Slide 1: Analyst Conference Call: Q4 and Year-End 2012 Review
CAPITAL POWER ANALYST CONFERENCE CALL Q4 AND YEAR-END 2012 REVIEW Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO March 4, 2013
Slide 2: Forward-looking information
Forward-looking information Cautionary statement Certain information in this presentation 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 fac
Slide 3: 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 disposals (adjusted EBITDA), (ii) funds from operations, (iii) funds from operations excluding non-controlling inter
Slide 4: Corporate updates
Corporate updates Quality Wind and Halkirk wind projects completed on time and under budget Quality Wind began commercial operations on Nov 6/12, on time and ~10% below $455M budget Halkirk began commercial operations on Dec 1/12, slightly ahead of schedule and ~8% below $357M budget Announced m
Slide 5: Q4/12 Results
Q4/12 Results Q4/12 results generally in line with expectations before two events Normalized earnings of $0.23 per share decreased 36% YOY Funds from operations, excluding non-controlling interests in CPILP, of $83M, down 5.7% from Q4/11 Two events impacted Q4/12 results but not expected to impa
Slide 6: Q4/12 Operating performance
Q4/12 Operating performance Plant Availability Q4/12 Q4/11 Operating performance Alberta Genesee 3 56% 44% met expectations commercial plants Keephills 3 100% 99% Genesee 3 planned Clover Bar Energy Centre 98% 99% outage extended 9 days Joffre 65% 93% Strong availability of Halkirk 95% N/A contr
Slide 7: Bridgeport heat rate option
Bridgeport heat rate option Overview Bridgeport hedge is a heat rate option product that was structured to closely resemble the plant’s operating characteristics Heat rate option was in place when Bridgeport was acquired in 2011 “Basis risk” existed because there is a mis-match between the exp
Slide 8: Bridgeport heat rate option (cont'd)
Bridgeport heat rate option (cont’d) Correlation between locations has historically been very high for both power and natural gas; widening of Nov/Dec spread in gas prices resulted in loss Generally, high correlation during Feb/10 to Oct/12 timeframe of nearly 3 years except in Dec/10 Unpreceden
Slide 9: Bridgeport heat rate option (cont'd)
Bridgeport heat rate option (cont’d) Actions taken to limit exposure Apr-Oct/12 natural gas basis risk was hedged in Jan/12; but throughout 2012 unable to hedge Nov-Dec/12 exposure due to liquidity constraints and limited number of counterparties Trades were executed at reasonable costs to limit
Slide 10: Wind projects: early performance indicators
Wind projects: early performance indicators Quality Wind Capacity factor (35% expected) 142 MW project in BC began Monthly Target commercial operations in Nov/12 actual (3-month avg.) Lower-than-expected capacity Nov/12 23% factor of 27% in first couple of Dec/12 31% 47% months, but seeing impro
Slide 11: Financial performance – Q4/12
Financial performance – Q4/12 $M, except per share amounts Q4/12 Q4/11 % Change Revenues and other income(1) $330 $347 (4.9%) Adjusted EBITDA(1,2) $100 $121 (17%) Basic earnings per share $0.19 $1.47 (87%) Normalized earnings per share $0.23 $0.36 (36%) Funds from operations excluding non- $83 $88 (
Slide 12: Financial performance – 2012
Financial performance – 2012 $M, except per share amounts 2012 2011 % Change Revenues and other income(1) $1,344 $1,395 (3.7%) Adjusted EBITDA(1,2) $456 $385 18% Basic earnings per share $0.84 $1.60 (48%) Normalized earnings per share $1.29 $1.24 4.0% Funds from operations excluding non- $381 $352 8
Slide 13: AB commercial portfolio positions
AB commercial portfolio positions Alberta portfolio hedged positions for AB baseload plants and Sundance PPA (% sold forward) 2013 2014 2015 Hedged positions (% hedged) 49% 37% 31% Average hedged prices ($/MWh) Mid-$60 Mid-$50 Mid-$50 Sensitivity analysis to +/- $1/MWh change in Alberta power pr
Slide 14: Financial outlook – 2013 vs. 2012
Financial outlook – 2013 vs. 2012 Normalized EPS and FFO for 2013 are expected to be in line with 2012 Assumes an average AB power price of ~$58/MWh for 2013, compared to $64/MWh in 2012 Expect lower realized prices on economically unhedged position, profitability from the Clover Bar peaking fac
Slide 15: Corporate priorities
Corporate priorities Operational targets Performance measure 2012 Target 2012 Results 2013 Target Plant availability average ≥ 91% 91% ≥ 93% Sustaining capex ≤ $108M $102M ≤ $105M • Plant maintenance $80M • Genesee mine maintenance(1) $6M • Other $22M(2) Maintenance and operating $215M - $235M $208M
Slide 16: Corporate priorities (cont'd)
Corporate priorities (cont’d) Development and construction targets Performance measure 2012 Target 2012 Results 2013 Target Quality Wind $455M budget; Final costs estimated at Q4/12 target COD $405-$415M; ▬ COD Nov 6/12 Halkirk Wind $357M budget; Final costs estimated at Q4/12 target COD $325-$335M;
Slide 17: Corporate priorities (cont'd)
Corporate priorities (cont’d) Financial targets 2012 Target 2012 Actual 2013 Target (based on $74/MWh ($64/MWh actual AB (based on $58/MWh AB power price) power price) AB power price) Normalized EPS $1.50 - $1.70 $1.29 $1.20 - $1.40 Funds from operations $380 - $420M $381M $385 - $415M Cash flow per
Slide 18: Questions?
QUESTIONS? 18
Slide 19: 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 20: 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 20