Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (April 2013)
40 slides from Capital Power's roadshow presentation, April 2013
Slide 1: Capital Power Investor Meetings
Capital Power Investor Meetings Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO April, 2013
Slide 2: Capital Power overview
Capital Power overview Growth-oriented independent power producer (IPP) • Trading on the TSX (CPX); ~$2.1B market cap (diluted); EV ~$4.2B • IPO in mid-2009 from the spin-off of power generation assets from EPCOR • Growth through acquisitions / robust development pipeline Straight-forward business m
Slide 3: North American footprint & target markets
North American footprint & target markets Ownership interest in 15 facilities with more than 3,600 MW(1) Ontario Alberta • Two contracted wind facilities • 1,943 MW of owned under development/construction generation increases • 40 MW contracted wind facility with the addition of Shepard and CPEC • 2
Slide 4: Contracted Ontario wind projects
Contracted Ontario wind projects Port Dover & Nanticoke 105 MW; near Port Dover & Nanticoke, Ontario Construction commenced Sep/12 COD Q4/13 PD&N K2 Wind Ontario 270 MW (33% CPC ownership); in southern, Ontario Equal partnership with Samsung and Pattern Renewable Holdings Commercial oper
Slide 5: Shepard Energy Centre
Shepard Energy Centre Excellent fit with our strategy and will strengthen our position in Alberta Provides stable cash flows 20-year tolling agreement on 50% of owned capacity with ENMAX Additional 25% contracted for 2015-17 which increases cash flow certainty during an expected period of low po
Slide 6: Capital Power Energy Centre to be built to meet Alberta's power needs
Capital Power Energy Centre to be built to meet Alberta’s power needs Expands our market share in the attractive Alberta market Working with General Electric in the development of the project, and would utilize GE’s latest gas turbine technology • Looking to partner with 3rd party in the developme
Slide 7: Continue to own the best fleet in the fastest growing power market in North America
Continue to own the best fleet in the fastest growing power market in North America Expansion plans with Shepard and CPEC will increase our Alberta portfolio 3,000 Best peaking responsiveness 2,500 Best coal reliability Lowest environmental 2,000 (MW) impact and lowest cost 1,500 Most compet
Slide 8: Balanced portfolio of merchant and contracted cash flows
Balanced portfolio of merchant and contracted cash flows 2012 2015 Forecast(1) • 38% of EBITDA(2) (plant results) • 56% of EBITDA (plant results) from contracted from contracted Long-term contracts help 38% 44% stabilize cash Contracted Merchant 56% flows, support 62% Contracted dividend and Merchan
Slide 9: Technology focus
Technology focus(1) Operations and growth are focused on: natural gas, coal, wind and solar Current By 2015 year-end 15 facilities (3,631 MW) 17 facilities (4,076 MW(2)) 9% 9% 41% 50% 54% 37% Gas Wind Coal & solid fuels Interest in Shepard facility (400 MW) will increase natural gas generation from
Slide 10: Modern fleet
Modern fleet Helps keep availability high and reduces risk of unplanned outages Average weighted facility age of the current fleet is 12.5 years(1) 2 new wind projects (195 MW) begin commercial operations in 2013 – 2015 Shepard Energy Centre expected COD Q1/15 CBEC 3 Facility age CBEC 2 Remain
Slide 11: Proven operating excellence
Proven operating excellence Operating availability consistently 90%+ over a growing fleet and production volumes Operating performance 96% 90% 92% 91% 93% 18,000 15,000 Generation (GWh) 12,000 9,000 6,000 3,000 - 2009 2010 2011 2012 2013E Generation Average plant availability 11
Slide 12: Halkirk wind
Halkirk wind Alberta’s best performing wind facility in Q1/13 Halkirk made ~25% more revenue than the average of all AB wind units(1) 42% 41% 73% $48 56% $37 Capacity factor Realized Price Price capture factor Halkirk South wind (1) Based on average hourly revenue per installed megawatt. 12
Slide 13: Clover Bar provides the best peaking responsiveness in Alberta
Clover Bar provides the best peaking responsiveness in Alberta Excellent asset to take advantage of volatility and backstop AB fleet Clover Bar (243 MW) provides significant ability to manage our portfolio • Can power up to full load in 10 minutes, providing flexibility to respond to sudden change
Slide 14: 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 throughout various time periods to minimize portfolio risks, create incremental value, and reduce volatility
Slide 15: Financial strength and access to capital
