—		—
Contributions received
from non-controlling
interests, net of cost					—	—	—	—	—				6,208	6,208
Common shares issued
upon conversion of
convertible debentures					6	—	—	—	—	—						6
Common shares issued
upon public offering,
net of tax effected cost					38,163	—	—	—	—	—				38,163
Common shares issued
under employee share
purchase plan					3,951	—	—	—	—	—				3,951
Share-based
compensation					—	—					9,377	—	—	—				9,377
Common shares issued
pursuant to share-based
awards					4,479	—					(7,382)				(1,861)	—	—		(4,764)
Balance, September 30,
2022				$ 6,149,794 $ 184,299 $	4,002 $ (796,439) $ (195,109) $ 1,399,444 $ 6,745,991
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)
For the nine months ended September 30, 2021
				Algonquin Power & Utilities Corp. Shareholders
	Additional	Retained	Non-
					Common	Preferred	paid-in	earnings		controlling
					shares	shares	capital	(deficit)	AOCI	interests	Total
Balance, December 31,
2020					$ 4,935,304 $ 184,299 $	60,729 $	45,753 $ (22,507) $ 458,612 $ 5,662,190
Net earnings (loss)						—	—	—								89,247	—	(47,103)					42,144
Redeemable non-
controlling interests not
included in equity
(note 14)						—	—	—		—	—								(2,747)	(2,747)
OCI						—	—	—	—	(86,059)								627	(85,432)
Dividends declared and
distributions to non-
controlling interests						—	—	— (244,812)		—	(19,613) (264,425)
Dividends and issuance of
shares under dividend
reinvestment plan						69,496	—	—	(69,496)		—	—							—
Contributions received
from non-controlling
interests, net of cost						—	—							6,919	—									(6,371) 1,035,923 1,036,471
Common shares issued
upon conversion of
convertible debentures												16	—	—	—	—	—				16
Common shares issued
upon public offering, net
of tax effected cost						365,554	—	—	—	—	—	365,554
Contract adjustment
payments						—	—	(62,240) (160,138)			—	— (222,378)
Issuance of common
shares under employee
share purchase plan						3,839	—	—	—	—	—					3,839
Share-based
compensation						—	—							8,749	—	—	—				8,749
Common shares issued
pursuant to share-based
awards						8,109	—	(12,198)								(4,528)	—	—				(8,617)
Acquisition of redeemable
non-controlling interest						—	—	—	—	—							29,141	29,141
Balance, September 30,
2021					$ 5,382,318 $ 184,299 $	1,959 $ (343,974) $ (114,937) $ 1,454,840 $ 6,564,505
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 September 30	Nine months ended September 30
	2022		2021	2022		2021
Cash provided by (used in):Operating activities
					Net earnings (loss)	$				(207,335) $	(39,421)	$	(217,059) $	42,144
					Adjustments and items not affecting cash:
					Depreciation and amortization					108,207	96,553				340,718	292,153
					Deferred taxes					(24,949)	(23,143)				(48,029)	(56,215)
					Initial value and unrealized loss (gain) on derivative
					financial instruments					1,405	(11,884)				1,003	(11,686)
					Share-based compensation					3,055	3,414				6,550	7,800
					Cost of equity funds used for construction purposes					(476)	(275)				(1,443)	(406)
					Change in value of investments carried at fair value					300,358	139,050				484,387	183,452
					Pension and post-employment expense lower than
					contributions					(4,464)	(1,477)				(10,900)	(7,525)
					Distributions received from equity investments, net of
					income					17,616	6,676				21,000	13,587
					Other					5,155	(1,000)				8,691	5,300
					Net change in non-cash operating items (note 20)					(95,667)	6,221		(180,455)	(437,648)
						102,905	174,714					404,463	30,956
Financing activities
					Increase in long-term debt		5,951,493		1,824,449	11,231,531		9,175,714
					Repayments of long-term debt		(5,611,835)		(1,535,152)	(9,617,670)		(8,392,109)
					Issuance of common shares, net of costs					39,659	105,229				42,114	367,991
					Cash dividends on common shares					(94,364)	(82,151)		(281,922)	(222,928)
					Dividends on preferred shares					(2,188)	(2,267)				(6,628)	(6,757)
					Contributions from non-controlling interests and redeemable
					non-controlling interests							—	—						—	1,032,204
					Production-based cash contributions from non-controlling
					interest							—	—				6,208	4,832
					Distributions to non-controlling interests, related party
					(note 13(b) and (c))					(6,723)	(5,233)				(25,083)	(19,191)
					Distributions to non-controlling interests					(4,782)	(3,449)				(29,891)	(7,447)
					Payments upon settlement of derivatives							—	—				(26,254)	(33,782)
					Shares surrendered to fund withholding taxes on exercised share
					options					(268)	(1,120)				(4,388)	(2,984)
					Increase in other long-term liabilities					5,536	4,986				12,804	61,202
					Decrease in other long-term liabilities					(26,406)	(21,742)				(68,978)	(25,046)
						250,122	283,550		1,231,843	1,931,699
Investing activities
					Additions to property, plant and equipment and intangible
					assets					(321,956)	(348,050)		(897,193)	(1,051,182)
					Increase in long-term investments					(60,028)	(118,764)		(156,966)	(787,149)
					Acquisitions of operating entities (note 3(a))							—	—	(632,797)							—
					Increase in other assets					(15,570)	(9,728)				(28,374)	(37,580)
					Receipt of principal on development loans receivable					74,892			834				75,215			834
					Decrease in long-term investments							—	—				2,920			—
					Other proceeds							—	1,616						—	5,960
						(322,662)	(474,092)		(1,637,195)	(1,869,117)
Effect of exchange rate differences on cash and restricted cash						(1,447)	(1,276)					(3,293)	(749)
Increase (decrease) in cash, cash equivalents and restricted cash						28,918	(17,104)					(4,182)	92,789
Cash, cash equivalents and restricted cash, beginning of period						128,289	239,911					161,389	130,018
Cash, cash equivalents and restricted cash, end of period	$					157,207 $	222,807	$				157,207 $	222,807

Algonquin Power & Utilities Corp.
Unaudited Interim Consolidated Statements of Cash Flows (continued)
(thousands of U.S. dollars)	Three months ended September 30	Nine months ended September 30
	2022		2021	2022		2021
Supplemental disclosure of cash flow information:Cash paid during the period for interest expense
	$				89,580 $	50,349	$	203,454 $	162,674
Cash paid during the period for income taxes	$				2,335 $	1,687	$	8,692 $	3,362
Cash received during the period for distributions from equity	$				30,790 $	28,139	$	100,245 $	90,779
investments
Non-cash financing and investing activities:Property, plant and equipment acquisitions in accruals
	$				118,952 $	120,640	$	118,952 $	120,640
Issuance of common shares under dividend reinvestment plan and
share-based compensation plans	$				29,120 $	26,184	$	78,833 $	81,444
Property, plant and equipment, intangible assets and accrued
liabilities in exchange of note receivable	$				74,891 $	3,089	$	74,891 $	90,821
See accompanying notes to unaudited interim consolidated financial statements

