Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (May 2012)
35 slides from Capital Power's roadshow presentation, May 2012
Slide 1: Capital Power Investor Meetings
CAPITAL POWER INVESTOR MEETINGS Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO May, 2012
Slide 2: Capital Power overview
Capital Power overview Growth-oriented independent power producer (IPP) • Trading on the TSX (CPX); ~$2.3B market cap (diluted); EV ~$3.8B • Spin-off of power generation assets from EPCOR/IPO in mid-2009 High quality generation portfolio • Young and modern fleet with generation capacity of ~3,300 MW
Slide 3: Balanced portfolio of merchant and contracted generation
Balanced portfolio of merchant and contracted generation(1) Continue to have strong exposure to attractive Alberta power market Today - 2012 Year-end 2014E 15 facilities (3,351 MW) 17 facilities (3,798 MW(2)) • 40% capacity contracted • 45% capacity contracted 4% 4% 11% 17% 28% 32% 25% 24% 28% 27% A
Slide 4: Modern fleet
Modern fleet Average weighted facility age of the current fleet is 12.5 years(1) 4 new wind projects (487 MW) begin commercial operations in 2012 - 2014 CBEC 3 Facility age CBEC 2 Remaining life CBEC 1 Island Generation Gas Joffre (~25 years remaining life) Tiverton Rumford Bridgeport Kingsbridg
Slide 5: Technology focus
Technology focus(1) CPC’s operations and growth are focused on four fuel sources: natural gas, coal, wind and solar Current By 2014 year-end 15 facilities (3,351 MW) 17 facilities (3,798 MW(2)) 1% each 14% 45% 53% 47% 39% Gas Wind Hydro Coal & solid fuels Projects in development will increase owne
Slide 6: Favorable GHG emission regulations for coal-fired plants
Favorable GHG emission regulations for coal-fired plants Government of Canada’s proposed plan (published in Q3/11) would apply a new greenhouse gases (GHG) emissions performance standard to new coal- fired electricity generation units New performance standard is intended to represent the intensi
Slide 7: Proven operating excellence
Proven operating excellence Capital Power has maintained high operating availability over a growing fleet and production volumes Operating performance 12,000 92% 96% 90% 92% 91% Generation (GWh) 10,000 8,000 6,000 4,000 2,000 - 2008 2009 2010 2011 2012E Generation (actual) Average plant availability
Slide 8: Enhanced reliability at Clover Bar
Enhanced reliability at Clover Bar Participation in GE lease-pool minimizes outage periods and provides prudent risk management LMS 100 units can be replaced by a leased unit from GE in 2 - 4 days Clover Bar (243 MW) provides significant ability to manage our portfolio • Can power up to full loa
Slide 9: North American footprint & target markets
North American footprint & target markets Ownership interest in 15 facilities with more than 3,300 MW Ontario • Target market for contracted assets Western Canada • 2 wind projects expected COD in 2013 • 53% of total owned and 2014 capacity is in attractive AB power market • 2 wind projects expected
Slide 10: Framework for disciplined growth
Framework for disciplined growth Capital Power’s strategy drives opportunity evaluation Merchant Geography Technology Flexibility Develop within Target Acquire Zone Financial (after-tax, unlevered minimum IRR) • 11% for merchant assets (theoretical financing: 60% equity, 40% debt) • 8% for contracte
Slide 11: Creating value through disciplined growth
Creating value through disciplined growth Wind developments expected to be significantly accretive Significant experience in the construction and operation of both thermal (coal, natural gas) and renewable (wind, biomass, small hydro) facilities Four wind projects under development are expected
Slide 12: 2013 - 2014 Projects under development
2013 - 2014 Projects under development K2 Wind Ontario Port Dover & Nanticoke 270 MW wind project in the township of 105 MW wind farm in an area Ashfield-Colborne-Wawanosh, ON that covers the counties of Norfolk and Haldimand, ON Limited partnership between Capital Power, Samsung and Pattern
Slide 13: Capital Power's growth
Capital Power’s growth(1) 487 MW of committed projects will increase contracted cash flows in 2012-2014 4,000 Wind project 3,500 developments 3,000 Acquisitions 2,500 MW 2,000 1,500 Completed construction and 1,000 developments 500 CPC base at IPO 0 2009 2010 2011 2012E 2013E 2014E (1) Based on MW c
Slide 14: 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 earne
Slide 15: Capturing upside from AB power prices
Capturing upside from AB power prices Hedging positions based primarily on generation from Genesee 3 and Keephills 3 baseload coal plants and output from the Sundance PPA Actively trading (portfolio optimization) throughout various time periods to minimize portfolio risks and create incremental
Slide 16: AB commercial portfolio positions
AB commercial portfolio positions Alberta portfolio hedged positions for AB baseload plants and Sundance PPA (% sold forward) Apr-Dec 2012 2013 2014 Hedged positions (% hedged) 73% 20% 5% Average hedged prices Mid-$60/MWh Mid-$60/MWh Low-$60/MWh Sensitivity analysis(1) to +/- $5/MWh change in Al
Slide 17: Financial strength and access to capital
Financial strength and access to capital BBB investment grade credit rating from S&P and DBRS ~$1.2B in debt issues since IPO ~$1.3B raised in equity markets since IPO; public float now 71% of ownership 120 90 Fully diluted 28% 40% 46% 51% 61% 71% shares 60 (M) 30 72% 60% 54% 49% 39% 29% 0 IPO