Financial strength and access to capital Strong balance sheet(1) Assets of ~$5.1B with ~$1.9B of long-term debt(2) $1.2B in credit facilities, of which ~$0.9B available • In 2012 added $300M accordion feature Debt to Total Capitalization 50% Long-term target 40% 40% - 50% 30% 20% 36% 38% 34% 10%
Slide 16: Debt maturity schedule
Debt maturity schedule(1) Well spread-out debt maturities are supported by long asset lives Term on credit facilities extended to 5 years ($M) $350 $314 $305 $300 $255 $250 US$230 $200 $179 $150 $144 $148 $100 US$65 $50 $19 $13 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2026 EPCOR Debt Capita
Slide 17: Strong financial performance of wind projects
Strong financial performance of 4 wind projects Wind projects are forecast to provide $150M - $155M of annual cash flow before financing Strong accretion of ~$0.90 - $0.95 in cash flow per share and ~$0.35 - $0.40 in EPS for all 4 wind projects Forecast cash flow from wind projects 180 160 140 K
Slide 18: Continued strong cash flow generation
Continued strong cash flow generation Funds From Operations (FFO) Targeting $385M-$415M in FFO in $400 2013 • ~36% expected to be $350 discretionary cash flow(1) ~ 37% 35%-40% of 2010-12 FFO is $300 34% 35% discretionary cash flow ($M) $250 35% Additional cash flows in 2013 from: $200 ~ 27% •
Slide 19: Development projects - capex
Development projects - capex Prior Project ($M) to 2013 2013E Total Port Dover $68 $272 $340 Nanticoke K2 Wind Ontario $3 $30 $291(1) Shepard Centre $50 $335 $855 Continue strong execution of capex program Port Dover & Nanticoke Shepard Energy Centre (1) Represents Capital Power’s portion of total p
Slide 20: Cash flow and financing outlook
Cash flow and financing outlook No primary common share equity issuance expected in 2013 other than DRIP, absent an acquisition Sources of cash flow ($M) 2013E Funds from operations $400(1) Preferred share offering (Closed Mar/13) $200 Expected proceeds from sale of assets ~$350 Uses of cash flow Di
Slide 21: Financial performance – Q1/13
Financial performance – Q1/13 % $M, except per share amounts Q1/13 Q1/12 Change Revenues and other income(1) $354 $362 (2.2%) Adjusted EBITDA(1) $122 $139 (12%) Basic earnings per share $0.44 $0.66 (33%) Normalized earnings per share $0.36 $0.46 (22%) Funds from operations $103 $116 (11%) Cash flow
Slide 22: AB commercial portfolio positions
AB commercial portfolio positions Alberta portfolio hedged positions for AB baseload plants and acquired Sundance PPA (% sold forward) Apr–Dec, 2013 2014 2015 Hedged positions (% hedged) 52% 73% 48% Average hedged prices(1) ($/MWh) Mid-$60 High-$50 Mid-$50 (1) The forecast average contracted price
Slide 23: Financial outlook
Financial outlook No change to outlook 2013 financial targets based on an average AB power price of ~$58/MWh Two major scheduled outages (Genesee 1, Keephills 3) in Q2/13 Useful lives of our coal plants increased to 50 years from 45, in accordance with revised Federal Government coal regulatio
Slide 24: 2013 Financial targets
2013 Financial targets(1) Normalized EPS Funds from operations $1.50 $500 $1.20 – $1.40 $400 $385 – $415M $1.00 $300 $0.50 $200 $0.36 $103 $100 $0.00 $0 Q1/13 2013T Q1/13 2013T Cash flow per share $5.00 $4.00 $3.80 – $4.20 $3.00 $2.00 $1.04 $1.00 $0.00 Q1/13 2013T 2013 financial targets assume an av
Slide 25: Credit rating agency metrics
Credit rating agency metrics(1) In line with DBRS financial criteria for current rating Cash flow/Adj. Debt EBITDA/Adj. Interest 25% 6.0 20% 5.0 15% 4.0 3.0 10% 2.0 5% 1.0 0% 0.0 2012 2013E 2012 2013E Above S&P financial criteria for investment grade rating AFFO/Adj. Debt Corporate Liquidity(2) 25%
Slide 26: Alberta power market
Alberta power market Alberta (AB) has a competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO); market has an installed generation capacity of ~13,000 MW No capacity market – power generators must recover all costs through revenue earne
Slide 27: Alberta generation and load mix
Alberta generation and load mix 2010 AB fuel mix by capacity (MW) Estimated customer electricity usage Bio/Wood/Waste/ including oil sands LDF gas, 2% Gas other 1% Wind Hydro 6% Residential 7% Oil Sands 14% NG CT 23% 9% Coal 43% Commercial 21% NG Cogen 28% Industrial 41% Farm 1% Source: Velocity sui
Slide 28: Alberta market
Alberta market Positive long term supply dynamics Projected reserve margin signals Forecast spark spreads the need for new capacity in the above historical average 2017-2020 timeframe AB market design expected to continue to provide timely pricing signals for the addition of new supply Source: AESO
Slide 29: Historical Alberta prices
Historical Alberta prices Daily average power prices 800 600 ($/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 8.27 80.79 76.22 80 71.29 66.95 8.00 ($/MWh) 62.99 6.19 64.32 ($/GJ) 7.73 60 43.93 70.36 47.81 50.88 6.
