Capital Power Corporation · TSX:CPX
Capital Power — Investor Presentation (February 2011)
30 slides from Capital Power's investor presentation, February 2011
Slide 1: Investor Meetings
Investor Meetings Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO February, 2011 1
Slide 2: Forward-looking information
Forward-looking information Cautionary statement Certain information in this presentation and in responses to questions contain forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material fact
Slide 3: Capital Power overview
Capital Power overview Canadian-based, growth-oriented independent power producer (IPP) operating in North America Trading on the TSX (CPX) with market cap of ~$1.9B (fully diluted) Consistent strategy Business model: Commitment Generate stable to deliver and growing cash disciplined flows g
Slide 4: Corporate strengths
Corporate strengths by Solid platform si tts for sustainable ba a e aw s growth iv g et e cr 0 m Financial strength ac 00 with access to capital ly 0, nt 1 te to Proven operating and is e n s s iz construction history co le a r ip on to t Young and modern fleet 20 l: 20 oa G Large, high quality gene
Slide 5: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 32 facilities (nearly 3,800 MW)(1) Segmented owned capacity by MW(2) 30% 15% 35% 20% AB contracted AB commercial ON / BC contracted Capital Power Income L.P. (1) Capacity owned and /or operated; excludes Sundance PPA (371 MW) (2) Owned capacity o
Slide 6: Young and modern fleet
Young and modern fleet Young fleet with average facility age of only 13 years(1) 3 new projects (495 MW) with COD in 2011-12 Kingsbridge I is ~5 years old with expected life remaining of ~15 years Coal plants Current age Expected life remaining Genesee 2 2034 Genesee 1 2039 Genesee 3 2050 Keep
Slide 7: Strong operating history, fleet availability
Strong operating history, fleet availability Forecast Generation 12,000 95% 95% 91%(1) 94% 91% 94% Plant (GWh)(2) Availability 9,000 6,000 3,000 CPC Generation Pro-rata CPILP Generation - Availability(3) 2006 2007 2008 2009 2010 2011 Proven operating performance history with high plant availability
Slide 8: Long-term contracts & merchant position
Long-term contracts & merchant position Contracted / merchant split by plant capacity(1) Operating margin split(2) 3,000 2,500 2,000 943 695 943 Megawatts 49% 51% 1,500 1,000 1,175 1,175 1,422 500 CPILP Merchant & portfolio optimization (Contracted) Contracted 457 457 457 - Contracted Merchant 2010
Slide 9: Financial strategy
Financial strategy Investment grade minimum BBB credit rating to access debt markets Stable dividend with growth over time Maintain economic discipline for growth and acquisitions (targeted unlevered, after-tax IRR) • 11% for uncontracted / merchant assets and 9% for contracted assets • Projec
Slide 10: Strong financial base
Strong financial base Debt to capital ratio ~35% (non-consolidated basis) Consolidated assets of ~$5.0B with only ~$1.8B(1) in long-term debt Filed base shelf prospectus in Ap/10, positioning the Company to fund growth plans through the issuance of up to $1B in equity and $1B in debt • Issued
Slide 11: Financial ratio targets
Financial ratio targets Debt to capital FFO to total debt Operating margin ratio(1) ratio Dividend split Targets 40% - 50% Minimum 20% 60% - 70% long term 50% contracted vs. payout ratio merchant (consistent with peers) As of September 30, 2010 35% 24%(2) 82%(3) 49%(4,5) 51% Merchant & portfolio opt
Slide 12: Liquidity & debt maturities
Liquidity & debt maturities $1.2B in credit facilities with terms out to 2013 with $0.9B available Debt maturity profile very manageable Asset base will support new issues of longer term debt Credit facilities(1) Debt maturity profile(2) $450 $1.2 $400 $1.0 $350 $300 $0.8 ($B) $0.9 $250 Availa
Slide 13: Alberta power prices
Alberta power prices Portfolio optimization value creation $90 $81 $80 $70 $67 $66 $66 $57 $60 $54 $49 ($/MWh) $50 $46 $41 $40 $36 $30 $20 $10 $0 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Capital Power's captured price Alberta power average spot price 13
Slide 14: Alberta power price sensitivity
Alberta power price sensitivity(1) 2011 2012 2013 Hedged positions (% contracted) ~65% ~30% ~15% Contracted prices Mid-$60/MWh Mid-$60/MWh High-$60/MWh Sensitivity analysis to +/- $1/MWh change in Alberta power prices • 2011: +/- $2M to operating margin • 2012: +/- $5M to operating margin • 2013:
Slide 15: Cash flow – trailing 12 months
Cash flow – trailing 12 months Generating significant discretionary cash flow net of dividends and maintenance capex • Discretionary cash flow represents 50% of Funds from operations(1) • At bottom of commodity cycle with 25% of capital in construction projects • Substantial future cash flows from