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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, natural gas, water distribution and wastewater collection utility systems and transmission operations in the United States, Canada, Bermuda and Chile; the Renewable Energy Group owns and operates a diversified portfolio of non-regulated renewable and thermal electric generation assets.
1.	Significant accounting policies(a)
		Basis of preparationThe 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 at and for the year ended December 31, 2021.
	(b)	SeasonalityAQN'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. During the winter period, natural gas distribution utilities generally experience higher demand than during the summer period. 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. 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 translationAQN’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 pronouncementsThe Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-05, Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments, to address concerns relating to day-one losses for sales-type or direct financing leases with variable payments that do not depend on a reference index or rate. The update amends the lease classification requirements for lessors to align them with past practice under Topic 840, Leases. The adoption of this update did not have an impact on the unaudited interim consolidated financial statements.The FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, to address the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. The number of accounting models for convertible debt instruments and convertible preferred stock is being reduced and the guidance has been amended for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions. The adoption of this update did not have an impact on the unaudited interim consolidated financial statements.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
2.	Recently issued accounting pronouncements (continued)(a)
		Recently adopted accounting pronouncements (continued)The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to ease the potential burden in accounting for reference rate reform. The amendments apply to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The FASB issued an update to Topic 848 in ASU 2021-01 to clarify that the scope of Topic 848 includes derivatives affected by the discounting transition. The adoption of this update did not have an impact on the unaudited interim consolidated financial statements.
	(b)	Recently issued accounting guidance not yet adoptedThe 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. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently assessing the relevant disclosure.
3.	Business acquisition and disposition transactions(a)
		Acquisition of New York American Water Company, Inc.Effective January 1, 2022, the Company completed the acquisition of New York American Water Company, Inc. (subsequently renamed Liberty Utilities (New York Water) Corp. (“Liberty NY Water”)). Liberty NY Water is a Merrick, New York based regulated water and wastewater utility company, serving customers in seven counties in southeastern New York.A purchase price of $608,000 (before closing adjustments) was paid for this acquisition. The costs related to this acquisition have been expensed through the unaudited interim consolidated statement of operations. The following table summarizes the preliminary allocation of the acquisition prices of the assets acquired and liabilities assumed at the acquisition date:
		Working capital	$	4,493
		Property, plant and equipment		517,591
		Goodwill		95,514
		Regulatory assets		68,270
		Other assets		4,507
		Pension and other post-employment obligations		(13,402)
		Regulatory liabilities		(59,650)
		Other liabilities		(8,026)
		Total net assets acquired		609,297
		Cash and cash equivalents		49
		Net assets acquired, net of cash and cash equivalents	$	609,248
		The determination of the fair value of assets acquired and liabilities assumed is based upon management's estimates and certain assumptions. The Company has not finalized the fair value measurements. The fair value of property, plant and equipment was reduced by $9,194 in Q2 2022 to reflect the time value of money of assets that will not be included in rate base until the next rate case. The valuation of regulatory assets and liabilities and deferred income taxes has not been completed. The Company will continue to review information and perform further analysis prior to finalizing the fair value of assets acquired and liabilities assumed in the fourth quarter of 2022.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
3.	Business acquisition and disposition transactions (continued)(a)
		Acquisition of New York American Water Company, Inc. (continued)Goodwill represents the excess of the purchase price over the aggregate fair value of net assets acquired. The contributing factors to the amount recorded as goodwill include future growth, potential synergies, and cost savings in the delivery of certain shared administrative and other services.
	(b)	Pending acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc	.
		On October 26, 2021, Liberty Utilities Co. (“Liberty Utilities”), an indirect subsidiary of AQN, entered into an agreement with American Electric Power Company, Inc. and AEP Transmission Company, LLC to acquire Kentucky Power Company and AEP Kentucky Transmission Company, Inc. for a total purchase price of approximately $2,846,000 including the assumption of approximately $1,221,000 in debt (the “Kentucky Power Transaction”). On September 29, 2022, the parties entered into an amendment to the acquisition agreement that, among other things, reduces the purchase price by $200,000. Closing of the Kentucky Power Transaction remains subject to the satisfaction or waiver of certain conditions precedent, which include the approval of the Kentucky Power Transaction by the U.S. Federal Energy Regulatory Commission. The Kentucky Power Transaction is expected to close in January 2023.
	(c)	Partial disposal of renewable assetsSubsequent to quarter-end, on October 3, 2022, the Company announced that it had entered into an agreement to sell ownership interests in a portfolio of operating wind facilities in the United States and Canada. The transaction consists of the sale of (1) a 49% ownership interest in three operating wind facilities in the United States totaling 551 MW of installed capacity: the Odell Wind Facility in Minnesota, the Deerfield Wind Facility in Michigan and the Sugar Creek Wind Facility in Illinois; and (2) an 80% ownership interest in the 175 MW Blue Hill Wind Facility in Saskatchewan. The Company will continue to oversee day-to-day operations and provide management services to the facilities. Total cash proceeds to AQN from this transaction are expected to be approximately $277,500 for the U.S. facilities and approximately C$107,300 for the Blue Hill Wind Facility, subject to customary closing adjustments. Closing of the transaction is subject to receipt of certain regulatory approvals and other customary closing conditions and is expected to occur in the fourth quarter of 2022.
4.	Accounts receivableAccounts receivable as at September 30, 2022 include unbilled revenue of $82,787 (December 31, 2021 - $102,693) from the Company’s regulated utilities. Accounts receivable as at September 30, 2022 are presented net of allowance for doubtful accounts of $26,539 (December 31, 2021 - $19,327).
5.	Regulatory mattersThe operating companies within the Regulated Services Group are subject to regulation by the respective authorities of the jurisdictions in which they operate. The respective public utility commissions 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 probable future revenue or expenses associated with certain charges or credits that will be recovered from or refunded to customers through the rate setting process.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
5.	Regulatory matters (continued)
	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.
	Utility	State or	Regulatory	Details
		country	proceeding type
	Empire Electric	Missouri	General rate		On April 6, 2022, the regulator approved an annual base rate
	System		review and		revenue increase of $35,516, as well as another $4,000 in
			Securitization		revenues associated with the Empire Wind Facilities. The new rates
					became effective in the second quarter of 2022.
					In January 2022 and March 2022, Empire Electric filed petitions
					for securitization of the costs associated with the impact of the
					February 2021 extreme winter storm conditions (the “Midwest
					Extreme Weather Event”) and the retirement of Asbury. On
					April 27, 2022, the Missouri Public Service Commission (the
					“MPSC”) issued an order consolidating, for purposes of hearing,
					these two cases regarding the quantum financeable through
					securitization, 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 $290,383 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. However, the process could result in
					lower amounts being financeable through securitization than
					sought by the Company. 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 filed an appeal of
					the MPSC order on November 10, 2022.
	BELCO	Bermuda General rate			On March 18, 2022, the regulator issued a final decision
			review		authorizing $224,056 and $226,160 in revenue for 2022 and
					2023, respectively, at a weighted average cost of capital or return
					of 7.16% in each year. The new rates are effective from April 1,
					2022. On April 7, 2022, BELCO filed an appeal in the Supreme
					Court of Bermuda challenging the decisions made through the
					recent Retail Tariff Review.
	Empire Electric	Kansas	General rate		On May 27, 2021, Empire Electric submitted an abbreviated rate
	System		review		review seeking to recover costs associated with the addition of the
					Empire Wind Facilities, the retirement of Asbury and non-growth
					related plant investments since the 2019 rate review. In May
					2022, the Commission approved the unanimous partial settlement
					resolving the rate treatment of the Asbury retirement and the non-
					wind investments resulting in a base rate decrease of $636, and
					granted Empire Electric's motion to withdraw its request to recover
					cost associated with the Empire Wind Facilities. New rates became
					effective in July 2022.
	Empire District	Missouri	General rate		In June 2022, the Commission approved an annual increase of
	Gas Company		review		$1,000 in base rate revenues. New rates became effective in
					August 2022.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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:
		September 30,	December 31,
		2022	2021
	Regulatory assets
				Fuel and commodity cost adjustments			368,483	339,900
				Retired generating plant			174,723	185,073
				Pension and post-employment benefits			138,609	134,141
				Rate adjustment mechanism			127,214	117,309
				Income taxes			95,935	79,472
				Deferred capitalized costs			85,243	62,599
				Environmental remediation			70,458	81,802
				Wildfire mitigation and vegetation management			57,682	35,789
				Asset retirement obligation			38,344	26,810
				Clean energy and other customer programs			27,118	26,015
				Debt premium			26,447	34,204
				Rate review costs			8,705	9,167
				Long-term maintenance contract			6,996	9,134
				Other			51,476	26,210
	Total regulatory assets	$ 1,277,433 $ 1,167,625
	Less: current regulatory assets				(166,931)	(158,212)
	Non-current regulatory assets	$ 1,110,502 $ 1,009,413
	Regulatory liabilities
				Income taxes	$		318,891 $	295,720
				Cost of removal			190,892	191,981
				Pension and post-employment benefits			66,710	34,468
				Clean energy and other customer programs			16,029	14,829
				Fuel and commodity costs adjustments			17,080	18,229
				Rate adjustment mechanism			2,680	3,316
				Rate base offset			3,703	4,998
				Other			14,973	12,648
	Total regulatory liabilities	$			630,958 $	576,189
	Less: current regulatory liabilities				(71,204)	(65,809)
	Non-current regulatory liabilities	$			559,754 $	510,380

