The above calculations of cash available for distribution represent cash available to fund distributions on ordinary units, subordinated units and ECT preferred units, as well as for debt repayments and reserves. This measure is important to unitholders as the Fund’s objective is to provide a stable and sustainable flow of distributable cash to unitholders.

The cash retained by Alliance Canada reflects the cash from operations of Alliance Canada that has not been distributed to the Fund. While the cash from operations is proportionately consolidated and is included in the results of the Fund, it is not available for distribution by the Fund until it has been received from Alliance Canada. The cash available for distribution from Alliance Canada is reduced to reflect debt service reserves, capital expenditures and other cash that is needed to fund working capital or other requirements at Alliance Canada. Cash retained by Alliance Canada is included above under “Alliance Canada cash retained” except for cash needed to fund working capital, which is included in “Change in operating assets and liabilities in the period”. Distributions from Alliance Canada, which are subject to the approval of the Board of Directors of the General Partner of Alliance Canada, are made on a quarterly basis and paid in the month subsequent to the quarter end.

In the first quarter of 2006, $4.0 million, representing the Fund’s 50% investment in the Kerrobert waste heat project, was returned by Alliance Canada to the Fund. Alliance Canada returned these funds as a result of the sale of the project at carrying value to NRGreen. ‘NRGreen cash retained’ reflects this return from Alliance Canada and its retention for expenditures related to the Kerrobert waste heat project.

The Saskatchewan System maintenance capital expenditures are determined based on the capital requirements necessary to maintain the service capability of the existing assets and include the replacement of system components and equipment, which are worn, obsolete or completing their useful life.

For the year ended December 31, 2006, cash distributions declared of $67.3 million (2005 – $66.1 million) represent 90.6% (2005 – 89.0%) of cash available for distribution. The Fund’s policy is to distribute, on average, approximately 95% of cash available for distribution over a five-year period.

The Fund pays cash distributions on a monthly basis to unitholders of record on the last business day of each month. Distributions are payable on or about the 15th day of the month following the declaration. During the years ended December 31, 2006 and 2005, the Fund declared the following distributions to ordinary unitholders. Cash distributions of the same amount per unit were also declared on the subordinated units and the ECT preferred units.

The Board of Trustees approves changes to distributions periodically based on cash flow to meet the Fund’s distribution policy. As a result, the annual distribution rate has increased from $0.825 at the inception of the Fund to $0.96 per unit effective November 30, 2006. The timing of the regular annual review of the distribution rate is in the fourth quarter of each year. The Fund estimates that approximately 80% of cash to be distributed during 2006 will be included in the income of unitholders for tax purposes. Based on current operations, the Fund estimates that approximately 80% of cash to be distributed during 2007 will be included in the income of unitholders for tax purposes.

On January 15, 2007, the Fund made a monthly cash distribution in the amount of $0.08 per ordinary unit. A cash distribution of $0.08 per unit was also paid on the same date on the subordinated units and the ECT preferred units.

On January 18, 2007, the Fund declared a monthly cash distribution in the amount of $0.08 per ordinary unit to unitholders of record on January 31, 2007, which is payable on February 15, 2007. Cash distributions of $0.08 per unit were also declared on the same date on the subordinated units and the ECT preferred units.

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