Slide 18: Public float growth has enhanced liquidity
Public float growth has enhanced liquidity Added to S&P/TSX Composite Index in June 2011 Average daily trading volume has doubled compared to 2010 160,000 ~146K ~147K 140,000 120,000 Average daily 100,000 trading volume 80,000 ~71K 60,000 40,000 20,000 - 2010 2011 2012 YTD(1) (1) As of May 11/12
Slide 19: Debt maturity schedule
Debt maturity schedule Well spread-out debt maturities are supported by long asset lives $350 $315 $305 $300 $255 $250 $230 $200 $179 ($M) $145 $150 $100 $65 $50 $25 $18 $14 $15 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2026 Debt payable to EPCOR Debt payable to non-related parties 19
Slide 20: Financial performance – Q1/12
Financial performance – Q1/12 $M, except per share amounts Q1/12 Q1/11 % Change Revenues and other income(1) $366 $376 (2.7%) EBITDA(1,2) $139 $72 93% Earnings per share $0.66 $0.06 n.m. Normalized earnings per share $0.46 $0.34 35% Funds from operations excluding non- $116 $83 40% controlling inter
Slide 21: Strong cash flow generation
Strong cash flow generation FFO (excluding CPILP) Discretionary cash flow(1) $350 represented 37% of Funds from operations in 2011 $300 35% Keephills 3 will start generating $250 full year cash flows in 2012 35% $200 Halkirk and Quality Wind ($M) 26% expected to be in operation in $150 Q4/12 2
Slide 22: 2012 Outlook
2012 Outlook Normalized EPS is now expected to be slightly under the low end of the $1.50 - $1.70 target range based on revised forecast power prices and spark spreads • Revised Alberta forward power prices of $68/MWh compared to original forecast of $74/MWh New England facilities are now expect
Slide 23: 2012 Financial targets
2012 Financial targets Deliver on growth in cash flow and normalized EPS Normalized EPS Funds from operations $2.00 $500 $1.50 Target $1.50–$1.70 $400 $352 Target $380–$420M $1.24 $300 $1.00 $200 $0.50 $100 $0.00 $0 2011 2012T 2011 2012T Cash flow per share Dividend coverage ratio $5.00 3.0 $4.00 $3
Slide 24: Summary
Summary Large, high quality generation portfolio Young and modern fleet with proven operating history Diversified portfolio in attractive North American markets Strong exposure to attractive Alberta power market Long-term contracts and merchant position provides stable cash flows and upside opportun
Slide 25: 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 genera
Slide 26: AB system heat rate forecast
Appendix AB system heat rate forecast Portfolio bidding keeping prices high and lowering NG prices driving system heat rates high Alberta expected to grow at above-national average rates due to the impact of oil sands activity Capital Stock Turnover expected to drive major coal retirements wit
Slide 27: AB cost of generation (COG)
Appendix AB cost of generation (COG) Sustained higher power prices are required to incent new builds Current market fairly well-supplied (COD Keephills 3 in 2011), significantly tighter now due to shutdown of Sundance 1 & 2 Source: Internal forecast – Spring 2012 New generation likely to be ba
Slide 28: AB power market (new builds/retirements)
Appendix AB power market (new builds/retirements)(1) 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 Shepard Energy 800 Enmax Combined 2015 Centre cycle Facility
Slide 29: Summary of assets
Appendix Summary of assets Clover Bar Clover Genesee Genesee Genesee Keephills Energy Bar 1 2 3 3 Joffre Centre Landfill Roxboro Southport Alberta Contracted Alberta Commercial Mid-Atlantic Contracted Electric 422 MW 430 MW 516 MW 495 MW 480 MW 243 MW 4.8 MW 88 MW 46 MW Capacity % owned / 100 / 100
Slide 30: Summary of assets (cont'd)
Appendix Summary of assets (cont’d) Island Kingsbridge 1 Miller Creek Brown Lake Generation Tiverton Rumford Bridgeport Ontario & British Columbia Contracted US Northeast Commercial Electric 40 MW 33 MW 7 MW 275 MW 279 MW(1) 270 MW(1) 540 MW(1) Capacity % owned / 100 / 100 100 / 100 100 / 100 100 /
Slide 31: Summary of projects under development
Appendix Summary of projects under development Halkirk K2 Wind Ontario Quality Wind Port Dover & Nanticoke Alberta Commercial & Ontario & British Columbia Contracted Contracted Electric 150 MW 270 MW 142 MW 105 MW Capacity % owned / 100 / 100 33.3% owned 100 / 100 100 / 100 operated Location Halkirk
Slide 32: Forward-looking information
Forward-looking information Forward-looking information or statements included in this presentation 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 may not be appropriate for othe
Slide 33: 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 losses, and gains on acquisitions and disposals (EBITDA), (ii) funds from operations, (iii) funds from operations excluding non-controlli
Slide 34: Discretionary cash flow
Discretionary cash flow The Company uses discretionary cash flow as a measure of the Company’s available cash to reinvest into the business after paying sustaining capital expenditures and declared dividends and distributions to common and preferred shares. Discretionary cash flow is not a defined f
Slide 35: Investor Relations Contacts
Investor Relations Contacts Randy Mah Chris Williams Senior Manager Senior Analyst (780) 392-5305 (780) 392-5105 rmah@capitalpower.com cwilliams@capitalpower.com 35