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
6.	Long-term investmentsLong-term investments consist of the following:
		September 30,	December 31,
		2022	2021
	Long-term investments carried at fair value
				Atlantica	$ 1,287,725 $ 1,750,914
	Atlantica Yield Energy Solutions Canada Inc.				68,253	95,246
				Other				2,133	2,296
		$ 1,358,111 $ 1,848,456
	Other long-term investments
				Equity-method investees (a)	$			419,092 $	433,850
				Development loans receivable from equity-method investees (a)				121,607	31,468
	Other				27,656	30,508
		$			568,355 $	495,826
	Income (loss) from long-term investments for the three and nine months ended September 30 is as follows:
							Three months ended	Nine months ended
							September 30	September 30
							2022	2021	2022	2021
	Fair value gain (loss) on investments carried at fair value
	Atlantica						$ (291,819) $ (132,690) $ (463,189) $ (168,234)
	Atlantica Yield Energy Solutions Canada Inc.							(8,615)	(6,468)	(21,010)	(15,728)
	Other								76	108		(188)	510
							$ (300,358) $ (139,050) $ (484,387) $ (183,452)
	Dividend and interest income from investments carried at fair value
	Atlantica						$	21,789 $	21,054 $	64,876 $	62,673
	Atlantica Yield Energy Solutions Canada Inc.							3,003	2,433	15,694	11,153
	Other								17	15	27		329
							$	24,809 $	23,502 $	80,597 $	74,155
	Other long-term investments
				Equity method loss				(11,677)	(3,669)	(19,126)	(12,039)
				Interest and other income				7,453	4,975	19,074	17,093
							$	(4,224) $	1,306 $	(52) $		5,054
	Loss from long-term investments						$ (279,773) $ (114,242) $ (403,842) $ (104,243)
	(a)			Equity-method investees and development loans receivable from equity investeesThe Company has non-controlling interests in various corporations, partnerships and joint ventures with a total carrying value of $419,092 (December 31, 2021 - $433,850), including investments in variable interest entities ("VIEs") of $117,882 (December 31, 2021 - $86,202). During the three and nine months ended September 30, 2022, the Company recorded OCI loss of $167 and $67,519, respectively (2021 - $nil and $nil, respectively) attributable to derivative financial instruments designated as a cash flow hedge, in proportion to the Company’s ownership interest in the entities.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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 2021, the Company acquired a 51% interest in four operating wind facilities located in Texas (“Texas Coastal Wind Facilities”). All facilities have achieved commercial operations. The Company does not control the entities and, therefore, accounts for its 51% interest using the equity method. As at September 30, 2022, the Company had issued $119,750 in letters of credit and guarantees of performance obligations under energy purchase agreements and decommissioning obligations on behalf of the Texas Coastal Wind Facilities.
		The Company owns 50% equity interests in several wind and solar power generation projects under development or construction. During development and construction, the Company provides cash advances and credit support in amounts necessary for the continued development and construction of the equity investees' projects.Summarized combined information for AQN's investments in significant partnerships and joint ventures is as follows:
			September 30,	December 31,
			2022	2021
		Total assets	$	2,630,635 $ 2,126,934
		Total liabilities		1,452,967	945,971
		Net assets	$	1,177,668 $ 1,180,963
		AQN's ownership interest in the entities			312,657	327,555
		Difference between investment carrying amount and underlying equity in
		net assets(a)			106,435	106,295
		AQN's investment carrying amount for the entities	$		419,092 $	433,850
		(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.
		Except for Liberty Development Energy Solutions B.V., 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 at September 30, 2022, 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 recorded as at September 30, 2022 amounts to $6,707 (December 31, 2021 - $4,612).