Slide 30: Alberta market design
Alberta market design Current market design has been successful in signaling when new capacity is required Alberta reserve margin and new capacity 1,200 30% 1,000 25% Capacity (MW) Reserve Margin 800 20% 600 15% 400 10% 200 5% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 New capa
Slide 31: Expected coal unit retirements - CST
Expected coal unit retirements - CST Retirements under the federal Capital Stock Turnover (CST) regulations Alberta coal generation (MW) Generation End of Life 7,000 Capacity (Final Facility (MW) Regulations) Battle River 3 149 2019 6,000 Sundance 1 288 2019 H.R. Milner 144 2019 5,000 Sundance 2 288
Slide 32: Expected coal unit retirements - CASA
Expected coal unit retirements - CASA Clean Air Strategic Alliance (CASA) regulations may result in coal units retiring sooner NOTE: CASA Financial Compliance assumes coal-fired capacity retirements in the year BATEA must be installed as per the Alberta Air Emissions Standards for Electricity Genera
Slide 33: Alberta power market summary
Alberta power market summary Alberta's market design framework Has attracted continued investment by various parties for different fuel types Ensures investment risk is borne by investors and not ratepayers/taxpayers Provides participants with options and choices for managing their commodity p
Slide 34: Summary
Summary Straight forward business model with long-term contracted assets and merchant position that provides stable cash flows and upside opportunities Large, high quality generation portfolio Young and modern fleet with proven operating history Technology focus on natural gas, coal, wind and solar
Slide 35: Summary of assets
Appendix Summary of assets Clover Bar Energy Clover Bar Genesee 1 Genesee 2 Genesee 3 Keephills 3 Joffre Centre Landfill Halkirk Alberta Contracted Alberta Commercial Capacity 430 MW 430 MW 516 MW 495 MW 480 MW 243 MW 4.8 MW 150 MW % owned / 100 / 100 100 / 100 50 / 100 50 / 0 40 / 0 100 / 100 100 /
Slide 36: Summary of assets (cont'd)
Appendix Summary of assets (cont’d) Kingsbridge Island Quality 1 Generation Wind Roxboro Southport Tiverton Rumford Bridgeport Ontario & British Columbia Contracted Mid-Atlantic Contracted US Northeast Commercial Capacity 40 MW 275 MW 142 MW 88 MW 46 MW 279 MW(1) 270 MW(1) 540 MW(1) % owned / 100 /
Slide 37: Development projects
Appendix Development projects Capital Power Energy Port Dover & Shepard Energy Centre Centre K2 Wind Ontario Nanticoke Alberta Commercial Ontario Contracted Capacity 800 MW Up to 900 MW 270 MW 105 MW % owned / 50 / 0 100 / 100, looking for 3rd 33.3% owned 100 / 100 operated party in development Loca
Slide 38: 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) cash flow per share, (iv) discretionary cash flow, (v
Slide 39: Forward-looking information
Forward-looking information Certain information in this presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial and operating performance, events or strategies. Forward-looking information or statements included in this presentation are p
Slide 40: 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