Capital Power Corporation · TSX:CPX

Capital Power — Non-Deal Roadshow (March 2016)

44 slides from Capital Power's roadshow presentation, March 2016

1. Slide 1: Capital Power Investor Meetings March 2016

   CAPITAL POWER Investor Meetings March, 2016 Brian Vaasjo, President & CEO Bryan DeNeve, SVP Finance & CFO

2. Slide 2: Outline of presentation

   Outline of presentation  Capital Power Overview  Alberta Climate Leadership Plan • Carbon price • Accelerated phase-out of coal; renewables acceleration • Alberta merchant market design • Expected financial impacts  Finance Overview  Alberta Power Market  Growth Opportunities  2016 Outlook and

3. Slide 3: Capital Power overview

   Capital Power overview  Growth-oriented North American IPP with ownership interest in 18 facilities in Canada and the US totaling more than 3,200 MW(1)  Young and modern fleet of assets  Proven operating, development & construction expertise  Strong contracted cash flow base supports annual divi

4. Slide 4: Carbon price

   Carbon price Alberta Climate Leadership Plan Government plan and Panel recommendations Carbon price  Economy wide carbon price starting at $20/tonne on Jan 1/17 and increasing to $30/tonne on Jan 1/18  Existing Specified Gas Emitters Regulation (SGER) replaced in 2018 with a Carbon Competitiveness

5. Slide 5: Phase-out of coal

   Phase-out of coal Alberta Climate Leadership Plan Accelerated phase-out of coal facilities by 2030 Generation End of Life  Coal retirements Capacity (current Facility (MW) Regulations) • Capital Stock Turnover, Federal Battle River 3 149 2019 Government regulations Sundance 1 288 2019 H.R. Milner 1

6. Slide 6: Phase-out of coal: Compensation

   Phase-out of coal Alberta Climate Leadership Plan Compensation  A component of compensation for early retirement could be the ratio of reduced asset life to the current remaining life multiplied by Net Book Value (NBV)  NBV of our coal assets is ~$2 billion at end of 2015  Remaining life of our c

7. Slide 7: Renewables

   Renewables Alberta Climate Leadership Plan Renewables RFP process & maintenance of AB market design  Mar 3/16 – AB Government has tasked the Alberta Electric System Operator (AESO) to develop and implement a renewable electricity incentive program (REIP) to add additional renewable generation capac

8. Slide 8: Carbon tax – cost of coal compliance

   Financial impacts Carbon tax – cost of coal compliance Cost of compliance versus tax $25 AVG AB COAL $20 Unhedged Cost Cost of Emissions ($/MWh) $15 CPC COAL Unhedged Cost $10 CPC COAL Hedged Cost $5 $- 2016 2017 2018 2019 2020 Lower compliance costs achieved by offset development & procurement stra

9. Slide 9: Carbon competitiveness regulation

   Financial impacts Carbon competitiveness regulation  Required to comply with Specified Gas Emitters Regulation (SGER) through to the end of 2017. Levy under Carbon Competitiveness Regulation (CCR) effective starting in 2018. 2017 2018 2019 2020 Compliance regulation SGER CCR Compliance requirement

10. Slide 10: Estimated incremental impacts of CCR

    Financial impacts Estimated incremental impacts of CCR(1)  Contracted revenue under Genesee 1 & 2 PPA is expected to be $37/MWh in 2020  Expected revenue will be $60 to $70/MWh when the output is sold into the AB merchant market, which will now be partially eroded by the higher carbon tax EBITDA i

11. Slide 11: Carbon tax: impact on pool price

    Carbon tax - AB power market Carbon tax: impact on pool price  Some variable cost increase will be passed through power prices 1) Assumes allocation based on Cleanest Gas Standard of 0.4T/MWh, and the following intensities (T/MWh): coal = 1.05, Simple cycle & cogen = 0.55, Combined cycle = 0.45 11

12. Slide 12: Alberta Climate Leadership Plan: Expected incremental impacts

    Financial impacts Alberta Climate Leadership Plan Expected incremental impacts  2018 to 2020 (~ +$20M average EBITDA(1) per year) - Coal compliance costs partly recovered through higher power prices + Utilize existing inventory of carbon credits + Higher power prices benefits natural gas and wind f

13. Slide 13: Financial performance – 2015

    Finance overview Financial performance – 2015 $M, except per share amounts 2015 2014 Change Revenues $1,251 $1,228 2% Adjusted EBITDA (before mark-to-market)(1) $462 $387 19% Basic earnings per share $0.70 $0.28 150% Normalized earnings per share $1.15 $0.72 60% Funds from operations $400 $362 10% 2

14. Slide 14: Capital allocation

    Finance overview Capital allocation (1) Maintain growing dividend backed by Dividend sufficient contracted cash flow base Growth Capital Growth (2) Fund growth opportunities in the near term with discretionary cash flow Allocation Opportunities Share Buybacks & (3) Active in debt reduction and share

