Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (March 2010)
32 slides from Capital Power's roadshow presentation, March 2010
Slide 1: Investor Meetings March, 2010
Investor Meetings March, 2010 Brian Vaasjo, President & CEO Stuart Lee, CFO CONFIDENTIAL
Slide 2: Cautionary statement regarding forward-looking information
Cautionary statement regarding forward-looking information Certain information in this presentation and in oral answers to questions contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain
Slide 3: Overview of Capital Power
Overview of Capital Power New company formed in July/09 from EPCOR Utilities Inc.’s spin-off of its power generation business Canadian-based independent power producer (IPP) operating in North America Business model: stable and growing cash flow from a balanced portfolio of long-term contracts
Slide 4: Corporate strengths
Corporate strengths One of Canada’s largest IPPs with interests in 31 Large, high quality facilities totaling ~3,500 MW of owned and/or operated generation portfolio generation capacity; geographic, fuel source and counterparty diversification Modern fleet with Average plant availability of 94%(1);
Slide 5: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 31 facilities (~3,500 MW) Directly Owned 30.5% LP Interest Alberta Contracted ON/BC Contracted Capital Power Income L.P. Two Facilities Alberta Three Facilities 20 Facilities 820 MW(1) Commercial 80 MW(1) 1,668 MW(1) (820 MW)(2) (80 MW)(2) (472 M
Slide 6: Strategic North American platform
Strategic North American platform Williams Lake Mamquam Calstock Capital Power facilities Capital Power Income L.P. facilities CONFIDENTIAL 6
Slide 7: Modern fleet
Modern fleet Modern fleet with average facility age of 12 years; two units commissioned in late 2009 with 390 MW of additional capacity in 2011/13 Facility age (as of December 31, 2009) Genesee 2 Genesee 1 Capital Power Income L.P. Brown Lake Taylor Coulee Joffre Weather Dancer Miller Creek Average
Slide 8: Strong operating history, fleet availability
Strong operating history, fleet availability Very good operating performance history with high plant availability (1) 12,000 95% 95% 91% 94% 94% 100% 10,000 75% Total 8,000 Plant Generation 6,000 50% Availability (GWh) 4,000 (%) 25% 2,000 - 0% (2) 2006 2007 2008 2009 2010E Capital Power Generation P
Slide 9: Financial strength and access to capital
Financial strength and access to capital(1) Strong balance sheet with BBB investment grade credit rating (S&P/DBRS) • $1.2B in credit facilities, of which $1.0B available • Net debt / total capitalization of ~34% (non-consolidated basis) • Consolidated assets of ~$5.0B with only ~$1.7B in long-ter
Slide 10: Strong cash flow generation
Strong cash flow generation $M (on a de-consolidated basis) $240(1) FFO excluding non-controlling interests in CPILP ~($100) Dividends ~($30 - $40) Average maintenance capex (excluding CPILP) ~($10 - $20) Average other capex (emission credits) ~$80 - $100 Free cash flow Generating significant discre
Slide 11: Financial ratio targets
Financial ratio targets Dividend • Consistent with peers in the 60-70% payout ratio over the long term Debt-to-total capitalization ratio • 40-50% Funds from operations to total debt ratio • Minimum 20% Contracted versus merchant operating margin contribution • Minimum 50% contracted CONFIDE
Slide 12: Alberta power prices
Alberta power prices Alberta spot power prices of ~$46/MWh in Q4/09 declined 6.5% from Q3/09 Higher spot pricing in Q3/09 due to a number of significant base load plant outages and derates that constrained supply and caused higher spot prices $57/MWh captured power price(1) for Alberta commerc
Slide 13: Hedging Alberta spot power price exposure
Hedging Alberta spot power price exposure Alberta commercial portfolio Actively manage our position; despite being flat in 2010, there will be some quarterly fluctuations in results depending on the success of our positioning in the quarter substantially sold forward @ ~70% hedged low-$60/MWh @ lo
Slide 14: Hedging update
Hedging update Took early view prices would be soft in 2010 and locked in all of our base load length Continue to have material heat rate upside from our natural gas facilities (~300 MW from Clover Bar and Joffre) To date, our call on 2010 has been prudent Increased hedging on base load leng
Slide 15: Hedging update (cont'd)
Hedging update (cont’d) May see some level of increased hedging for 2011, but expect to not only carry some open base load into 2011, but also 300 MW of variable length providing lots of capacity to participate in upside Clover Bar provides significant ability to manage our portfolio • Plant can
Slide 16: Outstanding platform for growth
Outstanding platform for growth Pursue selected target markets Development Numerous development opportunities at various stages Near term opportunities for contracted cash flows Very disciplined and patient approach Acquisitions Focus on large natural gas facilities 1,066 MW(1) of mercha
