Capital Power Corporation · TSX:CPX

Capital Power — Investor Day (December 2014)

94 slides from Capital Power's investor day presentation, Dec 4, 2014

1. Slide 1: 2014 Investor Day

   CAPITAL POWER 2014 Investor Day December 4, 2014

2. Slide 2: Forward-looking information

   Forward-looking information Cautionary statement Certain information in today’s presentations and in responses to questions contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material

3. Slide 3: Our management team

   Our management team Brian Vaasjo President & CEO Kate Todd Bryan Darcy Stuart Chisholm Gilchrist DeNeve Trufyn Lee SVP Legal & SVP Human SVP Corporate SVP Operations, SVP Finance External Resources, Development & Engineering & & CFO Relations Health, Safety Commercial Construction & Environment Serv

4. Slide 4: Agenda

   Agenda Time Topic Presenter 10:00 am Introduction Randy Mah Delivering on our strategy Brian Vaasjo Optimizing operations Darcy Trufyn Alberta power market Bryan DeNeve Construction update Darcy Trufyn Contracted growth pipeline Bryan DeNeve Growing cash flows & dividends Stuart Lee 2015 corporate p

5. Slide 5: Delivering on our Strategy

   Delivering on our Strategy Corporate strategy and execution Brian Vaasjo, President & CEO

6. Slide 6: Preserving and growing shareholder value

   Preserving and growing shareholder value Existing operations  Assets, resources and capital optimized to generate greater value Future growth  Genesee 4 & 5 project moving from development to construction  Acquisition of a contracted renewable development and construction platform 2015  2015 is

7. Slide 7: 2015 market looks as expected

   2015 market looks as expected Alberta power price low point  Accelerated reliability program from 2012, substantial 2013 cost reductions and sale of the U.S. North East U.S. assets  Structured Shepard agreement so that 100% of our output is contracted in 2015  2015 portfolio hedging strategy Plan

8. Slide 8: Capital Power's value proposition

   Capital Power’s value proposition 8

9. Slide 9: Operational excellence

   Operational excellence  A number of 2014-15 activities developed to increase reliability, reduce costs or reduce risks  Restoring the North Carolina plants to capacity  Significant increase in availability at Clover Bar Energy Center at lower cost and risk 9

10. Slide 10: Strong financial position

    Strong financial position  Despite low point in the cycle: • Cash flow expected to increase ~8% in 2015 over 2014 • Capital Power is in a strong financial position  Strengthening balance sheet and credit metrics  Basis for consistent dividend increases beyond 2014 10

11. Slide 11: Contracted cash flow

    Contracted cash flow  North American markets outside of Alberta have contracted opportunities  Acquisition of Element Power US is responsive to the market and creates a platform for future contracted growth  Focus on development and construction strengths 11

12. Slide 12: Alberta power market upside

    Alberta power market upside  2015 is the bottom of the cycle and hedging strategy responded to it  Supply/demand outlook beyond 2015 supports timing of the Genesee 4&5 commercial operation date (COD)  Market risks are mitigated by the flexible COD which is as early as late 2018  Final design of

13. Slide 13: Growth

    Growth  Completion of Shepard in 2015, on time for COD in Q1/15 and on budget  Completion of K2 Wind, on time for COD in mid-2015 and on budget (adjusted for US$)  Execution of our construction strategy on Genesee 4&5 13

14. Slide 14: Key growth drivers

    Key growth drivers  Disciplined focus on the power generation business in North America  Investments in Shepard and Genesee 4&5 complement our existing assets in Alberta  Strong North American platform of contracted opportunities  Capitalize on proven development and construction strength 14

15. Slide 15: Execution of strategy

    Execution of strategy  Pursuit of higher levels of operational excellence  Strong and growing contracted cash flow base • Strong financial position and prudent capital allocation • Supports an increasing dividend profile  Commercial activities focused on capturing the Alberta power market upside

16. Slide 16: Optimizing Operations

    Optimizing Operations Facilities and operating performance Darcy Trufyn, SVP Operations, Engineering & Construction

