Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (March 2012)
32 slides from Capital Power's roadshow presentation, March 2012
Slide 1: Capital Power Investor Meetings
CAPITAL POWER INVESTOR MEETINGS Brian Vaasjo, President & CEO March, 2012 1
Slide 2: Capital Power overview
Capital Power overview Growth-oriented independent power producer (IPP) • Trading on the TSX (CPX: fully diluted market cap ~$2.4B) • 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 • Gene
Slide 3: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 15 facilities, more than 3,300 MW(1) Segmented owned capacity by MW(1) Additional facilities to come on line 4% • 2 wind projects (292 MW) located in BC and AB with 11% expected CODs in Q4/12 28% • 2 wind projects (195 MW net) in ON with expect
Slide 4: 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 5: Modern fleet
Modern fleet Average weighted facility age of the current fleet is 12.3 years(1) 4 new projects (487 MW) begin commercial operations in 2012 - 2014 CBEC 3 Facility age CBEC 2 CBEC 1 Remaining life Island Generation Gas Joffre (~25 years remaining life) Tiverton Rumford Bridgeport Kingsbridge I W
Slide 6: 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 7: Proposed GHG emission regulations for coal-fired plants
Proposed 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 intensit
Slide 8: 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% 10,000 Generation (GWh) 8,000 6,000 4,000 2,000 - 2008 2009 2010 2011 2012E Generation (actual) Average plant availability
Slide 9: 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 c
Slide 10: Growth from Alberta power market
Growth from 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 r
Slide 11: 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 create incremental value to portfolio CPX’s aver
Slide 12: AB commercial portfolio positions
AB commercial portfolio positions Lower hedged position in 2012 is expected to result in higher realized prices for the portfolio Alberta portfolio hedged positions for AB baseload plants and Sundance PPA (% sold forward at beginning of year) 2012 2013 2014 Hedged positions (% hedged) 48% 20% 5% A
Slide 13: Framework for disciplined growth
Framework for disciplined growth Capital Power’s strategy drives opportunity evaluation Merchant Geography Technology Financial Flexibility Develop within Target Acquire Zone Contracted 13
Slide 14: 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 15: Creating value through disciplined growth
Creating value through disciplined growth Wind developments expected to be significantly accretive Four wind projects under development are expected to add ~$0.15/share on an earnings and cash flow basis during the first two years of operations, with associated EBITDA of $150M - $160M Constructi
Slide 16: 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 17: Financial strength and access to capital
Financial strength and access to capital Current BBB investment grade credit rating from S&P and DBRS $1.15B in debt issues since IPO At ~36%, debt to capitalization ratio(1) remains below long-term target zone of 40% - 50% Public float growth has enhanced liquidity and equity market access
Slide 18: Financial performance – 2011
Financial performance – 2011 $M, except per share amounts 2011 2010 % Change Revenues and other income(1) $1,842 $1,809 1.8% EBITDA(2,3) $533 $444 20% Earnings per share $1.60 $0.77 108% Normalized earnings per share(3) $1.24 $1.40 (11%) Funds from operations(3) $433 $374 16% Funds from operations e
Slide 19: Strong cash flow generation
Strong cash flow generation Discretionary cash flow(1) of $131M in 2011, up 19% from $110M in 2010 Discretionary cash flow represents 37% of Funds from operations(2) Keephills 3 will start generating full year cash flows in 2012 2011 FFO excl CPILP(2) of $352M Discretionary cash flow $180 2% $16
Slide 20: 2012 Financial targets
2012 Financial targets(1) Targeting year-over-year improvements on all major financial targets Normalized EPS Funds from operations $2.00 $500 $1.50 Est. $1.50–$1.70 $400 $352 Est. $380–$420M $1.24 $300 $1.00 $200 $0.50 $100 $0.00 $0 2011 2012E 2011 2012E Cash flow per share Dividend coverage ratio
Slide 21: 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 22: 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 23: AB system heat rate forecast
Appendix AB system heat rate forecast Portfolio bidding keeping prices and 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 with upward impact on prices 2015 o
Slide 24: 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, significantly tighter now due to shutdown of Sundance 1 & 2 & COD of Keephills 3 Source: Internal forecast – Fall 2011 After Shepard COD in 2015, additional
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: Non-GAAP financial measures
Non-GAAP financial measures The Company uses (i) EBITDA, (ii) funds from operations, (iii) funds from operations excluding non-controlling interests in CPILP, (iv) cash flow per share, (v) dividend coverage ratio, (vi) normalized earnings attributable to common shareholders, and (vii) normalized ear
Slide 31: 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 32: 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 32