15. Slide 15: Continued strong cash flow generation

    Finance overview Continued strong cash flow generation Funds from operations (FFO)(1) $450  ~42% of 2016 FFO is $400 discretionary cash flow(2) 45% 42% $350  At the mid-point of 2016 37% guidance range, generating $300 ~$170M in DCF before growth $250 capex to reinvest in ($M) renewables and natur

16. Slide 16: Improving contracted cash flow

    Contracted cash flows Improving contracted cash flow(1,2,3) Substantial expansion in contracted operating margin from 2012 to 2016 $400 $350 $300 } Shepard & K2 Wind } Beaufort 3 wind $250 projects Macho Springs ($M) K2 Wind $200 Shepard PD&N $150 Halkirk Quality Wind $100 Island Generation North Ca

17. Slide 17: Target annual dividend increase

    Contracted cash flows Target annual dividend increase (dividend/share) $1.80  Generating $340M in free cash flow(2) in 2016 before growth capex at the bottom of the cycle $1.60  Dividend payout ratio to FFO averages 39% from 2016 to $1.40 2018  Pipeline of opportunities to expand contracted footp

18. Slide 18: Strong financial coverage

    Contracted cash flows Strong financial coverage Operating margin(1) to financial obligations(2) and dividends(3) 160% 150% Contracted + merchant ($70/MWh) 140% 130% 120% 110% 100% Contracted + merchant (Forwards(4)) Contracted + merchant ($40/MWh) 90% Contracted margin 80% Minimum AB power prices re

19. Slide 19: Financial strength

    Strong financial base Financial strength Strong balance sheet and investment grade credit rating  Investment grade credit ratings Agency Ratings Outlook recently reaffirmed by S&P and DBRS S&P BBB- / P-3 Stable  Debt-to-capital ratio remains below DBRS BBB / Pfd-3 (low) Stable long-term target of

20. Slide 20: Credit metrics

    Strong financial base Credit metrics(1) Above DBRS financial criteria for current rating Adj. Cash flow/Adj. Debt EBITDA/Adj. Interest 30% 6.0 25% 5.0 20% 4.0 15% 3.0 10% 2.0 5% 1.0 0% 0.0 2015A 2016T 2015A 2016T Within S&P financial criteria for investment grade rating Adj. FFO/Adj. Debt(2) Adj. De

21. Slide 21: Alberta demand

    AB power market Alberta demand Alberta demand growing modestly in low oil price environment  2015 weather normalized load growth of 1.2%  Long term fundamentals remain strong Alberta Load Growth(1) AIL Growth (%) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 M

22. Slide 22: Alberta market forecasts

    AB power market Alberta market forecasts $/MWh Alberta Energy Prices(1) $/GJ 100 15 75 10 50 5 25 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Power Forwards Dec 31 /15 Gas 1) Power and gas forecasts represent the average forecasts of three leading 3rd party consult

23. Slide 23: AB commercial portfolio positions

    AB power market AB commercial portfolio positions Alberta portfolio hedged positions (% sold forward) As of Dec 31/15 2016 2017 2018 Percentage sold forward 100% 38% 9% Average contracted prices(1) High-$40 Low-$50 Mid-$60 ($/MWh) Average forward prices $35 $40 $51 ($/MWh)  Percentage sold forward

24. Slide 24: Alberta power market trading

    AB power market Alberta power market trading  Portfolio optimization activities focused on managing exposure to commodity risks, reducing volatility and creating incremental value Average realized power price(1) has exceeded spot power prices ($/MWh) by 35% over the last 2 years $125 $100 $75 $50 $

25. Slide 25: Growth opportunities – Canada & US

    Growth Growth opportunities – Canada & US 1 Wind Natural Gas Solar 25

26. Slide 26: Alberta opportunity set

    Alberta growth Alberta opportunity set “6 GW of coal = 4 GW of renewables and 2 GW of gas” Significant investment required:  4-6 GWh of renewable energy • 150 MW / site • > 40 sites = $12B  4-5 GW of gas replacement energy • 8-10 NGCC sites = $8-10B • PLUS: gas peaker for wind intermittency • PLUS

27. Slide 27: Capital Power is the leading IPP developer in the AB market

    Alberta growth Capital Power is the leading IPP developer in the AB market Generation built in Alberta since 2004(1) 1,500 Renewables Thermal 1,000 (MW) 500 0 Capital Power ENMAX TransAlta ATCO Other 1) Excludes generation for oilsand developments and coal-fired unit expansions. 27

28. Slide 28: Genesee 4&5

    Alberta growth Genesee 4&5  Joint venture partners with ENMAX to develop, construct, own, and operate the 1,060 MW natural gas-fired combined cycle facilities  8-year tolling agreement with ENMAX for 50% of CP’s share of the output  All major regulatory approvals received to proceed with construc

29. Slide 29: Halkirk 2

    Alberta growth Halkirk 2  150 MW wind facility next to the existing Halkirk facility  Investment of ~$300M  AESO interconnection application filed  Application for permits and supporting studies underway  Operational and construction cost savings with experience from Halkirk 1  Locational adva