17. Slide 17: Operations – optimization

    Operations – optimization Cost Risk Safety & Output Management Mitigation Environment Capital Power continues to optimize assets based on 4 pillars Output - Focus on Reliability Program continues – our pro-active approach to improve availability on a high availability fleet Cost - Significant cost i

18. Slide 18: Fleet performance

    Fleet performance Targeting 95% availability over the 6-year period 100 Availability 98 96 (%) 94 92 90 2012 2013 2014F 2015T 2016T 2017T CP Operated Plants Availability Average Proven Operations + Reliability = Increased Availability 18

19. Slide 19: Cost – bending the curve

    Cost – bending the curve(1) 60 58 O&M Owned Plants 56 Controllable Costs(2) 54 52 $/kW 50 48 46 44 42 40 2012 2013 2014F 2015B Committed to spending smarter, however, we will not compromise our high maintenance standards that allow us to achieve high plant availability. 1) Normalized to 2014 dollars

20. Slide 20: Cost - fleet O&M and sustaining capital

    Cost - fleet O&M and sustaining capital(1) Trend is towards more efficient use of resources in both O&M spending and sustaining capital program Total non-fuel O&M and CAPEX spending excluding planned outages 160 140 120 100 ($M) 80 60 40 20 0 2012 Actual 2013 Actual 2014 Forecast 2015 Budget Adjuste

21. Slide 21: Risk mitigation

    Risk mitigation Numerous initiatives undertaken to minimize operational risk and improve predictability  Service Agreements - Long Term Service Agreements (LTSA) established with Original Equipment Manufacturers (OEM) on key assets  Major Spares - Critical spares on major components enable CP to r

22. Slide 22: Safety and environment

    Safety and environment Capital Power is an industry leader in safety and environment  Zero Incident Commitment - A commitment to eliminate lost time incidents and major environmental incidents  Safe Facilities - TRIF this year is forecasted at 0.3 and a record 284 days without a lost time incident

23. Slide 23: Coal facilities – Genesee

    Coal facilities – Genesee Genesee 1& 2: 400 MW each, Genesee 3: 466 MW Output  Genesee boiler program enhanced to further reduce tube leaks Cost  Optimization continues – reduced capital spend  Major reductions in mine O&M and capital Risk Mitigation  Resolution with Hitachi on the 2008 G3 blade

24. Slide 24: Benchmarking Genesee 1, 2, & 3

    Benchmarking Genesee 1, 2, & 3 Genesee unplanned commercial unavailability 7% 6% 5.60% 5% 4% 3.40% 3% 2% 1% 0% 2011 2012 2013 2014YTD 2015T Genesee Solomon Q1 Solomon Q2  G1&2 have historically performed very consistently each year  G3 performance has improved substantially over the past two years

25. Slide 25: Mining – Genesee

    Mining – Genesee Background  In Spring 2014, Westmoreland Mining acquired CP’s JV mining partner, Prairie Mines, and became Operator of the Genesee Mine Mining improvements  Westmoreland introduced different mining techniques that provide lower unit coal costs  Maintenance program completely reva

26. Slide 26: Capital Power operated gas facilities

    Capital Power operated gas facilities Clover Bar units 1, 2 & 3: 250 MW; Island Generation: 275 MW Output  Reliability program in an advanced phase Cost  Issues with early vintage LMS units Risk mitigation  Two LMS 100 units are now fully reconditioned with the more durable components Clover Bar

27. Slide 27: Wind farm facilities

    Wind farm facilities Halkirk, AB: 150 MW Quality Wind, BC: 142 MW Kingsbridge 1, ON: 40 MW Port Dover Nanticoke, ON: 105 MW Output  Availability improvement strategies underway  Opportunity to improve V90 and V100 output Cost  Cost optimization implemented Risk  LTSA in place with OEM’s to maint

28. Slide 28: Biomass facilities

    Biomass facilities Southport, NC: 84 MW + steam; Roxboro, NC: 48 MW Both plants use tri-fuel blend: wood/tire-derived fuel/coal Output  Improved sustainable output  Bottom ash removal system installed  Fuel storage/receiving improved Cost  Program to reduce/eliminate coal fuel (high $/GJ)  Alte