Slide 17: Growth development opportunities
Growth development opportunities Size Estimated Project (MW) Cost ($M) Fuel Location Keephills 3(1) 247.5 $955 Coal AB Quality Wind 142 $455 Wind BC Port Dover & Nanticoke 100 - 110 $340 Wind ON Kingsbridge II 270 $800 Wind ON Pioneer (carbon - TBD Chilled ammonia AB capture & storage) BC Wind 500 $
Slide 18: Keephills 3 construction project
Keephills 3 construction project 495 MW coal-fired plant, supercritical boiler technology (same as Genesee 3) Partnership with TransAlta Total project cost of ~$1.9B (CPX 50% portion = $955M) Project currently at peak hired labor (~1,600 workers) Overall project 84% completed; power island
Slide 19: Quality Wind project
Quality Wind project Quality Wind project selected by BC Hydro for the award of an Energy Purchase Agreement (EPA) 142 MW wind power project 79 turbines on a site 10 km northeast of Tumbler Ridge, B.C. Energy generated would be sold under a 25-year EPA with BC Hydro Commercial operation ex
Slide 20: Quality Wind project (cont'd)
Quality Wind project (cont’d) Meets our minimum 9% hurdle rate (unlevered, after-tax IRR) for contracted facilities 5-year wind study used in evaluating project; 35% expected capacity factor Low construction risk Majority of construction costs are turbine-related, which have been conditional
Slide 21: 2010 Corporate priorities
2010 Corporate priorities Operational targets • Plant availability of ≥ 94% • Sustaining capex of $60M (includes $20M for emissions credits) Construction / development objectives • CPC’s share of final costs for Keephills 3 project at ≤ $955M with completion by Q2/11 • Commit at least $500M to c
Slide 22: Investment summary
Investment summary Positive long-term fundamentals for the Alberta power market • Demand expected to increase in 2011 from oil sands investment activity • Retirement of capacity on Alberta electricity grid positive for creation of new generation capacity • Alberta power prices expected to be among
Slide 23: Appendix
Appendix • Q4/09 results • Board of Directors • Non-GAAP financial measures CONFIDENTIAL
Slide 24: Q4/09 - Corporate updates
Q4/09 - Corporate updates Operating performance in line. Q4/09 and H2/09 operating performance in-line with management’s expectations • 92% average plant availability in Q4/09, including scheduled outage at Genesee 1 Development on track. Construction activity continues to meet milestones, and d
Slide 25: Q4/09 Operating performance
Q4/09 Operating performance Q4, 2009 Plant Generation Availability (Gwh) Alberta commercial plants Genesee 3 99% 484 Joffre 94% 73 Clover Bar Energy Centre(1) 98% 9 Taylor Coulee Chute 66% 2 Clover Bar Landfill Gas 94% 10 Weather Dancer 0% - 97% 578 Alberta contracted plants Genesee 1 74% 618 Genese
Slide 26: Financial highlights – Q4/09
Financial highlights – Q4/09 ($M, except earnings per share) Q4/09 Q3/09 Change Revenues $497 $511 2.7% Gross margin (excluding fair value changes)(1) $182 $189 3.7% Operating margin(1) $154 $169 8.9% Net income $7 $14 50% Earnings per share (normalized)(1) $0.18 $0.42 57% Funds from operations $71
Slide 27: Financial outlook
27 Financial outlook 2010 vs. 2009 Sale of remaining 15% interest of Battle River PPA in Jan/10 Higher operating margin (excluding fair value adjustments) from full year of operation of Clover Bar units 2 and 3 Higher captured power price for Alberta commercial portfolio as a significant porti
Slide 28: Experienced board of directors
Experienced board of directors Donald Lowry President and CEO of EPCOR and Chairman of EPLP Chairman, EPCOR Nominee Director of Canadian Oil Sands Trust Former President and COO of TELUS Hugh Bolton Non-executive chair of the Board of Directors of EPCOR EPCOR Nominee Chairman of Matrikon;
Slide 29: Non-GAAP financial measures
Non-GAAP financial measures The Company uses (i) gross margin, (ii) operating margin, (iii) funds from operations, (iv) funds from operations excluding non-controlling interests in CPILP and (v) normalized earnings per share as financial performance measures. These terms are not defined financial me
Slide 30: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) Prior to the third quarter of 2009, the Company used adjusted earnings before foreign exchange gains and losses, interest, income tax, depreciation and amortization and impairments (adjusted EBITDA) to measure plant operating performance. Commencing with the thir
Slide 31: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) Normalized net income and normalized earnings per share The Company uses normalized earnings per share to measure performance by period on a comparable basis. Normalized earnings per share is based on net income according to Canadian GAAP adjusted for items that
Slide 32: Contact information
Contact information Investor Relations (780) 392-5305 (866) 896-4636 (toll-free) investor@capitalpower.com www.capitalpower.com CONFIDENTIAL 32