Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (June 2011)
28 slides from Capital Power's roadshow presentation, June 2011
Slide 1: Investor Meetings
Investor Meetings Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO June, 2011
Slide 2: Capital Power overview
Capital Power overview Canadian-based, growth-oriented independent power producer (IPP) operating in North America CPX included in the S&P/TSX Composite Index as of Jun 20/11 • Market cap of ~$2.4B (fully diluted)(1) Business model: Commitment Generate stable to deliver and growing cash disciplined
Slide 3: Corporate strengths
Corporate strengths by Solid platform si tts for sustainable ba a e aw s growth iv g et e cr 0 m Financial strength ac 00 with access to capital ly 0, nt 1 te to Proven operating and is e n s s iz construction history co le a r ip on to t Young and modern fleet 20 l: 20 oa G Large, high quality gene
Slide 4: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 34 facilities, nearly 4,900 MW(1) Segmented owned capacity by MW(2) Additional facilities to come on line 13% • Keephills 3 (247.5 MW) 24% expected COD in Q3/11 • 3 wind projects (397 MW) located in BC, AB, and 32% ON with expected CODs in 2012 2
Slide 5: Modern fleet
Modern fleet Young fleet with 4 new projects (645 MW) scheduled to begin commercial operations in 2011 and 2012 Coal-fired generating facilities, which have historically represented the majority of the portfolio, have useful lives of up to 45 years Genesee 2 Genesee 1 Capital P o wer Inco me L.P . B
Slide 6: Proven operating history
Proven operating history Historical operating performance 12,000 92% 96% 90% 91% 10,000 Generation 8,000 (GWh)(1) 6,000 4,000 2,000 CPC Generation Pro-rata CPILP Generation Average availability excluding - CPILP plants 2008 2009 2010 2011E Average 3-year plant availability of 93% for owned and/or op
Slide 7: Proven construction capability
Proven construction capability Foundation of proven capability and processes in construction Significant experience in the construction and operation of both thermal (coal, natural gas) and renewable (wind, biomass, small hydro) facilities Capital Power (predecessor EPCOR Utilities Inc.) led constru
Slide 8: Balancing contract & merchant positions
Balancing contract & merchant positions Operating margin split(1) 13% Target of 50% contracted 6% cash flow provides solid platform Total Contracted 43% 57% AB (Contracted) CPILP (Contracted) 38% AB (Merchant & Port. Opt.) BC & Ontario (Contracted) (1) Mar 31/11 LTM operating margin excluding unreal
Slide 9: Financial strength and access to capital
Financial strength and access to capital(1) Strong balance sheet with BBB investment grade credit ratings (S&P/DBRS) • Debt-to-capitalization ratio(2) of 31% • Assets(2) of ~$3.8B with ~$1.0B of long-term debt(2) • CPLP has $1.2 B in credit facilities, of which ~$1.0 B available Continuous access to
Slide 10: Successful capital markets financings
Successful capital markets financings Capital Power has closed 3 debt financings totaling ~$900M $232M common equity offering in Mar/11 $221M secondary common equity offering in Dec/10 $125M preferred share issuance in Dec/10 Debt maturities are well spread out(1) ($M) $350 $315 $307 $300 $250 $235
Slide 11: Alberta power market
Alberta power market Alberta (AB) has a competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO); market has an installed generation capacity of ~13,000 MW No capacity market – power generators must recover all costs through revenue earned in
Slide 12: Hedging AB spot power price exposure
Hedging AB spot power price exposure Risk management policy framework in place Hedging positions based primarily on generation from G3 baseload coal plant and output from the Sundance PPA and will include Keephills 3 post COD in 2011 Risk management targets a significantly hedged position entering i
Slide 13: 2011 EPS guidance
2011 EPS guidance If average AB spot power prices for the balance of 2011 settle on average in the low-$60/MWh range, expect full year 2011 normalized EPS to be ~$1.40 Alberta portfolio hedged positions at Mar 31/11 Balance of 2011 2012 2013 Hedged positions (% hedged) ~64% ~35% ~17% Hedged prices L
Slide 14: North American platform & growth strategy
North American platform & growth strategy Significant growth Canada through acquisitions West and development Ontario Maintain discipline on: • Geography • Size US • Fuel type Northeast • Economics US US Mid-Atlantic Southwest Capital Power facilities Assets Under Construction 14