29. Slide 29: Summary

    Summary Our Vision Respected, Reliable & Competitive Generator Major risks Manage have been Industry Top controllable identified and Results Quartile Zero Incidents costs to meet have Availability budget targets mitigation plans Execution Objective Each plant and support group optimize their operati

30. Slide 30: Alberta Power Market

    Alberta Power Market Most attractive power market in North America Bryan DeNeve, SVP Corporate Development & Commercial Services

31. Slide 31: Strong Alberta focus

    Strong Alberta focus  Capital Power continues to focus on the Alberta power market  Shepard will reach COD in Q1/15 Industrial  Genesee 4&5 will start Genesee 4&5 construction in May 2015  Increasing focus on large industrial Shepard power solutions  Also investigating renewable opportunities N

32. Slide 32: Overview of Alberta power market

    Overview of Alberta power market  Competitive wholesale and retail energy market  Installed generation capacity of 16 GW  Entire province is a single zone where power prices are determined by the bid price of the incremental power generator – no capacity market  About 10% of hours have prices gr

33. Slide 33: Historical Alberta prices

    Historical Alberta prices Daily average power prices 800 600 $/MWh 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Annual average power prices and AECO 100 89.95 10.00 70.36 80.79 76.22 80.19 80 71.29 66.95 8.00 62.99 54.59 64.32 47.81 50.88 43.93 7.74 60 8.27 6.00 $/MWh 6

34. Slide 34: Stability of market design is critical

    Stability of market design is critical given the magnitude of investments in new generation Stable market design has signalled the addition of 7 GW of new generation 1000 45% 900 40% 800 35% 700 30% 600 25% Capacity Reserve 500 (MW) Margin 20% 400 15% 300 200 10% 100 5% 0 0% 2001 2002 2003 2004 2005

35. Slide 35: Expected coal unit retirements

    Expected coal unit retirements Clean Air Strategic Alliance (CASA) regulations may result in coal units retiring sooner Total coal capacity (MW) 7,000 2019: Sundance 1&2 (576 MW); Battle River CASA Financial Compliance 3 (149 MW); H.R. Milner 6,000 (144 MW) Capital Stock Turnover 5,000 4,000 2025-29

36. Slide 36: Timing of new supply

    Timing of new supply Alberta supply and demand Other Wind Hydro Natural Gas Coal Demand 20 15 GW 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Projected reserve margin signals the need for new capacity in the 2018-2020 timeframe(1,2) 1) So

37. Slide 37: Market balance

    Market balance Reserve Margin(1,2) 45% Base Case 40% 35% Low Growth Scenario 30% 25% 20% 15% 10% 5% Historical Forecast 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Slower growth in oil sands development due to persistent low oil prices would delay new capacity requirements by

38. Slide 38: Alberta market

    Alberta market Alberta energy prices(1) 125 Power Prices NG Prices 15 100 10 75 $/MWh $/GJ 50 5 25 Historical Forecast 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Alberta market design expected to continue to provide timely pricing signals for the addition of new s

39. Slide 39: Diverse generation fleet in Alberta

    Diverse generation fleet in Alberta Well positioned to capture value in Alberta’s merchant market Expected AB power generation stack for 2015(1) 100% Other Clover Bar Energy Centre Gas peaking 30% • Most responsive peaking facility in the AB market 90% • Captures peak pricing, backstops position Gas

40. Slide 40: AB power market in Q3/14

    AB power market in Q3/14 $500 Daily settled prices and plant outages Daily Settled Price Average Forward Price $400 $300 ($/MWh) $200 Legend: SD5 = Sundance 5 SD6 = Sundance 6 K3 = Keephills 3 G3 = Genesee 3 $100 $0 1-Jul 8-Jul 15-Jul 22-Jul 29-Jul 5-Aug 12-Aug 19-Aug 26-Aug 2-Sep 9-Sep 16-Sep 23-Se