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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)
		Summarized combined information for AQN's VIEs is as follows:
			September 30,	December 31,
			2022	2021
		AQN's maximum exposure in regards to VIEs
		Carrying amount	$		117,882 $	86,202
		Development loans receivable			121,607	31,468
		Performance guarantees and other commitments on behalf of VIEs			529,989	409,232
			$		769,478 $	526,902
		The commitments are presented on a gross basis assuming no recoverable value in the assets of the VIEs.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
7.	Long-term debtLong-term debt consists of the following:
		Weighted
					September 30,	December 31,
		average
	Borrowing type	coupon	Maturity	Par value	2022	2021
	Senior unsecured revolving credit
	facilities (a)		—	2022-2027				N/A $	534,511 $	368,806
	Senior unsecured bank credit
	facilities (b)		—	2022-2031				N/A	766,072	141,956
	Commercial paper		—	2023				N/A	445,400	338,700
	U.S. dollar borrowings
	Senior unsecured notes
	(Green Equity Units)	1.18 %	2026 $ 1,150,000		1,142,294 1,140,801
	Senior unsecured notes (c)	3.39 % 2023-2047 $ 1,505,000			1,491,724 1,689,792
	Senior unsecured utility notes	6.34 % 2023-2035 $		142,000				154,287	155,571
	Senior secured utility bonds	4.71 % 2026-2044 $		556,216				560,411	558,177
	Canadian dollar borrowings
	Senior unsecured notes (d)	3.68 % 2027-2050 C$ 1,200,000						872,849 1,099,403
	Senior secured project notes	10.21 %	2027 C$	20,854				15,214	18,344
	Chilean Unidad de Fomento borrowings
	Senior unsecured utility bonds	4.12 % 2028-2040 CLF 1,695						69,979	77,963
					$ 6,052,741 $ 5,589,513
	Subordinated borrowings
	Subordinated unsecured notes (e)	5.25 %	2082 C$ 400,000 $					287,712 $		—
	Subordinated unsecured notes (e)	5.56 % 2078-2082 $ 1,387,500			1,364,451	621,862
					$ 1,652,163 $	621,862
					$ 7,704,904 $ 6,211,375
	Less: current portion					(461,862)	(356,397)
					$ 7,243,042 $ 5,854,978
	Short-term obligations of $778,692 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 StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
7.	Long-term debt (continued)Recent financing activities:(a)
		Senior unsecured revolving credit facilitiesOn April 29, 2022, the Regulated Services Group entered into two new senior unsecured syndicated revolving
		credit facilities: a $1,000,000 senior unsecured revolving credit facility with an initial maturity date of April
		29, 2027 (the “Long-Term Regulated Services Credit Facility”) and a $500,000 short-term senior unsecured
		revolving credit facility maturing on March 31, 2023. Subject to the terms and conditions therein, the Long-
		Term Regulated Services Credit Facility may be extended for two additional one-year periods. In conjunction
		with the new facilities, the Regulated Services Group’s $500,000 senior unsecured syndicated revolving
		credit facility was cancelled.On June 24, 2022, the Regulated Services Group entered into a new $25,000 senior unsecured bilateral
		revolving credit facility in Bermuda that matures on June 24, 2024.On July 22, 2022, the Renewable Energy Group’s senior unsecured syndicated revolving credit facility was
		amended and restated with a new maturity date of July 22, 2027. Subject to the terms and conditions
		therein, the facility may be extended for additional one-year periods.On July 22, 2022, the Renewable Energy Group entered into a new $250,000 uncommitted bilateral letter of
		credit facility. Subsequent to quarter-end on November 8, 2022, the Renewable Energy Group's $350,000
		uncommitted letter of credit facility was amended and restated with a new maturity date of June 30, 2024.
	(b)	Senior unsecured bank credit facilitiesOn December 20, 2021, the Regulated Services Group entered into a $1,100,000 senior unsecured syndicated delayed draw term facility, which matures on December 19, 2022. On January 3, 2022, the purchase price, plus certain adjustments and acquisition costs, for the acquisition of Liberty NY Water (note 3(a)) of approximately $610,400 was funded through a draw on the senior unsecured syndicated delayed draw term facility.
	(c)	U.S. dollar senior unsecured notesOn April 30, 2022, the Company repaid a $80,000 senior unsecured note on its maturity.On August 1, 2022, the Company repaid a $115,000 senior unsecured note on its maturity.
	(d)	Canadian dollar senior unsecured notesOn February 15, 2022, the Company repaid a C$200,000 senior unsecured note on its maturity. Concurrent with the repayments, the Renewable Energy Group unwound and settled the related cross-currency fixed-for-fixed interest rate swap (note 21(b)(iii)).
	(e)	Subordinated unsecured notesOn January 18, 2022, the Company closed: (i) an underwritten public offering in the United States (the “U.S. Offering”) of $750,000 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 (the “Canadian Offering” and, together with the U.S. Offering, the “Offerings”) of C$400,000 (approximately $320,000) 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”). Concurrent with the pricing of the Offerings, the Company entered into a cross currency interest rate swap to convert the Canadian-dollar-denominated proceeds from the Canadian Offering into U.S. dollars, and a forward starting swap to fix the interest rate for the second five-year term of the U.S. Notes (note 21(b)(ii)), resulting in an anticipated effective interest rate to the Company of approximately 4.95% throughout the first ten-year period of the Notes.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
8.	Pension and other post-employment benefitsThe following table lists the components of net benefit costs for the pension plans and other post-employment benefits (“OPEB”) in the unaudited interim consolidated statements of operations for the three and nine months ended September 30:
		Pension benefits
			Three months ended	Nine months ended
			September 30	September 30
			2022	2021	2022	2021
	Service cost				$	4,080 $	3,987 $		12,468 $	12,323
	Non-service costs
	Interest cost					5,634	4,909		18,475	15,126
	Expected return on plan assets					(10,421)	(8,890)		(31,264)	(26,670)
	Amortization of net actuarial loss					865	2,431		2,911	7,243
	Amortization of prior service credits					(396)	(407)		(1,188)	(1,220)
	Impact of regulatory accounts					5,008	5,653		16,010	16,662
					$	690 $	3,696 $		4,944 $	11,141
	Net benefit cost				$	4,770 $	7,683 $		17,412 $	23,464
						OPEB
			Three months ended	Nine months ended
			September 30	September 30
			2022	2021	2022	2021
	Service cost				$	1,598 $	1,942 $		4,707 $	5,486
	Non-service costs
	Interest cost					2,337	2,097		6,978	6,149
	Expected return on plan assets					(2,837)	(2,518)		(8,519)	(7,539)
	Amortization of net actuarial loss (gain)					130	643		(42)	1,516
	Amortization of prior service credits						6	18			18	18
	Impact of regulatory accounts					1,192	(61)		2,975	135
					$	828 $	179 $		1,410 $	279
	Net benefit cost				$	2,426 $	2,121 $		6,117 $	5,765
	The service cost components of pension plans and OPEB are shown as part of operating expenses within operating income in the unaudited interim consolidated statements of operations. The remaining components of net benefit cost are considered non-service costs and have been included outside of operating income in the unaudited interim consolidated statements of operations.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
9.	Other long-term liabilitiesOther long-term liabilities consist of the following:
		September 30,	December 31,
		2022	2021
	Contract adjustment payments	$		132,384 $	187,580
	Asset retirement obligations			121,853	142,147
	Advances in aid of construction			88,635	82,580
	Environmental remediation obligation			43,047	55,224
	Customer deposits			33,750	32,633
	Unamortized investment tax credits			17,113	17,439
	Deferred credits and contingent consideration			35,668	35,982
	Preferred shares, Series C			11,869	13,348
	Hook-up fees			31,650	21,904
	Lease liabilities			21,381	22,512
	Contingent development support obligations			6,707	4,612
	Note payable to related party			25,808	25,808
	Other			30,645	42,050
		$		600,510 $	683,819
	Less: current portion		(168,511)	(167,908)
		$		431,999 $	515,911
10.	Shareholders’ capital(a)
						Common sharesNumber of common shares
		Nine months ended September 30
		2022	2021
						Common shares, beginning of period	671,960,276	597,142,219
						Public offering	2,861,709	23,531,465
						Dividend reinvestment plan	5,140,249	4,560,456
						Exercise of share-based awards (b)	907,773	909,762
						Conversion of convertible debentures	754	1,886
						Common shares, end of period	680,870,761	626,145,788
						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 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 and nine months ended September 30, 2022, the Company issued 2,861,709 common shares under its ATM Program at an average price of $13.94 per common share for gross proceeds of $38,923 ($38,534 net of commissions). Other related costs were $371.As at November 10, 2022, 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 $4,656.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
10.	Shareholders’ capital (continued)(b)
		Share-based compensationFor the three and nine months ended September 30, 2022, AQN recorded $3,055 and $6,550, respectively (2021 - $3,414 and $7,800, respectively) in total share-based compensation expense. 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 at September 30, 2022, total unrecognized compensation costs related to non-vested share-based awards was $16,570 and is expected to be recognized over a period of 1.9 years.Share option planDuring the nine months ended September 30, 2022, the Board of Directors of the Company (the "Board") approved the grant of 646,090 options to executives of the Company. The options allow for the purchase of common shares at a weighted average price of $19.11, the market price of the underlying common shares at the date of grant. One-third of the options vest on each of December 31, 2022, 2023 and 2024. The options may be exercised up to eight years following the date of grant.The following assumptions were used in determining the fair value of share options granted:
			2022
		Risk-free interest rate	1.9 %
		Expected volatility	23 %
		Expected dividend yield	4.3 %
		Expected life		5.50 years
		Weighted average grant date fair value per option		$	2.44
		During the nine months ended September 30, 2022, 40,074 share options were exercised at a weighted average price of $15.78 in exchange for 3,999 common shares issued from treasury, and 36,075 options were settled at their cash value as payment for the exercise price and tax withholdings related to the exercise of the options.Performance and restricted share unitsDuring the nine months ended September 30, 2022, a total of 1,015,153 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 nine months ended September 30, 2022, the Company settled 1,024,307 PSUs and RSUs in exchange for 520,085 common shares issued from treasury, and 504,222 PSUs and RSUs were settled at their cash value as payment for tax withholding related to the settlement of the awards.During the nine months ended September 30, 2022, the Company settled 4,108 bonus deferral RSUs in exchange for 1,908 common shares issued from treasury, and 2,200 RSUs were settled at their cash value as payment for tax withholding related to the settlement of the awards. During the nine months ended September 30, 2022, 48,552 bonus deferral RSUs were granted to employees of the Company. The RSUs are 100% vested. Directors' deferred share unitsDuring the nine months ended September 30, 2022, 73,916 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. In addition, the Company settled 5,176 DSUs in exchange for 2,403 common shares issued from treasury, and 2,773 DSUs were settled at their cash value as payment for tax withholding related to the settlement of the awards.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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:
				Pension and
		Foreign	Unrealized	post-
		currency	gain (loss) on	employment
		cumulative	cash flow	actuarial
		translation	hedges	changes	Total
	Balance, January 1, 2021	$	(39,725) $	50,817 $	(33,599) $	(22,507)
	OCI		(25,982)	(97,103)			32,247	(90,838)
	Amounts reclassified from AOCI to the
	unaudited interim consolidated statements of
	operations		(4,288)	42,772			9,804	48,288
	Net current period OCI	$	(30,270) $	(54,331) $			42,051 $	(42,550)
	OCI attributable to the non-controlling
	interests						(249)	—	—	(249)
	Net current period OCI attributable to
	shareholders of AQN	$	(30,519) $	(54,331) $			42,051 $	(42,799)
	Amounts reclassified from AOCI to non-
	controlling interest		(6,371)						—	—	(6,371)
	Balance, December 31, 2021	$	(76,615) $						(3,514) $	8,452 $	(71,677)
	OCI		(54,281)	(124,980)						—	(179,261)
	Amounts reclassified from AOCI to the
	unaudited interim consolidated statements of
	operations		(1,091)						54,666	(203)	53,372
	Net current period OCI	$	(55,372) $	(70,314) $			(203) $	(125,889)
	OCI attributable to the non-controlling
	interests		2,457						—	—	2,457
	Net current period OCI attributable to
	shareholders of AQN	$	(52,915) $	(70,314) $			(203) $	(123,432)
	Balance, September 30, 2022	$	(129,530) $	(73,828) $			8,249 $	(195,109)
	Amounts reclassified from AOCI for foreign currency cumulative translation affected interest expense and 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.	DividendsAll 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 September 30
							2022		2021
			Dividend per		Dividend per
		Dividend	share	Dividend	share
	Common shares	$	123,718 $						0.1808 $	107,229 $	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 StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
12.	Dividends (continued)
		Nine months ended September 30
		2022	2021
		Dividend per	Dividend per
				Dividend	share	Dividend	share
	Common shares			$	361,927 $	0.5322 $	307,551 $	0.4963
	Series A preferred shares			C$ 4,646 C$ 0.9679 C$ 4.646 C$ 0.9679
	Series D preferred shares			C$ 3,818 C$ 0.9546 C$ 3,818 C$ 0.9546
13.	Related party transactions(a)
								Equity-method investmentsThe Company provides administrative and development services to its equity-method investees and is reimbursed for incurred costs. To that effect, during the three and nine months ended September 30, 2022, the Company charged its equity-method investees $10,621 and $29,207, respectively (2021 - $6,879 and $19,199, respectively). 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. During the three and nine months ended September 30, 2022, the development fees charged to the Company were $nil and $nil, respectively (2021 - $nil and $738, respectively).In 2021, the Company issued a promissory note of $25,808 payable to New Market Solar Investco, LLC, an equity investee of the Company.On August 10, 2022, the Deerfield II Wind Project was contributed into a joint venture entity (in which the Company and the Infrastructure and Power strategy of Ares Management, LLC each own an indirect 50% equity interest). The transfer of the project did not result in a gain or loss.
	(b)							Redeemable non-controlling interest held by related partyLiberty 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. 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 at September 30, 2022. During the three and nine months ended September 30, 2022, the Company incurred non-controlling interest attributable to Liberty Development Energy Solutions of $4,450 and $10,111, respectively (2021 - $2,588 and $7,886, respectively) and recorded distributions of $3,576 and $8,980, respectively (2021 - $2,663 and $7,709, respectively).
	(c)							Non-controlling interest held by related partyNon-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 and nine months ended September 30, 2022, the Company recorded distributions of $3,147 and $16,103, respectively (2021 - $2,570 and $11,482, respectively).