Slide 16: Financial outlook
Financial outlook Currently experiencing bottom of an economic cycle and expect this will continue through 2011 Expect significant upside as power prices recover in 2012 Announced acquisition and development projects in 2010 have long term contracts Maintenance of investment grade credit rat
Slide 17: North American platform & growth strategy
North American platform & growth strategy Significant growth through acquisitions and development Maintain discipline on: • Geography • Size • Fuel type • Economics Target markets where merchant or contracted assets could potentially be added Capital Power facilities Areas where contracted Capit
Slide 18: Building momentum: Keephills project update
Building momentum Keephills 3 project update 495 MW coal-fired generating plant 50% partnership with TransAlta CPC responsible for construction TransAlta responsible for operations COD planned in Q2/11 Major milestone first fire, December 10, 2010 Steam blow, December, 2010 18
Slide 19: Building momentum: 2010 growth announcements
Building momentum 2010 Growth announcements Acquisitions Contracted Development Island Generation Quality Wind Port Dover & Nanticoke Location Campbell River, BC Tumbler Ridge, BC Norfolk & Haldimand, ON Fuel Type Natural Gas Wind Wind Size 275 MW 142 MW 105 MW Costs ~$207M ~$455M ~$340M COD 2002 Be
Slide 20: Building momentum: Growth opportunities
Building momentum Growth opportunities Stage Project Size (MW) $M Fuel Status Most Kingsbridge II 260 $800 Wind Bid submitted Advanced Pioneer TBD Carbon Capture Underway and Storage BC Biomass 50 - 70 $400 Biomass Bid unsuccessful Halkirk 150 TBD Wind Underway Developing BC Wind 500 $1,100 Wind Sit
Slide 21: Execution of growth strategy
Execution Of growth strategy Confirmed capacity growth 4,500 4,000 Since Capital Power’s IPO launch in mid-2009, 3,500 970 MW of new capacity 3,000 has been added or (MW) 2,500 placed into development 2,000 Significant growth 1,500 expected in 2011 with $1.5B committed capital 1,000 target 500 0 200
Slide 22: 2011 Corporate priorities
2011 Corporate priorities Operational targets ≥ 94% CPC capacity-weighted plant availability (one Genesee turnaround planned in 2011) ≤ $40M Maintenance capital (plant maintenance and Genesee mine extension) Development and construction targets ≥ $1.5B Capital committed to acquisitions or developmen
Slide 23: 2011 Corporate priorities (Cont'd)
2011 Corporate priorities (Cont’d) Financial targets(1,2) ~$1.20 Normalized EPS (comparable to original guidance for 2010) Modestly higher Funds from operations than 2010 Cash flow per share Modest Dividend coverage ratio (based on current dividend improvement level) from 2010 Overall investment per
Slide 24: Investment highlights summary
Investment highlights summary Large, high quality generation portfolio Young and Solid modern fleet platform with proven for operating growth history Diversified Financial portfolio in strength with attractive North access to American capital Long-term markets contracts & merchant position provides
Slide 25: Capital expenditures
Appendix Capital expenditures 2011E Sustaining capex $M 2011E Growth capex $M Plant maintenance capex $25 Keephills 3 ~$25 Mine capex $12 Quality Wind ~$180 Information Technology $13 Port Dover Nanticoke ~$95 Other $20 Total sustaining capex $70 Quality Wind - Artist Rendering 25
Slide 26: Alberta power market
Appendix Alberta power market Alberta (AB) has competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO) Entire province is a single zone where prices are determined by the bid price of the marginal unit needed to balance demand and supply
Slide 27: 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. When used in this context, words such as will, anticipate, believe, plan, int
Slide 28: Forward-looking information (cont'd)
Forward-looking information (cont’d) dilutive to earnings per share; (xxi) expectations regarding the impact on earnings of a full year of operations of the Island Generation facility and one scheduled maintenance outage for the Genesee units; (xxii) expectations that improved earnings will mostly o
Slide 29: Forward-looking information (cont'd)
Forward-looking information (cont’d) uncertainties relating to: (i) operation of the Company's facilities; (ii) power plant availability and performance; (iii) unanticipated maintenance and other expenditures; (iv) availability and price of energy commodities; (v) electricity load settlement; (vi) r
Slide 30: 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 30
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