41. Slide 41: Impact of selling forward gas position

    Impact of selling forward gas position  Strategy generated trading losses in February and July when power prices settled above forward prices but has generated a net gain of $10M year to date Trading Price 90 CBEC Capacity Sold Actual Pool 2014 Days Prior Gain/(Loss) Forward (MW) Price ($/MWh) ($/M

42. Slide 42: AB Commercial – Q3/14 YTD variances

    AB Commercial – Q3/14 YTD variances $15 $13.7 $10 Total Plants (unhedged) -$35.7 $5 $4.0 $M $0 Keephills 3 Sundance Genesee 3 Halkirk Other Clover Bar Value of Trading PPA -$1.4 hedges -$5 -$5.4 -$4.9 -$7.7 -$10 -$15 -$13.3 -$14.7 AB Commercial segment variance of -$29.7M YTD largely attributed to K

43. Slide 43: AB commercial portfolio positions

    AB commercial portfolio positions  Alberta portfolio hedged positions (% sold forward) 2015 2016 2017 Percentage sold forward(1) 96% 51% 26% Average contracted prices(2) Mid-$50 Mid-$50 Low-$60 ($/MWh) Forward prices ($/MWh) $48 $48 $51 (as of November 30/14)  2015 is significantly hedged in the m

44. Slide 44: Alberta power market trading

    Alberta power market trading  Hedging positions based primarily on generation from Genesee 3 and Keephills 3 baseload coal plants and output from the Sundance PPA  Actively trading throughout various time periods to minimize portfolio risks, create incremental value, and reduce volatility CPX’s av

45. Slide 45: Genesee 4&5

    G4 G5 Genesee 4&5 1,060 MW natural gas-fired combined cycle project

46. Slide 46: Genesee 4&5 highlights

    Genesee 4&5 highlights  1,060 MW natural gas fired combined cycle facility  Two train 1-on-1 configuration in a single shaft layout utilizing the most recent combined cycle technology  Located at the Genesee site adjacent to Genesee 3 – significant brownfield advantages  Approved by AUC, Alberta

47. Slide 47: Strategic fit

    Strategic fit  Fixed base of toll revenues with 50% contracted in the Alberta market with upside potential from 50% merchant  Schedule optionality with a two train 1-on-1 configuration • Built in flexibility in Power Island and EPC  Lowest cost mid-merit gas-fired generation provides fuel and dis

48. Slide 48: Technology and configuration

    Technology and configuration  Latest combined cycle technology has 4% lower heat rate than previous technology  Highest output – lower cost due economies of scale  Single shaft layout provides lower construction cost and dispatch advantages (i.e. faster ramp up and down)  Two train 1-1 configura

49. Slide 49: Commercial structure

    Commercial structure  50/50 Joint Venture with ENMAX  Capital Power leads and manages development and construction  Capital Power will operate and maintain the facility  Each partner will have dispatch rights to 50% of the output  50% of Capital Power’s share, 25% of the total, contracted to EN

50. Slide 50: Construction Update

    Construction Update Development & Construction Darcy Trufyn, SVP Operations, Engineering & Construction

51. Slide 51: Shepard Energy Center

    Shepard Energy Center  Plant: 873 MW 2 on 1 combined cycle natural gas power plant  Location: SE Calgary, AB  Ownership: 50/50 joint venture Capital Power/ENMAX  Schedule: Target COD Feb 2015  Cost: On budget; CP’s portion $821M  Safety: TRIF 0.83  Current status: • Steam blows/pipe restorati

52. Slide 52: K2 Wind Ontario

    K2 Wind Ontario  Plant: 270 MW wind farm located near Goderich, ON.  Equipment: 140 Siemens turbines  Ownership: JV equal ownership (CP/Samsung/Pattern)  Schedule: COD mid-2015  Contract: 20 year FIT contract with Ontario Hydro  Cost: CP’s portion of the wind farm is $310M  Status: • On sched

53. Slide 53: Excellent track record of development

    Excellent track record of development Outstanding track record of completing 7 construction projects (supercritical coal, natural gas, wind) totaling 1,691 MW Asset Capacity / fuel On-time On-budget In-Service Genesee 3(1) (AB) 516 MW / coal  + 2005 Kingsbridge 1 (ON) 40 MW / wind   2006 Clover B