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
13.	Related party transactions (continued)(d)
		Transactions with AtlanticaDuring 2021, the Company sold Colombian solar assets to Atlantica for consideration of $23,863, with a gain on sale of $878, and contingent consideration of $2,600, if certain milestones are met. During the nine months ended September 30, 2022, a gain of $1,200 relating to the contingent consideration has been recognized.
	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 interestsNet effect attributable to non-controlling interests consists of the following:
			Three months ended	Nine months ended
			September 30	September 30
			2022		2021	2022		2021
	HLBV and other adjustments attributable to:
	Non-controlling interests - tax equity partnership
	units						$	16,088 $	14,264 $	88,049 $	55,785
	Non-controlling interests - redeemable tax equity
	partnership units							1,278	1,696	4,214	5,121
	Other net earnings attributable to:
	Non-controlling interests							(758)	(1,873)	(2,692)	(5,917)
							$	16,608 $	14,087 $	89,571 $	54,989
	Redeemable non-controlling interest, held by
	related party							(4,450)	(2,588)	(10,111)	(7,886)
	Net effect of non-controlling interests						$	12,158 $	11,499 $	79,460 $	47,103
	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 StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
15.	Income taxes For the three and nine months ended September 30, 2022, the income taxes expense (recovery) in the unaudited interim consolidated statements of operations represents an effective tax rate different than the Canadian enacted statutory rate of 26.5% (2021 - 26.5%). The differences are as follows:
		Three months ended	Nine months ended
		September 30	September 30
		2022		2021	2022		2021
	Expected income tax recovery at Canadian statutory
	rate					$	(60,116) $ (15,584) $	(66,235) $		(815)
	Increase (decrease) resulting from:
							Effect of differences in tax rates on transactions
							in and within foreign jurisdictions and change
							in tax rates		(11,709)		(11,398)	(30,748)	(33,283)
							Adjustments from investments carried at fair
							value		35,197		15,264	53,426	14,310
							Non-controlling interests share of income		8,075		5,267	23,715	21,594
							Acquisition related state deferred tax
							adjustments			—	—	7,600		—
							Tax credits		8,285		(8,801)	(13,738)	(35,320)
							Amortization and settlement of excess deferred
							income tax		(3,724)		(3,435)	(10,054)	(10,435)
							Other		4,476		(701)	3,151	(1,272)
	Income tax recovery					$	(19,516) $ (19,388) $	(32,883) $ (45,221)
16.	Other net lossesOther net losses consist of the following:
		Three months ended	Nine months ended
		September 30	September 30
		2022		2021	2022		2021
	Acquisition and transition-related costs	$	6,850 $		1,725 $	14,865 $		4,709
	Other		(904)		(836)	4,463		6,377
		$	5,946 $		889 $	19,328 $		11,086