30. Slide 30: Element Power US

    U.S. growth Element Power US  In Dec/14, completed the acquisition of Element Power US for ~US$69M (includes US$52M of project financing)  Primary driver is to build a portfolio of development projects in strategic locations in the U.S. • 10 wind development sites • 4 solar development sites, incl

31. Slide 31: 2015 Performance and 2016 targets

    Outlook 2015 Performance and 2016 targets Operational and financial targets Plant availability Sustaining capex ($M) 95% $65 $65 94% 94% $62 2015T 2015 2016T 2015T 2015 2016T Plant operating & maintenance expenses ($M) Funds from operations ($M) $365 - $415 $400 $380 - $430 $200 - $220 $180 - $200 $

32. Slide 32: 2016 Disciplined growth targets

    Outlook 2016 Disciplined growth targets On-time, on-budget and safe development of committed projects Genesee 4&5 (Alberta) New development  Transition from development to  Execute a PPA for a new construction development  Timing based on clarity with respect to  Bloom Wind (180 MW project impac

33. Slide 33: Attractive value proposition

    Summary Attractive value proposition  Excellent existing operations  Continued growth in funds from operations • Able to increase the annual dividend through 2018 at 7%  Significant growth opportunities • Genesee 4&5 best positioned to be the next large natural gas-fired generation project to be

34. Slide 34: Alberta demand by end use

    Appendix Alberta demand by end use 2013 Demand by end use(1) 2034 Demand by end use(1) Farm Farm 3% 1% Commercial Commercial 20% 19% Industrial 40% Industrial 45% Residential 11% Residential 13% Oilsands Oilsands 19% 29% Demand from Industrial and Oilsands account for 64% of current demand, that is

35. Slide 35: Historical Alberta prices

    Appendix Historical Alberta prices Daily average power prices 800 700 600 500 $/MWh 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual average power prices and AECO (Annual power prices have averaged $63/MWh in the past 15 years) 100 89.95 10.00 8.27

36. Slide 36: Alberta market design

    Appendix Alberta market design Stable market design has signalled the addition of 7 GW of new generation 1600 45% 1400 40% 35% 1200 30% 1000 25% Capacity 800 Reserve (MW) 20% Margin 600 15% 400 10% 200 5% 0 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 New Capacity AE

37. Slide 37: Illustrative view of new supply

    Appendix Illustrative view of new supply Alberta supply and demand (Gigawatts) 25 Generic Renewables Generic Gas Other Wind Hyrdo Natural Gas Coal (1) Demand (2) 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

38. Slide 38: Debt maturity schedule

    Appendix Debt maturity schedule(1) $1B in committed credit facilities with 5-year tenor maturing 2020, of which $745M is available $550 $540 $500 $450 $400 $350 ($M) $300 $250 $250 US $230 $200 $174 $150 $139 $100 US $65 $50 $10 $0 2016 2017 2018 2019 2020 2021 2026 (2) EPCOR Debt Capital Markets De

39. Slide 39: Summary of assets

    Appendix Summary of assets Clover Bar Clover Shepard Genesee Genesee Genesee Keephills Energy Bar Energy 1 2 3 3 Joffre Centre Landfill Halkirk Centre Alberta Contracted Alberta Commercial Capacity 430 MW 430 MW 516 MW 516 MW 480 MW 243 MW 5 MW 150 MW 800 MW % owned / 100 / 100 100 / 100 50 / 100 50

40. Slide 40: Summary of assets

    Appendix Summary of assets Kingsbridge Island Quality Port Dover & Macho Beaufort 1 Generation Wind Nanticoke K2 Wind Roxboro Southport Springs Solar Ontario & British Columbia Contracted U.S. Contracted Capacity 40 MW 275 MW 142 MW 105 MW 270 MW 46 MW 88 MW 50 MW 15 MW % owned / 100 / 100 100 / 100

41. Slide 41: Projects under development/construction

    Appendix Projects under development/construction Genesee 4&5 Halkirk 2 Bloom Wind Alberta Commercial U.S. Contracted Capacity Up to 1,060 MW 150 MW 180 MW % owned / 50 / 100 100 / 100 operated Location Warburg Halkirk Ford and Clark Counties, Kansas Fuel & equipment Combined-cycle natural gas Wind (

42. Slide 42: Non-GAAP financial measures

    Non-GAAP financial measures The Company uses (i) earnings before finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, income from joint venture, and gains on disposals (adjusted EBITDA), (ii) funds from operations (FFO), (iii) normalized

43. Slide 43: Forward-looking information

    Forward-looking information Forward-looking information or statements included in this presentation and in responses to questions are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information m

44. Slide 44: Investor Relations Contact

    Investor Relations Contact Randy Mah 10423 101 Street NW Senior Manager 10th Floor (780) 392-5305 Edmonton, Alberta rmah@capitalpower.com Canada, T5H 0E9 www.capitalpower.com

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