54. Slide 54: Capital Power is the leading developer in the AB market

    Capital Power is the leading developer in the AB market Generation built in Alberta since 2004(1) 1800 Genesee 4&5 Renewables Thermal 1600 Proposed Genesee 4&5 1400 1200 1000 (MW) Proposed Genesee 4&5 800 600 400 200 0 Capital Power ENMAX TransAlta ATCO Other 1) Includes Shepard Energy Centre and ex

55. Slide 55: Project execution status – Genesee 4&5

    Project execution status – Genesee 4&5  Plant and equipment layout/requirements finalized  Competitive process completed to select power island equipment  Competitive EPC Balance of Plant (BOP) process initiated  Schedule • Award power island equipment – Dec 2014 • Expand cooling water channel –

56. Slide 56: Creating the competitive advantage for Genesee 4&5

    Creating the competitive advantage for Genesee 4&5  Extensive power plant construction expertise and knowledge  In-house pre-construction/estimating and engineering expertise  Proven successful Alberta experience  Established tools, standards, processes and systems for project management (cost,

57. Slide 57: Contracted Growth Pipeline

    Contracted Growth Pipeline Growth in North America Bryan DeNeve, SVP Corporate Development & Commercial Services

58. Slide 58: British Columbia

    British Columbia Market opportunity  Site C decision – potentially generates 5,100 GWh/year  LNG growth - environmental regulations create incentive to use electricity from the grid for ancillary loads  Forecast LNG demand of 3,000 GWh/year already met with the electrical requirements for Fortis

59. Slide 59: Saskatchewan

    Saskatchewan  Need for 400 MW of new supply by 2019  RFP expected in Q2/Q3 2015  1X1 combined cycle • Site, transmission and gas expected to be supplied by SaskPower  Given recent construction experience, believe we will be competitive 59

60. Slide 60: Ontario

    Ontario Market opportunity  Potential need for gas-fired generation following proposed refurbishment of Darlington and Pickering retirement  Opportunity to provide peaking capacity to balance continued additions of renewable resources  Large Renewable Procurement (LRP) for wind and solar projects

61. Slide 61: Summary of contracted development sites in Canada excluding Alberta

    Summary of contracted development sites/ opportunities in Canada excluding Alberta Natural Gas Wind 61

62. Slide 62: U.S. renewable strategy

    U.S. renewable strategy Target markets with low installed capital costs  SPP / ERCOT  Upper Midwest Target market with superior wind resources  SPP / ERCOT  Upper Midwest  Great Lakes 62

63. Slide 63: U.S. renewable strategy (cont'd)

    U.S. renewable strategy (cont’d) Target areas in proximity of states with high carbon intensity  SPP / ERCOT  Upper Midwest  SERC Carbon Intensity 63

64. Slide 64: Renewable Portfolio Standards provide near term contracting opportunities

    Renewable Portfolio Standards provide near term contracting opportunities 15% by 40% by 2020 2017 15% by 2015 10% by VT: 10% of 2005 2015 27.4% sales by 2013by 2025 20.2% by 10% by 30% by by 2025 2025 NH: 23.8% by 2025 2015 10% by 2015 10% by 2015 RI: 16% by 2019 2015 8% by MA: 20+% by 2025 2% by 12

65. Slide 65: Element Power US

    Element Power US  Signed agreement to acquire Element Power US for ~US$69M (includes US$52M of project financing)  Primary driver for the acquisition was to build a portfolio of development projects in strategic locations in the U.S. • 10 wind development sites • 4 solar development sites, includi

66. Slide 66: Element Power US – strategic fit

    Element Power US – strategic fit Market Strategy Element Sites SPP / • Strong wind regime • 300 MW wind project in Missouri ERCOT • Adjacent to • 200 MW wind project in Kansas transmission build-out • Affordable land positions • Low construction cost Upper • Coal dependency • 99 MW wind project in N