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
17.	Basic and diluted net earnings (loss) per shareBasic and diluted earnings (loss) per share have been calculated on the basis of net earnings (loss) 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 (loss) per share is computed using the weighted-average number of common shares, additional shares issued subsequent to quarter-end under the dividend reinvestment plan, PSUs, RSUs and DSUs outstanding during the period and, if dilutive, potential incremental common shares related to the convertible debentures or resulting from the application of the treasury stock method to outstanding share options and Green Equity Units (note 7).
	The reconciliation of the net earnings (loss) and the weighted average shares used in the computation of basic and diluted earnings (loss) per share are as follows:
		Three months ended	Nine months ended
		September 30	September 30
		2022		2021	2022		2021
	Net earnings (loss) attributable to shareholders of
	AQN					(195,177)	(27,922) $ (137,599)	89,247
	Series A preferred shares dividend						1,201		1,244	3,638	3,709
	Series D preferred shares dividend						987		1,023	2,990	3,048
	Net earnings (loss) attributable to common
	shareholders of AQN – basic and diluted					$ (197,365) $	(30,189) $ (144,227) $	82,490
	Weighted average number of shares
	Basic					678,623,606 621,405,414 676,035,613 611,772,460
	Effect of dilutive securities						—	—	— 6,300,009
	Diluted					678,623,606 621,405,414 676,035,613 618,072,469
	This calculation of diluted shares excludes the potential impact of the Green Equity Units and all potential
	incremental shares that may become issuable pursuant to outstanding securities of the Company for the three and
	nine months ended September 30, 2022, as they are antidilutive. This calculation of diluted shares for the three
	and nine months ended September 30, 2021 excludes the potential impact of 9,360,556 and 437,006
	securities, respectively, as they are anti-dilutive.
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.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
18.	Segmented information (continued)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 gains 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.
		Three months ended September 30, 2022
			Regulated	Renewable
			Services Group	Energy Group	Corporate	Total
	Revenue (1)(2)		$	561,641 $				86,572 $	— $	648,213
	Other revenue			14,316				3,822	373	18,511
	Fuel, power and water purchased			172,508				15,081	—	187,589
	Net revenue			403,449				75,313	373	479,135
	Operating expenses			189,799				26,823	25	216,647
	Administrative expenses			11,767				8,544	3,134	23,445
	Depreciation and amortization			82,129				25,824	254	108,207
	Gain on foreign exchange			—						—	(4,985)	(4,985)
	Operating income			119,754				14,122	1,945	135,821
	Interest expense			(32,887)	(23,817)	(18,345)	(75,049)
	Income (loss) from long-term investments			6,919						15,278	(301,970)	(279,773)
	Other expenses			(614)						(1,464)	(5,772)	(7,850)
	Earnings (loss) before income taxes		$	93,172 $				4,119 $	(324,142) $	(226,851)
	Capital expenditures		$	286,881 $				35,075 $	— $	321,956
	(1) Renewable Energy Group revenue includes $23,856 related to net hedging loss from energy derivative contracts and availability credits for the three months ended September 30, 2022, that do not represent revenue recognized from contracts with customers.(2) Regulated Services Group revenue includes $4,052 related to alternative revenue programs for the three months ended September 30, 2022, that do not represent revenue recognized from contracts with customers.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
18.	Segmented information (continued)
		Three months ended September 30, 2021
			Regulated	Renewable
			Services Group	Energy Group	Corporate	Total
	Revenue (1)(2)		$	434,708 $	73,595 $			— $	508,303
	Other revenue			14,490					5,394	388	20,272
	Fuel, power and water purchased			112,820	11,898			—	124,718
	Net revenue			336,378	67,091			388	403,857
	Operating expenses			150,934	26,270			—	177,204
	Administrative expenses			6,976							6,981	1,208	15,165
	Depreciation and amortization			71,430	24,858			265	96,553
	Loss on foreign exchange			—							—	1,267	1,267
	Operating income (loss)			107,038					8,982	(2,352)	113,668
	Interest expense			(22,300)	(17,461)	(11,893)	(51,654)
	Income (loss) from long-term investments			4,470			22,126	(140,838)	(114,242)
	Other recovery (expenses)			(3,462)					(4,770)	1,651	(6,581)
	Earnings (loss) before income taxes		$	85,746 $					8,877 $ (153,432) $	(58,809)
	Capital expenditures		$	263,711 $	84,339 $			— $	348,050
	(1) Renewable Energy Group revenue includes $1,160 related to net hedging loss from energy derivative contracts for the three months ended September 30, 2021, that do not represent revenue recognized from contracts with customers.(2) Regulated Services Group revenue includes $5,324 related to alternative revenue programs for the three months ended September 30, 2021, that do not represent revenue recognized from contracts with customers.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
18.	Segmented information (continued)
		Nine months ended September 30, 2022
			Regulated	Renewable
			Services Group	Energy Group			Corporate	Total
	Revenue (1)(2)			1,691,495	271,807 $			— $ 1,963,302
	Other revenue			41,863					20,374	1,141	63,378
	Fuel, power and water purchased			566,336					41,685	—	608,021
	Net revenue			1,167,022	250,496			1,141	1,418,659
	Operating expenses			553,466					81,466	47	634,979
	Administrative expenses			30,803					24,599	5,602	61,004
	Depreciation and amortization			238,640	101,298			780	340,718
	Gain on foreign exchange			—						—	(259)	(259)
				344,113					43,133	(5,029)	382,217
	Gain on sale of renewable assets			—						1,200	—	1,200
	Operating income (loss)			344,113					44,333	(5,029)	383,417
	Interest expense			(78,172)	(67,145)	(52,248)	(197,565)
	Income (loss) from long-term investments			16,693					69,579	(490,114)	(403,842)
	Other expenses								(8,400)	(9,757)	(13,795)	(31,952)
	Earnings (loss) before income taxes		$	274,234 $					37,010 $	(561,186) $	(249,942)
	Property, plant and equipment		$ 8,335,477 $ 3,539,518 $		29,145 $ 11,904,140
	Investments carried at fair value			2,133		1,355,978			—	1,358,111
	Equity-method investees			54,825	350,722	13,545	419,092
	Total assets		11,812,751	5,587,113	253,465 17,653,329
	Capital expenditures		$	722,344 $	174,849 $			— $	897,193
	(1) Renewable Energy Group revenue includes $53,748 related to net hedging loss from energy derivative contracts and availability credits for the nine months ended September 30, 2022, that do not represent revenue recognized from contracts with customers.(2) Regulated Services Group revenue includes $19,141 related to alternative revenue programs for the nine months ended September 30, 2022, that do not represent revenue recognized from contracts with customers.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
18.	Segmented information (continued)
		Nine months ended September 30, 2021
			Regulated	Renewable
			Services Group	Energy Group			Corporate	Total
	Revenue (1)(2)		$ 1,452,609 $	182,268 $			— $ 1,634,877
	Other revenue			40,056	14,536			1,171	55,763
	Fuel, power and water purchased			506,745	25,887			—	532,632
	Net revenue			985,920	170,917			1,171 1,158,008
	Operating expenses			448,844	79,499			—	528,343
	Administrative expenses			24,431	19,589			4,910	48,930
	Depreciation and amortization			206,517	84,805			831	292,153
	Loss on foreign exchange			—						—	3,412	3,412
	Operating income (loss)			306,128	(12,976)	(7,982)	285,170
	Interest expense			(73,715)	(54,206)	(31,495)	(159,416)
	Income (loss) from long-term investments			14,937	70,531	(189,711)	(104,243)
	Other expenses			(16,108)					(8,424)	(56)	(24,588)
	Earnings (loss) before income taxes		$	231,242 $					(5,075) $ (229,244) $	(3,077)
	Capital expenditures		$	817,661 $	225,968 $			7,553 $ 1,051,182
				December 31, 2021
	Property, plant and equipment		$ 7,394,151 $ 3,615,915 $		32,380 $ 11,042,446
	Investments carried at fair value								2,296 1,846,160	— 1,848,456
	Equity-method investees			37,492	375,460	20,898	433,850
	Total assets		10,512,799 6,123,888		149,149 16,785,836
	(1) Renewable Energy Group revenue includes $45,748 related to net hedging loss from energy derivative contracts for the nine months ended September 30, 2021, that do not represent revenue recognized from contracts with customers.(2) Regulated Services Group revenue includes $12,803 related to alternative revenue programs for the nine months ended September 30, 2021, 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					Nine months ended
		September 30					September 30
		2022						2021	2022	2021
	Revenue
										United States	$	532,231 $ 408,419 $ 1,630,811 $ 1,335,677
										Canada		30,754	28,845	125,986	112,648
										Other regions		103,739	91,311	269,883	242,315
			$	666,724 $ 528,575 $ 2,026,680 $ 1,690,640
	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 StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)

