Slide 1: Analyst Conference Call Q2/12 Review
CAPITAL POWER ANALYST CONFERENCE CALL Q2/12 REVIEW Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO July 27, 2012 Quality Wind, BC, July/12
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 acquisitions and disposals (EBITDA), (ii) funds from operations, (iii) funds from operations excluding non-controlli
Slide 4: Q2 Summary
Q2 Summary Q2 financial performance typically weaker due to seasonally lower power prices and outage scheduling Q2/12 normalized earnings of $0.07 per share was flat YOY; results reflected usual seasonal softness • Average AB spot power price was $40/MWh in Q2/12 Normalized earnings were $8M or
Slide 5: Q2 Summary (cont'd)
Q2 Summary (cont’d) Announced sale of hydro facilities Jun/12, an agreement reached to sell Brown Lake and Miller Creek hydro facilities to Innergex Renewable Energy for $69.2M ~$16M gain expected to be recognized in Q3/12 upon closing of the transaction in Aug/12 5
Slide 6: Q2/12 Operating performance
Q2/12 Operating performance On track to meet full year availability target of 91% or greater Plant Availability Q2/12 Q2/11 Alberta Genesee 3 95% 100% Average availability in commercial plants Keephills 3 Q2/12 of 82% versus 91% 100% N/A in Q2/11 Joffre 99% 78% Clover Bar 97% 65% Scheduled outag
Slide 7: Q2 Financial performance 2012 Outlook
Q2 Financial performance 2012 Outlook
Slide 8: Financial performance – Q2/12
Financial performance – Q2/12 $M, except per share amounts Q2/12 Q2/11 % Change Revenues and other income(1) $272 $350 (22%) EBITDA(1,2) $72 $73 (1.4%) Earnings (Loss) per share ($0.50) ($0.67) 25% Normalized earnings per share $0.07 $0.07 ─ Funds from operations excluding non- $54 $65 (17%) control
Slide 9: AB commercial plants & portfolio optimization
AB commercial plants & portfolio optimization Portfolio optimization continues to deliver value Segment contributed $55M EBITDA in Q2/12, up 25% over prior year Increase primarily driven by two components: Portfolio optimization performance driven by strategies which sold forward length at prices
Slide 10: Capturing upside from AB power prices
Capturing upside from AB power prices CPX’s average realized power price has exceeded spot power prices by ~$6.90/MWh over the past 2 years through forward contract sales and power trading activities $100 $80 $60 $/MWh $40 $20 $0 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Capital Power captured
Slide 11: AB commercial portfolio positions
AB commercial portfolio positions Alberta portfolio hedged positions for AB baseload plants and Sundance PPA (% sold forward) Jul-Dec 2012 2013 2014 Hedged positions (% hedged) 91% 28% 5% Average hedged prices ($/MWh) High-$60 Mid-$60 Low-$60 Summer pricing off to a good start with July(1) average
Slide 12: North Carolina U.S. contracted plants
North Carolina U.S. contracted plants No EBITDA contribution from Roxboro and Southport in Q2/12, compared with $2M in Q1/12 Performance lower than expected primarily due to reduced energy margins from lower than expected heat rates and higher maintenance and fuel costs Higher maintenance cost
Slide 13: Impairment of North East U.S. Assets
Impairment of North East U.S. Assets Under IFRS, impairment charges and On-peak Spark Spreads reversals will be more frequent than in (MassHub) Forwards the past 19 Recognized a pre-tax impairment Spark Spread ($/MWh) 18 charge of $74M primarily due to lower current and forecasted spark spreads
Slide 14: 2012 Outlook
2012 Outlook Latest 2012 financial guidance unchanged despite a decline in power prices in Q2/12 in both the Alberta and New England markets 2012 Normalized earnings per share is expected to be slightly under the low end of the target range based on revised AB forward power prices which have decre
Slide 15: 2012 Outlook (cont'd)
2012 Outlook (cont’d) Sundance plant owner (TransAlta or TA) provided notification on a force majeure claim for up to $39M relating to the Q3/11 outage of Unit 6 due to a transformer failure • We have a 52% interest in the Sundance PPA for Units 5 and 6 • Contractually responsible for paying our s
Slide 16: 2012 Corporate Priorities
2012 CORPORATE PRIORITIES 16
Slide 17: 2012 Corporate priorities
2012 Corporate priorities Deliver strong operational performance from a young, well- maintained generation fleet Operational targets Performance measure 2012 target H1 Results Status Plant availability average ≥ 91% 89% On track Sustaining capex ≤ $108M $50M On track • Plant maintenance $80M • Genes
Slide 18: 2012 Corporate priorities (cont'd)
2012 Corporate priorities (cont’d) Enhance value for shareholders by delivering accretive growth from current developments Development and construction targets Performance measure 2012 target Status Quality Wind and Continue on time and on budget On track Halkirk wind projects with CODs expected in
Slide 19: 2012 Corporate priorities (cont'd)
2012 Corporate priorities (cont’d) Deliver on substantial growth in cash flow and normalized EPS Normalized EPS (NEPS) Funds from operations $2.00 $500 $1.50 $1.50 – $1.70 $400 $380 – $420M $300 $1.00 $170 $200 $0.50 $0.50 $100 $0.00 $0 Q2 YTD 2012 T Q2 YTD 2012 T Cash flow per share Dividend covera
Slide 20: Questions?
QUESTIONS? 20
Slide 21: 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 22: 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 22