67. Slide 67: Macho Springs

    Macho Springs  50 MW project in Luna County, NM  28 Vestas V-100 1.8 MW turbines  COD in Nov 2011  100% contracted through 2031, PPA with Tucson Electric Power  Tax Equity and Term Loan with MetLife 67

68. Slide 68: Bloom Wind

    Bloom Wind  180 MW project in SW Kansas  11,500 acres; 9.0+ m/s wind speeds  Adjacent to Clark County 345kV substation – IA pending  Construction ready pending off-take agreement 68

69. Slide 69: Sun Valley Energy Center

    Sun Valley Energy Center  300 MW solar PV project in Arizona targeting long term PPAs with California LSE in 2020-21  CAISO has approved construction of the Delaney-Colorado River 500kV transmission line which increases export capability from the Palo Verde Hub and the Delaney Substation into Cali

70. Slide 70: U.S. gas & renewable development sites

    U.S. gas & renewable development sites Natural Gas Wind Solar 70

71. Slide 71: Growing Cash Flows, Growing Dividends

    Growing Cash Flows Growing Dividends Finance Overview Stuart Lee, SVP Finance & CFO

72. Slide 72: Additions to the fleet in 2015 – Shepard

    Additions to the fleet in 2015 Shepard Energy Center – modelling guidance $90 Cash flow  COD expected in Q1/15 ($M) $80  100% of generation capacity contracted in $70 2015; decreases to 75% $60 in 2016 and 2017 $50 2015E 2016E 2017E 72

73. Slide 73: Additions to the fleet in 2015 – K2 Wind

    Additions to the fleet in 2015 K2 Wind - modelling guidance Assumptions $25 Cash distributions $20  COD expected in mid-2015 ($M) $15  2015 power price at $149/MWh, $10 escalating post COD based on $5 Feed-in-tariff (FIT) contract $0 2015E 2016E 2017E  Cash flow based on net capacity factor of 41

74. Slide 74: Improving contracted cash flow

    Improving contracted cash flow(1,2) ($M) $400 $350 } Shepard & K2 Wind K2 Wind } $300 3 wind Shepard $250 projects PD&N Halkirk $200 Quality Wind $150 Island Generation North Carolina $100 Kingsbridge 1 Genesee 1&2 $50 $0 2012 2013 2014T 2015T 2016T 2017T Substantial expansion of contracted operatin

75. Slide 75: Cash flow and financing outlook

    Cash flow and financing outlook Generating surplus FFO after dividends, development projects and sustaining CAPEX expenditures Sources of cash flow ($M) 2015E Funds from operations(1) $390 Uses of cash flow Dividends (net of DRIP) & distributions to NCI $(104) Dividends (Preferred shares) $(22) Deve

76. Slide 76: Continued strong cash flow generation

    Continued strong cash flow generation Funds from operations (FFO) $450  Cash flow expected to increase $400 35% ~8% in 2015 34% 42% $350 42%  Approximately 41% of FFO is $300 discretionary in 2015 $250 19%  Generating ~$200M free cash ($M) 31% flow before growth capex to $200 17% 24% reinvest in

77. Slide 77: Capital allocation

    Capital allocation Dividend 1) Growing contracted cash flow Growth base supports dividend growth 2) Well positioned to fund or Growth partially fund any new Capital Opportunities significant growth Allocation opportunities in the near term with discretionary cash flow Repurchase 3) Consider debt red

78. Slide 78: U.S. and Canadian tax positions

    U.S. and Canadian tax positions U.S. tax position Canadian tax position  Approximately $220M of U.S. net  Approximately $3.5B of tax pools operating losses (NOLs) available but expected to shelter Canadian not recognized for accounting earnings until 2018 with minimal purposes cash taxes starting

79. Slide 79: Financial strength

    Financial strength Strong balance sheet and investment grade credit rating  Investment grade credit ratings Agency Ratings Outlook  Debt-to-capital ratio of ~33% expected S&P BBB- / P-3 Stable at 2014 year-end remains below long- DBRS BBB / Pfd-3 (low) Stable term target of 40% - 50% Debt to total