19.

Commitments and contingencies(a)

ContingenciesAQN 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 FireOn 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 eleven active lawsuits that name the Company and/or certain of its subsidiaries as defendants in connection with the Mountain View Fire. Five of these 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. In the sixth active lawsuit, County of Mono, Antelope Valley Fire Protection District, Toiyabe Indian Health Project 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 eleventh lawsuit alleges the wrongful death of an individual, along with causes of action similar to those alleged in the cases filed by groups of individual plaintiffs. 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 at September 30, 2022.AQN has outstanding purchase commitments for power purchases, 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)

$ 76,734 $ 37,611 $ 37,845 $ 20,040 $ 12,459 $ 145,757 $ 330,446

Gas supply and

service

agreements (2) 92,191 82,276 64,594 36,162 27,227

159,649

462,099

Service

agreements

65,030 56,306 55,380 51,260 44,106

301,982

574,064

Capital

projects

27,089

—

27,089

Land

easements and

others

13,268 13,249 13,428 13,596 13,764

461,675

528,980

Total

$ 274,312 $ 189,442 $ 171,247 $ 121,058 $ 97,556 $ 1,069,063 $ 1,922,678

(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 September 30, 2022. However, the effects of purchased power unit cost adjustments are mitigated through a purchased power rate-adjustment mechanism.

(2) 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 StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
20.	Non-cash operating itemsThe changes in non-cash operating items consist of the following:
		Three months ended	Nine months ended
		September 30	September 30
		2022		2021	2022		2021
	Accounts receivable					$	20,107 $	(7,006) $	(29,146) $	26,969
	Fuel and natural gas in storage						(34,360)	(43,158)	(41,488)	(37,229)
	Supplies and consumables inventory						(6,423)	8,363	(17,198)	3,977
	Income taxes recoverable						870	1,547	2,941	380
	Prepaid expenses						(7,193)	(6,083)	(19,746)	(15,126)
	Accounts payable						(13,811)	25,731	12,948	(22,123)
	Accrued liabilities						6,295	90,745	37,006	(676)
	Current income tax liability						2,617	1,499	3,470	7,124
	Asset retirements and environmental obligations						(6,036)	(957)	(17,390)	(1,488)
	Net regulatory assets and liabilities						(57,733)	(64,460)	(111,852) (399,456)
						$	(95,667) $	6,221 $ (180,455) $ (437,648)

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
21.	Financial instruments (a)
		Fair value of financial instruments
			Carrying	Fair
		September 30, 2022	amount	value	Level 1	Level 2	Level 3
		Long-term investments carried at
		fair value	$ 1,358,111 $ 1,358,111 $ 1,289,858 $					— $	68,253
		Development loans and other
		receivables		122,353	118,193					—	118,193				—
		Derivative instruments:
											Interest rate swap designated
											as a hedge		68,520	68,520			—	68,520			—
											Energy contracts not
											designated as cash flow
											hedge		1,213	1,213			—	—	1,213
											Congestion revenue rights
											designated as a cash flow
											hedge		2,568	2,568			—	—	2,568
											Congestion revenue rights not
											designated as a cash flow
											hedge		4,157	4,157			—	—	4,157
											Commodity contracts for
											regulated operations		3,235	3,235			—	3,235			—
											Interest rate swap not
											designated as a hedge								767	767		—	767	—
											Cross currency swap
											designated as a net
											investment hedge		4,847	4,847			—	4,847			—
											Total derivative instruments		85,307	85,307			—	77,369	7,938
		Total financial assets	$ 1,565,771 $ 1,561,611 $ 1,289,858 $			195,562 $	76,191
		Long-term debt	$ 7,704,904 $ 7,319,099 $ 2,715,772 $ 4,603,327 $							—
		Notes payable to related party		25,808	14,972					—	14,972				—
		Convertible debentures										243	388			388	—		—
		Preferred shares, Series C		11,869	11,571					—	11,571				—
		Derivative instruments:
											Energy contracts designated
											as a cash flow hedge		154,763	154,763			—	—	154,763
											Energy contracts not
											designated as a cash flow
											hedge		1,141	1,141			—	—	1,141
											Cross-currency swap
											designated as a net
											investment hedge		26,196	26,196			—	26,196			—
											Cross-currency swap
											designated as a cash flow
											hedge		16,548	16,548			—	16,548			—
											Interest rate swaps not
											designated as a hedge		5,649	5,649			—	5,649			—
											Commodity contracts for
											regulated operations								346	346		—	346	—
											Total derivative instruments	204,643	204,643			—	48,739	155,904
		Total financial liabilities	$ 7,947,467 $ 7,550,673 $ 2,716,160 $ 4,678,609 $				155,904