Slide 15: Investment strategy
Investment strategy Merchant Geography Technology Financial Flexibility Develop within Target Acquire Zone Contracted 15
Slide 16: 2011 Growth announcements
2011 Growth announcements Acquisitions Rumford Tiverton Bridgeport Location Rumford, Maine Tiverton, Rhode Island Bridgeport, Connecticut Fuel Type Natural Gas Natural Gas Natural Gas Size 270 MW (Winter 279 MW (Winter 520 MW Capacity) Capacity) Costs ~US$315M ~US$355M COD 2000 2000 1999 16
Slide 17: Acquisition of Halkirk
Acquisition of Halkirk Announced 100% acquisition of the Halkirk Wind LP from Greengate Power Corporation (Greengate) in Jun/11 Capital Power will build and own the 150 MW wind project located east of Red Deer, AB Total capital cost expected to be $357M, including acquisition costs Commercial operat
Slide 18: Acquisition of Halkirk (cont’d)
Acquisition of Halkirk (cont’d) Construction ready to begin All approvals and permits in place from Alberta Utilities Commission and Alberta Environment 3-year wind study indicates a consistent and strong wind resource Sustains our balance of contracted and merchant assets Project will have two reve
Slide 19: Corporate update – divestiture of CPILP
Corporate update – divestiture of CPILP Jun 20/11 - CPC announced that CPILP (TSX: CPA.UN) and Atlantic Power Corporation (ATP) have entered into an agreement whereby ATP will acquire, directly and indirectly, all of the outstanding limited partnership units of CPILP Upon closing, CPC will receive ~
Slide 20: 2011 corporate priorities
2011 corporate priorities Priority Status Operational targets • Plant availability of ≥ 94% Expect 91% due to – CPC capacity-weighted plant availability (one issues with CBEC 3 Genesee turnaround planned for 2011) Maintenance capital of approximately $56M(1) Estimate $63M(2) – Plant maintenance and
Slide 21: 2011 corporate priorities (cont’d)
2011 corporate priorities (cont’d) Priority Status Financial • Normalized EPS under previous Canadian GAAP reporting Revised of ~$1.20(1,2) annualized $1.40(3) • Funds from operations expected to be modestly higher than 2010 On track • Cash flow per share expected to be modestly higher than 2010 On
Slide 22: Investment highlights summary
Investment highlights summary Large, high quality generation portfolio Young and Solid modern fleet platform with proven for operating growth history Diversified Financial portfolio in strength with attractive North access to American capital Long-term markets contracts & merchant position provides
Slide 23: AB reserve margin forecast
Appendix AB reserve margin forecast Supply-demand balance (reserve margin) expected to be tight until Shepard (800 MW) COD in 2015, and then gradually tighten through the early 2020s • Bringing significant upside to power prices in AB market When AB net reserve margin falls below 10%, new generation
Slide 24: AB cost of generation (COG)
Appendix AB cost of generation (COG) Sustained higher $160 power prices are $140 required to incent new builds $120 ($/MWh) $100 Current market fairly well-supplied, $80 significantly tighter $60 now due to $40 shutdown of 2015 2016 2017 2018 2019 2020 2021 2022 2023 Sundance 1 & 2 & AB Power Price
Slide 25: AB power market (new builds/retirements)
Appendix AB power market (new builds/retirements) New builds/retirements (major projects of 100+ MW) over the next 5 years based on internal assumptions Project Capacity Developer Type COD year (MW) Halkirk 150 Capital Power Wind 2012 Blackspring 300 Greengate Wind 2013 Ridge I Wind Power Corp Bonny
Slide 26: Forward-looking information
Forward-looking information Certain information in this presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, a
Slide 27: Forward-looking information (cont’d)
Forward-looking information (cont’d) acquisition of the North Carolina assets and the Halkirk Wind Project; (xvii) ability to implement strategic initiatives which will yield the expected benefits; (xviii) ability to obtain necessary regulatory approvals for development projects; (xix) the Company’s
Slide 28: Investor Relations contacts
Investor Relations contacts Randy Mah Senior Manager (780) 392-5305 rmah@capitalpower.com www.capitalpower.com Chris Williams Senior Analyst (780) 392-5105 cwilliams@capitalpower.com www.capitalpower.com 28