80. Slide 80: Credit metrics

    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 2014T 2015T 2014T 2015T Within S&P financial criteria for investment grade rating Adj. FFO/Adj. Debt(2) Adj. Debt/Adj. EBITDA(2) 25%

81. Slide 81: Debt maturity schedule

    Debt maturity schedule(1)  $1.2B in credit facilities with 4-year tenor maturing 2018, of which $1.1B available $400 $350 $314 $305 $300 $255 $250 US$230 ($M) (2) $200 (2) $179 $144 $150 $100 US$65 $50 $15 $1 $0 Q4, 2015 2016 2017 2018 2019 2020 2021 2026 2014 EPCOR Debt Capital Markets Debt Bank D

82. Slide 82: Attractive yields relative to peers

    Attractive yields relative to peers 2015E Dividend and AFFO yields(1) Boralex Inc. 3.9% 15.5% Capital Capital Power Power Corp. 4.9% 11.8% Pattern Energy Group Inc. 5.0% 9.6% Innergex Renewable Energy Inc. 5.4% 9.1% TransAlta Corp. 6.3% 8.7% TransAlta Renewables Inc. 6.4% 8.6% Northland Power Inc. 6

83. Slide 83: Dividends

    Dividends Contracted operating margin to financial obligations(1) and dividends(2)  With addition of Shepard and 120% K2 Wind in 2015, forecasting 110% substantial expansion in our contracted operating margin 100%  Dividend increased 7.9% in 90% 2014 that was supported by 80% growing contracted ca

84. Slide 84: Merchant position in AB provides upside

    Merchant position in AB provides upside Operating margin(1) to financial obligations(2) and dividends(3) 200% Contracted + merchant ($70/MWh) 150% Contracted + merchant ($40/MWh) 100% Contracted margin 50% 2013 2014F 2015F 2016F 2017F 1) Merchant margin is calculated using $40/MWh and $70/MWh and is

85. Slide 85: Consistent dividend growth is core to Capital Power's story

    Consistent dividend growth is core to Capital Power’s story  One of the lowest payout ratios of Canadian IPPs  Generating $200M in free cash flow before growth capex at the bottom of the cycle  Significant expansion of contracted cash flow to cover financial obligations and dividends  2014 decis

86. Slide 86: 2015 Corporate Priorities

    2015 Corporate Priorities Corporate priorities Brian Vaasjo, President & CEO

87. Slide 87: 2015 Corporate priorities – operations

    2015 Corporate priorities Priority: Deliver strong operational performance from a young, well- maintained generation fleet Operational targets 94% Capacity-weighted plant availability (reflects planned turnarounds at Genesee 1 & Keephills 3) $65M Maintenance capital (plant maintenance capital and su

88. Slide 88: 2015 Corporate priorities – development

    2015 Corporate priorities Priority: Enhance value for shareholders by delivering accretive growth from new developments Development and construction targets On-time, on-budget and • K2 Wind project (complete construction for safe development of COD in mid-2015) committed projects • Genesee 4&5 (tran

89. Slide 89: 2015 Corporate priorities – financial target

    2015 Corporate priorities Funds from operations of $365M to $415M Financial target 2014-15 year-over-year changes Funds from operations(1)  Commence COD for: $400 $360 $365 to $415 • Shepard Energy Centre in $300 Q1/15 ($M) $200 • K2 Wind in mid-2015 $100 $0 2014E 2015T 1) Funds from operations is

90. Slide 90: Why invest in Capital Power

    Why invest in Capital Power  Continue to improve operating cost base, fleet availability and risks  Best fleet in the best power market in North America  Genesee 4&5 is best positioned to be the next largest natural gas-fired generation project to be built in the province  Substantial growth in

91. Slide 91: Capital S

    Capital S apital ©

92. Slide 92: Non-GAAP financial measures

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

93. Slide 93: Forward-looking information

    Forward-looking information Certain information in this Investor Day presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial and operating performance, events or strategies. The forward-looking information or statements are provided to in

94. Slide 94: Investor Relations Contact

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

Capital Power — Investor Day (December 2014) on 6ix