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
21. Financial instruments (continued)
	(a)	Fair value of financial instruments (continued)
			Carrying	Fair
		December 31, 2021	amount	value	Level 1	Level 2	Level 3
		Long-term investments
		carried at fair value	$ 1,848,456 $ 1,848,456 $ 1,753,210 $					— $	95,246
		Development loans and
		other receivables		32,261	33,286					—	33,286				—
		Derivative instruments:
											Energy contracts
											designated as a cash
											flow hedge		15,362	15,362			—	—	15,362
											Interest rate swap
											designated as a hedge	1,581	1,581			—	1,581			—
											Commodity contracts
											for regulatory
											operations		1,721	1,721			—	1,721			—
											Cross-currency swap
											designated as a net
											investment hedge		1,958	1,958			—	1,958			—
											Total derivative
											instruments		20,622	20,622			—	5,260	15,362
		Total financial assets	$ 1,901,339 $ 1,902,364 $ 1,753,210 $			38,546 $ 110,608
		Long-term debt	$ 6,211,375 $ 6,543,932 $ 2,418,580 $ 4,125,352							—
		Notes payable to related
		party		25,808	25,808					—	25,808				—
		Convertible debentures										277	519			519	—		—
		Preferred shares, Series C		13,348	14,580					—	14,580				—
		Derivative instruments:
											Energy contracts
											designated as a cash
											flow hedge		60,462	60,462			—	—	60,462
											Energy contracts not
											designated as a cash
											flow hedge		1,169	1,169			—	—	1,169
											Cross-currency swap
											designated as a net
											investment hedge		50,258	50,258			—	50,258			—
											Interest rate swaps
											designated as a hedge	7,008	7,008			—	7,008			—
											Commodity contracts
											for regulated
											operations		1,348	1,348			—	1,348			—
											Total derivative
											instruments		120,245	120,245			—	58,614	61,631
		Total financial liabilities	$ 6,371,053 $ 6,705,084 $ 2,419,099 $ 4,224,354 $				61,631

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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 at September 30, 2022 and December 31, 2021 due to the short-term maturity of these instruments.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 fair value of the investment in Atlantica (level 1) is measured at the closing price on the NASDAQ stock exchange.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 fair value of 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 $23.49 to $210.09 with a weighted average of $46.90 as at September 30, 2022. 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 $1.58 to $19.65 with a weighted average of $7.76 as at September 30, 2022. 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 9.17% to 9.67% with a weighted average of 9.55%, and the expected volatility of Atlantica's share price ranging from 25% to 37% as at September 30, 2022. 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 gas and electric service territories. The Company’s strategy is to minimize fluctuations in gas sale prices to regulated customers. The following are commodity volumes, in dekatherms, associated with the above derivative contracts:
			September 30,
			2022
		Financial contracts: Swaps		2,245,873
				Options	113,504
				2,359,377

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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

Receive average

Pay floating price

(MW-hrs)

Expiry

prices (per MW-hr)

(per MW-hr)

4,204,184

September 2030

$24.54

Illinois Hub

445,669

December 2028

$30.14

PJM Western HUB

2,123,023

December 2027

$22.61

NI HUB

1,764,648

December 2027

$36.46

ERCORT North HUB

The Company provides energy requirements to various customers under contracts at fixed rates. While the production from the Tinker Hydroelectric Facility is expected to provide a portion of the energy required to service these customers, AQN anticipates having to purchase a portion of its energy requirements at the ISO NE spot rates to supplement self-generated energy. The Company seeks to mitigate the risk by using short-term financial forward energy purchase contracts. These short-term derivatives are not accounted for as hedges, and changes in fair value are recorded in earnings as they occur (note 21(b)(iv)). A prior contract used as a hedging instrument expired in February 2022.The Company is party to two interest rate swap contracts as cash flow hedges to mitigate the risk that LIBOR-based interest rates will increase over the life of term loan facilities. Under the terms of the interest rate swap contracts, the Company has fixed its LIBOR interest rate expense on its two 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 and between April 18, 2027 and April 18, 2032 on the $750,000 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 StatementsSeptember 30, 2022 and 2021(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	Nine months ended
			September 30	September 30
			2022		2021	2022		2021
		Effective portion of cash flow hedge					$	(43,128) $	(31,323) $ (124,980) $ (94,490)
		Amortization of cash flow hedge						(3,401)	(545)	(7,393)	(1,657)
		Amounts reclassified from AOCI						47,980			269	62,059	40,401
		OCI attributable to shareholders of AQN					$	1,451 $	(31,599) $	(70,314) $ (55,746)
		The Company expects $49,323 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 operationThe 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 gain of $2,454 and $2,674 for the three and nine months ended September 30, 2022, respectively (2021 - gain of $338 and loss of $108, respectively) 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 gain of $18,033 and $24,498 for the three and nine months ended September 30, 2022, respectively (2021 - gain of $12,284 and $817, respectively) was recorded in OCI.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(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 operationsThe 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 $17,238 and $19,782 for the three and nine months ended September 30, 2022, respectively (2021 - loss of $744 and gain of $1,247, respectively) was recorded in OCI.The Renewable Energy Group was party to C$500,000 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 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 Renewable Energy Group'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 loss of $6,110 and $12,190 for the three and nine months ended September 30, 2022, respectively (2021 - loss of $11,644 and gain of $1,630, respectively) was recorded in OCI. On April 9, 2021, the Renewable Energy Group entered into a cross-currency interest rate swap, coterminous with the senior unsecured debentures, to effectively convert the C$400,000 Canadian-dollar-denominated offering 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 Renewable Energy Group'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 loss of $146 and $14,398 for the three and nine months ended September 30, 2022, respectively (2021 - loss of $10,135 and $12,788, respectively) was recorded in OCI.Chilean operationsThe 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 managementIn 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.

Algonquin Power & Utilities Corp.Notes to the Unaudited Interim Consolidated Financial StatementsSeptember 30, 2022 and 2021(in thousands of U.S. dollars, except as noted and per share amounts)
21.	Financial instruments (continued)(b)
		Derivative instruments (continued)
	(iv)	Other derivatives (continued)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	Nine months ended
			September 30	September 30
			2022		2021	2022		2021
		Unrealized gain (loss) on derivative financial
		instruments:
							Interest rate swaps	$	(521) $			— $	(5,201) $				—
							Energy derivative contracts	$					68 $	(2,176) $	(3,035) $	(4,803)
			$	(453) $		(2,176) $	(8,236) $		(4,803)
		Realized loss on derivative financial
		instruments:
							Energy derivative contracts		(805)	(485)	(656)	(126)
		Loss on derivative financial instruments not
		accounted for as hedges		(1,258)		(2,661)	(8,892)		(4,929)
		Amortization of AOCI gains frozen as a result
		of hedge dedesignation		872		844	2,622		2,847
			$	(386) $		(1,817) $	(6,270) $		(2,082)
		Amounts recognized in the unaudited
		interim consolidated statements of
		operations consist of:
		Loss on derivative financial instruments	$	(386) $		(1,817) $	(6,270) $		(2,082)
22.	Comparative figuresCertain of the comparative figures have been reclassified to conform to the unaudited interim consolidated financial statement presentation adopted in the current period.